Australian Labor Party Is Hit by Charges of Corruption

THE Australian press is calling it a Down Under Watergate. The Royal Commission, an independent inquiry in Perth, has heard testimony since March 12 about the relationship between some of Western Australia's high flying businessmen and the state's Labor government. Then, on April 10, the inquiry turned to the same businesses' relationship with Prime Minister Bob Hawke.

So far, Mr. Hawke's reputation remains intact, but there has been more than enough material to keep the tabloids happy.

* Laurie Connell, the former head of Rothwells, a failed investment bank, testified that he gave a A$250,000 (US$320,000) campaign contribution to Hawke's Australian Labor Party after having lunch with the prime minister. At the lunch, Mr. Connell said, the prime minister assured Connell the Hawke government would not put a tax on the gold mining industry. Connell was involved at the time in a gold mine as well as banking. In total, Connell says he and other businessmen at the lunch gave A$9 50,000 for Labor's 1987 reelection campaign. In Parliament, the prime minister denied the contributions influenced his decision not to tax gold miners.

* Connell also testified he gave massive amounts of cash to former Western Australian Premier Brian Burke. At one point, a Burke assistant arrived at Rothwells looking for a A$300,000 cash contribution, which was deposited in a slush fund run by Burke. The assistant later destroyed all records. Burke is now the Australian ambassador to Ireland and the Holy See. He plans to return to Perth at the end of April to give his side of the story.

The revelations have galvanized the opposition Liberal Party, which is peppering the prime minister with questions in Parliament.

Hawke and Paul Keating, the deputy prime minister and treasurer, have not taken the criticism sitting down. Mr. Keating pointed out April 15 that the Liberals had asked for and received A$50,000 from Connell. The Liberals, however, had only declared A$5,000. The Liberals quickly pointed out the Labor Party had only declared A$1,000 of the money Connell gave Labor.

BOB HOGG, secretary of the Labor Party, concedes the inquiry is ``not doing any good at all'' for Labor. At the end of the inquiry, he says, ``you get a note that says Bob Hawke is not a crook, but in the meantime he is associated with a bunch of crooks.'' Mr. Hogg says the lesson for the government is to maintain an arm's length relationship with business.

The Labor Party received a sobering indication of the political fallout on April 13, when the Western Australian Labor Party lost a by-election in Geraldton, a seat Labor had controlled for more than 70 years.

``It seems fairly evident from Geraldton that it presages a fairly major electoral disaster for Labor with both state and federal implications,'' says Des Moore, senior fellow of the Institute of Public Affairs in Melbourne.

There is little doubt the continuing inquiry will continue to hurt the Western Australian Labor Party, which will not face the voters until early 1993. The inquiry is particularly interested in the business dealings of the former premier. The Burke state government tried to become a corporate power, owning gold mines, office towers, newspapers and high-tech companies. Prof. Patrick O'Brien of the University of Western Australia nicknamed it ``WA Inc.''

``It was old-fashioned corporatism - really cronyism,'' Mr. O'Brien says.

Unfortunately for the taxpayers, the state's attempts at business rarely worked. Now, the inquiry is trying to figure out what happened to A$1 billion of the state's money.

``The Labor governments in Western Australia and Victoria thought that they could do better in business than business,'' says Gerald Henderson, executive director of the Sydney Institute, a think tank. ``Their involvements became total failures or close to it.''