The Sydney Morning Herald from Sydney, New South Wales, Australia • Page 1

SATURDAY, NOVEMBER 19, 1977 turn TELEPHONE 20944 V- No. 43,658 13 CENTS 108 PAGES Fraser to Lynch: Lynch to Fraser: LATE EDITION CAPSIZE Ttocf voytc PccH 3 VJ FIRST PUBLISHED 1831 the trTi icalnree us. atn conriaeiuthar ifiyctTon Treasurer will prevent the quite the wrong issues and Australian people in a poisonous a. Yours sincerely, I received your letter today and I can understand the very great issue that must have weighed in your mind in coming to the decision contained in your letter. It grieves me greatly that you have felt the necessity to write such a letter I recognise the over-riding interest you place DENIES GUILT coin LYNCH QUIT Howard to be sworn in as Treasurer By PETER BOWERS, Political Correspondent Mr Phillip Lynch resigned as Federal Treasurer last night, creating an electorally-damaging crisis for the Government.

His successor. Mr John Howard, 38. a Sydney solicitor who entered 1 -j; 1 1 Aft s---u Parliament only three years ago, will be sworn in today. In a letter to the Prime Minister, Mr Fraser, Mr Lynch offered his resignation until he was cleared of what he termed "unfounded allegations" about his and his family's financial interests. In reply, Mr Fraser said he accepted the resigna-tin "with extreme sadness." In accepting Mr Lynch's resignation he wanted to reaffirm bis full confidence in him.

He commended Mr Lynch's decision which, he said, had put the interests of the country and the party ahead of Mr Lynch's own. Id studding as 90'ing to the poll on atmosphere would have received 46 per cent of first preference votes up 3 per cent on the December 1975 election. The coalition parties would have received 43 per cent of first preference votes down 10 per cent on its December 1975 results. Report, Page 4. as long ago as January and February, 1976.

This week he had instructed his accountants, Irish Young and Outhwaite, and his solicitors, Mallesons, to prepare respectively a statement on the financial interests of himself and his family and an independent analysis of the transactions. 'No instance of impropriety' "I am satisfied, without any qualification whatsoever that no instance of impropriety on my behalf, or on behalf of my family, is contained in the letter written to me yesterday by those firms," Mr Lynch said. PAGE 3: Day of crisis. Howard. PAGE 10: Editorial.

PAGE 21: Text of letters said. I 1 I 1 Mr Fraser leaves last Mr Lynch in hospital last night after the resignation announcement, his bed littered with get-well messages. Sadat will press on regardless Labor ahead by 3pc By Margaret Jones, Foreign Editor Til be fighting as never before' MELBOURNE. From his hospital bed here last night Mr Lynch agreed to speak briefly to reporters half an hour after his resignation was officially announced. He said his decision was made in the interests of Australia and the Liberal Party.

"I've always been a team man," he said. "My action today is aimed at insuring a victory on December 10." 1 Mr Lynch, wearing spotted blue pyjamas, looked to be relieved that the announcement had been made. His private room, Ward 12, was filled with flowers, tele grams and letters from well-wishers. Mr Lynch said, "So far as Flinders is concerned I'm fighting hard. I can't wait to get out of here.

He said he wanted to make sure no one was under any misapprehension. "I'll be fighting for Flinders as I've never fought before," Mr Lynch said. Mr Lynch, who is undergoing treatment for kidney stones, said he was in considerable pain. He said he was due to see his eurologist yesterday "but more pressing matters got in the way." He said he expected to see his specialist tomorrow but was unsure how long he would have to remain in hospital. Tennis battle The American Terry Holla-day held the former Wimbledon champion Evonne Caw-ley in awe for the first 20 minutes of their quarter final match in the Colgate Womens' Tennis Championship at White City yesterday.

In the first 20 minutes Miss Holladay did not win a game. She lost the first set 6-0, but then lifted her game to break Mrs Cawley's service twice and take the second set 6-2. In fading light Mrs Cawley levelled the scores at 3-all in the third set and play was then postponed until 11 am today. Report, Page 54 The Good Weekend: Capsize A Family's nightmare voyage to Australia; Joseph Glascott goes to Dorrigo National Park; Love Me Sailor on trial, by Robert Close; The Arts, book reviews and About Column. l( Arts 16 Births, Deaths, etc 31 Books 17, 19 Chess 6 Comics, Crossword 27 Finance 29-31 Juries 50 Lotteries (591, 1219) 73 Mails 50 Radio 50 Shipping 50 Sport 49-54 Television 50 Weather 50 FORT DENISON: High 4.17 am (1.3 metres), 4.24 pm (1.4 metres); Low 10.11 am (0.5 metres), 10.57 pm (0.3 metres).

SUN: Rises 5.41, sets 7.40. MOON: Rises 1.38 pm, sets 1.44 am. OODCc nnnn THE south side of the nudists' beach Lady Bay was laid bare yesterday as Navy officials and police cleared it before a marine mortar practice by gunners at the South Head naval depot. The only people who needed any persuasion to move were two drunks. YES, we got the message loud and clear.

