POLICE Minister Mike Gallacher has been forced by Premier Mike Baird to resign over sensational ICAC allegations he masterminded a “corrupt scheme” to raise illegal political donations in concert with a company part-owned by mining entrepreneur Nathan Tinkler.

In a phone call at 3.15pm yesterday from Canberra, Mr Baird insisted to Mr Gallacher that he had to go.

The Central Coast MP then fell on his sword — the latest collateral damage for the state government in its ICAC corruption crisis.

I have spent my entire professional life fighting corruption and crime. “I am disappointed this allegation has been made and the manner in which it came to be made.

Gallacher

At 10am Mr Gallacher had been all smiles as he proudly inspected the latest police graduates in Goulburn. Thirty minutes later, 200km away in Sydney, counsel assisting Geoffrey Watson SC dropped the corruption bombshell that effectively ended Mr Gallacher's ministerial career.

Mr Gallacher said he could not say if he was innocent of the allegations because he did not know what they were. “I have spent my entire professional life fighting corruption and crime. I am disappointed this allegation has been made and the manner in which it came to be made but it will be dealt with through the processes of ICAC,” he said.

He denied he was forced out.

Mr Gallacher joins former premier Barry O'Farrell and Mr Gallacher's close friend, former energy minister Chris Hartcher as Liberals who have resigned from cabinet over this year’s ICAC scandals ­involving Australian Water Holdings and illegal donations.

Arthur Sinodinos has stood aside as federal assistant treasurer and four other state MPs, including Mr Hartcher, are now sitting on the crossbenches as independents pending the ICAC outcomes.

Mr Gallacher will now join them.

Mr Watson had been cross-­examining Mr Tinkler's business partner at development company Buildev, Darren Williams, in yesterday’s hearing when he revealed that there was evidence Mr Gallacher hatched a “corrupt scheme” to take illegal donations from Mr Tinkler in return for access to politicians.

Mr Watson said the evidence of Mr Gallacher's central involvement only came to light on Thursday and rested on emails and phone calls ­between him, Mr Hartcher and Mr Williams. Mr Watson then accused Mr Williams of colluding with Mr Gallacher and Mr Hartcher, in return for meetings about the company’s proposed projects, including Mr Tinkler's proposed billion-­dollar coal loader at Mayfield.

“You had a close, long-standing connection with the-then shadow minister Michael Gallacher,” mr Watkins said to Mr Williams. “It was through him that the two of you hatched a corrupt scheme to make donations to the Liberal Party?”

“No,” Mr Williams said.

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Mr Watson then replied: “By the end of this, you are going to regret giving that answer.”

It has been illegal for property developers to make donations to state political parties since December 2009. Emails implicating Mr Gallacher in the scheme tendered to the inquiry date from 2010.

Buildev paid $66,000 through another Tinkler entity, Patinack Farm, to the alleged Liberal Party slush fund EightbyFive which was run out of Mr Hartcher’s office, ahead of the 2011 election.

ICAC is investigating how EightbyFive allegedly raised more than $400,000 from illegal donors and how former Liberal Party chief fundraiser Paul Nicolaou raised $700,000, mostly from prohibited donors, through another alleged slush fund.

An email from Mr Williams to Buildev managing director David Sharpe on June 2, 2010, tendered to ICAC said: “Which entity will i give mike gallagher(sic)?” Mr Sharpe responded: “Ask Nathan (Tinkler) as I think it’s best to come through patnack (sic) (Mr Tinkler’s horse farm) get right away from property minning (sic) infristructure (sic).”

Mr Williams denied Buildev paid donations to the Liberal Party, and said he was merely chasing up ­invoices from EightbyFive for Patinack Farm for “marketing services”.

Mr Gallacher’s barrister, Arthur Moses, SC, described Mr Watson’s actions as “inappropriate and ­offensive” and demanded to know why Mr Gallacher was not ­informed until 9.20am yesterday. “This is not a show for my learned friend to make jokes about,” Mr Moses said.

Commissioner Megan Latham defended ICAC’s decision, saying to give people “advance notice, chapter and verse” of allegations against them would “deprive the inquiry of much of its force”. Mr Moses told ICAC that Mr Gallacher intended to “stand aside as minister pending the outcome of the inquiry”.

But at 3.30pm, Mr Baird announced Mr Gallacher was gone, saying that to wait until the allegations were resolved would “constitute an unacceptable distraction for my government”. “I will take whatever action possible to clean up politics in NSW,” he said. “I don’t care what the political damage is.”

Mr Watson also indicated that because of the seriousness of the new evidence, the inquiry may have to adjourn and return for more hearings.

Brad Hazzard, the Attorney-General, will be acting Police Minister until a replacement is decided.

Liberals fear more scalps are to come

A PREMIER, an energy minister, a federal assistant treasurer, a parliamentary secretary, two other MPs — and now a police minister.

The list of scalps in this year’s two ICAC inquiries is nothing short of extraordinary.

But if you have taken note of the evidence so far before Operations Credo and Spicer, all of the resignations or decisions to stand down are justified.

There is a certain inevitability in Mike Gallacher’s fate insofar as he and the biggest ICAC target in this inquiry, Chris Hartcher, have always been as thick as the proverbial thieves.

It seemed exceptionally improbable that Hartcher could have been in charge of an elaborate slush fund arrangement and that his Central Coast colleague had no idea about it.

And once a police minister, of all portfolios, is accused in ICAC of behaving illegally, that has to be it.

Word is Gallacher did not go easily and he was essentially sacked by Mike Baird in a phone conversation at 3.15pm.

The worst part about this is O’Farrell came to office promising to end the “donations for decisions” culture which had so damaged Labor. If it wasn’t for the Obeid and Macdonald scandals and the fact the Opposition Leader John Robertson has admitted he received a $3 million bribe offer while a union boss but did not report it to police, we could be looking right now at a one-term Coalition government.

Labor set the booby trap in 2009 legislation which banned developer donations. The fact that some Liberals fell for it and decided to raise money illegally is downright unbelievable and a symptom of how a lack of ICAC investigations during the Labor years rendered some politicians too cocky and full of hubris.

The Liberals raised $11 million for the 2011 state election through legal means and won in an absolute landslide.

The fact certain people in their head office and on the Central Coast thought they needed to raise another $1 million illegally is absolutely ridiculous.

The only piece of good fortune for the Libs in this disaster is that Baird, the cleanskin Christian and the only one capable of saying that he is moving in a new, clean direction, is premier. Said one senior government source yesterday of Baird’s approach: “If this (scandal) backwashes on him or his mates, they’re gone too. There’s no two standards here.”

The fear in government is there is more to come.