Ex-NSW minister, ex-union boss on trial

Former NSW minister Ian Macdonald granted a valuable mining licence to a company chaired by his mate, ex-union boss John Maitland, to secure the friendship and enhance his prospects after his political retirement, a court has heard.

Macdonald and Maitland are on trial in the NSW Supreme Court over Macdonald's 2008 decision to grant the Maitland-chaired company Doyles Creek Mining a coal exploration licence at Doyles Creek in the Hunter Valley.

Crown prosecutor Michael McHugh SC said Macdonald used his power as mineral resources minister to directly allocate the Doyles Creek licence to DCM, which was chaired and directed by Maitland, "out of a desire to secure friendship".

"Mr Macdonald favoured the interest of that company over the interests of the state of NSW," Mr McHugh told the jury on Monday.

Maitland, the court heard, was from the same Labor faction as Macdonald and had supported his pre-selection to stand for the party in the NSW upper house.

"They were mates," Mr McHugh said.

Macdonald was also motivated because his political career was due to come to end and Maitland had "influence and significant connections" in the mining industry.

The minister cultivated the friendship in a move calculated to enhance his prospects after political retirement, the jury was told.

In directly allocating the licence to DCM, rather than inviting expressions of interest or opening a competitive tender, NSW was denied significant financial gain in the form of payments known as "additional financial contributions".

These were paid by companies to secure mining licences and could rise as high as $276 million, the amount paid by China's Shenhua company for its Watermark exploration licence in 2008.

Mr McHugh said Macdonald had acted against official guidelines and against departmental recommendations, knowing that Maitland stood to gain a personal benefit as chairman of DCM.

Macdonald took steps to avoid being challenged over his favouritism, including keeping cabinet in the dark and authorising a press release announcing the licence grant on Christmas Eve.

Macdonald has pleaded not guilty to two charges of misconduct in public office.

Maitland has pleaded not guilty to two charges of being an accessory to the alleged misconduct.

Among the Labor heavyweights due to appear as witnesses at the trial are former NSW premiers Morris Iemma and Nathan Rees, federal frontbencher Anthony Albanese, Senator Doug Cameron and NSW Opposition Leader Luke Foley.

Mr McHugh is expected to continue his opening statement on Tuesday.