A big donor to the ruling Liberal National Party in Queensland has escaped prosecution for illegal quarrying because of a last-minute change to legislation ordered by the state's Deputy Premier.

Karreman Quarries was this month facing legal action by the Department of Natural Resources and Mines over unlawful extraction of sand and gravel from the Upper Brisbane River when an amendment, slipped unnoticed into a package of reforms to the Water Act, retrospectively legalised its activities.

The change was not mentioned in the bill that preceded the vote on the amendments and even the Labor Opposition knew nothing about it.

ABC's 7.30 has learned the amendment was drafted after a meeting in April called at short notice by Deputy Premier Jeff Seeney at which the Karreman case was raised. The meeting was attended by Natural Resources Minister Andrew Cripps and senior bureaucrats.

The change to the law means officials are no longer able to prosecute the company. It also means the company's activities at Harlin, worth more than $15 million annually, can continue unimpeded for another five years.

The amendment specifies that the type of extraction of quarry material for which Karreman Quarries was under investigation "is lawful, and is taken to have always been lawful".

Emails to farmers at Harlin from the Department of Natural Resources and Mines, seen by the ABC, show that officials had obtained a stop notice against Karreman and were gearing up for legal action to enforce it when the surprise amendment was made to the law.

'We know he's got some powerful friends'

Local farmers have campaigned for 20 years against the company's activities, claiming they cause excessive erosion of their properties.

They are up against Dick Karreman, a prominent Queensland businessman whose company has given $75,000 to the LNP in recent years, making it one of the largest donors.

Ministerial diaries show Mr Karreman met Mr Seeney in December 2013, when the investigation into the company's activities at Harlin was in full swing. The diary says that the purpose of the meeting was "Mining Act".

Neil O'Connor says he has lost 10 acres of land due to erosion caused by Karreman Quarries. ( ABC News )

"We know he's got some powerful friends," Harlin farmer Barrie Dunning told the ABC.

"But we've got to be careful about what we say because he's threatened to sue us at times if we complain too much about his not complying with council or department rules."

Neil O'Connor, who owns blocks of land upstream and downstream of the Karreman site, said he had lost about 10 acres of prime land along the river bank.

Mr O'Connor and two neighbours say that between them they have spent $180,000 on desperate attempts to prevent further erosion by building log walls to shore up the banks.

"The rivers have their way of doing things and if you abuse that, which I believe has happened, it will do what rivers do. It can only literally swallow us up."

Their claims are backed by scientists at the Australian Rivers Institute.

Karreman 'indirectly mining properties upstream'

The Institute's Professor Jon Olley, a fluvial geomorphologist at Griffith University, has told 7.30 that Karreman is indirectly mining the properties upstream and benefiting from the sand and gravel washed down into the area where the company is quarrying.

"By disturbing the banks of the channel you actually trigger erosion upstream, delivering material downstream and in effect mining farmer's properties upstream," Professor Olley said.

"They've lost many hundreds of thousands, if not millions of dollars worth of land that they can't get back.

"It's basically gone, it's a resource that they've lost."

The Institute warned in 2007 that sand and gravel extraction on the Upper Brisbane River, which feeds Wivenhoe Dam, was unsustainable and should cease altogether.

The Institute's report said quarrying also flushed excessive sediment and nutrients into Wivenhoe Lake, the main source of drinking water for Brisbane, increasing the costs of water treatment and reducing the lake's capacity.

Professor Olley estimated the additional recurring costs to the Mt Crosby water treatment plant downstream of the dam were $3 million a year.

He said the change to Queensland's Water Act was "a backward step" that reversed reforms enacted under the previous Labor government in 2010.

"The sustainable extraction set by [the Department of Natural Resources and Mines] is 20,000 tonnes a year and what's been coming out is estimated to be 100,000 to 150,000 tonnes," he said.

According to Rivers Institute research, half of the sediment load from the Upper Brisbane River is generated by the 20-kilometre reach where sand and gravel extraction takes place - representing only a quarter of its total length.

Fears amendment is a backward step

Professor Olley noted that other states had long ago outlawed the kind of in-stream quarrying that the Queensland amendment would encourage.

"New South Wales and Victoria legislated against this type of extraction in the mid-1990s, because they recognise the type of damage this type of extraction [causes]," he said.

Mr O'Connor has shown the ABC a letter from Premier Campbell Newman dated June 2013.

In it, Premier Newman said officials had established that Karreman Quarries needed a special permit to mine the watercourse - and that the company did not have such a permit.

The Premier told Mr O'Connor and his wife that he had asked Mr Cripps to carry out a further investigation.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 7 minutes 45 seconds 7 m Last minute amendment saves LNP donor from prosecution ( Mark Willacy ) Download 14.2 MB

That probe was due to report on June 6. But the new amendment became law the previous day.

"I just can't believe it," Mr O'Connor said.

"What can we do now? We're affected by this amendment. We have nowhere to go."

Responding to questions from the ABC, a law firm acting for Karreman Quarries said that allegations about the lawfulness of the company's operations and their impacts had often been made without a full appreciation of the legal position and had included factual inaccuracies.

The firm said that when Mr Karreman met Mr Seeney in December, he had not discussed the investigation into the operations in the Upper Brisbane River or changes to the Water Act.

In a statement, Mr Cripps told the ABC that the LNP had always planned to wind back reforms enacted by the previous Labor government relating to river quarrying.

He said the issuing of a compliance notice to Karreman Quarries, in accordance with legislation as it stood at the time, had only drawn its attention to the need for new arrangements.

Mr Seeney said that as his dealings with Clive Palmer had shown, everyone was treated equally by the LNP government.

He said all issues were dealt with based on the facts of the matter at the time.

Do you know more about this story? Email investigations@abc.net.au

Loading...