Cicadas are still Ul UUJlZUlJg UU UVUl IHIU- ers' responses it teems they're fleeing the City and some of its leafy suburbs. "Just listen to them," said Mrs Gladys Pryor, who telephoned Column 8 from Nowra to let us hear the din. An exasperated Mrs Thelma Billington, of North-mead, said: "I've been out in the garden hosing the gum trees late at night trying to shut the little beggars up." MISS Ethel Girouard said cicadas had deafened Blackheath, in the Blue Mountains, for two months. "They reached a crescendo but stopped suddenly about two days ago. There's been dead silence since'.

Maybe they've exhausted themselves." SPUN dry martinis have bees all the rage in one Canberra consulate where the hostess bought a $169 washing machine to mix her Her recipe: one dozen bottles of gin to a bottle of vermouth, one minute on the gentle wash cycle -and hundreds of very dry martinis ready to ladle-Barry Taylor, of Hoover (Australia), told Column 8. the stainless steel tub with1 its 28 litre capacity was a bar accessory "par excellence." i ARE the days of deadliness of the shy blue-ringed octopus numbered? There is enough venom in the adult's two tiny sacs to kill 10 people. But now Macquarie University reports that a five-member research team has discovered the chemical! make-up of the main lethal; toxin in the venom. It is identical to the known com-, pound, tetrodotoxin, present in toad fish, some newts and frogs. Now what is needed is the antidote.

Turn behind th Financial news for Personal notices: P31 Including summary of death notices rin.t mi auMUh1.1l hv JahH Fairfax way. Postal address: io SO. GPO. Sydney. 2001.

ReflllterW tor Pat)n newspaper Category J5" 1 ''IS The resignation of one of the most senior ministers 22 days before the December 10 election is a stunning blow for Mr Fraser. It ended weeks of deepening controversy over allegations about Mr Lynch's involvement in land transactions in Victoria. Mr Lynch, outranked only by Mr Fraser and the Deputy Prime Minister, Mr Anthony, is Deputy Leader of the Federal Parliamentary Liberal Party. Mr Lynch has not resigned from his party post and will contest his bayside Melbourne seat of Flinders in the election. Mr Fraser's letter accepting his resignation left the way open for Mr Lynch's return to the ministry but if he contests the deputy leadership after the election it is certain to be challenged, probably by the Speaker, Mr Snedden.

Mr Lynch tried unsuccessfully to fend off the crisis from a hospital bed. He is in the Peninsula Private Hospital, Frankston, for an operation to remove kidney stones a week ago. "I'll be fighting for Flinders as I've never fought before," he told reporters in a brief interview last night. The resignation ended a day of extraordinary confusion and speculation. Turmoil in the Victorian Liberal Party Howard Mr occurred when Mr Lynch's resignation, predicted in yesterday morning's newspapers, did not eventuate.

Visitors to Mr Lynch in hospital included the Minister for Transport, Mr Nixon, a senior Cabinet colleague, and the president of the Victorian Liberal Party, Mrs Joy Mien. Mr Nixon said later he spent all day with Mr Lynch who had asked him to visit him. "I have absolute confidence in Phillip Lynch's integrity and I have no doubt about the outcome of any perusal of his affairs," he said. Both Mr Lynch and Mr Fraser were coming under pressure from opposing factions within the Liberal Party. One group was demanding that Mr Fraser act before the night was out, to deal with the matter one way or another.

Strong arguments This group argued strongly that Mr Fraser must either reaffirm his confidence in Mr Lynch or dismiss him before the controversy irreparably harmed the coalition parties' election prospect. A pro-Lynch group was urging Mr Lynch to stand firm because he was not guilty of any wrongdoing. A letter from Mr Lynch's solicitors to Mr Fraser, released by Mr Lynch, reveals apparent friction between the Prime Minister and his party deputy over the delay in the letter reaching Mr Fraser. The The political drama was being played out in Sydney, too, where a long Cabinet meeting began at 2.30 pm. As the Cabinet meeting dragged on and still no resignation was forthcoming Mr Fraser cancelled a news conference scheduled for 5 pm at Kirri-billi House.

Cabinet sent out for sandwiches and sat through dinner. The resignation was finally Addressing an election campaign meeting in the Melbourne suburb of Nunawading, Mr Whitlam said the report by the Joint Committee on Pecuniary Interests of Members of Parliament had been tabled in September, 1975. "Nothing has been done," he said. Mr Fraser had contented himself with writing to his ministers asking them for a statement a private statement to him alone of their business and financial interests. "He has even refused to say in the Parliament whether he considers it appropriate for night's cabinet meeting.

decades in which three more Middle East wars have been fought. In the face of threats, pleas and resignations, President Sadat has stuck to his resolve to visit Israel. He will arrive tonight after the Jewish Sabbath ends, and stay for 36 hours. In a series of fast-moving developments yesterday: The Libyan Government threatened to break off relations with Egypt if the visit went ahead, and to invoke an Arab League boycott. The Egyptian Foreign Minister, Mr Ismail Fahmi, resigned in protest against the Jerusalem visit.

