Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

ICAC REPORT

APRIL 2005

Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

ICAC REPORT

APRIL 2005

2

ICAC REPORT:

Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

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opinions and recommendations are contained in this report. Dr Meredith Burgmann MLC President Legislative Council Parliament House Sydney NSW 2000 The Hon. His findings.3 The Hon. I draw your attention to the recommendation that the report be made public forthwith pursuant to section 78(2) of the Independent Commission Against Corruption Act 1988. Yours sincerely The Hon Jerrold Cripps QC Commissioner © ICAC . John Aquilina MP Speaker Legislative Assembly Parliament House Sydney NSW 2000 Madam President Mr Speaker In accordance with section 74 of the Independent Commission Against Corruption Act 1988. I am pleased to present the report of the Independent Commission Against Corruption of an investigation into certain transactions of Koompahtoo Local Aboriginal Land Council and its office bearers between 1996 and 2002. Mr John Basten QC was appointed as Assistant Commissioner for the purpose of this investigation and presided at the hearings.

4 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council © ICAC .

5 Contents Executive summary Chapter 1: The investigation How this investigation originated Why the Commission investigated Conduct of the investigation Hearings Section 78(2) recommendation Chapter 2: Legal framework – The Aboriginal Land Rights Act Operation of section 40D of the Land Rights Act Chapter 3: Legal framework – corrupt conduct Corrupt conduct defined Secret commissions Corrupt corporations Chapter 4: The KLALC– Sanpine joint venture – part 1 Background The land The proposal The parties: Koompahtoo Local Aboriginal Land Council Sanpine Pty Limited Robert Scott Charles and Adam Perkins Graham Steer The joint venture Financial arrangements Payment to Elaine Perkins Operation of the joint venture management committee Corrupt conduct? – payment to Mrs Perkins Section 74A(2) statement Chapter 5: The KLALC–Sanpine joint venture – part 2 Aboriginal Liaison Officer’s position Nature of position Appointment process Consequences of appointment 6 10 10 10 10 10 11 12 19 21 21 27 29 30 30 30 30 31 32 34 35 35 36 36 37 40 41 42 43 43 43 44 45 Corrupt conduct? – Mr Bill Smith Section 74A(2) statement – Mr Bill Smith Other participants – Mr Stephen Griffen Other participants – Sanpine representatives Corrupt conduct? – Messrs Adam Perkins. Scott and Steer Section 74A(2) statement – Messrs Adam Perkins. Scott and Steer Transfer of land to trustee company Corrupt conduct? – Mr Bill Smith Section 74A(2) statement – Mr Bill Smith Chapter 6: The Villa World consent Background The role of Villa World officers Nature of the transaction Corrupt conduct? Section 74A(2) statement Chapter 7: Land transfers to KLALC members Corrupt conduct findings Section 74A(2) statement Corrupt conduct and section 74A(2) statement Chapter 9: Departures from accounting standards The accounts Mr South’s evidence Conclusions Conclusions Chapter 10: Corruption prevention Disposal of land: what is expected Role of the Registrar Structural and governance issues for Local Aboriginal Land Councils Effective audit requirements Authority of executive Corruption prevention recommendations Implementation of corruption prevention recommendations 47 51 51 52 57 58 58 66 66 68 68 73 78 83 84 85 92 93 97 98 98 99 100 102 104 104 105 107 109 109 110 111 © ICAC Chapter 8: The KLALC–CKT joint venture 94 The NSW Aboriginal Land Council (NSWALC) 101 .

In July 1997. KLALC entered into a joint venture agreement with Sanpine Pty Limited (“Sanpine Pty Ltd”) to undertake a residential development of a large parcel of land at Morisset near Lake Macquarie in New South Wales.000 to obtain KLALC’s consent. was undertaking a residential property development at Wyee Point. The Chairperson and another member of the KLALC Executive signed a letter granting approval for the pipeline. There were four sets of transactions investigated by the Commission: (a) a joint venture with Sanpine Pty Limited. n © ICAC . After the joint venture agreement was entered into. The primary purpose of the investigation was to determine whether members of the Executive of the KLALC or its employees. The report examines a number of troubling aspects of the Sanpine joint venture.000 paid in interest to service the mortgages. the expenditure of funds raised by the mortgages over KLALC’s land. as well as those who dealt with them in organising the various land dealings.000 was paid to the Chairperson of the KLALC. and $500. Of this $100. Both transfers were at a price significantly below market value. The report also examines some aspects of this joint venture. The land was owned by KLALC. $40. the land was mortgaged to finance the development. and the circumstances surrounding the transfer of the land to be developed from KLALC to KLALC Property & Investments Pty Limited. An agreement was negotiated between Sanpine and Villa World under which Villa World paid Sanpine $100. CKT Developments Pty Ltd.15 million paid for services provided by related parties to the joint venture. and (d) certain transfers of residential land to KLALC members. It does not appear that the KLALC members voted to approve the proposed sewer main. the extent to which members of the KLALC were able to obtain information concerning the progress of the joint venture and. Members of the KLALC Executive appear to have procured the registration of the transfers of land with full knowledge that NSWALC had only approved the transfers if the full market value was paid to KLALC.2 million had been raised by mortgages over the land. Whilst the KLALC–Sanpine joint venture was on foot and at the instigation of one of the Sanpine directors. n n (b) the consent sought by Villa World Limited to the construction of a rising sewer main over KLALC land. Villa World Limited.6 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Executive summary This report is the result of an investigation by the Independent Commission Against Corruption (“the Commission”) into various land dealings engaged in by the Koompahtoo Local Aboriginal Land Council (“KLALC”) between 1996 and 2002. To pursue the project it sought to have a sewer main constructed along an existing electricity easement which travelled through KLALC’s land.000. The final matter relates to the transfer of two parcels of residential land by KLALC to members of KLALC. including: n Another matter investigated by the Commission concerned the circumstances surrounding the granting of approval by KLALC to the passage of a rising sewer main across its land to service a development occurring at Wyee Point on Lake Macquarie. one of whom was the Chairperson’s son. with over $1. to undertake a development of a small parcel of KLALC’s land at Ourimbah Street. Morisset. in particular. n the failure of the Chairperson to make appropriate disclosure to the members of the KLALC that he was employed as the Aboriginal Liaison Officer and the amounts he was receiving. (c) a joint venture with CKT Developments Pty Ltd. the acceptance by the Chairperson of payment for occupying the position of Aboriginal Liaison Officer. engaged in corrupt conduct within the meaning of the Independent Commission Against Corruption Act 1988 (NSW) (“the ICAC Act”). $2. a property development company based in Queensland. The Commission’s investigations revealed that as at 31 March 2003. a trustee company formed at the instigation of the Chairperson and outside the control of the majority of the membership of KLALC. KLALC entered into another joint venture with a company. the acceptance of the position of Aboriginal Liaison Officer to the joint venture by the Chairperson of the KLALC in circumstances which suggested he had a clear conflict of interest.

All Aboriginal people resident in the area or having an association with the area that is accepted by a meeting of the Local Aboriginal Land Council are eligible to become members of the Local Aboriginal Land Council for that area. Mr Robert Briggs. Any dissipation of such lands for improper purposes will diminish the benefits that would otherwise accrue to the Aboriginal community and undermine the objects of the Land Rights Act. on behalf of the council in the intervals between Council meetings. control and disposal of land acquired. Koompahtoo Local Aboriginal Land Council The Aboriginal Land Rights Act 1983 (NSW) (“the Land Rights Act”) establishes three types of bodies – Local Aboriginal Land Councils. It was apparent to the Commission that KLALC’s decision-making process was marred by a lack of transparency and by mismanagement and factionalism. namely the amount of consideration. The Land Rights Act enables a “Crown Lands Minister” to grant certain Crown (State-owned) lands to Aboriginal land councils. and Mr Stephen Griffen. there was gazetted an area known as the Koompahtoo Local Aboriginal Land Council area. each engaged in corrupt conduct in relation to his involvement in: a) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Malcolm Smith and Ms Debbie Barwick knowing that the transfer signed on 27 July 2001 contained a false statement. They were invested with specific duties and functions. comprising a chairperson. Under the Model Rules that were in force during the period of the Commission’s investigation. each officer of a Local Aboriginal Land Council falls within the definition of a public official within the meaning of the ICAC Act and is thus amenable to the jurisdiction of the Commission in relation to investigation of corrupt conduct in Aboriginal land councils. each Local Aboriginal Land Council had a three-member executive. There is a strong public interest in identifying appropriate safeguards to combat conduct conducive to corruption in dealings with land. As a consequence. This area is in the Lake Macquarie district on the mid-north coast. the risk of losses due to corrupt conduct needs to be minimised. The Commission’s investigations also raised broader issues concerning the adequacy and efficacy of some provisions of the Land Rights Act which affect the ability of Local Aboriginal Land Councils to deal with land. Local Aboriginal Land Councils set up under the Land Rights Act are “public authorities” by virtue of section 65A of the Land Rights Act. former Treasurer of Koompahtoo Local Aboriginal Land Council. which provides that each Aboriginal land council is to be a public authority for the purposes of the ICAC Act. In the last few years the value of the land base of Local Aboriginal Land Councils has swelled to tens of millions of dollars. Regional Aboriginal Land Councils and the NSW Aboriginal Land Council. The property dealings examined by the Commission raised a number of important governance and accountability issues. The Act provides that the Minister for Aboriginal Affairs may constitute an area as a Local Aboriginal Land Council area and then a Local Aboriginal Land Council is constituted by the Act for that area. former Co-ordinator of Koompahtoo Local Aboriginal Land Council. including a power to represent the Council and act. A close examination of KLALC’s operations was considered necessary in order to identify aspects of the operations that were susceptible to corruption and to explore the means by which such corruption risks might be minimised. the State land council. Each Local Aboriginal Land Council is vested with functions which include the claiming of land and the implementation of the wishes of the council’s members with respect to the acquisition. and © ICAC . management. On 17 May 1985. Outcomes The Commission has made the following findings of corrupt conduct in relation to eight persons.7 The report also deals with a number of material deficiencies identified in the conduct of KLALC’s auditor in auditing its financial statements. If utilised properly there may be considerable advantages to the members of Local Aboriginal Land Councils. subject to the instructions of a council meeting. These lands have become highly attractive to those with an interest in the development of such assets. a secretary and a treasurer. use.

in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. his involvement in the transfer of KLALC land at Morisset to KLALC Property & Investments Pty Ltd which involved him in a conflict of interest between his position as Aboriginal Liaison Officer for the Sanpine– KLALC joint venture and Chairperson of KLALC.000 from Sanpine Pty Limited to Smith & Sons Consultancy Pty Ltd. namely the amount of consideration. former Chairperson of Koompahtoo Local Aboriginal Land Council. in return for Mr Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. each engaged in corrupt conduct in relation to: a) his involvement in the unauthorised disbursement of joint venture funds of $183. namely the amount of consideration. b) Mr Dale Holt. Robert Scott.000) would be paid by Sanpine Pty Limited to Smith & Sons Consultancy Pty Ltd. signed on 27 July 2001. Further recommendations are made in Chapter 7 of the report that consideration be given to the prosecution of each of Mr Bill Smith and Mr Stephen Griffen for an offence under section 178BB of the Crimes Act.000 from Villa World Ltd to Sanpine Pty Limited in the knowledge that part of that money ($40.8 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council b) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Alan Smith and Ms Kim O’Leary knowing that the transfer signed on 27 July 2001 contained a false statement.000 from Villa World Limited to Sanpine Pty Limited in the knowledge that part of that money ($40. Ms Lesley Molony. a company associated with Mr Bill Smith. a company associated with Mr Bill Smith. Recommendations are made in Chapter 6 of the report that consideration be given to the prosecution of Mr Bill Smith for an offence under section 249B(1) of the Crimes Act 1900 (NSW) (“the Crimes Act”) and that consideration be given to the prosecution of Messrs Dale Holt. his involvement in the payment of $40. procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Malcolm Smith and Ms Debbie Barwick knowing that the transfer.000) would be paid by Sanpine Pty Limited to Smith & Sons Consultancy Pty Ltd. a company associated with Mr Bill Smith. and Mr Graham Steer. Mr Adam Perkins. in return for Mr Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. and his involvement in the payment of $40. signed on 27 July 2001.000 from Sanpine Pty Limited to Smith & Sons Consultancy Pty Ltd. a consultant and project manager. former Development Manager with Villa World Limited. the Chairperson of KLALC.314 paid to Mrs Elaine Perkins in discharge of a debt owed by Mr Robert Scott’s partner. Mr Robert Scott. namely the amount of consideration c) d) e) b) Mr Kim Wilson. a director of Sanpine Pty Limited. contained a false statement. © ICAC . the Chairperson of KLALC. a chartered accountant and director of Sanpine Pty Limited. engaged in corrupt conduct in relation to: a) his conduct in accepting paid employment as Aboriginal Liaison Officer for the Sanpine– KLALC joint venture in circumstances where there was a conflict of interest in relation to his role as Chairperson of KLALC. a native title and land rights consultant. engaged in corrupt conduct in relation to his involvement in arranging for a payment of $100. Mr Bill Smith. Adam Perkins. and procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Alan Smith and Ms Kim O’Leary knowing that the transfer. and in failing to disclose the conflict to KLALC. and Kim Wilson for offences under section 249F of the Crimes Act. contained a false statement. engaged in corrupt conduct in relation to his involvement in negotiating a payment of $100. a company associated with Mr Bill Smith. in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land.

no matter who the perpetrator may be. and makes recommendations where appropriate to help prevent similar conduct occurring. by way of explanation for aspects of his conduct. the fact that opportunities for corrupt conduct can arise does not excuse the conduct itself. Recommendation 5 That processes by which Local Aboriginal Land Councils enter into consultancy or partnership agreements with third parties be required to be open and transparent. in considering whether to recommend that steps be taken by way of prosecution for offences. Recommendation 4 That. sections 40B-40D of the Aboriginal Land Rights Act 1983 be amended to reflect the policy so determined. Local Aboriginal Land Councils may dispose of land held by them. if Local Aboriginal Land Councils are to be encouraged or permitted to undertake commercial development of land. That being said. The Commission has a statutory corruption prevention function.9 Certain structural failings in the relevant Aboriginal land rights legislation have been recognised when considering the seriousness of the conduct which is the subject of adverse findings by the Commission. principles and mechanisms of the Land Rights Act. customary Aboriginal norms. In the course of its investigation the Commission identified profound ambiguities in the purposes. the present investigation demonstrates. It is important for the broader Aboriginal community that corrupt conduct should be recognised as such. Recommendation 7 That consideration be given to legislative change to confer an express obligation on an appropriate entity to provide assistance and advice to Local Aboriginal Land Councils to help them to comply with their statutory obligations and to run their affairs effectively. In addition. as might be expected. in the Commission’s view. the conduct in question was not motivated by beliefs which were genuinely held. Recommendation 3 That. outlined in section 13 of the ICAC Act. The Commission is satisfied that no such cultural conflict issue actually arose in the circumstances the subject of the present investigation. Furthermore. the Commission has been careful not to apply different standards in relation to Aboriginal and non-Aboriginal people. The victims of corrupt conduct. may be Aboriginal people themselves: it is important that they enjoy equal protection of the law. Recommendation 1 That consideration be given to whether. though mistaken. likely to cause the conditions in which corrupt conduct is more likely to occur. Chapter 10 of this report deals with corruption prevention issues identified in the course of this investigation and makes the following specific recommendations to the State Government with respect to the holding of land by Aboriginal land councils in NSW. whether the perpetrators are members of their own Aboriginal community or other people. the above policy matters having been resolved. While the Commission is satisfied that. honorary members of the executive and the membership in general meeting be established for Local Aboriginal Land Councils. There is no doubt that such conflicts can arise in particular communities and there were times when it appeared that Mr Bill Smith was inclined to invoke. and if so on what grounds. Recommendation 2 That consideration be given to the oversight function of the NSW Aboriginal Land Council in relation to Local Aboriginal Land Councils and how this function should be carried out. As part of its investigations the Commission seeks to determine any factors which may have contributed to or facilitated corrupt conduct. clear guidelines be laid down as to how such development can be pursued. in such cases. these ambiguities in the legislation and uncertainty about it are. that both Aboriginal and non-Aboriginal people have become embroiled in impropriety. except where otherwise noted. Recommendation 6 That proper roles for employed staff. The Commission is satisfied that this was not a case in which Aboriginal people from traditional backgrounds faced difficulties in reconciling obligations and demands under traditional law and custom with their responsibilities under a statutory structure imposed by the general law. © ICAC .

Some KLALC members and persons who have had dealings with the KLALC were also interviewed to obtain relevant information. © ICAC . On 6 June 2002. which took place between 1996 and 2002. Why the Commission investigated After a protracted preliminary investigation and extensive analysis of the material provided by the investigating accountant and the administrator. The third complaint contained an additional allegation that the Chairperson of KLALC transferred a parcel of land belonging to KLALC to his son and that the proceeds of the transfer had not been received by KLALC.1 This appointment was revoked on 26 July and the investigator was re-appointed on 1 October 2002. On 7 June 2002. They could. Generally. in February 2003 the Minister for Aboriginal Affairs appointed an administrator to administer the affairs of KLALC and it remained under administration to the date of this investigation. Both the investigating accountant and the administrator have provided considerable assistance to the Commission. Based on the concerns raised by the investigator in his report. Many KLALC members had little or no information as to the complex nature of the commercial ventures undertaken on their behalf by the KLALC Executive. Information concerning the affairs of KLALC during the period subject of the Commission’s investigation was concentrated in the hands of a few former officers of the KLALC. or both. Mr John Basten QC was appointed Assistant Commissioner for the purpose of the investigation and presided over the hearings and has prepared this report. either in substance or numbering. on 16 September 2003 the Commission publicly announced that it would investigate the conduct of certain officers of the KLALC in relation to certain identified property 1 Major amendments to the Land Rights Act effective from late 2002 mean that many sections have changed. constitute corrupt conduct within the meaning of the ICAC Act. The allegations concerning some of these dealings were serious. It was further alleged that the Morisset land was transferred to a private trust controlled by the Chairperson of KLALC. Commission officers also interviewed a number of former KLALC office-holders and employees to obtain information relevant to the investigation. A fire on 5 September 2001 destroyed almost all of the existing records held by KLALC. It was in the public interest to conduct a thorough investigation. The first two complaints alleged that there were irregularities in the development of land owned by KLALC at Morisset. On 27 May 2002 NSWALC provided information indicating that certain dealings of the subject land were in breach of the Aboriginal Land Rights Act 1983 (NSW) (“the Land Rights Act”). Hearings The ICAC Act provides that for the purposes of an investigation the Commission may hold hearings. who themselves were of interest to the Commission. The documents available to the Commission lacked details and were disjointed.10 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 1: The investigation How this investigation originated Between 2 July 1999 and 27 February 2002 the Independent Commission Against Corruption (“the Commission”) received three separate complaints concerning the Koompahtoo Local Aboriginal Land Corporation (“KLALC”). unless otherwise indicated references to specific sections of the Land Rights Act refer to the Act as it operated prior to the ammendments of late 2002. the Director-General of the Department of Aboriginal Affairs provided a report under section 11 of the Independent Commission Against Corruption Act 1988 (NSW) (“the ICAC Act”) alleging that members of KLALC disposed of its land in contravention of section 40D of the Land Rights Act in that the transfer was effected without the necessary approvals from NSWALC and other relevant agencies. Conduct of the investigation This investigation was protracted and complex for several reasons. which materially assisted the investigation. an investigator was appointed by the Minister to investigate matters concerning KLALC pursuant to section 56D of the Land Rights Act. if proven. The Commission issued 49 notices under section 22 of its Act. The Commission used powers granted to it under section 22 of the ICAC Act to obtain financial and other information and analysed the information so obtained. Despite these difficulties Commission officers examined and reconstructed a large amount of financial records and other documents spanning more than four years of operations of KLALC. These difficulties were further exacerbated by the poor state of financial records of expenditure maintained by KLALC and the failure of its auditors to verify the financial statements in accordance with the appropriate accounting standards. dealings.

Eleven persons were identified as “affected persons” and the Commission considered each one of them as a person substantially and directly interested in the subject matter of the hearing. © ICAC . Section 78(2) recommendation Pursuant to section 78(2) of the ICAC Act.11 A number of private hearings took place between September 2003 and February 2004. Public hearings in relation to this matter commenced on 11 February 2004 and concluded on 11 October 2004. the Commission recommends that this report be made public immediately. examined all witnesses called before the Commission and made submissions with respect to possible findings. whether or not Parliament is in session. On 2 June 2004 a public hearing was held to explore relevant corruption prevention issues. In all. Mr Robert Beech-Jones. This recommendation allows either presiding officer of the Houses of Parliament to make the report public. 25 persons gave evidence over eight days of private hearings and 21 days of public hearings. Counsel Assisting the Commission.

