SYDNEY (Reuters) - The premier of Australia's New South Wales state, Barry O'Farrell, resigned from his position on Wednesday after it was revealed that he had lied about accepting a A$3,000 (1,674 pounds) bottle of wine as a gift.
O'Farrell is the latest official to be caught up in a wide-ranging investigation into corruption in the state that has also ensnared his fellow Liberal Party Senator Arthur Sinodinos, who stood aside as assistant treasurer last month.
The shock resignation is likely to embarrass conservative Prime Minister Tony Abbott, who came to power last year promising an end to the dysfunction of the previous Labor government.
O'Farrell took the decision after investigators unveiled a hand-written thank you note for the bottle of 1959 Penfolds Grange a day after he had denied any knowledge of it.
"I still can't recall the receipt of a gift of a bottle of 1959 Grange, I can't explain what happened to that bottle of wine," O'Farrell told reporters in Sydney.
"But I do accept that there is a thank you note signed by me and as someone who believes in accountability, in responsibility, I accept the consequences of my actions."
O'Farrell received the bottle of wine from Nick Di Girolamo, a businessman and lawyer connected to disgraced former NSW lawmaker Eddie Obeid, who is being investigated by the New South Wales Independent Commission Against Corruption.
Obeid was a power broker in the NSW branch of the Labor party, which is in opposition to Abbott's government at the national level.
Abbott quickly came to O'Farrell's defence, arguing that his resignation was a sign of integrity, not corruption.
"Obviously, as we now know, he innocently, inadvertently misled ICAC yesterday and he has taken the utterly honourable step of resigning as Premier," Abbott told reporters.
"This is an honour and an integrity at a very high level. We are seeing an act of integrity, an act of honour, the like of which we have rarely seen in Australian politics."
(Reporting by Matt Siegel; Editing by Michael Perry)