Today, the NSW government has released an independent review of the NSW government handling of the Paddington Bowling Club lease and the management of the club.
The review finds that a very senior official (called D1 in the review) of what was then known as the NSW Lands and Property Management Authority met with representatives of the Club and a private development company (CSKS Holdings). After the meeting, he communicated to senior Department employees that he wanted them to approve a 'package' that would allow the company to take over a 50 year Crown lease and apply to develop the land. No contemporaneous notes were found of the meeting.
The review finds that D1 acted "inappropriately" and may have acted corruptly under Section 8 of the NSW ICAC Act.
As reported on Saturday, the Paddington Bowling Club closed its doors last week after voluntary administrators were appointed to the Club.
The NSW government also withdrew permission for CSKS Holdings which leased the publicly owned site in late 2011 to apply to Woollahra Council to build a large for-profit childcare centre on the site.
The legal review examines a series of transactions including the transfer of Paddington Bowling Club's perpetual lease to a commercial lease for 50 years; the transfer of the lease to Christian Sanchez's property development company CSKS Holdings; the granting of a sub-lease back to Paddington Bowling Club; and the granting of approval for CSKS Holdings to mortgage and develop the land.
The independent review, which was conducted by legal firm Holding Redliech, took the form of a 'desk review' without interviews. Each transaction is examined in detail. Many names are redacted to preserve cabinet and legal confidentiality and because no procedural fairness has been granted to those whose actions are discussed in the review report.
The review was ordered by the then Deputy Premier Andrew Stoner in April last year in response to serious concerns raised by community group Friends of Quarry Street, Woollahra Council, local Independent MP Alex Greenwich and the Greens about the Paddington Bowling Club.
The review was received by the Department of Trade and Investment in August 2014 and was referred to NSW ICAC. Recently ICAC has decided not to investigate further and so the review report has been released.
The decision to transfer the lease from Paddington Bowling Club to CSKS Holdings was originally approved by Labor Minister Tony Kelly although by the time the transfer actually occurred on December 2011, the then LNP Deputy Premier Minister Andrew Stoner had taken over. In making decisions, senior Crown land officers are given the power to make decisions as delegates of the Minister but in several departmental emails reference was made to D1's desire to progress the transfer to the private company. He appears to have been determined that the deal would progress although the Woollahra Council through its Mayors Andrew Petrie and Keri Huxley objected strongly to the transfer. D1's determination to progress the deal appears to have overridden the obligation of other officers to apply public interest and other principles.
D1 gave his support for the the Club and company proposal in the context that the company would construct a gymnasium, child care and other commercial facilities on the site after it took over the lease.
The review finds that after they learned that D1 wanted the deal to go through, Crown land employees who were delegates of the Minister approached the decisions as if they had already been approved "before any formal application was submitted."
There was 'no competitive tender process, nor were there any negotiations with other interested parties."
The review finds that "the effect of the transactions is that Crown Land has been transferred to a private company and a financial opportunity was provided to a private company in the absence of a competitive tender process."
The review also finds that in allowing CSKS Holdings to lodge an application to build a large child care centre on public land, Minister Stoner's delegates may have allowed the land which is a Crown reserve to be used for a purpose other than its "declared purpose' of 'public recreation'. If this was found to be correct, the Minister would have failed to comply with a requirement of the Crown Lands Act.
The review also find that senior public servants with delegated powers failed to follow the relevant legislation, government policies or procedures in place at the time. Some of these public servants still work in the department.
Systemic issues in management of NSW public land
Department of Trade and Investment CEO Mark Patterson acknowledges that the review reveals "systemic issues".
This finding will focus more public and media attention on the Baird government's management of public land at a time when It is allowing more public land pass into private hands. The issues raised by the review are bound to be raised at a Crown Land Summit that is being convened by Greens MLC David Shoebridge on Wednesday evening. The fully booked meeting will be attended by an array of community groups who have also expressed concerns about the failure of the department to protect the public interest.
The Secretary of the Department of Trade and Investment Mark Paterson said in a letter attached to the front of the review report that the Department is responding by restructuring and training staff in "corruption prevention" and "robust decision making".
Much of the review focuses on decisions that were made after the NSW LNP government was elected in 2011 but it also deals with the failure of the NSW Labor government to act on recommendations made by the Office of Liquor Gaming and Racing following a 2007 Commission of Inquiry into the Club which reported serious problems with the administration of the club. If these recommendations had been followed years of mismanagement of the bowling club and wastage of public resources might have been avoided.