3 See sections 5 and 6. Originally. and to make provisions for certain other purposes. to amend certain other Acts. (Those having only an association with the area needed to be accepted by a meeting of the Council. The preamble reads as follows: WHEREAS: (1) Land in the State of New South Wales was traditionally owned and occupied by Aborigines.) The mechanism by which Local Aboriginal Land Councils were created was by the constitution of an area as a Local Aboriginal Council area. For the second purpose it is important to note that significant changes have been made to the Land Rights Act between the beginning of the period under investigation (1996) and the present time. The Land Rights Act contains both a preamble and a long title. sections 35 and 36. to whom and by what mechanisms. gives rise to the possibility of significant local autonomy. the acquisition of land by or for those Councils and the allocations of funds to and by those Councils. it is necessary to understand how land was sought to be returned. including provisions for or with respect to the constitution of Aboriginal Land Councils. accordingly. but also to the potential for inefficient allocation of scarce resources. social. In relation to the first function. That understanding must be achieved at two levels: first. 2 See Land Rights Act. cultural and economic importance to Aborigines. The first was to accept land claims and refer such claims to the “Crown Land Minister”.5 The latter function is relevant to particular aspects of the present investigation and will be referred to below. there was no express requirement for the Registrar to do anything with a claim after referring a copy to the Minister responsible for Crown lands. with all Aboriginal people resident in the local area or having “an association with that area” being eligible to join the Local Land Council for that area. the vesting of land in those Councils. scope and purpose of the Aboriginal Land Rights Act 1983. In the years following the commencement of the Land Rights Act on 10 June 1983.2 To give effect to these purposes. The long title may also be usefully set out in full and reads as follows: An Act to repeal the Aborigines Act 1969 and to make provisions with respect to the land rights of Aborigines. at the level of legal effect. it is necessary to understand the role the Land Rights Act plays in recognising the dispossession of the traditional Aboriginal owners of the land of New South Wales and the mechanisms it provides for a partial restoration of land to Aboriginal ownership.12 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 2: Legal framework – The Aboriginal Land Rights Act It is not possible to understand the activities the subject of this investigation without some basic understanding of the subject matter. particularly as they affect recommendations which may be made for improvements in the way the Land Rights Act operates to protect Aboriginal land-holders against corrupt conduct. the Registrar had two primary functions. Further. which were lodged with the Registrar appointed under the Land Rights Act. 5 Land Rights Act. (3) It is fitting to acknowledge the importance which land has for Aborigines and the need of Aborigines for land.3 The State was subdivided into more than 100 such areas and there are. 4 Section 36(4). as may readily be appreciated.4 The second function was to deal with disputes. more than 100 Local Aboriginal Land Councils. at the level of policy. section 59. lands broadly described as “claimable Crown lands”. especially with respect to organisational administration and land management. the whole of the State was to be divided into a large number of Local Aboriginal Land Council areas. These changes will be noted below. could be the subject of a claim lodged by a Local Aboriginal Land Council or by the New South Wales Aboriginal Land Council on behalf of a Local Aboriginal Land Council. Although the date on which the claim was . (2) Land is of spiritual. Secondly. (4) It is accepted that as a result of past Government decisions the amount of land set aside for Aborigines has been progressively reduced without compensation. which were lands held by the government and not reserved or dedicated for any purpose or lawfully used or occupied or likely to be needed for defined purposes. primarily between Aboriginal Land Councils or between Land Councils and individuals. significant resources have been devoted by Local Aboriginal Land Councils around the State in seeking to identify what might be claimable Crown lands within their areas and making claims. © ICAC The means by which “the land rights of Aborigines” were to be satisfied involved the vesting of lands previously held in the Aboriginal Lands Trust under the former Aborigines Act 1969 (NSW) in Local Aboriginal Land Councils. This.

and where thought appropriate approve. a Local Aboriginal Land Council was empowered to lease land to a member on such terms as it thought fit. Regional Aboriginal Land Councils could. From the funds available to NSWALC payments are made annually to Local Aboriginal Land Councils. the managerial ability at this stage to carry out fully all the functions of a Land Council at the local or regional level. 10 NSW Legislative Assembly Hansard. We are speaking here of communities of dispossessed people with high community aspirations but without.8 The Regional Aboriginal Land Council for the area also had to approve the lease or the change of use. 16 April 1986. A further important function of NSWALC is to consider. land claims and the management of the communally owned land and housing stock.13 lodged was of critical legal significance in determining whether the lands subject to it were claimable.2039 at 2040. These Land Councils have had a positive effect and have. introducing the amendment Bill. 7 Aboriginal Land Rights Amendment Act 1990 (NSW). spoke positively of the early results of the Land Rights Act. the Registrar did keep such a register and now has additional functions which have significantly increased the legal importance of his or her position under the Act. In addition to Local Aboriginal Land Councils. the Act provided for the creation of Regional Aboriginal Land Councils of which there were at the relevant time 13. 11 6 Some Regional Aboriginal Land Councils have since amalgamated. the Act contained no express obligation on the Registrar even to keep a register of claims. exchanging. pursuant to section 40D of the Land Rights Act. Such a certificate was said to be conclusive evidence “in favour of a bona fide purchaser for value without notice”.5% of land tax. section 40 had prohibited a Local Aboriginal Land Council selling. it may be noted that sections 40A-40D were not included in the Land Rights Act until 1990. which commenced on 16 August 1991. where the lease was to a member.7 Prior to that.000 has been treated as the basic payment received by Local Aboriginal Land Councils on an annual basis.6 Regional Aboriginal Land Councils constituted the middle-rung of a tripartite structure which was no doubt intended to create a level of autonomy and selfgovernment for Aboriginal people. hold lands. at least 80% of members present and voting supported the proposal. until an amendment to the Land Rights Act in 1988. NSWALC was responsible for the administration and distribution of funds which were made available for the purposes of the Land Rights Act by an annual payment of 7. Such payments were made from Consolidated Revenue from 1984 until 1998. Sub-section (3) then provided: (3) A Regional Aboriginal Land Council shall not refuse to give an approval … except on the ground that the terms or conditions of the lease are inequitable to the Local Aboriginal Land Council concerned … Further. The highest level in the tripartite structure was the NSW Aboriginal Land Council (“NSWALC”) which had state-wide functions which also have significance for present purposes. The Local Aboriginal Land Council had power to lease (or change the use of) land if. but for which funds should be available through different channels. The first significant amendments to the Land Rights Act were made in 1986. at a meeting of the Council specially called for that purpose. become the focus of a renewed commitment at the local level to self-directed community development. 8 Land Rights Act. However. 10 However. 9 See Aboriginal Land Rights (Amendment) Act 1986 (NSW). The Secretary of a Local Aboriginal Land Council was entitled to certify that the appropriate approvals had been given and. The scope and operation of this protective provision will be considered shortly. so long as NSWALC is satisfied that they have complied with their financial obligations. p. The Act has also resulted in the formation of a large network of Regional and Local Aboriginal Land Councils to carry out the functions of land purchase. any proposed disposal of land vested in a Local Aboriginal Land Council. mortgaging or disposing of land vested in it otherwise than by way of lease or by the grant of an easement.9 The Minister. 11 ibid at 2041. in many cases. in relation to their land holdings. the Minister continued: The chief concern of the Government is that the funds made available are used for the purchase of land and not for the satisfaction of other community needs which may be urgent. although that function came to be seen as something of an anomaly.6. The role of NSWALC in monitoring the financial affairs of Local Aboriginal Land Councils will also be dealt with in more detail below. A uniform sum of $110. that the lessee was in fact a member. in many instances. © ICAC . They have now ceased. In practice.7. section 40(2).

Thirdly. who merely certified that the disposal “does not contravene this section”. it was hoped that the restoration of land would help to undo the ravages of earlier dispossession. Mr Frank Walker. to have or acquire managerial abilities sufficient to use the resources of land being placed at their disposal. In addition. The certificate was said to be conclusive evidence of that fact. was not easily reconcilable with the concept of “community development”.13 He noted that the role of government was to assist Aboriginal people in realising their aspirations.5. This could be achieved through the provision of funds for open market purchases of economically viable properties with the purpose of providing an income for the numerous deprived Aboriginal communities. After recognising the spiritual attachment to land. the State land council. First. In all of this. There may have been some doubt as to precisely how that beneficial intention was to be achieved: at least in part it was anticipated that the creation of a network of Land Councils would promote the re-establishment of Aboriginal communities with improved resources upon which to develop selfsufficiency. Further. observances. New provisions in sections 40C and 40D provided for disposal of land by NSWALC and by a Local Aboriginal Land Council. it was not clear where the resources to do so would be obtained. 14 ibid at 2041. noted that the “Keane Committee” report15 “placed vital importance upon the need to return significant parts of this State back to their Aboriginal inhabitants as a form of compensation and a recognition of the great spiritual attachment that Aborigines have had to this great continent of ours”. in our times.6. respectively. All of these functions were made easier by the removal of the special majority requirement for a meeting of a Local Aboriginal Land Council called to approve such a decision. New section 40B dealt with the forms of disposal originally subject to the old section 40. who remained amongst the most disadvantaged members of the population. when the certificate was issued. the Minister noted that the Keane Report went further: It recognised also that Aborigines had experienced severe economic deprivations in this State. Let us not lose sight of the fact that it was precisely when Aborigines were dispossessed of their land that the problems of Aboriginal poverty and dependency arose.14 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council The Minister noted that despite certain differences of opinion. the then Minister. which was consistent with the then absence of any power of disposal of the land. The amendments made in 1990 were directed squarely at the second problem. the role of land is crucial – for members of the Aboriginal community land is integral to their identity as Aborigines.4. Secondly. customs. The power of granting a certificate recording compliance with the statutory requirements was still vested in the Secretary of the Local Aboriginal Land Council. The concept of “cultural significance” was defined in broad terms to include land which is “significant in terms of the traditions. the NSW Aboriginal Land Council was required to approve of “the proposed disposal” and two Ministers were to be “notified” of the proposed disposal. but in NSWALC. namely leasing. When the original Land Rights Bill was introduced into the Parliament on 24 March 1983. Both that determination and the decision that it should be disposed of required a special majority of 80% of members present and voting at a meeting specially called for the purpose. in favour of any person other than a person who had notice of a contravention of the section. 14 Three tensions which have become apparent to the Commission are reflected in these statements of intention of the Government. If the communities were expected to develop their land. the first requirement was its determination that the land was “not of cultural significance to Aborigines of the area”. © ICAC . chaired by Maurice Keane.”12 The Minister noted a proposal to develop a “comprehensive training program” during 1986. The Land Rights Act did not then permit the land to be mortgaged. In this sense land rights has a dual 12 ibid at 2042. In relation to disposal by a Local Aboriginal Land Council. there was a “solid common ground” between the Government and the NSW Aboriginal Land Council concerning “the urgent need to provide members of Land Councils with the opportunity to develop administrative and accounting skills sufficient to cope with the demands of the legislation. the requirement of approval was now vested. not in the Regional Land Council. 13 ibid at 2042. change of use and granting or releasing easements. beliefs or history of Aborigines”. … The Committee believed that land rights could also. lay the basis for improving Aboriginal self-sufficiency and economic well-being. there was a recognition of the difficulties implicit in expecting Aboriginal people. 15 Select Committee of the Legislative Assembly upon Aborigines. the concept of land held under “communal title”.

to allow for the economic benefits anticipated under the Act. no doubt.18 The changes made in 1990. the amendments to the Land Rights Act provided for the reconstitution of the State land council. it appears that both the Chairperson and Registrar dealt with the matter on the basis that the model rules regulated the affairs of the KLALC.9.22 Although the KLALC lost all of its original records in a fire. Aboriginal people in NSW were not significantly better off than they had been a decade earlier. 24 March 1983. because communal land ownership 16 NSW Legislative Assembly Hansard. conducted on behalf of the Government by Mr Charles Perkins. or the Local Aboriginal Land Council had otherwise complied with its accounting obligations or the Minister had obtained a report from an investigator or an administrator. However. to cease immediately the provision of funds to any Local Aboriginal Land Council which failed to obtain a “satisfactory certificate” from an auditor. with traditional significance to Aborigines. of itself. the Minister recognised the need for further funding.20 It will be necessary to consider these provisions further below. once land was returned to Aborigines it should remain Aboriginal land in perpetuity. in a passage which resonates in relation to the matters now before the Commission. He continued: Further. Mr Nick Greiner. Some lands. 10 May 1990. Against this policy background it is useful to consider specific mechanical provisions of the Act. The new financial arrangements required that Local Aboriginal Land Councils furnish to the NSW Aboriginal Land Council and to the Minister audited financial statements. I have asked Mr Charles Perkins. as opposed to a rates bill. 18 ibid at 5090. Section 13 of the Land Rights Act provided for the rules of Local Aboriginal Land Councils. and a certificate of the auditor within four months from the end of a financial year. 20 See section 34C. its rules shall be the rules prescribed by the Regulations as Model Rules. will retain a cultural and spiritual significance. Accordingly. There was no discussion in the Second Reading Speech as to the underlying philosophy of new sections 40A40D. in relation to a complaint considered by the Registrar in 1999. 17 Finally. 21 See now. including from the Commonwealth. in the light of the unsatisfactory reports from KLALC’s auditor over the period to which the matters before the Commission relate. it could not resume until a satisfactory certificate had been obtained. There was. introduced by the then Premier. 22 Land Rights Act.21 The Act has also provided that a Local Aboriginal Land Council shall have a Chairperson. section 84(2) of the Land Rights Act.8. There is no evidence that any such approval was sought at any time and. as head of the Aboriginal Development Commission.19 That was. could not. reference to the model rules will be made as necessary. and indeed obligation. provide people with an income. Other lands will be developed as commercial ventures designed to improve living standards. 16 The Minister also noted that a key element of land rights as a concept was that there should be “inalienable community title to land owned by Aborigines”. At all relevant times. resulted from some two years of consultations with Aboriginal people. Once funding ceased. p.2948. NSWALC was given a new power. who constitute the office-holders of the LALC. Secretary and Treasurer. the overriding purpose of the 1990 amendments was to tighten controls on financial arrangements. … This Bill will provide for freehold title to be held by local community groups in perpetuity. to enter into joint ventures with the Aboriginal Land Councils to be established by the proposed Act and to maintain funds at present coming to NSW under other programs. © ICAC . section 13(6) has provided: (6) Until a Local Aboriginal Land Council makes its first rules in accordance with this section.2. as the Premier noted. any variation of its rules from the model rules prescribed by the Regulations would have required approval from the Registrar. He continued: In other words. p. a concern that. with some additional functions. despite the expenditure of over $1 billion on Aboriginal affairs in the previous decade. 19 NSW Legislative Assembly Hansard. In addition to the introduction of sections 40A-40D. 17 ibid at 5089.Chapter 2: Legal framework – The Aboriginal Land Rights Act 15 purpose – cultural and economic.5089. section 9 and now section 61.

The Aboriginal Land Rights Regulation 1983 was repealed on 1 September 1996 and replaced by the Aboriginal Land Rights Regulation 1996. Amongst the primary functions in relation to land were the following. 24 Clause 32(g). and … (h) to protect the interests of Aborigines in its area in relation to the acquisition. The Land Rights Act imposes obligations on officeholders of a Local Aboriginal Land Council. His obligations extended to ensuring that the Council carried out its statutory functions. subject to the instructions of a Council meeting. to disclose the nature of the interest at a meeting of the Council if the interest appears to raise a conflict with the proper performance of the office holder’s duties in relation to the consideration of the matter. to the extent that their duties provide for them to do so. and further requires that the office-holder. and … (d) to implement the wishes of its members (as decided at a meeting of the Council) with respect to: (i) (ii) the acquisition. act on behalf of the Land Council and. The latter Regulation operated throughout the time relevant to the present investigation. establishment and operation of enterprises. Section 56B imposes an obligation on the office-holder to disclose any pecuniary interest in a matter being considered by the Council. control and disposal of land and the acquisition. the respective functions of the officers are not specified in the Land Rights Act. land vested in the Council except in accordance with the wishes of the members. 25 Section 56B(1). or otherwise deal with. including a co-ordinator and office staff. on behalf of the Council in the interval between meetings. formally expressed at a meeting of the Council. the duties of the Chairperson. © ICAC . use. not participate in deliberations with respect to the matter unless the other office-holders of the Council “otherwise determine”. management. The relevant provisions of section 56B read as follows: (2) An office holder of an Aboriginal Land Council who has a direct or indirect pecuniary interest in a matter being considered or about to be considered by the Council is required. to that extent. 23 Clause 31(j). control and disposal of its land … It is apparent from these provisions that the Executive of the Local Aboriginal Land Council is not expressly vested with any powers to dispose of. as soon as possible after the relevant facts have come to the office holder’s knowledge. who was at all material times the Chairperson of KLALC. as identified in section 12 of the Land Rights Act: 12(1) The functions of a Local Aboriginal Land Council are: (a) in accordance with any regulations. the office A similar obligation is placed on the Secretary23 and on the Treasurer. Secretary and Treasurer were set out in clauses 30. management. but in the Regulations. but particularly the conduct of Mr Bill Smith. land vested in or acquired by the Council. and represent and act. The other office-holders are required to consider making a different determination. having disclosed such an interest. although the rules identified in Schedule 1 of each regulation are substantially the same. in the interval between meetings and thus satisfy the definition of a “public official” in the ICAC Act. who are defined to include the Chairperson. but only in the absence of the person having the pecuniary interest.16 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Apart from the role of the Chairperson as the chair of meetings of a Local Aboriginal Land Council. In relation to the Chairperson. The matters of concern addressed in the subsequent chapters of this report relate to the conduct of various office-holders of KLALC.24 It follows that the three statutory officers of a Land Council act on behalf of the Land Council. would. 31 and 32 of the model rules in Schedule 1. (2) Accordingly the Chairperson must: (a) (b) (c) uphold the rules of the Council. … (5) After an office holder has disclosed the nature of an interest in any matter or thing. Any persons engaged as employees of a Land Council. and preside at Council meetings. use. Secretary and Treasurer25 in relation to pecuniary interests. In the 1996 Regulation. clause 30 provided: (1) The primary duty of the Chairperson is to ensure the successful functioning of the Council and achievement of its objects. or otherwise use. to acquire land and to hold and dispose of. would also be “public officials”.

a phrase which would cover a broader range of situations which could legitimately be treated as giving rise to a conflict of interests. more recent legislation tends to adopt the terminology of a “material personal interest”. (b) Significantly for the purposes of section 9 of the ICAC Act (”Limitation on nature of corrupt conduct”). unless the court by which the person was convicted specified a lesser term or ordered that no disqualification should follow because of the trifling character of the offence. of the Council with respect to that matter or thing.26 Secondly.28 The membership of a Local Aboriginal Land Council. Next. In 1997. or is in the employment of. that contrary to appearances there was no real conflict of interest involved.f. or exercise any function under this Act with respect to that matter or thing.27 Further. Section 56B(2) merely required disclosure of “the nature of the interest”. or take part in any decision. They might well assume. had 13 members. NSWALC.Chapter 2: Legal framework – The Aboriginal Land Rights Act 17 holder may not. © ICAC . No formality was required in relation to such a determination. a particular company or other body: 26 See e.g. or has some other specified interest in relation to. is sufficient disclosure of the nature of the interest in any matter or thing relating to that company or other body … which may arise after the date of the disclosure and which is required to be disclosed under subsection (2). The offence created under section 56C(1) did not distinguish between the independent obligations imposed. 27 c. its underlying purpose is difficult to comprehend. section 56C(1) of the Land Rights Act provides that a person who fails to comply with section 56B is guilty of an offence. The maximum penalty at the time was limited to “two penalty units” but conviction also carried an automatic disqualification from holding office under the Land Rights Act for a period of seven years. Commonwealth Authorities and Companies Act 1997 (Cth). section 26F(3). it was limited to a person who has a “direct or indirect pecuniary interest” in a matter. no further disclosure would be necessary if the Chairperson later enters into a contract with that company for a payment if the negotiations with the Council was successful. If the provision has that effect. unless the other office holders of the Council concerned otherwise determine: (a) be present during any deliberation. The general members of the Local Aboriginal Land Council might be unaware of the significance of the disclosure or even the reason why the affected officeholder continued to participate in debates about the matter. for example. Regional and Local Aboriginal Land Councils. How much detail was required of the nature and extent of the interest and the relationship of the interest to the affairs of the Council was not specified. there are two s difficulties which arise in relation to the content of the disclosure. However. was readily able to persuade the Secretary and Treasurer to approve his participation in the deliberations. section 56B applied indiscriminately to State. This could amount to several hundred members. and accordingly all the other members of the Council must be involved in such a determination. by section 56B. Pursuant to section 56B(5). First. With a Local Aboriginal Land Council. section 22(2). for example. Section 56B raised its own issues of construction. all members are office-holders. That language is also to be found in the Aboriginal Councils and Associations Act 1976 (Cth). In the case of NSWALC. sub-section 56B(3) stated that disclosure that a person is a member. Nor was any record required to be made of it. 28 Land Rights Act. This provision appeared to suggest that if the Chairperson of a Local Aboriginal Land Council discloses that he or she held a small parcel of shares in a large public company with which the Local Aboriginal Land Council was seeking to do business. however. sequentially. a breach of any specific obligation would appear to constitute a failure to comply with section 56B. Commonwealth Authorities and Companies Act. with the result that the State land council. sections 27F and 27J. However. may comprise any or all of the Aboriginal persons living within or having a recognised and accepted association with its area. there were 13 Regional Aboriginal Land Councils in New South Wales. there are only three office-holders and it is easy to envisage circumstances in which a Chairperson. section 49D. where there had been a disclosure “the other office-holders of the Council” might determine that the affected office-holder be permitted to take part in deliberations with respect to the matter the subject of a conflict of interest.

that provision may have made some sense: in relation to Local Aboriginal Land Councils. Mr Bill Smith. each of which has been repealed and replaced by Part 10.31 The kinds of disputes which could be referred to the Court were widely defined. 32 See section 59(1)(a). section 59(2) imposed an additional constraint on the power of the Registrar: 29 See sections 182-188. and included a dispute between a Local Aboriginal Land Council and an individual. the Registrar could refer to the Court for determination: (c) any other matter concerning the administration of particular … Local Aboriginal Land Councils. 31 See section 59. There may be some force in that argument. Division 4 of the Land Rights Act. by the insertion of a new Part 10 dealing with pecuniary interests and establishing an Aboriginal Land Councils Pecuniary Interest Tribunal. Although it cannot determine the construction of the Act. to the effect that he had no power. However. in his submissions to the Commission. Land Rights Act. there may be a basis for suggesting that the “matter” raised by the complainants was not limited to a contravention of section 56B. However. The outcome of the Registrar’s consideration was that the matter should not be referred to the Land and Environment Court. dealing with the identification of “pecuniary interests” and the obligations of disclosure.18 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Finally. from Mr Tony McAvoy of counsel. given the limitations imposed on the kinds of disputes covered by paragraph (a). which contains model rules for Local. modelled on the Local Government Act 1993. he pointed to legal advice he had obtained for the purposes of this investigation. who took some steps to investigate the matter. but the dispute must have related to a land claim or purchase and have been referred to the relevant Regional Aboriginal Land Council for conciliation. 33 What precisely paragraph (c) was intended to cover. Although section 59(1) provided that the Registrar could act at the request of NSWALC. or on his or her own initiative. under sub-section (1) refer to the Court a dispute or matter if provision is made for the determination of the dispute or matter under another section of this Act. or between individual members of a Local Aboriginal Land Council. In the present case. section 56B confused the nature of the Land Councils involved by providing that a reference to a “meeting of an Aboriginal Land Council” included a reference to a meeting of a “committee” of the Council and further stated that reference to an office-holder included reference to a member of such a committee. equally. As will be noted in Chapter 9 below. That was because a contravention of section 56B constituted an offence and hence was a matter which could properly have been dealt with under another provision of the Act.30 One of his functions was to refer disputes to the Land and Environment Court for determination. The process of inquiry and reasoning which led to that conclusion was criticised in the course of the present investigation on the basis that the Registrar construed section 56B(2) of the Land Rights Act too narrowly. both its purpose and operation are far from clear. there was a complaint made in 1999 to the Registrar appointed under the Land Rights Act. in any event. in practice it is unlikely that such a power would be engaged unless the dispute had been drawn to the Registrar’s attention by some affected individual or Land Council. but in each case refers to “sub-committees”. it is notable that the Aboriginal Land Rights Regulation 1996. © ICAC . there have been substantial amendments to these provisions. under section 56B was drawn to the attention of the Registrar. in Chapter 5. although. nor to its recommendations in relation to corruption prevention.29 There are also entirely new provisions relating to complaints regarding failure to disclose pecuniary interests. 33 See new section 178 ff. Furthermore.32 More broadly. Regional and State Land Councils. to refer the matter to the Court. a concern with respect to proper disclosure by the KLALC Chairperson. As will be noted below. In relation to the NSWALC. is unclear. (2) The Registrar shall not. in the light of the substantial amendments made to the Act in 2002. 30 See old section 49. that issue has no direct bearing on the Commission’s conclusions. makes no provision for the establishment of committees. Land Rights Act.

and the Minister has been notified of the proposed disposal. as in force during the period 1997–2001. Thus. cover further mortgages (with increased borrowings and for fresh periods) and even subsequent sale of subdivided blocks? A second question concerned the requirement that 80% of the members determine: (a) that the land is not of cultural significance to the Aborigines of the area. and may seek to change the usage of the land by having it rezoned. change of use … has been approved at a meeting of the Local Aboriginal Land Council specifically called for that purpose at which a quorum was present. would an approval to sell the land. Broadly speaking. and (b) the New South Wales Aboriginal Land Council has approved of the proposed disposal. and (b) that the land should be disposed of. Section 40D(1). whether conforming to a planning instrument or not. there was a significant debate as to the effect of an approval by the NSWALC for a particular dealing in land for which its approval had been sought. which impose restraints on a Land Council leasing or changing a use of land vested in it. would consent to mortgage the land. For reasons which will be discussed later. some of which were debated during the course of the present investigation. subdivided or by obtaining development consent for a particular purpose. Before considering the operation of that provision. That term could mean Aboriginal people with a traditional connection to the area. Depending on which meaning is accepted. constitute a continuing right to sell without further approval? Similarly. Presumably one underlying purpose of the provision is that land which is of cultural significance should not be disposed of. Perhaps more importantly. may conveniently be set out in full.Chapter 2: Legal framework – The Aboriginal Land Rights Act 19 Operation of section 40D of the Land Rights Act A matter which featured extensively in the Commission’s investigation concerned the operation of section 40D of the Land Rights Act. In carrying out its approval function under section 40B(3). Thus a planning scheme may prohibit a particular use or may change permissible uses by changing the zoning of land. exchange. it would appear that section 40B requires that a Local Aboriginal Land Council obtain NSWALC consent if it wishes to engage in any such activity. 40B(2) A Local Aboriginal Land Council may. a form of sale. which may not have been intended. 40D Sale etc of land by Local Aboriginal Land Council (1) A Local Aboriginal Land Council may. sell. both the Crown Lands Minister referred to in that section and the Minister have been notified of the proposed disposal. which may be understood in legal terms as a conveyance of the land and. Thus. (c) (d) The terms of this provision give rise to a number of questions of construction. or it could mean Aboriginal people living in the area who are members of the Local Aboriginal Land Council. mortgage or otherwise dispose of land vested in it if: (a) at a meeting of the Council specifically called for the purpose (being a meeting at which a quorum was present) not less than 80 per cent of the members of the Council present and voting have determined that the land is not of cultural significance to Aborigines of the area and should be disposed of. subject to the provisions of any other Act and of the approval of the New South Wales Aboriginal Land Council: (a) lease or change the use of land vested in it … but only if the lease. it is useful to note the related terms of section 40B. for some purposes. The concept of ‘change of use’ in relation to land invokes elements of planning law. the concept of “cultural significance” could take on a quite different flavour. where the particular transaction proposed did not eventuate. an owner may have rights depending on existing usage. the question of the meaning of the first limb of the requirement is quite unclear: even the concept of “Aborigines of the area” is ambiguous. as in force in July 1997. and in the case of the disposal of land transferred to an Aboriginal Land Council under section 36. First. Similarly. section 40B provided. in July 1997. subject to the provisions of any other Act. NSWALC is required not to refuse approval of a lease or change of use except on grounds that the terms or conditions of the lease “are inequitable” to © ICAC . the conjunction of these two elements seems to suggest a connection between them.

in the case of land successfully claimed under section 36 of the Act also the Minister responsible for Crown Lands. is unclear. either to NSWALC or to the Local Aboriginal Land Council. for example. in addition. is NSWALC expected to consider whether the land should. Again. expected to make its own enquiries as to cultural significance? Alternatively. be disposed of? Or is it to give consideration to the financial merits of the proposed disposal? Other questions could be envisaged: in each case it will further be necessary to enquire whether such consideration is mandatory or merely permissible. but neither is there any specification of criteria which might be relevant. It is also important to note the role of the Secretary of the Local Aboriginal Land Council in relation to the certification that relevant procedures have been followed. Their only possible role may be to make submissions. no timetable is prescribed which would allow that to take place and the purpose is itself largely speculative. The purpose of notification of the Minister administering the Land Rights Act and. in its view. it will be necessary to return to the purpose and effectiveness of this provision in Chapter 9.20 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council the Local Aboriginal Land Council or that the change of use would be detrimental to its interests. seeking to persuade one or other of those bodies to take a particular course. Is NSWALC. However. or even impermissible. No such constraint is imposed on NSWALC carrying out its functions under section 40D(1)(b). © ICAC .