Mr Mohammed Riad, the Minister of State for Foreign Affairs, designated to replace him, also resigned. In Washington, President Carter, worried about the Arab backlash, urged the Israeli Prime Minister, Mr Begin, to make sure President Sadat did not go home empty-handed from his extraordinary peace mission. In Jerusalem, aides to Mr Begin said the Israeli Prime Minister, whose invitation to President Sadat followed closely on a strong hint from the President that he was ready to make the journey, was now considering extending a similar invitation to King Hussein of Jordan. The Sadat visit has caused an apparent split in the Arab world, with Syria, Libya, and the Palestinian Liberation Organisation expressing violent opposition to the projected trip. President Assad of Syria described it yesterday as "very dangerous to the Arab cause." Jordan and Saudi Arabia, the two most moderate nations in the Arab world, have so far remained largely silent.

There are unconfirmed reports that the Carter Administration has urged both nations not to join in the chorus of protest. Page 7: Sadat and his opposition. He said he was releasing the text of the letter Mallesons had written to Mr Fraser but he would not release the letter written by the two firms to him. "I have, however, after the most careful thought decided that I will not forward to you, or release publicly, these particular letters," Mr Lynch said. "It is quite clear to me that publication of further material in the present political climate, notwithstanding that no part of it contains any charge of impropriety against me, could only lead to contamination of the current attacks on me," he said.

Mr Lynch said he was prepared to step aside as Trea-. surer "in the present Government" in the interests of his party and his colleagues. Mr Fraser, in a letter that began "My dear Phillipp' in the Prime Minister's bold scrawl, said he had accepted Mr Lynch's view that the matter must be resolved. "I also accept your view with extreme sadness that the proper course is for you to stand aside but so doing, I want to re-affirm my confidence in you," Mr Fraser said. Biographies of Lynch and and what Lynch's solicitor Mr Whitlam, asked what he would do to a Labor Treasurer in similar circumstances, said: "Dr Cairns's (a former Labor Treasurer) stepson was engaged in land development and he ceased to be Treasurer." He said what he had done in that instance was the subject of correspondence which was published promptly.

Mr Whitlam said that what had so far been extracted did not show that Mr Lynch had done anything illegal. "But he has not acted in a way that any minister should act," he said. Despite fierce opposition in the Arab world and the resignation of his two top foreign affairs advisers President Sadat of Egypt is determined to address the Israeli Parliament in Jerusalem tomorrow. When President Sadat makes his historic speech from the floor of the Knesset, it will be the most significant contact Israel and one of its Arab neighbours since the War of Independence in 1948: three TODAY'S 17EATIIIR Metropolitan: Few showers. Max temps: City 22, Liverpool 24.

NSW: Showers and thunderstorms NE quarter. Few showers elsewhere. Details, Page 50 Late news Five die in crash MELBOURNE. Fiv people were killed when a and a car towing a caravan collided and burst into flames near Rntherglen. about 200 km north-east of Melbourne, last light The accident happened on the corner of the Murray Valley Highway and Three Chain Road.

Two men were taken to the Albury base hospital in a serious condition. Police said one of the cars was Victorian, and the other was registered in NSW. The latest Gallup Poll gives the Australian Labor Party a lead of 3 per cent over the Liberal National Country Party coalition. The poll, conducted in the first two weeks of this month, shows that if the Federal election had been held during the last two weekends, the ALP announced in Sydney about 9.15 pm. On leaving after the Cabinet meeting Mr Fraser would say only: "The Treasurer's actions accord wit! the highest traditions of the Westminster system." Mr Lynch, in his letter of resignation to Mr Fraser, stressed that he had at all times acted with propriety and discharged his ministerial duties in a responsible and proper manner.

"There has unquestionably been a very determined effort by our political opponents and by some sections of the media to carry out an 'execution without trial' based on innuendo and not on any specific or factually based charge," Mr Lynch said. He explained in detail that he had already made a full declaration of his family's business interests including the land deal, to Mr Fraser his ministers to make investments or hold interests in companies in such a guise or disguise that the public cannot discover them. "He has only himself to blame for a scandalous situation which is doing something far worse, far more serious than the mere destruction of his Government. "It is a further blow to the parliamentary system and to Australia's faith in the system." Mr Whitlam said a Labor Government would ask the House of Representatives and the Senate to implement the Scandalous situation, says Whitlam committee's recommendations; On ABC television last night Mr Whitlam said Mr Fraser could be an election liability because of the Lynch inquiries. "Mr Fraser is a greater liability because he either knew what Mr Lynch was doing and did nothing about it, which is unforgiveable, or he didn't bother to find out, which is also unforgiveable," he said on This Day Tonight.

"Whatever happens, Mr Fraser is branded with what the public now knows that Mr Lynch was doing under the tax laws, Federal, and under the land laws of Victoria." MELBOURNE. The Prime Minister, Mr Fraser, had only himself to blame or the "scandalous situation" concerning former Treasurer, Mr Lynch, the Opposition Leader, Mr Whitlam, said last night. Mr Whitlam, speaking before Mr Lynch's resignation was announced, said the question of probity in public life would not be cleared up until the principle of public declaration of ministers' pecuniary interests was established by law. He described the day's events as "astonishing." state Ol air extra. ri i 2 1.