Whitlam supporters are fond of anniversaries, especially November 11, 1975. There is another they should add to their pantheon - Whitlam’s dismissal of Rex Connor, his Minister for Minerals and Energy, on October 14, 1975, allegedly because Connor had misled Whitlam, thus causing Whitlam to mislead the Parliament. I say allegedly, because there is evidence which suggests that the truth may have been different.
The loans affair saw the Whitlam Government try to raise billions of dollars in overseas loan through a Pakistani money dealer, Tirath Khemlani. The late Alan Reid, arguably the doyen of the parliamentary press gallery in Canberra at the time, described the loans affair as “the death warrant of the Whitlam ALP government”.
Rex Connor was a big man with big ideas for Australia. He had a grand plan for a resources and infrastructure program that would require massive funding. He spurned the normal means of raising such funding overseas through regular financial institutions in New York, ignored Treasury advice on the matter, and pursued his own line of inquiry through Khemlani, who claimed he could raise the money through oil interests in the Middle East.
On December 13, 1974 Connor was given authority by the Federal Executive Council to borrow $4 billion for “temporary” (sic) purposes. The meeting was planned, and was held at the Prime Minster’s Lodge, while the Governor-General was in Canberra, but all knowledge of it was deliberately withheld from him until the following day.
On January 7, 1975 this authorisation was revoked at an Executive Council meeting at which the Governor-General was present. On January 28, 1975, at another Executive Council meeting at which the Governor-General was present, authority was given for an overseas borrowing of half of the previous amount - $2 billion - but for the same “temporary” (sic) purposes.
On May 20, 1975, this authority, too, was revoked. As the Governor-General was absent from Australia on state visits to Fiji and New Zealand, the meeting was presided over by the Vice-President of the Federal Executive Council and Minister for Tourism and Recreation, Frank Stewart. The other ministers present were Whitlam and Connor.
The reason for this second revocation was that the Treasurer, Dr Jim Cairns, was about to go overseas to negotiate a foreign loan through regular sources in the United States, and these negotiations would have been compromised by the existence of an authorisation to seek funds from the Middle East at the same time.
When details of Connor’s loan-borrowing attempts became public knowledge, Whitlam told the House of Representatives that he had been advised that there had been no further negotiations with Khemlani after the revocation of the Executive Council authority on May 20. But then Khemlani arrived in Australia and told a reporter of his telephone conversations with Connor after May 20 and continuing into June. Whitlam demanded Connor’s resignation for having misled him and thus causing him to mislead Parliament. Connor resigned on October 14.
On December 2 Alan Reid gave a television interview in which he clamed that, on October 20, Frank Stewart, in his capacity as Vice-President of the Federal Executive Council, had telephoned the Governor-General.
The interview with Reid was conducted by Michael Shildberger, who began the interview with the following introduction:
According to Alan Reid, the former Minister for Tourism and Recreation, Frank Stewart, was disturbed by the circumstances surrounding Mr Whitlam’s dismissal of former Minerals and Energy Minister, Rex Connor. Alan Reid says that in his position as Vice-President of the Executive Council Mr Stewart phoned the Governor-General, Sir John Kerr, on October 20, six days after Mr Connor resigned from the ministry. Mr Stewart told the Governor-General that in his view Mr Connor was entitled to believe that Mr Whitlam had given him approval to continue seeking petro-dollars from overseas immediately following the May 20 Executive Council meeting during which Mr Connor’s authority had officially been revoked.
In the course of the interview, Reid stated that Stewart had confirmed to him that he (Stewart) had spoken with the Governor-General on October 20; that Government House had not denied that the conversation had taken place; but that both Stewart and Government House had refused to give him any details of the conversation.