36 Section 74A(1).35 Further. with a view to dismissing. ICAC Act. (iii) conduct connected with corrupt conduct may have occurred. conduct will not amount to corrupt conduct unless it could constitute or involve a criminal offence. As will be noted below. the taking of action against the person for a specified disciplinary offence. … (d) to examine the laws governing and the practices and procedures of. © ICAC . in the following terms: 13(1)The principal functions of the Commission are as follows: (a) to investigate any allegation or complaint that. substantial allegations have been made. a disciplinary offence. The scope of this term is discussed further below. and the power to formulate recommendations for the taking of action that the Commission considers should be taken in relation to its findings or opinions or the results of its investigations. or reasonable grounds for terminating services. There is no necessary inconsistency in the Commission concluding that particular conduct is (b) It is clear from the statement of these functions that a key concept in relation to the functions and powers of the Commission is that of “corrupt conduct” which is a defined term. or Corrupt conduct defined A restriction is imposed on the role of the Commission in making a report. encourage or cause the occurrence of corrupt conduct.37 the ICAC Act requires: 74A(2) The report must include. the Commission is empowered to prepare “reports in relation to any matter that has been or is the subject of an investigation”. being the matters in relation to which recommendations must be made under section 74A(2). in respect of any conduct. in the opinion of the Commission. whether or not the findings or opinions relate to corrupt conduct. the Commission is authorised to include in its reports both its findings. public authorities and public officials. substantial allegations have been made in the course of or in connection with the investigation concerned.36 Where a person has been identified as an affected person. 37 Section 74A(3). or conduct liable to allow.21 Chapter 3: Legal framework – corrupt conduct The ICAC Act identifies the principal functions of the Commission. ICAC Act. circumstances or events with which its investigations are concerned. a statement as to whether or not in all the circumstances the Commission is of the opinion that consideration should be given to the following: (a) (b) (c) the prosecution of the person for a specific criminal offence. despite the broad terms of section 13(3). in order to facilitate the discovery of corrupt conduct and to secure the revision of methods of work or procedures which. (4) Subsection (2) does not limit the kinds of statement that a report can contain concerning any such “affected” person and does not prevent a report from containing a statement described in that subsection in respect of any other person. The Commission is obliged to prepare a report in relation to a matter which has been the subject of a public hearing. may be conducive to corrupt conduct … . dispensing with the services of or otherwise terminating the services of the public official. the taking of action against the person as a public official on specified grounds. (3) An “affected” person is a person … against whom. 34 See section 13(4). in the Commission’s opinion. by section 74B. in the Commission’s opinion. or any circumstances which in the Commission’s opinion imply that: (i) (ii) corrupt conduct. ICAC Act. … (3) The principal functions of the Commission also include: (a) the power to make findings and form opinions on the basis of the results of its investigations.34 Pursuant to section 74. opinions and recommendations and its reasons for reaching such conclusions. may be occurring or may be about to occur. relevantly for present purposes. in respect of each “affected” person. ICAC Act. namely one against whom. 35 Section 74(3).

22

ICAC REPORT:

Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

corrupt conduct because it could constitute a criminal offence, and yet expressing the opinion that it is not necessary or desirable to consider prosecuting a person for such an offence. That is because the definition of “corrupt conduct” will be satisfied even though such proceedings can no longer be brought,38 or because, for discretionary reasons, such consideration seems inappropriate. However, in other cases, where an allegation is thought to be justified, the Commission will inevitably be required to express an opinion under section 74A(2). In that regard, it is important to note the constraints imposed by section 74B. Relevantly for present purposes, that section states: 74B(1) The Commission is not authorised to include in a report under s.74 a statement as to: (a) a finding or opinion that a specified persons is guilty of or has committed … a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence), or (b) a recommendation that a specified person be, or an opinion that a specified person should be, prosecuted for a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence). (2) A finding or opinion that a person has engaged …: (a) in corrupt conduct (whether or not specified corrupt conduct), or (b) in specified conduct (being conduct that constitutes or involves or could constitute or involve corrupt conduct), is not a finding or opinion that the person is guilty of or has committed … a criminal offence or disciplinary offence. Because the expression of a finding or opinion that a person has engaged in corrupt conduct, of a particular kind, will require the forming of an opinion as to whether the conduct could constitute or involve a criminal offence, it is important to emphasise that any such finding or opinion set out in this report is intended to conform to the description given in section 74B(2) and no finding or opinion as to guilt or commission of a criminal offence or disciplinary offence is intended or should be inferred. The nature of the Commission’s functions and powers demonstrate why that is so. Many of the substantive and procedural protections which
38 Section 9(2), ICAC Act. 39 (1990) 169 CLR 625. 40 (1992) 30 NSWLR 21 at 27-28
© ICAC

apply in criminal proceedings are unavailable to those appearing before the Commission. The absence of such protections is justified by the need to uncover and prevent any repetition of the kinds of pernicious practice at which the ICAC Act is directed. The Commission is not responsible for the prosecution, let alone the determination, of criminal charges. Although the Act has been amended in significant respects since the judgment was handed down, the underlying philosophy of the ICAC Act identified by the High Court in Balog v Independent Commission Against Corruption,39 still provides a helpful guide to the role of the Commission. Counsel appearing for one of the affected persons in the course of this investigation suggested in submissions that, as a matter of discretion, the Commission should not make a finding of corrupt conduct in relation to an affected person in circumstances where no recommendation in favour of prosecution was proposed. That approach was, it was submitted, supported by the remarks of Gleeson CJ in Independent Commission Against Corruption v Chaffey.40 The point in issue in that case was, however, somewhat different. Chaffey was a police officer who had been the subject of serious allegations by two persons themselves convicted of serious crimes. The sole issue was whether the Commission had failed to accord Mr Chaffey procedural fairness by allowing the allegations to be aired in evidence at a public hearing. The damage to Mr Chaffey’s reputation, which would inevitably arise, whether or not the allegations were found to have substance, was said to constitute the relevant unfairness. As the Chief Justice noted, it was precisely that danger which required the Commission to observe the rules of procedural fairness. It did not follow, however, “that fairness requires that proceedings be conducted in all respects in such a way as to minimise damage to reputation”. In that case, the alleged unfairness is said to derive, not from the public airing of evidence capable of demonstrating corrupt conduct, but the fact that an adverse finding, without a recommendation that prosecution be considered, deprives the person affected of an opportunity to clear his name of any inference that he is guilty of a crime. There are a number of answers to this complaint. First, the statute expressly makes clear that a finding of corrupt conduct does not involve a finding that a person is guilty of a crime, or even that the person should be prosecuted. On the other hand, it may be accepted that, as a practical matter, and given the definition of “corrupt

Chapter 3: Legal framework– corrupt conduct

23

conduct”, members of the public may well draw an adverse inference from the existence of such a finding. Secondly, because the most that the Commission can do is recommend that prosecution be considered, it can never guarantee an affected person an opportunity to clear his or her name at a criminal trial. Thirdly, at least in some circumstances, it would be unrealistic to expect persons against whom an adverse finding has been made to invite criminal prosecution. If the evidence against them is strong, they risk conviction; if weak, most would prefer not to be prosecuted than to achieve an acquittal. Fourthly, it is clear that the ICAC Act envisages that any recommendation for prosecution should be dealt with separately from the formation of the opinion as to corrupt conduct. The Commission is of the view that it should, in all circumstances, be cautious in reaching a finding of corrupt conduct. That is because no person’s reputation should be unfairly sullied. However, where the Commission is comfortably satisfied that corrupt conduct has occurred, it should make such a finding despite the consequences for the individual’s reputation. It is not a function of the Commission to protect a reputation which is undeserved. Further, it is necessary to take into account the fact that the Commission is entitled to hear evidence which could not be used in a criminal prosecution. If the only powerful evidence against a person is his or her admission to the Commission, the Commission should not be prevented from finding corrupt conduct in such clear circumstances, despite the fact that the evidence will be inadmissible in court and no recommendation to consider prosecution would be justified. The term “corrupt conduct” is defined in sections 8 and 9 of the ICAC Act. The definition covers any conduct which falls within the description in either or both of sub-sections 8(1) and (2), which is not excluded by section 9.41 Section 8 is in broad terms and relevantly provides: 8(1) Corrupt conduct is: (a) any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority, or

(b)

any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions, or any conduct of a public official or former public official that constitutes or involves a breach of public trust, or any conduct of a public official or former public official that involves the misuse of information or material that he or she has acquired in the course of his or her official functions, whether or not for his or her benefit or for the benefit of any other person.

(c)

(d)

(2) Corrupt conduct is also any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the exercise of official functions by any public official, any group or body of public officials or any public authority and which could involves any of the following matters: (a) official misconduct (including breach of trust, fraud in office, nonfeasance, misfeasance, malfeasance, oppression, extortion or imposition), bribery, … (d) (e) (f) obtaining or offering secret commissions, fraud, theft, … (x) (y) matters of the same or a similar nature to any listed above, any conspiracy or attempt in relation to any of the above.

(b)

Section 9 provides, relevantly for present purposes: 9(1) Despite section 8, conduct does not amount to corrupt conduct unless it could constitute or involve: (a) (b) (c) a criminal offence, or a disciplinary offence, or reasonable grounds for dismissing, dispensing with the services of or otherwise terminating the services of a public official, or …

41 Section 7(1) ICAC Act.
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24

ICAC REPORT:

Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

(2) It does not matter that proceedings or action for such an offence can no longer be brought or continued, or that action for such dismissal, dispensing or other termination can no longer be taken. (3) For the purposes of this section: … criminal offence means a criminal offence under law of the State or under any other law relevant to the conduct in question. disciplinary offence includes any misconduct, irregularity, neglect of duty, breach of discipline or other matter that constitutes or any constitute grounds for disciplinary action under any law. The conduct in question need not be the conduct of a “public official” in order to satisfy the definition in section 8(1). However, if the conduct is that of another person, it must at least be capable of adversely affecting the proper exercise of official functions by a public official. The term “official functions” is not defined, but clearly involves the functions or powers exercised by an officer who is a public official, in his or her capacity as such. The term “public official” is defined as follows:42 Public official means an individual having public official functions or acting in a public official capacity, and includes any of the following: … (h) (i) (j) an individual who constitutes or is a member of a public authority, a person in the service of the Crown or of a public authority, an individual entitled to be reimbursed expenses, from a fund of which an account mentioned in paragraph (d) of the definition of public authority is kept, of attending meetings or carrying out the business of any body constituted by the Act, … (m) an employee of or any person otherwise engaged by or acting for or on behalf of, or in the place of, or as deputy or delegate of, a public authority or any person or body described in any of the foregoing paragraphs.

The term “public authority” is also defined: Public authority includes the following: … (d) a person or body in relation to whom or to whose functions an account is kept of administration or working expenses, where the account: is part of the accounts prepared under the Public Finance and Audit Act 1983, or (ii) is required by or under any Act to be audited by the Auditor-General, or (iii) is an account with respect to which the Auditor-General has powers under any law, or (iv) is an account with respect to which the Auditor-General may exercise powers under a law relating to the audit of accounts if requested to do so by a Minister of the Crown. Whatever may otherwise have been the case, since 1990 all Aboriginal Land Councils established under the Land Rights Act are taken to be public authorities for the purposes of the ICAC Act.43 The primary concepts of corrupt conduct set out in section 8(1) thus involve –
n n

(i)

the dishonest exercise of an official function; the partial exercise of an official function, and a breach of public trust.

n

(It is not necessary for present purposes to consider misuse of information or material obtained in the course of an official function.) The specific matters set out in sub-section 8(2) are largely, although not entirely, examples which fall within these concepts, although the term “official misconduct” may perhaps be broader. The concept of dishonesty will include many types of conduct that can readily be identified in paragraphs of section 8(2), including bribery, obtaining secret commissions, fraud, theft, perverting the course of justice and other matters. These elements need not be considered further at this stage.

42 Section 3(1), ICAC Act. 43 Land Rights Act, section 65A, introduced by the Aboriginal Land Rights (Amendment) Act 1990: and see now section 248.
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Art 145 at p.48 However. his Honour noted that it was not sufficient that the act be intentional. 1950). The scope of relevant conduct generally may thus be identified by reference to the criminal offence having the broadest coverage and the greatest potential relevance for present purposes. he wilfully and intentionally exercises a power or discretion which he has by virtue of his office or employment without reasonable excuse or justification. 50 [2002] HKCFAR 381. in its then form. “Official Misconduct” (1978) 2 Crim LJ 307. the scope of such improper conduct is likely to be defined by the limits of a relevant criminal offence. in circumstances where section 9(1)(c) is not available. So defined. 47 ibid at 161C-162D. and the extraneous purpose was deliberately so chosen. 52 See Finn. there is a duty on the repository of the power to act with impartiality. the elements of the offence in order to see that it had sufficient certainty and precision 44 (1992) 28 NSWLR 125.51 In my view. (3) wilfully and intentionally.52 Even neglect of a duty may there are two or more persons or interests competing for a benefit or advantage. a particular person or interest was selected for an improper purpose. op. the elements of the offence of misconduct in public office are: (1) a public official. The decision in that case turned largely upon the manner in which conduct might fall within paragraph (c) of section 9(1). 51 ibid at [84]. See also Stephens Digest of the Criminal Law (9th ed. conveniently for present purposes. cit. In relation to that matter.114. Sir Anthony Mason identified the constituent elements in the following passage. A public official also culpably misconducts himself if. 49 See Finn P. the importance of the public objects which they serve and the nature and extent of the departure from those responsibilities. the first of which concerned the conjunction of wilful and intentional as indicated by the emphasis provided in the passage set out above. Whether it is serious misconduct in this context is to be determined having regard to the responsibilities of the office and the office-holder. the additional quality of “wilfully” signified knowledge or advertence to the consequences. by Sir Anthony Mason NPJ in the Court of Final Appeal of the Hong Kong Special Administrative Region in Shum Kwok Sher v Hong Kong SAR. The most likely contender is the common law offence of misconduct in public office or. see also Gleeson CJ at 144. the precise scope of these concepts is not likely to be critical: rather. being the meaning of corruption which is often identified with bribery or extortion. the Court of Final Appeal was required to identify. 48 ibid at 165D-G. at 308.46 In substance his Honour found that partiality occurs where – n to satisfy the concept of a “law” for the purposes of the constitutional requirements of the Hong Kong Basic Law. as precisely as possible. A public official culpably misconducts himself if he wilfully and intentionally neglects or fails to perform a duty to which he is subject by virtue of his office or employment without reasonable excuse or justification.47 n n n In relation to the concept of breach of public trust.45 Of the three members of the Court of Appeal.49 That offence has been defined.44 a case involving a former Premier and a former Minister for the Environment.Chapter 3: Legal framework– corrupt conduct 25 Partiality and breach of public trust were considered by the Court of Appeal in Greiner v Independent Commission Against Corruption. The second qualification concerned the need for the misconduct to be serious misconduct. His Honour added two qualifications. (2) who in the course of or in relation to his public office. it is clear that the offence extends beyond the abuse of position for pecuniary gain. being primarily the use of an office or the powers of an office to secure an advantage for an individual for an improper reason. with an improper motive. and relevantly for present purposes. as it is sometimes called “official misconduct”. Mahoney JA appears to have identified similar elements. as well as intent to do an act or refrain from doing an act. only Mahoney JA (who dissented on other issues) considered questions of “partiality” and “breach of public trust”. © ICAC . 46 ibid at 154C-166D. (4) misconducts himself. 45 Section 9(1) did not then include paragraph (d) which was added by the Independent Commission Against Corruption (Amendment) Act 1994.50 In that case.

perhaps. © ICAC . other offences may become relevant. be taken too far. In short. or subjective intention. as such. Despite the comparison noted by Priestley JA with respect to the position of a magistrate conducting committal proceedings. That would be quite wrong. It is clear that. any property belonging to another person. there being very many people in the State who may fall within the concept of a “public official”.56 A similar provision. respectively. In Greiner v Independent Commission Against Corruption. respectively. shall be liable to imprisonment for 10 years. “if there were evidence of those facts before a properly instructed jury. By the same logic. with a direction in writing to apply. security or proceeds. or any part thereof. the analogy can. Gleeson CJ held that the Commission should first make findings of fact which would satisfy the elements of an offence and then ask whether. pay or deliver such money or security. in conducting that exercise. in violation of good faith. That section provides: Whosoever: fraudulently appropriates. although not originally taken with any fraudulent intent. 55 (1967) 117 CLR 326 at 331. 58 ibid at 167. as a limitation on the kind of conduct which may be corrupt conduct. such a jury could reasonably conclude that a criminal offence had been committed”. misappropriates in any manner such money.53 The concept of “fraudulent appropriation” simply engages the concept of “dishonesty”. or any part of the proceeds of such security for any purpose. as set out in section 527 of the Crimes Act 1900 (NSW). section 4 “property”. deals specifically with misappropriation of money held by an agent.59 although there is some difference in their Honours’ terminology. 56 The application of this provision is considered in Chapter 4 in relation to the Sanpine joint venture. 57 28 NSWLR 125 at 136 C-D. “Property” for the purposes of this section includes money. to form its own opinion in relation to criminality. on conviction by a Local Court. The scope of section 9.Whosoever having been intrusted as an agent with any money. the Commissioner may ignore the fact that no criminal proceedings could 53 Crimes Act. or any part thereof. the fraudulent misappropriation of property. or security for the payment of money. This provision is considered further in Chapter 5. there must be a lack of good faith in the exercise of the power. be liable to imprisonment for six months. Similarly. in Croton v The Queen55 the High Court held that withdrawal of money from a joint bank account by one account holder. Use of the conditional “could” no doubt emphasises the fact that the Commission is neither required. section 165. of the official will be of consequence. or fraudulently retains any such property in order to procure a reward for its restoration. there is no good reason for the Commissioner.57 A similar approach appears to have been taken by Mahoney JA58 and by Priestley JA. to his or her own use. to exclude from consideration material which would be inadmissible in criminal proceedings. will satisfy the relevant definition. in considering whether particular conduct is corrupt conduct or not. In specific circumstances. Thus. The motive. or both.26 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council be sufficient. Because all statutory powers and functions are conferred subject to limits. nor permitted. constituted a fraudulent misappropriation of funds. is itself qualified by referring not to criminal conduct. shall. or to any person specified in such direction. including. 54 R v Glenister [1980] 2 NSWLR 597 at 603-605 (Court of Criminal Appeal). so long as there is knowledge of or advertence to the consequences. relevantly for matters under consideration in the course of the present investigation. and contrary to the terms of such direction. without the authority of the other. but to conduct which “could constitute or involve” a criminal or disciplinary offence. or the proceeds. His Honour put to one side a matter of some practical significance. or to pay a fine of 5 penalty units. or that of another. 59 ibid at 186. that section provides: 165. No offence will be committed unless an act or omission is intentionally undertaken for what is understood to be an extraneous or improper purpose.54 Thus. some care must be taken not to criminalise mistakes or misjudgements. Relevantly for present purposes. namely whether it would be necessary to exclude from that approach evidence which would be inadmissible at a criminal trial. there must be an understanding as to the limits and a deliberate decision to act in defiance of those limits. neither ignorance nor incompetence.

