ICAC inspector David Levine released a scathing report alleging "unreasonable, unjust, [and] oppressive maladministration" in the Cunneen inquiry. Credit:Daniel Munoz The driving record of the Double Bay real estate agent was not perfect. Tilley had been caught driving at 100km/h in an 80km/h zone in rural NSW over the Easter long weekend. But it was not her fault when the Mondeo collided with a pizza van outside the Bridgeview Hotel, sending Stephen and his father Greg Wyllie sprinting to the scene of the crash. Cunneen followed in her car. The anxious group who gathered around as Tilley was treated in the ambulance could not have known that a phone call to a stranger about the damaged Mondeo would ensnare them in a saga of Kafka-esque proportions. The highly secretive Australian Crime Commission (ACC) concerns itself with investigations into serious organised crime.

Sophia Tilley and Margaret Cunneen's son Stephen Wyllie. Credit:Facebook As fate would have it, one of their targets, believed to be a tow-truck driver, took a call from Cunneen about the damage to her car. The tow-truck driver passed his phone to smash repairer George Kharadjian, an acquaintance of the top prosecutor. ICAC Commissioner Megan Latham has faced calls to step aside. Credit:Daniel Munoz Fairfax Media understands Cunneen was concerned her car insurance might be voided if Tilley, a P-plate driver, had consumed any alcohol at all.

According to a public statement issued by the ICAC last week, Tilley admitted that she had consumed alcohol before the accident. Kharadjian told Fairfax Media: "I've known Margaret for years just through the area. We drink at the same pub." He said that after the accident he'd had a "tongue in cheek conversation with Margaret about Sophia's fake boobs". Asked how this topic had come up, Kharadjian said: "Because when I first met Sophia – she was in the pub and Margaret and I were just having a laugh about her fake boobs." There is some confusion as to whether the call happened in the immediate aftermath of the crash or, as Cunneen claims, in a conversation with the smash repairer the next day. Also in dispute is the tone of the conversation. Cunneen told News Corp papers this week that the words were a "joke", and the reports suggested she had used "a play on the words 'fake chest pains' because Ms Tilley had recently undergone cosmetic surgery".

But those listening must not have got the joke because on June 30, 2014, almost a month to the day after the accident, the ACC hand-delivered a letter to the ICAC. "DPP Prosecutor possibly involved in corrupt conduct," read the reference. The genesis of the investigation was confirmed last week, when the ICAC's independent inspector, former Supreme Court judge David Levine, QC, released a scathing report alleging "unreasonable, unjust, [and] oppressive maladministration" in the Cunneen inquiry. In a slip-up in redacting sensitive parts of the report, the ACC was identified as the agency which passed on the material to the ICAC. Three days after the ACC delivered its letter, which would have been extraordinary for the ICAC commissioner and former Supreme Court judge Megan Latham to ignore, the ICAC launched a preliminary investigation. It later became a full-blown public inquiry into allegations Cunneen perverted the course of justice by advising Tilley to "fake chest pains" to avoid a police breath test. The allegations were furiously denied. As it turned out, Tilley did complain of chest pains, claiming she was worried her implants had ruptured. It is understood this delayed the blood alcohol test by just over an hour. Tilley returned a zero blood alcohol reading.

On October 30, 2014, shockwaves reverberated through the legal community when the ICAC announced it would hold a public inquiry into allegations Cunneen, her eldest son and his girlfriend had sought to pervert the course of justice, an offence punishable by up to 14 years in jail. In an email to a member of the public sent in December, Cunneen blamed her "malevent" (sic) ... long-estranged" sister Carol for the corruption investigation, although the ICAC later confirmed in a letter this year that she was "not a complainant" . "It is indeed amazing that these people don't realise that my dear Sophia doesn't drink (her blood test was 0.00) and the crash was so bad that the car was written off. Isn't it good that all the independent bystanders said I did absolutely nothing wrong?" Cunneen wrote in the email. Exactly what happened on that night may never be known. The transcript of the phone calls has not been released. One thing is clear: the Cunneen investigation was a mistake. Even supporters of the commission, including former Supreme Court judge and assistant ICAC commissioner Anthony Whealy​, QC, readily concede it fell well outside the watchdog's legislative mandate to focus on systemic corruption.

Levine said in his report: "At the beginning eyebrows might be raised at the allegation [of attempting to pervert the course of justice] but will be quickly lowered when the substance is considered." The substance of the entire investigation appears to be the single, hotly contested conversation about "fake chest pains". Cunneen successfully challenged the ICAC's jurisdiction to investigate the trio in the Court of Appeal, and fended off the ICAC's appeal to the High Court. The NSW Solicitor-General subsequently advised in July that she should not face charges over material referred by the ICAC. As soon as the ICAC announced the inquiry, Levine was quick to write to the corruption watchdog to say an attempt to pervert the course of justice was something "which a reasonable person would expect the NSW police to carry out". Fairfax Media understands the logical choice, of passing the information on to the NSW police, was considered inappropriate because Cunneen had professional associations and friendships with many police due to her role prosecuting some of the state's most serious offenders.

