Allegations being investigated ... Bill O'Chee in Parliament House in Canberra when he was a serving senator. Credit:Paul Miller Mr O'Chee, a Queensland senator between 1990 and 1999, has had a long and difficult relationship with the Murdoch press, which spent years reporting on his large parliamentary superannuation payout and an acrimonious split with his first wife. The incident came to light during a recent conversation at an Australian airport between Mr O'Chee and a sitting MP, involving the News of the World phone hacking scandal. The MP said they doubted anything similar would be unearthed in Australia's independent media inquiry. Mr O'Chee then relayed the incident. The conversation was brought to the attention of the federal police last month. The matter is being investigated by the special references unit which deals with sensitive political inquiries.

Mr O'Chee has given a statement to the federal police. Yesterday a police spokesman confirmed an investigation had begun on November 4. The allegations centre on proposed legislation regarding the creation of digital television in Australia, a bill called the Television Broadcasting Services (Digital Conversion) Act. News, Fairfax - the publisher of the Herald - Telstra and Optus opposed the legislation because it proposed to give free-to-air broadcasters up to six new channels each free as part of the move to digital television. It also proposed a ban on new TV stations for 10 years, protecting the existing operators. In 1998 the Senate was finely balanced with two independents - Labor defector Mal Colston and Brian Harradine - holding the key to whether the bill would pass. The Howard government supported it, Labor had said it would oppose it.

Mr O'Chee was on the Senate committee involved in scrutinising the bill and was seen as a weak link in Coalition support for the bill as he had previously crossed the floor on other bills. In the end, Labor secured some amendments and supported the legislation, making the independents irrelevant. But there was a frenzy of lobbying before the bill arrived in the Senate, with the vote expected to go to the wire. Mr O'Chee's statement says that in mid-1998 he received an invitation to lunch with a senior News Ltd executive and a lobbyist. The invitation was conveyed by the then state president of the Nationals, David Russell. Both men agreed it would not be proper to meet during the state election campaign then in progress, but agreed to a lunch afterwards. Soon after the election on June 13 Mr O'Chee and Mr Russell arrived for lunch at one of Brisbane's most exclusive restaurants, Pier 9. By coincidence, Lachlan Murdoch, the son of Rupert, and Chris Mitchell, the then editor of The Courier Mail, were having lunch at another table.

When the Herald contacted Lachlan Murdoch yesterday he said through a spokesman that he could not recall the lunch. Mitchell, who now edits The Australian, said he recalled a lunch with Mr Murdoch during which they encountered Mr O'Chee but could not recall the presence of the News executive. The News executive and the lobbyist declined to comment. Mr Russell has also provided a statement which confirms the meeting and those present. While the Herald has not seen this statement, it is understood Mr Russell does not recall any improper offers being made.

During the meeting, Mr O'Chee said, the News executive argued that the digital conversion bill needed to be defeated because it would bankrupt regional free broadcasters which could not afford to convert to digital. ''I felt that these arguments were made up because News Corporation had no financial interest in non-pay television broadcasting,'' Mr O'Chee's statement says. ''[I] believed that News Corporation's real interest was the effect the digital conversion legislation would cause to its Foxtel business venture, because it would reduce the amount of people who would want to subscribe for these services.'' The executive then said that while it would be controversial for Mr O'Chee to cross the floor, ''we will take care of you''. If Mr O'Chee was criticised for his decision, News would use its Australian newspapers to look after him, including running his media releases and opinion pieces. ''[He] also told me we would have a 'special relationship', where I would have editorial support from News Corporation's newspapers, not only with respect to the digital conversion legislation, but for 'any other issues' too. ''I believed that [he] was clearly implying that News Corporation would run news stories or editorial content concerning any issue I wanted if I was to cross the floor and oppose the digital conversion legislation.''

At this point, according to the statement, Mr Murdoch and Mr Mitchell rose from their table and came over. The statement says Mr Murdoch was surprised to see the News Ltd executive and said, ''I didn't know you were having lunch here today''. The executive then told Mr Murdoch: ''This is Bill O'Chee. He's going to help us with digital TV.'' Mr Murdoch and Mr Mitchell then left, and the lunch broke up soon after, with Mr O'Chee promising to consider the News executive's arguments. A week later he called the executive and told him he would not cross the floor. ''After this conversation, it became almost impossible for me to get anything published in the Queensland newspapers which News Corporation controlled, even though I had been able to do so before the lunch meeting.'' Mr O'Chee lost his Senate position three months later.