Clause 21 of the Model Rules provides that a Council may remove from office “for any reason” an officer or representative of the Council. in the face of misconduct.Chapter 3: Legal framework– corrupt conduct 27 now be brought. would not constitute a “dismissal”. the Commission does not think paragraph (c) has operation in relation to officers of a Land Council. as the Commission and the Court accepted. Part 4A. namely “dispensing with services” and “terminating services”. it does not follow that there is a dismissal on “reasonable grounds”. pursuant to section 74A(2)(a). even summary termination. A different conclusion may be reached with respect to paragraph (c) which involves “reasonable grounds for dismissing … a public official”. ICAC Act. be a factor of relevance and some importance in determining whether to express an opinion that consideration should be given to the prosecution of a person. so that 80% of members attending the meeting support the removal. The purpose of section 9(1) is to limit the ambit of the definition of corrupt conduct: it should not be treated as rendering a finding of corrupt conduct impossible in circumstances where criminal proceedings are not available. Secret commissions Section 8(2) of the ICAC Act expressly includes as a form of corrupt conduct. however vague the power of the Governor may be (and Priestley JA was prepared to describe it as “absolute. However. as the Act clearly envisages. or other statutory controls. involves a different conclusion. they were covered by specific legislation. of course. This has a greater analogy with the position of parliamentarians and premiers as subject to removal by an adverse vote at an election. it seems that the power of the removal extends beyond such cases to cases where the officer has lost the confidence of the Council. That question. That. It will not be the basis for a consideration of a finding of corrupt conduct in relation to such employees of the Land Council as might have acted in their positions as “public officials”. Further. For completeness. which provides as follows: 249B(1)If any agent corruptly receives or solicits (or corruptly agrees to receive or solicit) from another person for the agent or for anyone else any benefit: (a) as an inducement or reward for or otherwise on account of: 60 Section 74B(2)(a). Nor does it think that any broader scope should be given to the Act by reference to the other terminology used in paragraph (c). perhaps because they had already been brought or because a limitation period had expired. “obtaining or offering secret commissions”. Although it is suggested in the rule itself that one reason might be that the person has been convicted of an offence relating to the property or affairs of the Council. As it was not submitted to the Commission that any disciplinary offence could be created in the present circumstances.61 Such conduct also constitutes a criminal offence for the purpose of section 9(1) of the ICAC Act. Accordingly. Even if the matter were put to the meeting on the basis of a failure to carry out duties or responsibilities under the Land Rights Act.63 The principal substantive offence is contained now in section 249B of the Crimes Act. that possibility may be disregarded. The admissibility of the evidence relied upon in forming such an opinion will. that issue was not canvassed during the current investigation and it is therefore not necessary to say anything further about it. 62 Crimes Act 1900 (NSW). the general law of employment will frequently permit termination. it is necessary to note that an employee of the Land Council may be in a different position. which means it is subject to no legal constraints”) in the present case there is no-one in the position of the Governor. from one that a person has engaged in corrupt conduct. 61 Section 8(2)(d). namely the Secret Commissions Prohibition Act 1919 (NSW). the Commission having relied upon the power of the Governor of the State to remove the Premier or a Minister from office in exercise of a power existing under the Constitution Act 1902. This paragraph was the source of contention in Greiner v Independent Commission Against Corruption. is any public official (being an officer or employee of a Land Council) capable of being subject to disciplinary proceedings. The substantive provisions now contained in sections 249B-249E of the Crimes Act. based on different considerations. Whether or not the employment is subject to an award. 63 This Act was repealed by the Crimes (Secret Commissions) Amendment Act 1987 (NSW) which inserted Part 4A in the Crimes Act. Officers are subject to removal by the members who vote them in. © ICAC .60 There is a question as to whether the second limb of section 9(1) is relevant for present purposes: in other words.62 Before these matters were dealt with by amendments in 1987 to the Crimes Act.

offences. a corporation or an individual.28 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council (i) doing or not doing something. favour or disfavour to any person in relation to the affairs or business of the agent’s principal. the definition extends to persons serving under the Crown. by the mere act of receiving the benefit with his belief as to the intention with which it is given. or not to show. 65 Section 249A. With these legal principles in mind. need not be in the capacity of an agent. If he accepts a benefit which he believes is being given to him because the donor hopes for an act of favouritism in return. Why that may be so is understandable: for example. or agreement to receive a benefit. or having done or not having done something.67 It is perhaps obvious that the receipt of the benefit.65 The term “corruptly” in the operative provision has been the subject of consideration in relation to similar provisions in other jurisdictions. 70 (1940) 14 LGR 142. The definition of agent in section 249A is broad enough to include any person acting “for or on behalf of” any other person in any capacity and includes a person purporting to be or intending to become an agent of another person. knowingly profiting form his position of agent by reason of his supposed ability and willingness. the agent is liable to imprisonment for 7 years. the agent may be liable to the principal for the amount received69 and the principal may recover the amount in civil proceedings. 67 See Wiles J in Cooper v Slade (1858) 10 ER 1488 at 1499. who are expressly empowered by the model rules to act on behalf of the Land Council. even though he does not intend to perform that act. or having shown or not having shown. In short. he is. Giving or offering a benefit in such circumstances is also an offence carrying the same penalty. in Leary v Cohan70 a payment was made to a member of a local council for distribution of sums to other members. 69 Lunghi v Sinclair [1966] WAR 172. the use of the term “corruptly” is descriptive of the conduct. and related. Thus. again by an inclusive and nonexhaustive definition.64 The first question is whether an office-holder of a Land Council can constitute an “agent” for the purposes of this. to show favouritism in his principal’s affairs and knowingly putting himself in a position of temptation as regards the impartial discharge of his duties in consequence of the acceptance of a benefit. The purpose underlying the prohibition does not require an inquiry into the state of knowledge of the principal. in R v Dillon and Riach66. in relation to the affairs or business of the agent’s principal. 66 [1982] VR 434 at 436. or (ii) (b) the receipt or any expectation of which would in any way tend to influence the agent to show. in return for some reward. or showing or not showing. the next task is to identify the factual findings which could satisfy the respective statutory tests. to include “money and any contingent benefit”. police officers and councillors under the Local Government Act 1993. 68 R v Morgan [1970] 3 All ER 1053. Brooking J held in relation to equivalent Victorian legislation: An agent does act corruptly if he receives a benefit in the belief that the giver intends that it should influence him to show favour in relation to the principal’s affairs. © ICAC . favour or disfavour to any person. Similarly. Although both the short and long titles of the Secret Commissions Prohibition Act 1919 included the term “secret commissions” the element of secrecy is not an essential part of the offence. The definition is inclusive and does not purport to be exhaustive. 64 Section 249B(2). rather than restrictive of the scope of the provision. It is clearly intended to cover both public sector and private sector activity. It should also be noted that the concept of a “benefit” is broadly defined. whether a local council. knowingly encouraging the donor in an act of bribery or attempted bribery.68 On the other hand. It is sufficiently broad to include office-holders. approved by the Full Court of the Supreme Court of Victoria in R v Gallagher [1986] VR 219.

it has not been thought necessary to resolve this question. a corporation can engage in conduct. In relation to the joint venture with Sanpine Pty Limited. it has not been thought useful to make specific findings about the company itself. the term “person” may include an individual or a corporation. even if a corporation could be implicated in corrupt conduct. Nevertheless. below. In relation to a corrupt payment made by Villa World Limited. 73 It is at least arguable that the term “person” in section 8 of the ICAC Act does not include a corporation. in any event. corrupt conduct may involve conduct of any “person (whether or not a public official)”. 72 Interpretation Act 1987 (NSW). through individual agents and a corporation can commit a criminal offence. the Commission has not made the necessary factual findings to implicate the company. Chapter 6. In the context of the present investigation. sections 8(1) and (2). the question. © ICAC . In principle. does not arise. 73 Interpretation Act. On the other hand. 72 However. findings have been made in relation to several of its officers. section 6. Accordingly. in relation to Villa World Limited. 74 71 ICAC Act. their states of mind and actions could be treated as the actions and state of mind of Sanpine. section 21(1). However. the primary focus of the ICAC Act is on the conduct of public officials. 71 Generally speaking.Chapter 3: Legal framework– corrupt conduct 29 Corrupt corporations As noted above. the context or subject matter of legislation may suggest a different scope for a particular term such as “person”. 74 See generally.

the desultory nature of the process made it difficult.30 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 4: The KLALC – Sanpine joint venture – part 1 Background The land Under the Aboriginal Land Rights Act 1983 a Local Aboriginal Land Council may make a claim for what are described as “claimable Crown lands”. At its south-east extremity. however. Where. At this time. On its south-eastern side. A further advance of $200. an aspect of which is discussed below in Chapter 6. to put forward a proposal for a joint venture to create 200 residential blocks by subdivision. it adjoins Lake Macquarie. On 20 December 1996. when Mr Charles Perkins and Mr John Leece. In the present case. Mr Bill Smith. Sanpine Pty Limited.000 on the signing of formal joint venture documents. an Aboriginal Land Council could appeal to the Land and Environment Court. 3) (1988) 14 NSWLR 685. Perhaps inconsistently.75 That description covers lands vested in the Crown which are available for sale or lease. the result of delays in processing claims and making decisions was twofold. 77 New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (The Winbar Claim No. which formed the basis of the formal agreement eventually entered into on 4 July 1997. If the land was not needed for a relevant purpose at that time. until formal agreements were executed. little was done for some ten years. in a case known as Winbar [No.000 against KLALC’s interest in the joint venture. There are other qualifications which may be sufficiently summarised as requiring that the land not be needed for relevant public purposes.78 The passage of many years had the potential to cause difficulty for that Court in assessing whether the lands were claimable Crown lands at the date of lodgement of the claim. The proposal The first development plan was formulated in July 1996. The area relevant to the present investigation. Given the legislative constraints in the definition of claimable Crown lands. claims often related to relatively small parcels.The foregoing is subject to [Koompahtoo] being able to dispose of the lands referred to herein or an interest therein to [sic] within the provisions of the New South Wales Aboriginal Land Rights Act (1983) as amended. was claimed by KLALC after the State government closed the hospital. In cases where claims were refused. The agreement also provided in clause 9: 9. as to their possible needs for the land or views about the land claim. together with an advance of a further $50. set out in a four page letter. under relevant Crown lands legislation. for a Land Council to plan effectively for the possible use of the land. The decision to grant the land was made known publicly on 8 August 1995. © ICAC .000 was to be payable on the rezoning of land at Fishery Point Road. It was established by the Court of Appeal in 1988. where an unrelated residential development was taking place contemporaneously with the KLALC–Sanpine joint venture. at least some of the land clearly had potential for residential and commercial development. The proposal offered KLALC $100. an accountant. the proposal also stated that. which is further described below. such delays were not uncommon. Negotiations over the detail of the joint venture appear to have occurred between September and December 1996. the Morisset Hospital site extended over 850 hectares. 78 Section 36(6). gave evidence that the Land Council received numerous enquiries from potential developers. it is close to an area known as Wyee Point. which was identified as the old Morisset Hospital site. 3]77 that the relevant time for assessing the status of the land was at the date of lodgement of the claim. attended a meeting of the membership of the KLALC. acceptance of 75 Sections 36(1) and (3). Messrs Perkins and Leece represented a development company. The reasons for such delays are not immediately apparent. The land claim was lodged on 20 October 198976 and. The proposal put to the KLALC meeting was endorsed “in principle”. following standard enquiries to all potentially interested departments of government. if not impossible. It is bounded on its western side by the main northern railway. or are reserved or dedicated for any purpose. on the east of the site. The land adjoins the town of Morisset and basically extends to the south-east of the railway station. as in the present case. subsequent events would not remove the land from the category of claimable Crown lands. The Chairperson of the KLALC. the Minister responsible for Crown lands eventually decided to grant the claim. or was not used or occupied at that time. However. Given the proximity of the land to the Morisset town centre. 76 Identified as ALC 3514. Sanpine wrote to the Chairperson of KLALC putting forward a proposal.

1 What resolutions of KLALC authorise the signing of the joint venture? We request a copy or copies of the resolution(s) along with the dates of the meetings. it is helpful to identify the parties. Mr Sean Docker of the Land Rights Unit at NSWALC wrote to Mr Bill Smith seeking answers to certain questions. Thereafter. Fennell Bay. A copy of the resolution is set out in the letter of 3 November 1999 to the Registrar. He did so in order to prepare material to be put before NSWALC for the purpose of obtaining its approval to the mortgage which was then proposed to fund the joint venture development. Carried. The parties: Koompahtoo Local Aboriginal Land Council Before describing the history of the joint venture. the expectation was that there would be a three-stage residential subdivision comprising 1. On 1 February 1999. established pursuant to section 5 of the Land Rights Act. was: To enter into a joint project with Sanpine Pty. Interestingly. following meetings with Mr Smith. subject to small areas which might be used for a cultural centre and a possible conference centre designed to promote an understanding of Aboriginal culture and of the Aboriginal history of the area. The remaining 745 hectares were to be preserved for purposes of “conservation and recreation”. because the December 1998 version was in capitals and the copy sent to the Registrar was in lower case. Mr Docker set out in a letter his understanding of the responses to the questions. Thus. much valuable information has been collected and © ICAC .1 he noted: The JVA was approved in principle by a resolution of KLALC on 10 July 1996 with the entering into of the Agreement being authorised by a resolution on 18 December 1996. requiring NSWALC consent. Seconded: Gloria Smith. agenda papers. Whether any copy of the resolution of 18 December 1998 was provided to NSWALC is unclear. on 19 January 1999. As a result. Whether because of the nature of the land. what records have been obtained by the Commission are almost entirely from third parties. In fact. including NSWALC.090 lots and covering a total area of 105 hectares. or for reasons relating to orderly development and resale. one or other (or both) of the sets of minutes appears to be a reconstruction: the motion has been retyped at some stage. rather vaguely formulated. It was carried. a copy of the resolution of 10 July 1996 had been supplied on 23 November 1998 in the following terms: Motion: Endorsement in principal [sic] by members of the proposal for the development of Morisset 200 acres by joint venture with Sanpine. under section 40D. By this means. However. In relation to 1. the solicitors and accountants for KLALC and the Registrar under the Land Rights Act. The first is a matter of practical relevance: on 5 September 2001 there was a fire which destroyed the offices of the KLALC at 2 Brougham Avenue. Moved: Steven Griffen. As noted below. a more detailed extract of “the minutes” was given to the Registrar on 3 November 1999. records of meetings and other business papers held by KLALC. The principal corporate entity involved in this investigation was the Koompahtoo Local Aboriginal Land Council (“KLALC”). but not the same ones.) The first question in the list asked by Mr Docker read: 1. the additions involved a note of discussions at which Messrs Charles Perkins and John Leece addressed the meeting. (The mortgage was a “disposal” of the land. The prescription of the area appears to have taken place by publication in the Gazette of a relevant notice on 17 May 1985. The motion. The KLALC eventually entered into a joint venture agreement in July 1997 with Sanpine Pty Limited. each has spelling errors. It is significant that the question of the KLALC’s approval of the joint venture agreement was a matter which was raised prior to the fire at the Land Council offices.31 the points of principle constituted a grant to Sanpine of a caveatable interest in the land to be the subject of the subdivisions. indications from the Lake Macquarie City Council as to likely conditions of approval for residential development. The destruction appears to have included all minute books. That occurred by the Minister constituting an area as a Local Aboriginal Land Council area. there have been two events of broad significance in relation to the operation of the Land Council and relevant to the present investigation. There is no suggestion in the minute that any documents were tabled: the discussion is merely recorded under the heading “Chairperson report” and the information set out in the minutes is minimal.

however. some dispute as to the validity of the appointment and a further appointment was made in October 2002. The companies were known as Sancave Pty Ltd. establish and maintain good relations with relevant Aboriginal interests. He said Mr Adam Perkins offered him an 80% shareholding in the joint venture vehicle. He said that he had first met Mr Charles Perkins in early 1995 when he had been seeking assistance to develop land owned by the Darkinjung Local Aboriginal Land Council. Mr John Landerer. and two shareholders. Jayare Nominees Pty Ltd held 70 units and a company associated with Mr John Landerer. Whatever the original expectations and whatever the precise cause of their disillusionment. but not with Mr Perkins. however. that negotiations with KLALC commenced in late 1995 or early 1996. It is not clear whether. Sanpine was the trustee of the Sanpine Unit Trust. was appointed on 25 February 2003. They were created in order to exploit possible opportunities for joint development with Aboriginal organisations and communities. The latter were intended to locate suitable investment opportunities and negotiate with Aboriginal communities. Over the next two years. Mr Bob Scott told the Commission that he had had discussions with Mr Adam Perkins in March or April of that year and that Adam Perkins had told him that Leece and Landerer were then seeking to sell their interests in Sanpine. The identities of the participants in this company. structure and operation of the joint venture. A form of letter setting out the basis of an in-principle agreement had been prepared by 16 January 1996. As noted above. It was apparently anticipated that the growing number of Aboriginal organisations and communities owning land which might be available for development or which might have minerals capable of exploitation. an administrator. as investigator was made by the Minister for Aboriginal Affairs (and Deputy Premier) Andrew Refshauge MP on 7 June 2002. Adam Perkins and John Leece. Messrs Perkins would seek out. resulted from a telephone call from Mr Adam Perkins in March or April 1997. Mr John Leece. he and Mr Landerer were becoming frustrated with the length of time taken to set up the KLALC–Sanpine joint venture. Messrs Perkins or their associated companies held any units in the Sanpine Unit Trust. would provide an opportunity for mutually beneficial commercial arrangements. Mr Bob Scott gave evidence that he had become involved in the proposed joint venture in the first half of 1997. he maintained contact with Mr Smith. The fire was apparently investigated by police at the time it occurred and no suspicious circumstances were identified. the intention of Sanpine Pty Ltd was to allow Aboriginal organisations with land available for development to utilise the professional and commercial experience of Messrs Leece and Landerer in relation to land development projects. the late Mr Charles Perkins and his son. Sanhope Pty Ltd and Sanpine Pty Ltd. The second significant event in the history of the KLALC was the appointment of an investigator and then an administrator under the Land Rights Act. in particular to sell the services of Sanpine (or one of the other companies) to the community. Difficulties arise where gaps occur. In approximately early 1996 three companies were formed involving a solicitor. © ICAC . He met Mr Bill Smith around the same time. Mr Scott then contacted Mr Graham Steer. little more than a year after the arrangements were created. Mr Terry Lawler. In February 1996 Sanpine had two directors. is a matter of some importance in understanding the creation. in which a company associated with Mr Leece. Thus. There was. Messrs Leece and Landerer appear to have had second thoughts about the arrangement as early as March or April 1997. held 100 units. Mr Leece said that. of Ferrier Hodgson. a chartered accountant. On the basis of the investigator’s report. and his first in relation to the present matter. an accountant. at least by mid-1997. There was.32 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council inferences can be drawn from it. Mr Scott Sanpine Pty Limited The other important corporate entity involved in this aspect of the investigation was a company known as Sanpine Pty Limited (“Sanpine Pty Ltd”). His next contact. Paul Robert Collins and Robert Bernard Goodwin. prior to October 1997. The KLALC–Sanpine joint venture appears to have been the first significant test of this business model. The fire itself was not a subject of the Commission’s investigation and accordingly no inference is drawn from its occurrence. Mr Adam Perkins. An appointment of Mr Tony Hanrahan. Ganeden Investments Pty Ltd. including the history of changes in the structure of the company and the involvement of individuals. a consultancy arrangement between Messrs Landerer and Leece on the one hand and Messrs Perkins on the other. in order to offer him half of his proposed shareholding. It appeared from Mr Leece’s evidence and from the documentation provided by Sanpine.

Whether Messrs Steer and Scott obtained that information is unclear: no-one had asked the NSWALC for any approval at that stage. apart from the consultancy fees paid to Messrs Perkins. to Erolvase Pty Ltd. according to Mr Leece. The letter concluded with the following paragraph: As the New South Wales Aboriginal Land Council have approved the sale of the land we require copies of correspondence granting this approval. transfers of the two shares held by them in Sanpine to the Perkins’ company. Mr Scott expressly stated that the money was to be treated as a “loan” with interest payable on settlement at the rate of 15%. if the purpose of the transaction was for the Perkins’ interests to acquire the shareholdings in Sanpine Pty Ltd and sufficient units in the trust to give them 90% of the total number of units. or he may have wished to spread the risk.Chapter 4: The KLALC – Sanpine joint venture – part 1 33 may not have had the funds to purchase the 80% shareholding by himself. Further. Nevertheless. Whether those figures are correct or not. This arrangement preserved to Mr Leece an interest in the outcome of the joint venture. It is at least likely that he was considering expenses incurred from the date that the in-principle agreement was reached in mid-December 1996. Accepting Mr Leece’s explanation that the joint venture proposal was taking more time than he or Mr Landerer had available. The first documentary evidence of the arrangement with Mr Scott is to be found in a letter of 23 June 1997 from Spencer Steer & Associates. namely 22 October 1997. Messrs Leece and Landerer were reconsidering their continued involvement in the joint venture vehicle in January 1997. which were paid to Messrs Leece and Landerer. Relevantly for present purposes. As noted above. Mr Scott appears to have affirmed the proposition that the moneys paid to Messrs Leece and Landerer were paid “on behalf of Sanpine”. it appears that the expenses he was referring to in giving that evidence were not limited to those incurred after 4 July 1997. However. convenient to address the nature of the relevant transactions at this point. The evidence does not suggest that the Perkins family were in fact paying anything more than a nominal sum for the shareholding and units in the Sanpine Unit Trust which they obtained from Messrs Leece and Landerer. Sanpine’s only value was the interest it held in the joint venture with KLALC. to Mr Adam Perkins. being a total of $148. which he stated in evidence was the subject of an agreement between himself and Mr Landerer to share equally in any profits received by the Unit Trust. together with their associated companies. and at what stage. held by their respective companies. As at October 1997. However. On 22 October 1997 an agreement was entered into between Messrs Charles and Adam Perkins and Messrs Leece and Landerer. in his view less than $10. must have been largely speculative. Mr Adam Perkins gave evidence that his mother had advanced the moneys. after the signing of the agreement on 4 July 1997.000 related to the joint venture. Erolvase Pty Ltd. under the heading “Scott Group of Companies” and addressed to Messrs Perkins. There is no reason to doubt Mr Leece’s evidence that less than $10. The agreement of 22 October 1997 required repayment by the Perkins’ interests of certain consultancy fees. Rather. Leece and Landerer also agreed to transfer 170 units in the Sanpine Unit Trust. However. the need for such approval was recognised. in order to identify who had interests in the development proposal. It is. the joint venture agreement itself referred © ICAC . it seems highly unlikely that any significant consultancy fees were incurred “on behalf of” the joint venture. the question is whether any of the payments made to them constituted reimbursement of expenses incurred by Sanpine as part of the joint venture with KLALC. nor was any to be sought for a further two years. or both. it cannot be correct to say that the payments were made “on behalf of Sanpine”.780.000 of the payments which he and Mr Landerer received related to expenses incurred in relation to the Sanpine joint venture. and given the nature of the consultancy arrangements between Leece and Landerer and the Perkins. According to a letter of the same date as the agreement. at that stage. Messrs Collins and Goodwin. The value of the interest. the discussions with respect to a proposed joint venture appear to have commenced in late 1995 and continued into 1997. legal and other. Sanpine paid an amount of $183. pursuant to which Leece and Landerer agreed to obtain from the trustee shareholders. In February 1999. At the end of the transaction. with the other 90% held by Erolvase. The financial arrangements in relation to this transfer are dealt with later in this chapter. chartered accountants. however. Messrs Leece and Landerer appear to have been content to put an end to the consultancy arrangements and joint venture arrangements with the Perkins family upon recoupment of the expenses incurred by them up until that time. the parties agreed that Jayare Pty Ltd would still hold 10% of the units in the Unit Trust.314 to Mrs Perkins out of funds acquired by the joint venture.

in the event that the venture was ultimately profitable. of the amount ultimately reimbursed to Mrs Perkins (which. pursuant to the agreement. Mr Scott (usually referred to as Mr Bob Scott) was introduced to the proposed development by Mr Adam Perkins. as “the development manager for the development”. the beneficial interests in Sanpine Unit Trust were ultimately held by a company associated with Mr Adam Perkins (Erolvase Pty Ltd) as to 35%. the agreement provided for the appointment of a “project manager”.34 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council to costs of the joint venture as those incurred “from the date of this agreement”. Further. the Commission is also satisfied that that fact was known to the parties responsible for that arrangement. His involvement commenced some weeks before the signing of the joint venture agreement on 4 July 1997 and it is clear that he had questions. who. Those costs were to be calculated as including all costs associated with the development from the date of the agreement. The Commission is comfortably satisfied that. Accordingly. but had been invited to attend at a later hour to answer questions. On 28 August 1997. On one view. nor was there any express reference to the payment of a fee or salary. a management committee meeting was held. Fees paid to him were to be treated as an expense of the joint venture. (The appointment of the Aboriginal liaison officer will be discussed in some detail below. in mid-June 1997. Thereafter. when the agenda identified the “ratification of monthly payments” including those to the project manager. for which it was to be paid a fee “equal to 25% of total project costs”. the agreement might have been read as requiring Sanpine to carry out project management. Sanpine Pty Ltd. by a company associated with Mr Scott’s partner. The agreement defined “project costs” in broad terms. Amabowl Pty Ltd in which Mr Steer himself had a major interest. The first two items on the agenda involved the appointment of a “liaison officer” and a “project officer”. about the terms of the agreement. If no person was appointed. payment of at least $165. For reasons considered further below. amounted to $183. There is no evidence that any earlier expenditure was approved by the joint venture management committee. other than the development management fee itself and the value of the land. and to have noted that he would “act as interim project officer”. but the only express provision in relation to the project manager was the inclusion in the definition of “project costs” of “costs and expenses paid or reimbursed to” that person. At that stage. and as to the remaining 30% by interests associated with Mr Graham Steer. the agreement envisaged that the duties and obligations of the project manager would be undertaken by the management committee.) It appears that Mr Scott was not at the meeting when it commenced. enjoyed an indirect beneficial interest in the profits of the venture. © ICAC . his role in relation to the development had not been settled. as an item of business. The agreement permitted the project manager to be “an associate of either of the joint venture parties”. as it is central to this aspect of the investigation. Sanpine itself was appointed. The minutes appear to have been written in advance of his attendance. The Commission is satisfied that as of 22 October 1997 Messrs Leece and Landerer had no active on-going interest in the joint venture vehicle. Its obligations covered virtually all aspects of the management of the development. The project manager’s duties were not specified in the agreement. and not an expense of Sanpine. at its own expense. including a company. with interest. which appears to have been the first management committee meeting of the joint venture. Mr Scott was appointed the project manager and undertook most of the obligations specified as the obligations of Sanpine. however. who was to be nominated by Sanpine. In addition. no more than 10% was properly attributable to “joint venture expenses”. That appears to have involved a de facto appointment: the matter was not revisited until 16 February 1999. although the document had apparently not then been executed Robert Scott It is appropriate to return to the position of Mr Robert Scott. Ms Lesley Molony (Bronzewing Property Holdings Pty Limited) as to 35%. In fact.000 from the joint venture funds on account of these “expenses” involved a misappropriation of those funds. unless otherwise agreed to be included by the management committee. As noted above. through his dual roles as project manager and as a person associated with Bronzewing. The minutes also referred to a “project management agreement” to be entered into between Sanpine and Bronzewing Property Holdings Pty Limited.314). They shared a passive interest in 10% of the units under the Sanpine Unit Trust. the Commission does not accept that any significant amount was incurred after 4 July 1997. That was presumably designed to provide some reimbursement for their own time expended on the joint venture proposal.