Separately, the ACC may have considered Cunneen's long-running friendship with Steve Fletcher, one of the nation's biggest gamblers and a person with underworld connections. For more than five years, Fletcher has employed Cunneen's son Stephen. Six months before the fateful car accident, Fletcher had been the subject of an unrelated Police Integrity Commission inquiry into his use of the identities of many NSW police officers to open hundreds of betting accounts to disguise his betting activities after he was banned from many internet betting agencies. It was Cunneen who introduced Fletcher to one of the detectives embroiled in the PIC inquiry, homicide detective Tony "Soup" Williams. No allegations were made about Cunneen at the inquiry. Williams, who has since left the force and is waiting to hear if he will face criminal charges, met Fletcher during Cunneen's prosecution in the Lyndsay van Blanken​ murder trial. Fletcher, who was alleged in the PIC inquiry to have received inside information on a wide range of sports from greyhounds to the tennis, is also waiting to hear whether he will face criminal charges.

Because of his previous friendship with Cunneen, the decision on whether to criminally charge Fletcher for fraud offences over his "police" betting accounts was removed from the DPP and sent instead to the Crown Solicitor's office. This week the Attorney-General's office said that a "senior counsel and a junior counsel" had been briefed to advise "on the sufficiency of the evidence and the prospects of a possible prosecution". The Cunneen case has become the cause célèbre of Sydney shock jocks and some sections of the media, and fuelled a wider backlash against the ICAC that could bring about the downfall of the agency and its commissioner. Levine lashed the ICAC for referring nine years' worth of Cunneen's personal text messages to her boss, Director of Public Prosecutions Lloyd Babb​, SC, to consider disciplinary action against her over allegations she disclosed information to journalists via texts. The watchdog said it had the power to refer such material under the ICAC Act. There is also a question about the lawfulness of the manner in which the phones of Cunneen and others were seized, with Levine suggesting the seizure by way of a "notice to produce" followed by a search warrant was unlawful. The ICAC takes a different view.

A cast of ICAC regulars, including Obeid and Macdonald, is now reaping the benefits of, if not exploiting, the renewed anti-ICAC sentiment – which kicked up a gear when the watchdog trained its sights on NSW Liberal Party figures and unwittingly ended Barry O'Farrell's premiership. 2GB's Alan Jones, improbably, has gone into bat for Macdonald against "this ICAC outfit" and said "Megan Latham must be finished". He enthusiastically took up Macdonald's refrain that the ICAC "withheld" evidence "favourable to" the former mining minister. Claims made by the Obeid family in a civil case against the ICAC, including extraordinary allegations the watchdog "planted" crucial evidence in its inquiry into a coal tenement created over the Obeids' farm, have been elevated in some media reports almost to fact. Jones said Obeid had also made "exactly the same point" as Cunneen about the lawfulness of the seizure of some evidence against his family. The Obeids' legal team has indicated they want to call Cunneen to bolster their case.

The Cunneen saga has given credence to some of the more outlandish bids to neuter the ICAC. For many targets of the watchdog, who have criminal trials looming, the furore could not have come at a better time. Adding fuel to the fire, the ICAC inspector – who is locked in an acrimonious, and very public, war with ICAC commissioner Latham – is now preparing another report on the ICAC's conduct in past and current inquiries, and any limits or enhancements that should be made to its powers. This could undermine previous high-profile investigations including the probe into Liberal party donations which resulted in 10 state Liberal MPs joining the crossbench or quitting politics. Premier Mike Baird has referred Levine's report on the Cunneen affair and the forthcoming report to the parliamentary committee on ICAC, which subjected Latham to torrid questioning about the Cunneen inquiry at a public hearing in August. Latham's judgment has been considered in some quarters and found wanting. The "architect" of the ICAC, Gary Sturgess, who was cabinet director-general of the Greiner government when the agency was established, wrote this week that she should step aside until the parliamentary oversight committee has delivered its response to Levine's report. But others have pointed out that Levine gave the ICAC no chance to respond to the allegations in his report before making the damaging findings. His report reveals a complete breakdown in the relationship between his office and the commission, with Latham only discovering Levine's report was imminent by reading press reports.

What happens next is make or break for the ICAC. The parliamentary committee will hold an inquiry in early February where its fate could be sealed, and the Cunneen case is just the ammunition many needed to cut it off at the knees.