200 per year. At the meeting at his home on 16 May 1999.100 per month. Charles and Adam Perkins Of the other parties originally involved in Sanpine Pty Ltd. a “projected cashflow” for the development. Adam Perkins. The Commission accepts that as a general description of the role developed by Mr Scott through 1997-1998 and continued thereafter. one being at his home in Newtown. (The precise nature of this expense is of importance and will be addressed below. the appointment of the Aboriginal Liaison Officer. it will be necessary to consider Mr Adam Perkins’ role in more detail below. who was introduced to the venture by Mr Scott. apparently prepared on 14 September 1997 contained a project management fee of $6. One might therefore expect that he would have been a driving force in the establishment of the joint venture. The Commission is satisfied that his involvement in the joint venture was limited in the manner described above and that he had no significant involvement in the administration of the joint venture. he presented in giving evidence as a brash young man with confidence in his own abilities. experience and judgment. the Commission did not hear evidence from him: nevertheless. resulting from the slow progress of the development and difficulties raised by some members of KLALC. it is apparent from the documentation and the evidence of the witnesses that his role was limited. The only comparable regular outgoing was a salary payable to the Aboriginal Liaison Officer which was fixed in the cashflow projection at $5. it is clear that he was actively involved in the establishment of the joint venture and its on-going administration. The late Mr Charles Perkins was an Arrente man from the Alice Springs area. many of which were held at his offices in Sydney. however. developed a close relationship. Thereafter. © ICAC . According to that document. attended the second meeting in September 1997 and the third meeting in January 1998. he appears to have attended only two minuted meetings.000 was to be paid to the Liaison Officer and the project manager. that ‘you had to go through Bob Scott to get to Bill Smith’. Because he had died before the commencement of the present investigation.) The figures demonstrate that an annual amount of approximately $140. at least to the end of 2000. There were undoubtedly points of friction. towards the end of that period. Mr Bill Smith. By 18 March 1999 he was chairing the meetings. His commercial experience was. at which the development proposal was Graham Steer The other principal participant in the joint venture on the Sanpine side was Mr Graham Steer. it seems likely that Mr Scott and the Aboriginal Liaison Officer. it was said by one witness in relation to another matter which arose in the second half of 2000. presumably with funds to be derived from the development. He was probably one of the best known Aboriginal Australians of his time. approved in principle. He was present at the first management committee meeting of the joint venture and appears to have been present at all meetings thereafter. The differential between the two figures was significantly reduced (and the overall cost increased) when allowance for the Liaison Officer’s vehicle was taken into account. he was a chartered accountant. Mr Adam Perkins stands in quite a different category. He also chaired the first meeting of the management committee of the joint venture. or in any of the subsequent arrangements regarding payments to Mr Smith. Adam Perkins. which is consistent with other material before the Commission. Because of his central involvement in the administration of the joint venture and. Over the first 18 months of the joint venture. particularly on Mr Scott’s side.Chapter 4: The KLALC – Sanpine joint venture – part 1 35 and was not tabled at the meeting. Over a long and illustrious career. in particular. payable from the first month. As already noted. there is no evidence that he had any role in the invitation to Mr Smith to apply for the position. Nevertheless. the other being at the offices of his son. he is recorded as suggesting the establishment by KLALC of “an educational trust”.000 for the services of Mr Scott as project manager. Overall. Although in 1995 he was just 27 years of age. It appears that he attended at least one meeting of the KLALC. it is necessary to refer to the late Mr Charles Perkins and his son. Although he chaired the meeting at which Mr Bill Smith was appointed the Aboriginal Liaison Officer for the joint venture. Whether it was ever tabled is unclear: nevertheless. his energy and abilities had ensured him a position of national recognition and stature.500 per month. totalling $61. Bronzewing was to be paid an annual fee totalling $78. limited and the Commission is satisfied that the terms of the agreement were largely left to Mr Leece and a solicitor from Mr Landerer’s firm.

an assessment done against the terms of the joint venture agreement would have suggested that the additional benefit of the agreement to KLALC (beyond the value of the land) was less than 10% of the value of the land it was contributing.525 per hectare giving a total value of approximately $1.36 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council The joint venture Financial arrangements The value of the land. The lots were valued at $3. After allowance for holding costs.75 million. the development management fee increases to over $4. In a feasibility assessment. Whether or not the joint venture to develop the land was ultimately advantageous to the Land Council.575. the agreement also provided that Sanpine would receive a “development management fee” which had priority for payment from the proceeds of the venture after the payment of creditors (other than the venturers) and before payment of any significant amount to KLALC. The “project costs” included all costs associated with the development. The total value to Sanpine. (Again demonstrating the marginal economic value of the project.250. It is of no great relevance for present purposes whether the valuation was reasonable or not: it provides some indication as to the nature of the asset which became the subject of the joint venture.1 million. a joint venture which permitted the development of the land to the stage of subdivision had the potential to provide a significant profit to the landowner and the developer.5 million indicating a proportion of 20%. the cost of the land and the payment of the project management fees to Sanpine. was $850. development costs were estimated at $35.000. The major potential beneficiary was Sanpine itself. would have given Sanpine a development management fee of $4. may be inferred from evidence of a valuation obtained by the joint venture in June 1998 for the purposes of raising finance by a loan secured over the whole of the land. the valuer adopted a value for completed lot – after subdivision and the provision of essential infrastructure – of $55. as determined by the Valuer-General at 1 July 1995. the valuation was $3. even assuming the optimistic selling price contained in the outline feasibility assessment. in the sense that it provided a better return than a straight sale.000. being appointed the “Aboriginal Liaison Officer”. would Sanpine provide value for this return? The second major beneficiary from the venture was the “project manager” whose salary was one of the costs of the joint venture. a figure of .75 million and the profit to less than $1 million. As at 31 March 2003.000. the fee would be $3. The third major beneficiary of the joint venture was the Chairperson of the Land Council.000 per month together with a vehicle.000 per lot and the open space land at $650 per hectare.000.059 had been paid to the company. costs described as “development costs”. The valuation noted that the unimproved capital value.000. Despite the apparent attractiveness of the joint venture. Mr Bill Smith. for which he was paid an payment of approximately $5. According to the outline feasibility assessment. Bronzewing.000 per lot. However.375.5 million for infrastructure costs. If the selling price of the lots had been $55.090 allotments. as executed. it was certainly advantageous to three parties. the feasibility assessment suggested a net profit of $2. Mr Smith was also an employee of the joint venture. some $417.3 million. as the valuer himself acknowledged. with development costs at $30. identified at $1.000. The valuer’s opinion.750. and in particular “fees and expenses paid to consultants and advisors for the development”. based on the then zoning of the area as rural 1a (with a minimum subdivision area of 40 hectares) allowed a value of $1. was appointed project manager and was paid a monthly allowance of $6. with a selling price (after sales and marketing costs) of $61.) If one adds into the figure of $17.000. and the balance of the land being used for cultural/open space purposes. was close to the value of the land. As noted above. at the date it was acquired. there is little doubt that the figures contained significant elements of uncertainty. together with “costs and expenses paid or reimbursed to the project manager”. In the course of providing his valuation. Subject to elements of risk and the need to make a commercial profit. prepared for the joint venture in December 1996. On the basis of a planned residential subdivision with a total of 1. However. that fee was initially calculated on the basis of “infrastructure costs” of $17. that amendment would have reduced the anticipated profit to $1.5 million in relation to the first 500 lots. Sanpine was to receive 50% of the net profits. If the © ICAC assumption that the venture would be profitable came to fruition. The 25% figure contained in the joint venture agreement. through its management development fee. Bronzewing. Thus. would have seen the profit turn into a loss. The question for KLALC should have been. rather than the figure used. As at 31 March 2003. the calculation.225. a company associated with Mr Robert Scott. The development management fee was to be equal to 25% of total project costs (excluding the value of the fee itself and excluding the value of the land). undertaken on the basis of 500 lots.

It appears that the $100. which the Commission accepts. Nevertheless. that amount was apparently calculated by reference to expenses and disbursements incurred by Messrs Leece and Landerer in the course of their arrangements with Messrs Perkins up until that time. the legal nature of the transaction involved the payment by or on behalf of the Perkins’ interests of a sum. the payment made by Mrs Perkins cannot properly have been characterised as a payment made on behalf of Sanpine. either on her own behalf or.780. Mr Adam Perkins stated in evidence that that transaction did not go ahead. namely that the Scott interests would purchase the Leece and Landerer interests for the sum of $148. at that date.000. The next stage in the transaction involved the acquisition from the Perkins’ interests (which then held 100% of the shares in Sanpine) of some of that shareholding. As noted above. 250 shares were held beneficially by Amabowl Pty Ltd. However. However. dated 24 April 2002. but appear to have © ICAC Payment to Elaine Perkins A fourth beneficiary of the joint venture arrangement was Mrs Elaine Perkins. One element of the arrangement. a financial settlement involved the payment to them of $148. the wife of the late Charles Perkins and mother of Mr Adam Perkins. pursuant to which that disengagement took place. in consideration for which. In 1997. a letter containing similar terms was sent on 4 July 1997.000. In accordance with the agreement so documented. It appears that neither Scott nor Molony had access to funds of that magnitude. the recitals to the sale agreement do not suggest that some identified part of the payments had been incurred on behalf of Sanpine Pty Ltd. payment made on behalf of her family members who were purchasing shares in Sanpine. Mr Scott gave evidence that in return for the Molony shareholding. A further letter addressed to Messrs Charles and Adam Perkins refers to the same sum “which you are paying on our company’s behalf to Mr John Leece and Mr John Landerer”. more likely. when Messrs Leece and Landerer were relinquishing their shareholding in Sanpine and other companies in which they held interests with Messrs Perkins. It was a . the amount of $100. the evidence of Mr Leece.800 had been paid to Mr Smith.Spencer Steer & Associates. That sum appears to have been paid by Mrs Perkins.000 which was due to KLALC on execution of the joint venture agreement and a further amount of $500. at least. Erolvase Pty Ltd. The financial arrangements as between the Scott. A company search of Sanpine Pty Ltd.000 issued shares of which 300 were beneficially held by Messrs Perkins’ company. As already noted. Leece and Landerer transferred their interests in Sanpine to the Perkins interests. reveals that Sanpine had. the funds were not in fact paid to Messrs Perkins. Whatever the method by which the consideration for the shares was calculated. which was said to be “exercisable one month” thereafter. being the date of execution of the joint venture agreement between Sanpine and KLALC. The Commission was not advised of any pre-existing agreement between Leece and Landerer on the one hand and the Perkins’ interests on the other. The means by which she received payment from the joint venture funds is complex.Chapter 4: The KLALC – Sanpine joint venture – part 1 37 $461.780. There was no attempt to identify the expenses incurred by Messrs Leece and Landerer as expenses incurred in relation to any particular company or joint venture arrangement. For example. No such item was included in any accounts prepared on behalf of Sanpine prior to October 1997. The result of that transaction was that the Leece and Landerer interests were transferred to entities owned by the Perkins. According to a letter of 23 June 1997. remained in place as at 18 September 1997. of which almost $40. on behalf of her late husband and her son Adam and their associated companies. was that only a small proportion of the expenses related to Sanpine and no specific element was identified as an expense specifically incurred on behalf of that company. nor in any accounts prepared thereafter which might have related to that period. Of the last group. The payment was identified as a loan provided to enable the Scott interests “to acquire the shares held in Sanpine Pty Ltd”. there was an agreement to pay the moneys outstanding to Leece and Landerer. respectively. Steer and Perkins interests remain obscure from the evidence given to the Commission. in exchange for the shares.000 was on account of the motor vehicle.000 payment to KLALC was made by interests associated with Mr Steer. 1. Neither Scott nor those associated with him appear to have had those funds and sought to issue a promissory note in favour of Messrs Leece and Landerer for that amount. a smaller amount was paid to members of his family. a company in which Mr Steer himself had a direct interest. The purchase was made by interests associated with Mr Bob Scott and Mr Graham Steer. 350 by Ms Lesley Molony (in her own name) and 350 by interests which gave their address as c/. the original proposal was that “Bob Scott & Associates” would acquire 80% of the issued capital in Sanpine Pty Ltd for the sum of $900.

1. which was described in the correspondence as provision for the purchase of “the remaining 13. on 18 February 2000. with interest.1. a source of funds associated with a north coast solicitor. It is sufficient for present purposes to note that a mortgage was executed in favour of Inteq Pty Ltd. The payment was described as to be made “from first residual funds”.79 It is clear from Mr Scott’s evidence that he and his partner. in effect.34%” of the shares in Sanpine held by Messrs Perkins. and with each party to receive a copy of “all periodic bank statements” was provided for by clause 16 of the Agreement.000. There remains the third payment of $500. and apparently has not been made. but was made. Although Mr Scott acknowledged the existence of the debt in his evidence. whereby the NSWALC was required to approve a disposal of the land. what were the terms on which those funds were. as at 18 February 2000.2 provided: All funds advanced by project financiers for the purposes of the Development shall be immediately deposited in the Joint Venture Account to be used solely for the purposes of the Development. The establishment of a joint venture bank account.3 Deposit of funds Except as provided in clause 15. pursuant to section 40D of the Land Rights Act. When Mr Steer was asked in evidence why the funds obtained under the mortgage were not paid into the joint venture account. 80 Agreement. the Development assets or the Joint Venture will be promptly deposited in the Joint Venture Account before any disbursement or use of those funds is made for any purpose. Mr Steer was taken to the minutes of the joint venture management committee of 16 February 1999. at least in relation to the affairs of Messrs Scott and Perkins. Two questions then arise: first. arrangements had been made to acquire funds by way of loan against the security of the land. whether that use of the joint venture funds was properly authorised and.314. secondly. the funds to be deposited in the Joint Venture Account will include all funds advanced by third parties to the Joint Venture as contemplated by the clause 11. Pursuant to the joint venture agreement. Unless financing arrangements require an alternative treatment or the management committee approves otherwise. subject to any special arrangements for the advance of the funds provided by project financiers and approved by the management committee. It will be necessary to consider further the mechanism.81 the Venturers agree that all cash and other funds received from time to time by the Venturers concerning the Development. and at all relevant times. The land was then.38 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council been provided to Sanpine Pty Ltd as working capital.80 Clause 11. he pointed to the provision for the management committee to approve “otherwise”. So far as the Commission can divine. The joint venture agreement made provision for funds to be obtained from a “project financier”. as is the payment of those moneys by the Perkins’ interests on their behalf. On 16 February 1999 an amount of $670. is confirmed in the correspondence. It was then put to him: 79 The Commission had no evidence from which it could draw any inference as to the magnitude of the business interests of Mr Graham Steer. clause 11. lent to Lesley Molony to assist her in purchasing her shareholding in the company? In the second half of 1998. That element of the transactions. it is startling that three business people. appear to have had absolutely no documentary arrangements in relation to a debt which was. What is extraordinary is that the repayment of that amount was never made by Scott or Molony from their own resources. 81 Which dealt with the initial payment of $100. This provision was triggered by the need to mortgage the land by way of security for the loan. Lesley Molony. were responsible for the payments to Leece and Landerer. It was Sanpine which was responsible for making the payment to KLALC. with signatories to be representatives of Sanpine and KLALC.000 was drawn down under the mortgage. © ICAC . as determined by the management committee. Clause 16. offering themselves and their services to a Land Council to carry out a multi-million dollar land development. was $183. the payment made by the Steer interests became.3 read: 16. owned by KLALC. from funds raised by mortgaging KLALC’s land. a significant sum for each of them. in effect. The sum required to expunge the Molony debt. an undocumented loan by the Perkins’ interests to Sanpine.000 to KLALC. at least. funds obtained for the purposes of the joint venture were to be deposited in an account opened for the purposes of the joint venture and having signatories including representatives of both Sanpine Pty Ltd and KLALC. which recorded Mr Steer advising the meeting that a joint venture bank account had been opened.

namely 16 February 1999. The minutes record that Mr Graham Steer advised the meeting that a bank account had been established with the National Australia Bank and appropriate signatories had been organised. at best. over $430. it is satisfied that all of the arrangements which involved Ms Molony were made by Mr Scott. it’s not recorded here. when expended.) The payment of $183. When asked why that step was being taken. as. The question for the Commission. yes. would then be reported via the project manager and myself to the subsequent committee meetings as they were expended. It’s not recorded in these minutes. approximately two-thirds of the available funds.314 to Mrs Perkins was in discharge of a debt owed to Mrs Perkins by Ms Molony. there was a joint venture management committee meeting. the funds were never placed in the joint venture account. However. Scott and Steer operated for the purposes of © ICAC . What knowledge. … Q: So do you say that the motion was at this meeting? A: Well. They involved a misuse of funds which were in part the funds of a public authority. but they do record that the salary for the Aboriginal Liaison Officer “would now be paid by direct bank transfer”. The unauthorised expenditure of funds of the joint venture in this manner undoubtedly constituted a breach of those fiduciary obligations. The expenditure of this specific amount from the Sanpine account was made in contravention of the contractual arrangements between Sanpine and KLALC. Within 48 hours. the Commission is unable to say. even those expenditures were not expressly authorised by the management committee. and without either notice or authority from the management meeting. The minutes do not record any reference to the draw-down on the mortgage. The meeting was further advised that two signatories were required for the account. The Commission is satisfied that the repayment was organised by Mr Scott who invariably attended joint venture management committee meetings “as proxy for Ms Molony”. Each of the joint venture partners and their representatives stood in a fiduciary relationship with each other. in contravention of the obligations under the joint venture agreement. through failing to deposit the funds in the joint venture account. That question requires further consideration of the manner in which Messrs Perkins. nor has the joint venture expenditure ever been audited. In fact. Rather. however. don’t you. that they be paid into Sanpine’s account? A: What was resolved was that the loan was being taken by Sanpine. I’ve read these minutes in detail and it’s not recorded here but it was certainly discussed at that meeting. including Messrs Steer. Some of those disbursements repaid expenses which had undoubtedly been incurred by various parties. Nevertheless. The manner in which the expenditure was effected. I think it was recorded later – there was a resolution that the funds would be deposited into the other bank account. using the security of the land and that the loan — and the moneys were going to be deposited into Sanpine’s account and that those moneys. is whether that action involved corrupt conduct because it could have involved a criminal offence.Chapter 4: The KLALC – Sanpine joint venture – part 1 39 [Counsel Assisting] Q: Of course. the funds were deposited in a private account of Sanpine Pty Ltd. suggest that the transactions were known by those party to them. including Mr Steer and his company Amabowl Pty Ltd. Q: That was decided at the meeting? A: It was certainly discussed and decided at that meeting. yes. On the day of the draw-down. you know that. if any. Ms Molony or Mrs Perkins had of any of these arrangements. had been disbursed by Sanpine. he indicated that the purpose was to “minimise as many costs as possible”. one being a Sanpine representative and one being a KLALC representative. yes. on behalf of the joint venture. Counsel Assisting continued: Q: Why would putting the money into the joint venture account add to that expense? A: Because it required an audit every year. A reader of the minutes would infer that the payment would be made from funds now available in the joint venture account. Scott and Adam Perkins. (It will be necessary to return to the last point. nor are their purposes documented in the records of the joint venture. Q: Was it resolved at that meeting? A: Well — Q: Sorry. devious.000. that the loan proceeds were not paid into that account but were paid into an account in the name of Sanpine? [Mr Steer] A: There was a resolution at this meeting which is – I’ve subsequently read these minutes and it’s not recorded here.

As already noted. Clause 10 of the joint venture agreement provided that the venturers would form a management committee “to manage the affairs of the Joint Venture” and to consider and make decisions in relation to all aspects of the development including. with the possible exception of Mr Bill Smith. who did not give the impression that he had any significant knowledge of the merits of. It also requires consideration of the role played by the KLALC representatives on the joint venture management committee. Whether that arrangement was disclosed to KLALC members is unclear. satisfy the Commission that the management committee was not asked to approve the expenditure of joint venture funds in that manner and did not in fact do so. to pay for the acquisition of shares in Sanpine by Ms Molony. for some years. according to the management committee minutes. because the management committee passed a resolution at what appears to have been its fourth meeting. or management issues involved in. the joint venture. the agreement provided that responsibility was to be equally shared. It required no great sophistication to appreciate that it was in the interests of KLALC to ensure that joint venture expenditure was kept under tight control. in 2002. In substance. other than Mr Bill Smith. Mr Steve Griffen. Non-attendance appears to have been an issue. Operation of the joint venture management committee It is convenient to consider first the role of the KLALC representatives on the management committee. stating that “future meeting payments would only be paid on attendance”. Mr Roberts appears not to have attended any meetings and was replaced by the KLALC Treasurer. combined with the absence of any suggestion in the minutes that approval was sought for the payment. however. because most of the minutes of KLALC meetings have not survived. it is difficult to know what steps were taken by KLALC at properly constituted meetings. who was personally committed to the project. without limitation. financial issues … ”. the failure to account through the only banking arrangements permitted under the joint venture agreement and the non-appointment of auditors. The management committee was also responsible for approval of financing and the appointment of auditors. The structure of the joint venture agreement was such that any addition to the costs of the joint venture increased the fee payable to Sanpine and diminished the overall profits available to be shared by Sanpine and KLALC. had any appreciation of that responsibility. in relation to the joint venture. to the effect that none of them were aware of the diversion of funds from the first mortgage to Mrs Perkins. Mr Bill Smith had his own interest in accepting these arrangements. two of his sons. However. evidence was given. to attend management committee meetings of the joint venture. Until February 2000. so that no approval could be obtained without the support of both joint venturers. It is also fair to say. Mr Edward Smith was absent on a significant number of occasions. Mr Bill Smith. but no doubt the payment provided some incentive to those elected. Had the KLALC representatives considered the matter from that perspective. it is unlikely that they would have accepted the limitations which were imposed on the financial information provided to them. It is possible that Mr Steve Griffen might have exerted some independent influence had he wished to do so. Mr Edward Smith was not a regular attender and his brother Malcolm Smith also missed a number of meetings. The agreement required that the management committee comprise four representatives of each venturer and specifically named the initial representatives. Again. which were not only of dubious legality under the agreement but were against the interests of the KLALC. Their evidence. that there was an election for the KLALC representatives on the joint venture management committee. by Mr Malcolm Smith amongst others. with the . The Commission heard evidence from Mr Malcolm Smith. The Commission accepts that that was so. He did. confirm the evidence given by his father. Messrs Malcolm and Edward Smith. if their representatives took common positions amongst themselves. on 16 February 1999. that neither Malcolm nor Edward Smith appear to have made any significant contribution to the matters under consideration. Treasurer of KLALC and. The payments apparently did not apply to Mr Bill Smith who had. Mr Bill Smith. combined with inferences to be drawn from the fact that the mortgage funds were paid into the Sanpine account and not the joint venture account. For reasons discussed further below. It is doubtful that the KLALC representatives. He was. For Sanpine. from a reading of the minutes. and Mr Steve Griffen. been © ICAC appointed Aboriginal Liaison Officer. For KLALC they were the Chairperson. they were Messrs Charles and Adam Perkins and Messrs Leece and Landerer. Further. by that stage.40 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council the joint venture. and Mr Ray Roberts. the KLALC representatives were paid $100 to attend a meeting.

The purchaser. Corrupt conduct? – payment to Mrs Perkins In substance. the Commission is satisfied that Mr Adam Perkins. that none of the KLALC representatives were actively complicit in the misappropriation of the joint venture funds for the benefit of Ms Molony. The Commission is also satisfied that Mr Steer was fully aware of the purpose and nature of the payment. 82 See section 8(2). the Commission is of the view that each of those persons could be found to have committed an offence under section 527 of the Crimes Act. namely that of Sanpine. It is clear that he did not have the money and that the repayment to Mrs Perkins was in fact made out of the proceeds of the joint venture mortgage moneys. It also appears from the minutes that it was he who proposed that no audits be undertaken. in circumstances where the approval of NSWALC was required for the purposes of section 40D of the Land Rights Act. Mr Steer sent at least two letters to Mr Adam Perkins on behalf of Mr Scott. Mr Robert Scott and Mr Graham Steer each understood the purpose for which the funds were being used in making the transfer of $183. nor was any apparent from his evidence. the relationship between Mr Scott and Mr Bill Smith. or even as their own funds. It is quite likely that. a stranger to Sanpine. as well as involving a potential criminal offence. If the evidence presented to the Commission were available to a relevant tribunal. Turning to the Sanpine representatives. which would satisfy the test of an offence of dishonesty. if not 2002. Messrs Adam Perkins. However. namely Mr Bill Smith and Mr Stephen Griffen.314 to Mrs Perkins. said to be in accordance with the joint venture agreement. he had primary responsibility for depositing the mortgage funds in the relevant account. The next question is whether. with no interest in the company. the Commission accepts Mr Bill Smith’s evidence that he had no knowledge of the arrangement with respect to the purchase by an associate of Mr Scott of the shares in Sanpine. albeit on a confidential basis.Chapter 4: The KLALC – Sanpine joint venture – part 1 41 assistance of KLALC’s accountant Mr South. However. Although it does not appear that he obtained any personal benefit from the appropriation of the moneys to Mrs Perkins. The second possibility is that the misuse of the funds could have affected adversely the exercise by the KLALC representatives. as will be noted below. Mr Steer was also the Chair of the management committee at the time when the mortgage was drawn down and it was Mr Steer who made the relevant banking arrangements. Mr Scott and Mr Steer would have provided the information. if Mr Bill Smith had demanded a full explanation of the expenditure of funds by the joint venture. including the two office-holders. was at all times prior to the acquisition of the shares. The correspondence between Mr Perkins and Mr Scott reveals a clear understanding on each part that Mr Scott owed money to the Perkins family for the purchase of shares in Sanpine. Further and separately. to purchase shares in the company from an existing shareholder and director. Mr Steer acted as Mr Scott’s agent in seeking to set out in written terms the arrangement between the Perkins interests and the Scott interests. appears to have been quite capable of applying proper accounting principles. and provided to the management committee a supposed justification for that position. appears to have been amicable and cooperative. The misappropriation of the funds was not carried out by any public official: accordingly. or could adversely affect the exercise of official functions by any public official. Even if one accepted the fallacious view that the joint venture funds could be treated by Sanpine as its own funds. it must constitute conduct of a person (who need not be a public official) that adversely affects. to be used without regard to the legal niceties of ownership and authority. at least in the first two years of the joint venture. to satisfy the terms of section 8. the conduct falls within the definition of “corrupt conduct” in section 8 of the ICAC Act. of their obligations © ICAC . at least until 2001. Ms Molony. he appears to have exercised no independent judgment of any kind that was recorded in the minutes. Scott and Steer treated the joint venture funds either as the private funds of Sanpine. This suggests. Mr Bill Smith had his own reasons for not wanting the financial arrangements to be made publicly available and the Commission is satisfied that he never made enquiries which might have resulted in the disclosure of the full financial arrangements with an adequate explanation of expenditure incurred. However. a separate question arises as to the propriety of Sanpine using those funds to allow a third party.82 There are two ways in which the funding arrangements could affect official functions: the first involves the potential misrepresentation to officers of NSWALC of the intended use of the funds to be obtained by mortgage of KLALC land. and the Commission accepts.

including the documentation. Scott and Steer which adversely affected the exercise of those functions was the failure of each of them to ensure that the KLALC representatives understood the purpose of the payment.83 Whether Messrs Malcolm and Edward Smith. © ICAC . a consultant and project manager. as approved by the KLALC members at a general meeting. The failure of disclosure was part of the conduct involved in the misappropriation of the funds. Section 74A(2) statement Section 74A(2) of the ICAC Act provides that. a director of Sanpine Pty Ltd. Ms Lesley Molony. no doubt that the Chairperson and Treasurer of the Land Council were exercising their statutory functions of protecting the interests of KLALC in carrying out their role as KLALC representatives on the joint venture management committee. 83 See paragraph (h) definition of “public official” set out in Chapter 3. the Commission is of the view that no question of disciplinary action or dismissal arises in relation to any person involved in conduct that was the subject of this investigation. dispensing with the services of or otherwise terminating the services of the public official. The conduct of Messrs Perkins. The Commission is satisfied that no such disclosure was made. Accordingly.314 paid to Mrs Elaine Perkins in discharge of a debt owed by Mr Robert Scott’s partner. the Commission is satisfied that: Mr Adam Perkins. in the Commission’s opinion. who held no office with the Land Council. before it was made.42 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council as office-holders to ensure that KLALC property was properly used for the purposes of the joint venture. each engaged in corrupt conduct in relation to his involvement in the unauthorised disbursement of joint venture funds of $183. a chartered accountant and director of Sanpine Pty Ltd. Given the lapse of time since the transaction that is the subject of the findings of corrupt conduct took place and the circumstances surrounding it. in respect of each “affected person” a report must include a statement as to whether or not in all the circumstances the Commission is of the opinion that consideration should be given to the following: a) b) c) the prosecution of the person for a specified criminal offence. substantial allegations have been made in the course of or in connection with the investigation. the taking of action against the person for a specified disciplinary offence. with a view to dismissing. the Commission does not recommend that consideration be given to prosecution of any of the participants for an offence in relation to the corrupt conduct findings stated above in this chapter. and Mr Graham Steer. however. For the reasons set out in Chapter 3 of this report. The Commission considers that each of the members of KLALC appointed to the joint venture management committee satisfied the definition of “public official” in section 3(1) if the ICAC Act. the taking of action against the person as a public official on specified grounds. and approved it or disapproved. were exercising “official functions” may be open to argument: there is. Mr Robert Scott. The term “affected person” is defined as including a person against whom.

at that time and thereafter. appointed Mr Bill Smith as the liaison officer. arranging. supported by Mr Adam Perkins. (b) (c) (d) (e) (f) (g) 8. was proposing to conduct activities on Aboriginal land over a significant period. that is to occur on Aboriginal land. This was a case in which the Aboriginal land-holders were themselves embarking on a development. The joint venture agreement made express provision for the appointment of an Aboriginal “liaison officer”. such as a mining company. secondly. reporting any concerns of the Koompahtoo Local Aboriginal Land Council as to the Development to the Management Committee. three matters need to be addressed. However. suggestions and concerns. the circumstances of his appointment and. This was not a situation where a commercial entity. negotiating on behalf of the Joint Venture with the Koompahtoo Local Aboriginal Land Council on matters of aboriginal cultural significance in accordance with the directions of the Management Committee. receiving questions. the nature of the position. suggestions and concerns of members of the Koompahtoo Local Aboriginal Land Council and relaying those to the Management Committee for further instructions from the Management Committee concerning responses to such questions. More particularly the aboriginal liaison officer will have the responsibility of: (a) outlining the nature and scope of the Development to the members of the Koompahtoo Local Aboriginal Land Council. queries. Mr Bill Smith was. the financial arrangements between the joint venture and Mr Bill Smith. which might well give rise to on-going disruption of Aboriginal life. queries. It is common practice for such an officer to be an Aboriginal person. that is entirely plausible. attending to such other matters which the Management Committee may delegate to the aboriginal liaison officer. which provided a level of on-going control and which rendered the concept of “liaison” virtually irrelevant. the removal of any item of aboriginal cultural significance from the Joint Venture Site to another area of land owned by Koompahtoo. Pursuant to a process which will be considered further below. although not necessarily a member of the land-holding group. Given his significant experience with developments of the kind referred to above. at Koompahtoo’s discretion. firstly. The KLALC had 50% representation on the board of the management committee.43 Chapter 5: The KLALC – Sanpine joint venture – part 2 Aboriginal Liaison Officer’s position Nature of position Where there is a proposal for some infrastructure development (such as the laying of a pipeline) or the establishment of a mine. explaining and demonstrating the benefits which will accrue to the Koompahtoo Local Aboriginal Land Council as a result of the Development. The evidence before the Commission. The first point may be conveniently addressed by setting out the terms of clause 8 of the joint venture agreement. thirdly. the Chairperson of KLALC and a member of the management committee. arrangements made on behalf of the Aboriginal land-holders and the commercial or government enterprise carrying out the development may well include provision for the appointment by the developer of an officer to liaise with the landholders.1 Upon the date of this Agreement the Joint Venturers shall call for expressions of interest from within the membership of Koompahtoo for the appointment of an aboriginal liaison officer for the Joint Venture whose role shall be to liaise between members of the Koompahtoo Local Aboriginal Land Council and the Venturers in connection with the Development. In seeking to understand the consequences of his appointment. (b) will be selected by Sanpine from the shortlist provided by Koompahtoo from the applications received in response © ICAC . little consideration appears to have been given to the appropriateness of the concept in the context of a joint venture. These are. including that of Mr Leece. of unused land which they were seeking to dispose of. the management committee. which were as follows: 8 Liaison Officer 8. albeit in partnership with commercial interests.2 The aboriginal liaison officer: (a) must be an ordinary member of Koompahtoo. at its first meeting on 28 August 1997. was that the inclusion of a full-time liaison officer was first proposed by Mr Charles Perkins.

26 August 1997 and advised that interviews would be held on Thursday. The result was apparently a motion. shall report to the Management Committee and be subject to the instructions and directions of the Management Committee. © ICAC . Bill Smith’s letter also referred to “Robbie and Louise” being available for interview on Thursday. only Bill Smith attended. It required “applications and resumes” to be lodged by 5pm on Tuesday. However. the Aboriginal Liaison Officer position. However. who was employed part-time as KLALC bookkeeper.84 Appointment process The second issue concerns the method by which Mr Smith was appointed. to Mr Adam Perkins seeking to nominate Mrs Carol Briggs (his daughter) and Ms Louise Charles. namely: 8. As appears from clause 8. (c) (d) will be an employee of the Joint Venture. in the following terms: Members agree that the joint venture management committee appoint liaison officer from KLALC membership. given that the motion which resulted did no more than affirm (though not entirely accurately) the requirements which had already been incorporated into the joint venture agreement. The evidence also disclosed that there was an extraordinary general meeting of KLALC held on 20 August 1997. Mr Robbie Briggs was Carol Briggs’ husband and the KLALC Co-ordinator. The evidence before the Commission included a two page notice. said she had indicated some interest by putting up her hand during the course of the Land Council meeting on 20 August 1997. It was apparently envisaged that KLALC would provide a “short list”85 from which the Sanpine representatives would select the successful applicant.3 The employment of the aboriginal liaison officer by the Joint Venture will be in part satisfaction of the obligations of Sanpine pursuant to clause 9. Although the interviews were to be held at the KLALC office. although clause 8. Mr Robert Briggs and Ms Louise Charles denied having expressed any interest in the position. Whether the notice was ever circulated is doubtful. Ms Carol Briggs. Ms Julianne Rose. Mr Adam Perkins had written to Bill Smith on 27 August 1997 inviting him to apply for the position of liaison officer. 48 hours later. Mr Bill Smith gave evidence that he had spoken to each of Louise Charles. thought the reference to “Robbie” was a mistake: that inference is probably correct. 28 August. Robert Briggs and Carol Briggs about the position and they had all indicated interest. The KLALC Secretary at the time. moved by Mr Malcolm Smith. On 26 August 1997 Mr Bill Smith wrote. That such a discussion did take place may be accepted: its purpose is less clear.S. She said she simply did not follow through by going to the interview. August 28. The motion was carried. all of them had apparently changed their minds and no-one attended for an interview. as Chairperson of KLALC.3 was replaced by a list of criteria. 85 Clause 8.3 The applicant will have to demonstrate (a) (b) (c) (d) (e) A proven record of reliability Hold excellent negotiation skills Hold a current drivers’ licence Hold a position of respect amongst the wider community Have a broad knowledge of Aboriginal Culture. the joint venture management committee agreed to employ Mr Bill Smith as the Aboriginal Liaison Officer and agreed to provide a package including a salary (e) 8. the joint venturers were required to call for “expressions of interest” from KLALC members for appointment as Aboriginal Liaison Officer. the remaining fragment of the minutes of which records “lengthy discussion” of the joint venture and 84 Which obliged Sanpine to use reasonable endeavours to give preference in employment to Aborigines.W.44 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council to the advertisements placed by the Management Committee. and may be a member of the Management Committee.2(b). on KLALC letterhead. who was Ms Carol Smith again by the time she gave evidence to the Commission.1 of the joint venture agreement. Whether the discussion at the meeting extended to nominations for the position is also doubtful. setting out the terms of clause 8 of the Agreement and seeking expressions of interests from the KLALC membership. In the meantime. for reasons which involved her personal domestic circumstances and were somewhat vague. As noted above. customs and practice of the eastern sea board of N.

The late Mr Charles Perkins did not give evidence to the Commission and it is unnecessary to make findings in respect of his role. It is possible that the position. Mr Adam Perkins went further. Mr Smith himself denied that anyone had raised the possibility of his appointment prior to the Agreement being executed.000 per year together with a car. which would become the property of Mr Smith after three years. on the other hand. The selection process on the KLALC side appears to have been a sham. There is no evidence that KLALC proposed Mr Bill Smith as a candidate. and clearly the driving force behind the Land Council. An important consideration in assessing the nature and existence of any conflict is the extent of disclosure to the interested parties. secondly. first. raising questions about the manner in which the joint venture © ICAC . the receipt of moneys from the joint venture in diminution of the potential payments to KLALC. the obligation incurred as Aboriginal Liaison Officer to promote the joint venture. not necessarily by reference to the appointment of any particular person. The Commission is satisfied that there was no real selection process: the Sanpine representatives. was included in the agreement as a means of providing for the on-going involvement of Mr Smith in a paid capacity. he did give evidence that Sanpine representatives had considered the appointment of Bill Smith as Aboriginal Liaison Officer prior to the execution of the Agreement. had he indicated his interest. but the Commission is satisfied that. which otherwise had no clear purpose in the context of the joint venture. but he was also a man with the age and experience which would have been hard to overlook had there been a genuine competitive selection process. Not only is he a person of forceful personality. Mr Adam Perkins and Mr Graham Steer each intended that Mr Smith be employed by the joint venture and be provided with substantial remuneration for that employment. though 86 Aboriginal Land Rights Regulation 1996. but the Commission is satisfied that. Mr Leece. the potential for conflict of interest which arose from this arrangement were. as defined in clause 30 of the Model Rules set out in the Land Rights Regulation. on the understanding that it would be open to other members of KLALC to apply for the position. It is sufficient to determine (and the Commission is so satisfied) that at the time of his selection by the Sanpine representatives. the relevant issue concerns disclosure to KLALC members of Mr Smith’s appointment and the benefits and disadvantages flowing from that appointment. rather than because she wanted the position. clause 30. How long before the date of the appointment they had reached that view is not a matter on which any firm conclusion can be reached.Chapter 5: KLALC – Sanpine joint venture – part 2 45 in excess of $60. Schedule 1. For present purposes it is neither necessary nor possible to resolve such matters. agreeing that he had directly raised with Mr Smith the possibility of his appointment. The vehicle provided was a Toyota Land Cruiser. it was because her father had encouraged her to do so. was conscious of the availability of the position and gave evidence that he had discussed the position with Mr Smith prior to the execution of the Agreement. and the role of the Chairperson of a Local Aboriginal Land Council. had clearly decided amongst themselves that Mr Bill Smith was the appropriate appointee prior to any possible interviews. He alone would appear to have satisfied the qualifications set out in the notice. On 19 August 1999 the Registrar appointed under the Land Rights Act received a letter from a firm of solicitors acting for a number of members of KLALC. Rather. if she did. Consequences of appointment In his letter inviting Mr Bill Smith to apply for the position. whether or not it was in the interests of KLALC and. prior to signing the Agreement. Mr Adam Perkins stated: I feel it would not create any difficulties in regard to your position as chairman of Koompahtoo and that your skills in this area would be invaluable. It is possible that some of those involved with Sanpine had expected Mr Bill Smith to take the position from the time the agreement was being negotiated. as set out in clause 8 of the joint venture agreement. it would have been most unlikely that any of his supporters or relatives on the Land Council would have sought to oppose him or compete with him. It is possible that Carol Smith expressed interest in the position.86 In broad terms. However. Whether similar views were held by Mr Charles Perkins and Mr Leece is unclear. No issue of disclosure to Sanpine arose: the Sanpine interests were clearly aware of Mr Smith’s position as Chairperson of KLALC and were also aware of both his employment as Aboriginal Liaison Officer and the payments agreed to be made to him. who were responsible under the Agreement for the appointment. The correctness of the assessment concerning the “difficulties” requires a comparison of the duties of the Liaison Officer.

For the purposes of dealing with this matter. apparently dating back to March 1999. which required disclosure at a meeting of the Land Council in accordance with section 56B(2) of the Land Rights Act. Chairperson. It appears that Adam Perkins.000. a meeting on 20 August 1997 considered an item identified as “job application. “copies of minutes of Local Aboriginal Land Council meetings convened since the date upon which the agreement with Sanpine Pty Ltd was entered into”. an officer from NSWALC and Mr Nicholas Dan. being the annual general meeting held on 15 December 1997.00 in bank a/c to pay for studies etc. each of which predated the formal agreement. 18 October 1999. being the date on which the agreement was executed.000 per year”. The short note from the minutes of 10 May 1999 contains little information but states.87 That request was made before the fire which destroyed KLALC records. Mr Bill Smith believed there was “a very small group of dissident members of our Land Council” who had been causing difficulties over a period of six months. p.46 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council had been entered into and was being administered. though not on “studies”. The letter refers to meetings on 10 July 1996 and 18 December 1996. until 8 December 1998. including a disclosure of “consultant wage $65.000 on signing. immediately after the dealings in relation to the mortgage had been completed. and (c) copies of the minutes of KLALC meetings were sought. KLALC’s solicitor. © ICAC . Those matters were apparently dealt with in the Chairperson’s report. As noted above. All of the details set out in the minutes appear to have been supplied to the meeting by the Chairperson delivering his report. as did Mr Sean Docker. No reference was made to the fact that that money was not in the joint venture bank account. That meeting was apparently called to discuss a proposed mortgage and rezoning of the land. in the Chairperson’s report: Joint Venture full steam ahead endorsed by all appropriate bodies. In relation to the meeting of 29 March 1999. presumably because it related to the joint venture agreement. liaison officer” and passed a resolution supporting the appointment of a liaison officer. which presumably refers to the payment being made to Mr Bob Scott. Charles Perkins and Bob Scott attended the meeting. A fifth meeting. occurring on 29 March and 10 May 1999 respectively. All Studies etc being carried out as required by lake Macquarie city Council. The minutes also note: $780. Mr Bill Smith was well aware that: (a) he was being asked whether he (or any other office-holder) had a direct or indirect pecuniary interest in the joint venture agreement. the meeting being eight days before the appointment was made. In responding to the Registrar. Mr Bill Smith is recorded as having participated in the discussion. Joint Venture major initiative of our members with 3 years of negotiation. (b) such an interest was required to be disclosed to NSWALC under section 56B of the Land Rights Act. noted the signing of the joint venture and the receipt of $100. According to his response. Open discussion took place regarding the Joint Venture to clarify concerns and misunderstanding by members. KLALC. Steve Griffen – expressed he had some concerns but after looking into with further discussions he now supports it. the Registrar sought from KLALC. There was a third meeting on 14 July 1997. There is no reference to any disclosure up to that time relating to Mr Smith’s position as Aboriginal Liaison Officer. apparently. A section of those minutes was provided to the Registrar. there is extensive information provided concerning the joint venture. as being relevant to the determination of the issues under consideration. Two further meetings are identified in the letter to the Registrar.2 at paragraph 5. In relation to the Registrar’s inquiry as to whether any 87 Letter from Registrar to Mr Bill Smith. nor to the fact that more than half had been expended almost immediately upon receipt. No further meeting discussed the joint venture. One question raised was whether the Chairperson had a pecuniary interest in the joint venture. There is a reference to the joint venture taken from the minutes of the annual general meeting held on 21 December 1998 which reads as follows: Glen Green – questioned the development. One may infer that the minutes provided to the Registrar were all of those dealing with the joint venture. In response a letter dated 3 November 1999 provided “extracts of minutes regarding the joint venture agreement”. amongst other things.

I am firmly of the belief that when this section of the Joint Venture Agreement is Read in conjunction with Schedule 1 – Model Rules for Local Aboriginal Land Councils. had approved the joint venture and. had placed himself in a position of conflict in accepting the position of Aboriginal Liaison Officer under the joint venture agreement. not Mr Smith’s position.Chapter 5: KLALC – Sanpine joint venture – part 2 47 office-holder had a pecuniary interest in the joint venture. meetings of the KLALC. It was. Corrupt conduct? – Mr Bill Smith In the course of the hearings held as part of this investigation. The Commission infers that the Registrar was not told of the remuneration payable to Mr Bill Smith. For example. a meeting apparently took place between the Registrar and the KLALC Treasurer (Mr Steve Griffen) and its Co-ordinator (Mr Robbie Briggs).094. nor does the Registrar refer to any salary payable to Mr Smith as Aboriginal Liaison Officer in the reasons he provided for his decision not to refer any issue to the Land and Environment Court. Objects (a)-(i) inclusive no pecuniary interest either of a direct or indirect nature exists in relation to this matter. Before turning to that question. as Chairperson of the KLALC. Clause 5. Smith & Sons. Between 24 September and 18 October 1999. However. however. by resolution. be proportionately reduced by the amount of the remuneration paid to Mr Bill Smith as Aboriginal Liaison Officer. and (e) KLALC’s share of the profit would. had © ICAC . either directly or indirectly.” Apparently it was disclosed at that meeting that Mr Bill Smith was the Aboriginal Liaison Officer for the joint venture. together with the provision of a four-wheel drive vehicle and payment of on-road costs. A different inference might be drawn if the KLALC. the Registrar did note in his reasons that he had been supplied with a transcript of a Local Court hearing which apparently contained evidence that Mr Bill Smith received “approximately $400. Mr Smith replied: No. if the Sanpine representatives had offered the Chairperson of the KLALC an attractive financial package on condition that the KLALC entered into an agreement with the Sanpine interests. 1999 noted that in addition to the Treasurer and the Co-ordinator. (c) the accounts of the Sanpine parties reveal that payments to Mr Bill Smith’s consultancy firm. Mr Smith had been at the meeting accompanied by two other KLALC representatives and “three representatives of Sanpine Pty Ltd. In substance. on the findings made above. (d) in accordance with the terms of the joint venture agreement. the interest involved payment of a monthly stipend of $5. Some circumstances examined here clearly fall within the scope of that concept: others may be less clear.00 per week from the KLALC”. At this point in time transparent application and allocation procedures will be implemented. I have enclosed a copy of that section of the Joint Venture Agreement which deals with that position.000 during the period 28 August 1997–31 March 2003. in full understanding of the nature of the agreement. The Commission is satisfied as to the following matters: (a) on and from the date of his appointment on 28 August 1997 as Aboriginal Liaison Officer for the joint venture. it is appropriate to return to the question of “corrupt conduct” for the purposes of the ICAC Act. accordingly. at least in 1999. that is not this case. By letter dated 3 November 1999 Mr Smith responded to the Registrar. accordingly. The Registrar noted that there was no evidence linking that statement to the joint venture agreement. However. An indirect pecuniary interest may arise in the future when blocks of land are to be allocated to members of KLALC as per the joint venture agreement. The Registrar’s letter of 18 October. payments to the Aboriginal Liaison Officer constituted costs of the joint venture to be accounted for prior to the ascertainment of any profit. some attention was paid to the question whether Mr Smith. or non-participation in. (b) although the details of the arrangement were not settled until some weeks later. the honest or impartial exercise of official functions by a public official. There is no reference in the correspondence to any salary. stating in part: As you are aware I am the Aboriginal Liaison Officer for the KLALC/Sanpine Joint Venture. corrupt conduct includes any conduct that could adversely affect. as an employee of the joint venture. corrupt conduct would be readily established. that there was anything which required disclosure to. Mr Bill Smith had a direct financial interest in the joint venture agreement. exceeded $400.

designed to hide the fact that decisions had already been taken.094. the KLALC accountant and auditor. the Commission is satisfied that before the matter was considered by the KLALC. presented a proposal to Sanpine. bearing the date 4 September 1997 and apparently signed by the Treasurer and Secretary of KLALC respectively. The then Treasurer. but could not recall signing it. the Commission is satisfied that the statements were prepared.000”. we © ICAC would welcome your consideration of this matter. In the minutes of the latter meeting there is a somewhat cryptic reference to the Chairperson’s explanation “that all times Aboriginal will be employed”. together with lease payments on a 1996 Toyota Landcruiser. denied that the signature over her name was in fact her signature. like the letters. on behalf of Mr Smith. The day after the dates on the two formal letters of approval from the Treasurer and Secretary. in a written statement provided to the Commission. in response to the request from Mr Adam Perkins. Although no formal agreement appears to have been entered into by the parties. First. Mr Richard South. for an annual salary package of $100. There is no suggestion in . Ms Jill Jessop. the Commission is satisfied that: (a) Mr Bill Smith was employed by the joint venture as Aboriginal Liaison Officer. Thirdly. however informally. any recommendations you may have and your Committee’s endorsement of this appointment. acting on behalf of Mr Bill Smith’s company. the printed transmission details at the top of the sheets indicate that both were sent within a 15 minute period on 2 January 1998. At about the same time. Paragraph 4 of that memorandum stated: As the executive of Koompahtoo you are requested to indicate if you have any difficulties with Sanpine appointing Bill Smith to the position of liaison officer. sent by facsimile to the KLALC office. Why that should have happened is not known. reporting on Mr Smith’s appointment. (b) his remuneration included a monthly salary of $5. which was transferred to Mr Smith after approximately three years. Who received this memorandum. there is a memorandum from Mr Adam Perkins of 29 August 1997. however. do not refer to that position. on KLALC letterhead. to give the appearance that the appointment of Mr Bill Smith was made pursuant to appropriate procedures. Two short statements.717 per month “plus a car to the value of $30. Nor is there any reference to it in the somewhat brief minute of the discussion at the Land Council meetings on 10 July and 18 December 1996. still exist. She believed that Mr Bill Smith had asked her to do so. The joint venture management committee minutes of 18 September 1997 (undated) refer to an employment contract with Mr Smith to commence on 1 September 1997. The Commission is satisfied that there was no appropriate disclosure to the KLALC membership of the proposed employment of an Aboriginal Liaison Officer prior to the execution of the formal agreement on 14 July 1997. although there was undoubtedly discussion of such an appointment at a KLALC meeting on 20 August 1997. is not known.000. Secondly. Ms Jill Jessop accepted that her signature appeared on the letter. Apart from the arrangements for interviews discussed above. the Sanpine representatives had already decided that Mr Bill Smith would be the Aboriginal Liaison Officer and had communicated that intention to him. This is. that Sanpine shall use reasonable endeavours “to ensure that throughout the term of the joint venture all contractors and subcontractors offer employment to local Aboriginal people where they have appropriate skills”. the Heads of Agreement considered in late 1996 and apparently executed in January 1997. with an agreed salary of $4. care of the Secretary. the Commission is satisfied that there was no discussion or approval of the Chairperson as an applicant. a matter of courtesy and co-operation as Sanpine has an obligation to appoint the liaison officer … . Although the facsimile cover sheets.48 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council authorised its Chairperson to apply for appointment as the Aboriginal Liaison Officer. addressed to the KLALC Executive Committee. at least in circumstances where the obligations and remuneration were known at the time of the approval. Attempts to convey an open and transparent process were a sham. But that is not the case here either. Thus said [sic]. However. although there was evidence that the concept of an Aboriginal liaison officer was discussed during 1996. are dated 4 September 1997. which is noted in the short form of the agreement. Smith & Sons Consultancy Pty Ltd. however. The differences need to be noted. However. nor was there any discussion or approval of a remuneration package. In relation to the other statement. and (c) the details of the remuneration were not made known in any appropriate manner to the members of the KLALC. Mr Steer provided a draft agreement. that is most probably a reference to the obligation on the part of Sanpine.

The Commission is unable to determine the source of that information. who was one of Mr Bill Smith’s sons. His obligations as Aboriginal Liaison Officer. at a formal meeting. Mr Malcolm Smith gave evidence that he had learned the amount of his father’s remuneration package at a management committee meeting. Mr Ray Roberts was wrongly identified in the minutes as “Ray Smith”: whether he was in attendance is not entirely clear.) However. that he did not see any necessary conflict between the interests of the Land Council and the interests of the joint venture. The point made by Mr Bill Smith in his evidence was. it was the only meeting he attended. At numerous points. when the question of disclosure was raised in late 1999. Accordingly. Despite his apparent attendance at numerous joint venture management committee meetings. rather than a true recollection. the Commission is satisfied that he had very little knowledge about the matters on which he spoke. other than Mr Bill Smith. on the other hand. the exercise of their functions by other members of the KLALC Executive. The manner in which he gave his evidence strongly supports that view. in the case of Mr Malcolm Smith. It is also surprising that the Registrar was not given that information. had. Further. but it does not matter for present purposes. in-principle manner and without any detailed understanding of the financial feasibility of the venture or the relevant respective obligations and rights. The other KLALC representative was Mr Malcolm Smith. He also asserted that the amount was discussed at a meeting of KLALC members. it is startling that no other witness before the Commission was able to recall that fact. If such a meeting did occur. namely that the Land Council. merits which happened to coincide with his own financial interests. The first was the fact that. with disparate interests and personalities. The second matter of concern is that referred to above. It is quite possible that he knew in broad terms the nature of the remuneration that his father was receiving from the joint venture as Aboriginal Liaison Officer. (These considerations will be addressed later in this report. there is no suggestion in the minutes that he contributed anything to the discussion. reports from its Chairperson in relation to the joint venture. and the remuneration package was clearly identified for KLALC members. Often he asked for questions to be repeated in circumstances where they were not complicated or unclear. directly or indirectly. from time to time. when dissent arose in early 1999. the first question is whether his failure to reveal his own financial interest in the joint venture affected. in the interests of his family. The Commission is satisfied that that information was not conveyed to any general meeting of the KLALC. the extraordinary arrangements adopted by the joint venture management committee to prevent the dissemination of financial material would have been fruitless. but if he was. the details of his remuneration package. in substance. He clearly drove his father to a number of meetings but was otherwise vague as to the arrangements. accordingly. However. for the further evaluation of KLALC members. two factors did not permit the assumption of congruence of interests between KLALC and Sanpine Pty Ltd as its fellow venturer. Many of his answers appeared to be constructed according to his understanding of what might be the best thing to say. no knowledge of the financial interest its Chairperson had © ICAC . That was because KLALC had properly approved the joint venture and was. which suggests that the arrangement was presented largely as a fait accompli. Of the two KLALC representatives at the meeting. the Commission is satisfied that it did so only in the broadest. That meeting he said occurred about three months after the appointment. It was information which Mr Bill Smith was anxious should not be disclosed and the Commission is satisfied that Mr Malcolm Smith would have understood that at all relevant times and would not have revealed what he did know to people who did not share his father’s interests. These considerations suggest that Mr Malcolm Smith’s evidence in this regard was incorrect. the honest and impartial exercise of his functions as Chairperson or. on the factual findings already made. More importantly. who attended the KLALC meeting. there might be merit in that response. to the extent that KLALC had approved the joint venture. Other things being equal. to promote the merits of the venture. It will be necessary to consider shortly whether that constitutes a contravention of section 56B of the Land Rights Act. However. in receiving. required him. His own evidence in relation to the activities of the joint venture did not suggest that he was actively involved. for present purposes. if that information was publicly available in the manner suggested. the Chairperson of the Land Council should have been in a position to provide a dispassionate and detailed statement of such matters. the Commission is satisfied that Mr Bill Smith himself did not disclose to the KLALC. subject to the general difficulties arising from having such a broad-based community organisation. his evidence gave the appearance of a reconstruction of events. and the announcement was made by Mr Charles Perkins.Chapter 5: KLALC – Sanpine joint venture – part 2 49 the minutes that Mr Bill Smith absented himself from the discussion. indeed. bound to participate in it in good faith. contractually bound to a major commercial enterprise.

largely at his instigation. Similarly. at least in written communications. included payments to the Chairperson. the terms of which have been set out above. Brief reference has been made to Mr Bill Smith’s background and experience. the disclosure required is relatively limited. section 56C(1. 1999. and perhaps particularly employed staff of NSWALC. Public service can provide personal rewards. direct or indirect. however. The third issue concerns disclosure of the nature of the interest at a meeting of the KLALC. in turn. The perception of a need for any such determination would have been inconsistent with Mr Smith’s expressed views in 1999. due to his own failure to make proper disclosure of his interests and his own failure to ensure that KLALC members were fully informed as to the terms of the joint venture. in the Commission’s view. There is no evidence of any such decision by office-holders in any of the material supplied to the Registrar. but the occasions in December 1997. whilst perhaps naïve. On the basis of the material supplied to the Registrar (which included no such record) the Commission is satisfied that that provision was not complied with. and that of his immediate family. or to the Commission. He appears to have adopted a similar position. with the Registrar. Importantly for present purposes. unless the office-holders of the Council had otherwise determined.88 The opinions already expressed would. namely that he had no pecuniary interest. it may be argued that the omission to keep the record does not 88 See Chapter 2. according . Further. It was put to the Commission on Mr Smith’s behalf that he was “a man of lofty ideals but poor in his skills to realise them”. There were lengthy and sometimes heated exchanges which took place between KLALC officers (and particularly Mr Bill Smith) and officers of NSWALC over the proposed mortgage of the land in late 1998. that he was oblivious to opportunities to improve his own financial position. Mr Bill Smith was not. 1998.89 no obligation to keep such a record is imposed by section 56B(4) on any particular individual. 89 See Land Rights Act. 2000 and 2001 on which he resubmitted himself to the members for election as Chairperson for a further year. permit the tribunal to be satisfied that Mr Bill Smith had a direct pecuniary interest in the joint venture during the period over which the Land Council was considering its involvement in it. being an aim consistent with his position as “an Aboriginal elder steeped in his cultural heritage”. To an extent. It was further put that. Accordingly. Section 56B further requires that particulars of any disclosure be recorded in a book kept for the purpose. During those exchanges. his primary aim was to improve the position of “his people”. For this purpose. which is to be open for inspection. It would have been sufficient for the Chairperson to disclose that he was employed by the joint venture as Aboriginal Liaison Officer. Mr Smith is clearly a man with a deep commitment to the improvement of the social and economic conditions of Aboriginal people generally. in a position to exercise his functions as Chairperson honestly and impartially. Whilst a failure to comply with “section 56B” constitutes an offence. Mr Bill Smith had more than one occasion to consider his position. Such participation by the Chairperson was a breach of section 56B(5). Those expenses. the absence of such a record is at least consistent with the absence of any proper disclosure being made by the Chairperson. Mr Bill Smith adopted a position of righteous indignation that anyone. That does not mean. The jurisdiction of the Commission is engaged. those deliberations included the mortgaging of the whole of the Morisset land to cover expenses of the joint venture. The impropriety of this should have been fully apparent to a Chairperson acting reasonably and in the interests of the Land Council. it would be open to the tribunal of fact to be satisfied that the interest appeared to raise a conflict with the proper performance of the office-holder’s duties in relation to the consideration of the matter. the Commission can accept these submissions.50 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council in maintaining and promoting the joint venture. in both financial terms and in terms of power and social status. The absence of any reference in the minutes presented to the Registrar (being the only extant minutes) of an express disclosure in those terms. The provision of most immediate relevance is section 56B of the Land Rights Act. would permit the tribunal of fact to be satisfied of that limb. The next question is whether the conduct may also involve a criminal offence. could question the value or propriety of the joint venture to which the Land Council was committed. at a point where. © ICAC itself constitute an offence. The extant minutes of KLALC meetings show that the Chairperson was heavily involved in discussions at those meetings in relation to on-going decisions with respect to the joint venture. That was not merely the time at which he accepted the position as Aboriginal Liaison Officer and negotiated a very favourable package for himself. if adopted by a relevant tribunal of fact. for the reasons set out above. For present purposes the need to keep a record indicates the degree of formality which should attend a proper disclosure.

the discussion. Accordingly. There was ample evidence to establish that Mr Bill Smith had a direct pecuniary interest in the joint venture. Since there was significant expenditure immediately following draw-down. When challenged by the Registrar in 1999. it is unlikely that he would be have been supplied with detailed information. namely that no details of expenditure would be released beyond management committee meetings because the expenditure had been incurred by Sanpine Pty Ltd and was “confidential information”. Such selectivity was not a function of naivety or cultural heritage: it was motivated by self-interest. and failing to disclose the conflict to KLALC. Indeed.Chapter 5: KLALC – Sanpine joint venture – part 2 51 to the law. The Commission does not recommend that consideration be given to such charges in respect of this conduct. the Commission is satisfied that in mid-1997 (and subsequently) Mr Smith was aware of the structure and terms of the Land Rights Act and the Model Rules under which he operated as Chairperson of the Land Council. As will be seen below in relation to the establishment of a trust. prior to the inquiry by the Registrar of the Aboriginal Land Rights Act. to protect not only the interests of the Land Council. An audit of the expenses was to be deferred until the rezoning of the land had occurred. he was happy to adopt legal devices of some sophistication. He was also content to ignore advice which did not. which was a matter being considered from time to time by the KLALC. with the Registrar. Accordingly. © ICAC . which suited his purposes. As his negotiation with the Sanpine representatives indicated on more than one occasion. This evidence. it is now too late to consider laying charges against Mr Smith for a criminal offence. suggests that even if Mr Griffen had asked. which had commenced almost 18 months earlier in September 1997. the Treasurer and a member of the joint venture management committee was the person most likely to have known about the arrangements between the joint venture and Mr Bill Smith. the minutes suggest that the first committee meeting he attended was that of 16 February 1999. so that a tribunal of fact could have found that he was guilty of an offence under section 56B of the Land Rights Act. but also his own private interests. details would not be supplied. so far as his role on the management committee was concerned. might appear unconvincing. it would have been on conditions as to confidentiality. all of whom were acting within a system which was ripe for personal exploitation and some at least of whom failed to curb appropriately their pursuits of personal gain. and because Mr Griffen was vague as to the timing of any request he may have made. the serious aspects of the conduct occurred in the early days of the joint venture. After some years as Chairperson of the Land Council. Other participants – Mr Stephen Griffen Of the members of KLALC. he was not necessarily the dominant force in the transactions the subject of consideration by the Commission. of which he was Chairperson. which is dealt with in more detail below. it is clear that Mr Bill Smith was a dominant force in KLALC. that until they were expended. This is because such offences under the Land Rights Act are summary offences and prosecution action must therefore commence within six months of the commission of the offence. he was one of a group of players. If it had been supplied. Mr Griffen said in evidence that he had asked Mr Graham Steer for details of the funds that were drawn down on the mortgage and was told. in effect. engaged in corrupt conduct in relation to his conduct in accepting paid employment as Aboriginal Liaison Officer for the KLALC–Sanpine joint venture in circumstances where there was a conflict of interest in relation to his role as Chairperson of KLALC. However. The Commission is satisfied that Mr Bill Smith was conscious of the need to exercise his position as Chairperson of the Land Council with propriety and according to the law. At no stage did he plead ignorance of its requirements in his dealings with NSWALC. this evidence. the pursuit of private interest has negatively affected the public official’s public official duties and his or her obligation to serve the public interest. Section 74A(2) statement – Mr Bill Smith Although Mr Smith’s conduct continued over a period of years. taken in isolation. Through a strong and engaging personality. it ceased more than two years ago. he sought legal and accounting assistance where necessary. Although arrangements with respect to the Aboriginal Liaison Officer’s remuneration and vehicle were discussed at that meeting. he was prompt in his responses and called in aid various provisions of the Land Rights Act and Regulation. Those events took place more than five years ago. former Chairperson of KLALC. Rather. or with the Commission. the Commission is satisfied that Mr Bill Smith. However. There was also sufficient evidence that he had not disclosed the nature of his interest. the relevant context is provided by the common position of the Sanpine representatives on the joint venture. concerned administrative matters in relation to the employment. However. Mr Stephen (Steve) Griffen. as recorded in the minutes.

The Commission is satisfied that Mr Griffen was. Mr Griffen appeared before the Commission to be a shrewd and articulate man. Mr Griffen was Treasurer of the Land Council for approximately 11 of the 12 years preceding the appointment of the KLALC administrator. KLALC representatives. to your knowledge. and it — Q: Sorry. His answer was that he did not because he saw it as the Aboriginal Liaison © ICAC Officer’s job to report back to the KLALC. that’s all. a cheque for his wage. As a result. the mortgage draw-down was deliberately diverted from the joint venture bank account into Sanpine’s bank account. Mr Bill Smith was his uncle. at all times between 1996 and 2002. but certainly I didn’t query it. it did get out there eventually. including its expenditure on the Chairperson of KLALC in his role as Aboriginal Liaison Officer. As already noted. who were required to be joint signatories of the joint venture bank account. you were going to go on? A: No. However. Q: When did you find that out? A: It was. a loyal lieutenant of Mr Smith. I knew of it. Rather. Mr Griffen was also asked about whether. in relation to the arrangements with Mr Bill Smith in the position of Aboriginal Liaison Officer. yeah. Between 16 February and 18 February 1999. each was involved in devising. The Commission is not satisfied that Mr Griffen’s participation in these events satisfied the statutory concept of corrupt conduct. or consenting to. a scheme which would prevent the disclosure of such information until at least the rezoning of the land was effected. that he failed to carry out his obligations as an office-holder of the KLALC in relation to the issues discussed above. but I mean to say.000 a month? A: At that — well. wages are certainly something that I would have seen as ethical and it was confidential. when Bill had the car and he up and working and I went to one of the management team meetings after I’d come back and he was handed his wage — sorry. did you know if it became known amongst the members of the Koompahtoo community that he was earning $5. as a member of the joint venture management committee. There was no aspect of the arrangements which were the subject of evidence before the Commission in relation to which Mr Griffen exercised any independent judgment. Mr Scott and Mr Adam Perkins were each fully aware of the details of Mr Bill Smith’s appointment and remuneration package. There is little doubt.000 of the moneys drawn down under the mortgage. he had reported back to KLALC as to what he had been told at management committee meetings. the joint venture disbursed more than $430. [Mr Davies] Q: Did you subsequently find out about the salary and the car? [Mr Griffen] A: I did. His position in that regard is assessed below in the context of the evidence of Mr Robbie Briggs.000 and something dollars for a month. Q: Did you see how much that was? A: It was 5. who was employed by the KLALC as its Co-ordinator and Mr Richard South.52 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council This conclusion does not entirely exonerate Mr Griffen from responsibility for the failure of the joint venture to provide KLALC with appropriate details of expenditure. Other participants – Sanpine representatives The involvement of the Sanpine representatives carries quite a different complexion. he betrayed the trust which the members had. To that extent. Q: Was it included in the expenditures as detailed by Mr Scott at the joint venture meetings? A: No. he gave the following evidence in response to questions from Mr Bill Smith’s counsel about his knowledge of Mr Smith’s remuneration as liaison officer. In the Commission’s view. were not . an independent accountant who was responsible for the preparation and audit of the KLALC’s annual accounts. placed in him. … Q: Do you know. They were also aware of how this package was provided. over more than a decade. although he was capable of giving evasive answers if he foresaw trouble in a line of questions. When I went to that management team meeting. Mr Steer. He was capable of doing so: he just did not see that as his role. which was something he said that Mr Bill Smith did. I guess. However. however. his sins were those of omission by playing a passive role in relation to the possibility of subsequent disclosures to the KLALC membership. Mr Griffen was not on the management committee at the time those arrangements were put in place and there was no evidence that he was party to them.

Messrs Adam Perkins. in almost identical terms. Charles Perkins. At Mr Scott’s instructions. faithfully provided to members at the meeting. The ‘expenditure to date’ is at the cost of Sanpine. two days before the extraordinary general meeting took place. 19 March 1999. Walmsley. By this stage. The answers set out above find their origin. During the same month.000 drawn down under the mortgage. as typed by Mr Scott were. totalling $65. had been appropriated. We understand that you. In his management report for the period 8 June 1999 Mr Scott had reported: A considerable amount of my time has been taken up with the problems brought about by the internal disruption of Koompahtoo. These facts were well known to Messrs Scott and Steer. together with others. and by inference to Mr Perkins. a draft letter had been prepared by solicitors.000 of expenditure. a set of answers was prepared by Messrs Scott. it is clear that the finance was obtained for the sole purpose of the joint venture. the extraordinary general meeting of KLALC had been requisitioned and held. it will be recalled. an extraordinary general meeting of members of KLALC was sought by the “dissidents” who posed a series of 13 questions in relation to the joint venture including a request for up-to-date information as to the expenditure of the $780. were asking questions about the joint venture expenditure. in contravention of the joint venture agreement. These statements were at least grossly misleading. They included the following propositions: It is not correct to say that Sanpine has put in ‘no cash or equity’. Lesley Molony and Graham Steer had executed a deed which commenced with the following recital: Sanpine and Koompahtoo have on or about the 14th July 1997 entered into a joint venture agreement and whereas they now wish to obtain finance to assist with the joint venture and whereas Koompahtoo are required to mortgage the land … Neither the Sanpine directors nor the company itself could properly deny any aspect of these recitals. in a facsimile sent by Mr Steer to Mr Scott on 25 May 1999. have requisitioned an extraordinary general meeting of the Local Council in relation to criticisms of the elected executive on grounds of: n n n ‘mismanagement’ ‘failure of duty of care’ ‘failure to work in the interests of members of the Local Council’ © ICAC . being the “troublemakers”. 14 April 1999 and 16 May 1999 contain no record of that expenditure. in an amount totalling $500 is dutifully minuted at a time when members of the KLALC Land Council. into the bank account of Sanpine Pty Ltd. Madgewick [sic] – solcitors [sic] (consultant Philip Penman) on behalf of Sanpine to the 13 members who petitioned for the extraordinary meeting of the KLALC. The answers. on 27 May 1999. according to the evidence. Steer and Adam Perkins. Their truth depended upon the fact that the funds drawn down under the mortgage. A further question asked why the project was to be “wholly financed on borrowed money and why. That which is included. For the purposes of the extraordinary general meeting. The draft letter contained the following statements: We act for Sanpine Pty Ltd who is the Joint Venturer of Koompahtoo Local Aboriginal Land Council (“the Local Council”) in the development of land at Morisset. The willingness of the joint venture (meaning presumably Sanpine) to cover the costs of a barbeque only on presentation of receipts.Chapter 5: KLALC – Sanpine joint venture – part 2 53 required to sign cheques for those disbursements. Accordingly. The minutes of the joint venture management committee for meetings held on 16 February 1999. The only relationship to the KLALC is the fact of the security of the land for the borrowings. The expenditure is confidential to Sanpine. On 20 November 1998 Sanpine. Sanpine has funded and/or underwritten the project from the start. The minutes of the 14 April 1999 meeting contain reference to receipts not being received for a donation to a KLALC barbeque in an amount of $500 and contain details of proposed expenditure on consultants preparing reports to go to the Shire Council. May 1999. The question of the need for an audit was in fact dealt with in the minutes of the joint venture management committee of 9 June 1999. I drafted and arranged letters to be sent via Garrett. described in the minutes of 16 May 1999 as “KLALC troublemakers”. The project manager’s report of 12 May 1999 referred to the need to give consideration to “taking legal action against the offending parties”. in support of the rezoning application. held on 27 May 1999. merely tends to highlight that which was omitted. whilst the Land Council was providing the land. Sanpine was providing no cash or equity”.

In short. he believed that if the expenses were not incurred until the rezoning then the audit of the Joint Venture could be deferred. the local Council and our client are substantial and could well exceed $1 million. It may have been done to prevent information concerning the expenditure becoming available. who intended it to be sent. which were signed by Mr Steer as chairman of the management committee. reads as follows: Billy and Bob then raised the issue of the upcoming Audit and in particular the cost to the Joint Venture. and had the account been audited. Mr Steer sought to say. was the repayment of a loan obtained by Mr Scott’s partner for the purchase of shares in Sanpine. However. In his evidence.000 and the repayment of the loan to Mrs Elaine Perkins in the amount of $183. These concerns were so strongly held that. that a reporter from the 60 Minutes program had been investigating the joint venture arrangements and had met with Messrs Charles Perkins. n … The necessary implication of the material contained within the requisition is defamatory of our client. By the time the joint venture management committee met on 9 June 1999. an audit might have revealed the amounts paid on account of Mr Smith’s motor vehicle lease. An attempt by KLALC members to have that information made available was firmly rejected at the extraordinary general meeting of the Land Council held less than two weeks earlier. payment to Bronzewing Property Holdings Pty Ltd on behalf of Mr Scott’s salary in an amount of $105. would have taken whatever position Mr Bill Smith took. perhaps faintly. that what occurred at the meeting on 9 June 1999 was confirmation of a position which had been reached earlier. had the mortgage amounts been paid into the joint venture account. The meeting resolved to defer the appointment of an auditor of the Joint Venture until the rezoning. The chairman [Steer] advised that whilst there is a requirement under the Joint Venture for an audit. There is no recorded resolution of the joint venture management committee approving the payment of the 90 Minutes. except to the extent permitted by the Sanpine representatives.90 . namely Mr Stephen Griffen and Mr Malcolm Smith. © ICAC moneys into the Sanpine account. It is likely that an audit of the joint venture expenditure as at 30 June 1999 would have revealed payments to Mr Bill Smith’s company of approximately $116. He confirmed that Sanpine has no requirement for an audit.000. The Commission is satisfied that Mr Perkins and Mr Steer shared that concern and that the other KLALC representatives. We have been instructed to obtain Senior Counsel’s urgent advice as to what action should be taken against yourself and any of the following … .000. that the audit of these expenses could be deferred until the rezoning. The next paragraph of the minutes. pages 1-2: emphasis added. Before leaving the joint venture management committee meeting of 9 June 1999.314 which. The persons who apparently raised the question of the audit at the meeting of the management committee on 9 June 1999 were Mr Bill Smith and Mr Bob Scott. The Commission is satisfied that that is not the case. the Commission is satisfied that a draft in similar terms was prepared by Mr Scott. it is convenient to note the statement recorded in the minutes concerning the meeting with the reporter from the 60 Minutes program: Adam Perkins then advised the meeting that Charles. as will be noted below. The damages that are likely to be suffered by the Joint Venture. It is clear that by 9 June 1999 the management committee was committed to not revealing details of the expenditure. After much discussion it was agreed by all members of the committee that because of the expense of the audit and the fact that at present the expenses of the JV are being incurred by Sanpine Pty Limited on behalf of the Joint Venture. as noted above. Adam Perkins and Graham Steer.54 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council n ‘failure to inform membership of matters of critical importance’ ‘failure to keep accurate records etc’. In addition. it appears. which was out of the reach of those members of the Land Council who were asking questions. Mr Scott and Mr Bill Smith would undoubtedly have been asked by the “dissidents” to explain payments to them or their associates totalling in excess of $400. as recorded in general business. Graham and himself had met with the reporter and the reporter confirmed that based on his research that there were only a handful of troublemakers that were not representative of the aboriginal community and the Land Council. they resulted in the executive of KLALC taking the extraordinary step of transferring the Morisset land from the Land Council to a trust company. 9 June 1999. Whether the letter was sent or not was a matter of dispute. at any time.

On 4 October 2000 Mr Briggs wrote to Mr Steer and to Mr Scott stating: Koompahtoo members moved a Motion unanimous that Sanpine be asked to present to Koompahtoo LALC a written updated fully financial and progress report ($780. it appears that Mr Briggs was seeking on behalf of KLALC an advance of $50. On 13 December 1999 Mr Graham Steer sent Mr Richard South. nor is it a full record of all joint venture expenses. Mr Griffen did not attend any meetings in the previous financial years. the only reference to the joint venture (if it is in fact the Morisset land joint venture) is an item of receivables “by auditor of the Land Council” being $2. Mr Bill Smith’s representations to the Registrar were that he enjoyed no pecuniary interest in the joint venture and that the expenditure of the joint venture was confidential. including the Treasurer and Co-ordinator and three representatives of Sanpine. The Commission infers that he was supported in that position by the Sanpine representatives.875. In fact the minutes produced by Sanpine indicate that only five meetings were held in that financial year. There is no evidence before the Commission that. Mr Briggs’ response of 24 November 2000 exhibited some bitterness. The further inference which should be drawn for present purposes is that Mr Adam Perkins. He also referred to “the current excellent working relationship” between Sanpine and KLALC. Nor did they leave that exercise to Mr Smith and his son and nephew.300. As already noted. drafted by Mr Steer and presented at the extraordinary general meeting by Mr Scott and Mr Adam Perkins. which Mr Steer refused. This account is not consistent with the proposition that the expenses of the joint venture were all being paid by Sanpine. beyond the members of the joint venture management committee.800 with respect to the joint venture.Chapter 5: KLALC – Sanpine joint venture – part 2 55 The solicitor’s letter arranged by Mr Scott was addressed to 13 members. The inference which the Commission draws is that the concern of the joint venturers was not that the dissidents were sufficient in number to gain control.000 from Sanpine. a document entitled “Financial Accounts for the Year Ended 30 June 1999” in relation to the joint venture. A figure of $25. but not the vehicle lease expenses or the remaining seven month’s salary. is an unknown fact. to say the least. A joint venture management committee meeting held on 16 October 2000 made no reference to this request. In the evidence before the Commission. The accounts suggest that Malcolm Smith and Stephen Griffen. contained no reference to the liability recorded in the joint venture accounts.478 is recorded for “Aboriginal liaison”. liability for which is said to be shared equally between Sanpine and KLALC. That document is sparse. the inquiry undertaken by the Registrar appointed under the Land Rights Act. It stated: © ICAC . Of the items over $500. who appear to have been Messrs Scott. A year later. referred to “issues associated with” the dissident group and the discussions about the possibility of transferring the joint venture land into a trust. both Mr South and the Co-ordinator. As already noted. Adam Perkins and Steer. of the remuneration package enjoyed by Mr Bill Smith. at any stage. It records an operating loss of $36. this document is unclear. as accountant for KLALC. during the period from February to June 1999. must have attended 13 meetings at the approved rate of $100 per meeting. It will be necessary to return to this inference in relation to the next topic. in its essence. How many supporters those requisitioning the meeting could have relied on if the continuance of the joint venture had been put in issue. By late October 1999. The “Aboriginal liaison” figure appears to cover five months of Mr Bill Smith’s salary.500. That process continued up to.89. $7. Indeed. namely the transfer of the land to a trust.200 and a fee paid to the City Council. but that the financial arrangements should not become public because they might be thought to reveal impropriety. they ever commanded a majority of KLALC members. Mr Robbie Briggs. and included. Each of them was an active party in the process by which all details of Mr Smith’s financial interest in the joint venture were concealed from the membership of KLALC. the claim of confidentiality in relation to financial details was. those who called the meeting were consistently described as a “small group” and as “disruptive”. The basis of these calculations is not known. were becoming impatient with the lack of information. Mr Graham Steer and Mr Bob Scott. as at 30 September 1999. Mr Bill Smith’s report. The KLALC balance sheet prepared by Mr Richard South. Whether anybody cared about.000 loan) by the end of October 2000 and that they table the such report at a meeting immediately after the 13 September 2000. each sought to avoid the revelation. as Aboriginal Liaison Officer. When Mr Bill Smith met the Registrar on 14 October 1999 he was accompanied by four members of KLALC. each of whom was paid $1. or even read. the meeting expenses paid to KLALC representatives for attending joint venture management committee meetings total $3.

Indeed. The legal basis for the second proposition is unclear: for example.1 Koompahtoo LALC are required to disclose in their financial statements any liabilities relating to their interests in joint ventures. the mortgagor (KLALC) agreed to provide the security. Mr Steer’s justification for the first proposition appears to arise from the fact that the “borrower” identified under the mortgage was Sanpine Pty Ltd. “These expenses will be to the account of the joint venture only when the development application has been finalised”. 9. it is at least difficult to argue that Sanpine was solely entitled to the money received from Inteq. The registered mortgage was apparently signed by the mortgagor and the mortgagee and was dated 15 February 1999. Sanpine treat the Members of Koompahtoo LALC like mushrooms ‘feed them shit and keep them in the dark’. The mortgagor and mortgagee are identified as KLALC and Inteq Custodians Ltd. Koompahtoo LALC are also required to disclose details of any revenue. the mortgagor and Sanpine Pty Ltd by the mortgagee to the mortgagor or so much thereof as shall remain unpaid twelve (12) months from the date of this mortgage. both Messrs Scott and Smith were employed by the joint venture – there was no © ICAC written agreement or resolution of the joint venture management committee which imposed any obligation on Sanpine to meet their expenses.4 and 10.56 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council We thank you very much for not helping us out of our short term financial difficulties.3. That agreement bears a facsimile transmission record with the date 28 October 1999. as envisaged in clause 11 of the joint venture agreement. It bears a stamp duty receipt of 18 February 1999. A statement that a payment is “to the account of” one entity rather than another involves one or both of two propositions. We can be assured of what our future holds especially with doing business with people like yourself and Bob Scott. including comparatives.000-00 loan which is required NOW for our audit report. Inteq was the lender under the loan agreement. The Commission was supplied by Sanpine with a copy of a “loan agreement” purportedly dated “November 1998” and signed by Mr Smith on behalf of KLALC. The first proposition is that the payment was in fact made by entity A and not by entity B. As mentioned on numerous occasions. The second is that the payment was made by entity A in discharge of an obligation which it had incurred as principal. expenses. Clause 3 records that the principal under the loan was lent to the borrower. and had no obligation to account to KLALC for its expenditure of those funds. it is beyond doubt that the mortgage was given by KLALC in fulfilment of its contractual obligations under the joint venture agreement and for the purpose of obtaining finance for the joint venture. On 4 December 2000 Mr Richard South wrote to Mr Steer: As per AASB 1006 para 5. . including details of any guarantees made upon the liabilities of the joint venture by the directors or other venturers in your organization. in consideration of which agreement on the part of the lender. could you please also ask your legal counsel if it would create a conflict by Koompahtoo LALC seeking and requesting a detailed financial report on the $780. The mortgage states. namely a first registered mortgage over the Morisset land.000 (‘principal sum’) lent pursuant to loan agreement between the mortgagee.1. He further stated. Clause 5 records that the borrower is obliged to repay the principal. Since Sanpine are unable to advance us any moneys from our agreement because of legal reasons. the legal assertion underlying the first proposition is also doubtful. As per AASB 1006 para 9. in clause 1 of the covenants: The mortgagor will pay to the mortgagee $780. assets or liabilities that relate to their interest in joint ventures. For this reason we request a summary of the current mortgage arrangements as they apply to Koompahtoo lands in relation to the joint venture. Even if the mortgage had not created a joint and several debt. The agreement identifies Sanpine as the “borrower”. Clause 4 of the covenants further states: This mortgage has been granted in consideration of the mortgagee at the request of the mortgagor advancing to the mortgagor and Sanpine Pty Ltd (‘debtors’) jointly and severally the principal sum and the debtors hereby covenant and agree with the mortgage to repay the principal sum and all interest thereon … Given the composite effect of these provisions. but clause 6 states that “the borrower and the mortgagor” will pay interest. Whether Mr Steer replied to Mr Briggs is unclear: on 19 December 2000 he replied to Mr South repeating the mantra that “the expenses incurred to date have all been to the account of Sanpine”.

For that he must wear the primary responsibility. to induce him to encourage KLALC members to look favourably on the joint venture agreement and its administration. authorise the financial package entered into between Sanpine (or the joint venture) and Smith & Sons Consultancy Pty © ICAC Corrupt conduct? – Messrs Adam Perkins. Even pursuant to the loan agreement with Inteq. To the extent that Sanpine paid the moneys into its own bank account. The primary question in this context is whether the conduct of the Sanpine representatives in relation to the loan moneys constituted a criminal offence for the purposes of section 9 of the ICAC Act. for the expenditure of those moneys. Scott and Steer had a role in the appointment of Mr Bill Smith as Aboriginal Liaison Officer in circumstances where there was a clear conflict of interest in relation to his role as Chairperson of the KLALC. with which they had no immediate connection. it would be open to the trier of any criminal charge. The Sanpine representatives did no more than facilitate a scheme which allowed Mr Smith to conceal the full circumstances relating to his employment. In the circumstances of this investigation. it was a constructive trustee of those moneys for the purposes of the joint venture. entered into by KLALC and by Sanpine. The argument in that respect is that the proceeds of the mortgage were received by Sanpine subject to a requirement that they be dealt with in accordance with the joint venture agreement.Chapter 5: KLALC – Sanpine joint venture – part 2 57 It follows that each of the propositions underlying Mr Steer’s assertions was false. Even in relation to Mr Bill Smith. To similar effect. none can be the primary person responsible for the offence of misconduct in public office.000. it was not suggested that any recommendation or referral . but for the purpose of concealing from the members of KLALC the amounts of the payments made on behalf of the joint venture. and thus might constitute a contravention of section 165 of the Crimes Act 1900. to find that the payments made to Mr Bill Smith were intended. each of the Sanpine representatives and Mr Smith might argue that KLALC had authorised not only the appointment of an Aboriginal Liaison Officer for the joint venture. as agents of the joint venture. For this purpose. The Commission is satisfied that Sanpine’s refusal to do so from February 1999 until the end of 2000 was designed to prevent the public disclosure of the beneficiaries of the payments. The interest payments and loan establishment fees incurred between January 1999 and 31 March 2003 totalled approximately $450. The deposit in the Sanpine account was not entered into in good faith. as its joint venture partner. for the purposes of section 9 of the ICAC Act. it is necessary to find that they were parties to a criminal offence other than that identified in section 56B of the Land Rights Act. which included the personal pecuniary benefits obtained by him under the agreement. are sufficient to constitute a written direction as to the destination of the proceeds of the security. The claim that the costs were those of Sanpine and that it had no legal obligation to account was simply a device to justify non-disclosure. It is arguable that the diversion of those funds into Sanpine’s own account constituted misappropriation of the proceeds by the Sanpine officers. the terms of which are set out in Chapter 3 above. it is more likely than not that they were the instigators of that appointment. That bears some similarity to the question to be dealt with next. and were known by him to be so intended. Scott and Steer It is the view of the Commission that Messrs Adam Perkins. namely the transfer of the land itself from KLALC to a trust company. The underlying issue is whether there was corrupt conduct in relation to the transfer of the proceeds of the mortgage of KLALC land into the private bank account of Sanpine Pty Ltd. Sanpine was not authorised to appropriate the moneys received pursuant to the mortgage secured over KLALC land to its own purposes. However. be made in relation to criminal prosecution. KLALC was liable to pay interest on the loan. and to whom they were made. Neither Counsel Assisting nor any other party sought to argue that the facts gave rise to such an issue. It may further be noted that the advances made by LKM Capital Ltd in April and November 2000 each included terms rendering Sanpine and KLALC joint and several debtors in terms substantially the same as those set out above. By way of defence. As none of the Sanpine representatives is a public official. the Commission does not consider it appropriate or desirable to enter upon this question. however. Indeed. At the heart of the matter presently being considered is the failure of Mr Smith to disclose his circumstances at a meeting of the KLALC. So much may be accepted: KLALC did not. being the money obtained by draw-down of the mortgage by KLALC of its land. they could be complicit in an offence committed by Mr Smith. It was at all stages obliged to account to KLALC. At most. but the appointment of Mr Smith himself to that position. the terms of the joint venture agreement.

they understood that the significant sums being paid to Mr Smith would constitute costs of the joint venture. if members did know some of the facts. A certificate in that limited form could have been justified on the basis that a resolution to that effect was passed by KLALC members prior to the first mortgage for the purposes of the joint venture. Class B unitholders held sole rights to the distribution of trust income or property (other than capital). or that. even those members of KLALC who had some recollection of the meeting were either doubtful. It is convenient first to consider the purpose underlying the transfer. The Secretary of KLALC. fallen out with the Smith faction. It is doubtful whether the terms of that agreement were known to or understood by members of KLALC. Ms Veronika Bailey. the second was a trust deed creating the KLALC Property & Investment Trust. Mr Robert Briggs. The certificate is silent as to whether there had been any separate approval for disposal to the trustee company. a position asserted by Mr Smith and others at various times. with the possible exception of Mr Stephen Griffen and Mr Malcolm Smith. after finding out that the transfer had taken place. being the three members of the executive and 27 other persons who were either relatives or supporters of Mr Bill Smith. One was a transfer of the Morisset land from KLALC to a company known as KLALC Property & Investments Pty Ltd. the Commission is not comfortably satisfied that the relevant conduct could constitute a criminal offence for the purposes of section 9 of the ICAC Act. The Trust included three classes of unitholders. As the holders of class A units had the power to elect directors of the trustee company. and (3) whether the transfer was carried out for an improper purpose. in all the circumstances. However. no findings are made that Messrs Adam Perkins. any motion being put to authorise the disposal of the land by way of transfer to the trust. (2) whether NSWALC approval was required for the transfer. Class B and class C units were issued to KLALC. Whether KLALC members voted on the disposal of the land to the trustee company prior to the transfer occurring was a matter raised in evidence with a number of witnesses before the Commission. by this stage. Scott and Steer engaged in corrupt conduct in relation to the payments made to Smith & Sons Consultancy Pty Ltd. However. Class C unitholders were entitled to the distribution of trust capital. positively asserted that there was no motion put to a meeting to transfer land to a trust. Accordingly. Mr Briggs had. the then Co-ordinator of KLALC. signed a certificate stating that the disposal of the land “does not contravene section 40D of the Land Rights Act in that the land is not of cultural significance to Aboriginal people of the area”. Scott or Steer for any criminal offence arising out of their conduct described above. That a meeting of KLALC was called and a proposal to establish a trust was put forward seems beyond doubt. class A units were issued to 30 members of KLALC. and possibly directors of the trustee company. but the Commission is satisfied that his evidence in this regard is truthful and accurate. on account of Mr Bill Smith’s role as Aboriginal Liaison Officer. Class A unitholders were entitled to vote on the appointment and removal of the trustee. namely: (1) whether KLALC membership approved the transfer of the land to the trustee company. A number of witnesses refer to there being some discussion in relation to a proposed trust and members being asked to put up their hands if they were willing to be involved in some way with the trust. this confusion is of little consequence. He further stated that. thereby reducing the benefits flowing to KLALC. Nevertheless. Evidence and submissions before the Commission concerned three main issues arising from this transaction. Transfer of land to trustee company On 30 March 2001 Mr Bill Smith (KLALC Chairperson) and Mr Stephen Griffen (KLALC Treasurer) executed two documents under seal on behalf of KLALC. . he took the minute book. or could not recollect. who were on the joint venture management committee. to NSWALC and pointed to the absence of any minute authorising the transfer. Scott and Steer No recommendations are made that consideration be given to the prosecution of Messrs Adam Perkins. then in existence. Precisely what role was expected of them was unclear. The KLALC minute book for this period was lost in the fire at the KLALC offices and no secondary documentary evidence © ICAC is available. the expectations of those who gave evidence were that they were nominating themselves to become unitholders of the Trust. Section 74A(2) statement – Messrs Adam Perkins.58 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Ltd.

it is possible that the lender had obtained some indication that there was dissatisfaction or potential instability in KLALC. However. it could not control the trust and therefore. Because the joint venture management committee adopted a firm policy of non-disclosure in relation to the expenditure of the funds. to a significant extent. and (4) protection against government action to recover lands from Aboriginal land councils. Therefore. Thirdly. Secondly. The concerns of the financier are understandable: indeed. which no doubt increased the risk to the lender. all the possible purposes of the transfer. nor any evidence of KLALC seeking independent advice in late 2000.Chapter 5: KLALC – Sanpine joint venture – part 2 59 Four possible purposes were identified by witnesses before the Commission. The effect would be to protect the lands “from the government. It was an arrangement which the mortgagee had initially accepted. (2) to protect the joint venture with Sanpine Pty Ltd from being subverted by a change in control of KLALC. the land. First. Ms Jo Gamble. gave evidence that Mr Bill Smith addressed a meeting of members at which he had stated that “all our lands” needed to be protected and that this could be done by a transfer to a trust. (3) to protect the joint venture against subversion by the appointment of an administrator to KLALC. even if the breakaway group controlled the KLALC executive committee. The first record of the consideration of a transfer to a trust of the Morisset land appears in the minutes of a management committee meeting of the joint venture dated 16 October 2000. a member of KLALC. but had declined to become involved. they are. Furthermore. On 8 March 2001 a solicitor from Baldwin Oates & Tidbury wrote to her client Sanpine confirming that she had been instructed that the joint venture sought to raise additional funds from the existing mortgagee. which was presumably anticipated to be a reasonable period within which the development could have proceeded towards a stage at which external funding would not be required. The first legal advice which appears in the records is that sought by Sanpine Pty Ltd in March 2001. She added: Bill explained that although the KLALC members were the beneficiaries of the trust. The letter also noted: The purpose of this alienation of property from the Land Council is to prevent any administrator who might be appointed in the future from upsetting the joint venture and ensuring continued stable management of the development. financial information was scarce and rumours rife. pursuant to which the management was vested in one partner and the land in the other. Those minutes noted a report by the Aboriginal Liaison Officer (Mr Bill Smith) in the following terms: The issues associated with George Parry. To these may be added a fifth possibility. the need for such approvals being obviated by alienation to a trustee company. In a general sense. Why the possibility of the appointment of an administrator was identified as an issue at that stage is unclear. a substantial increase in the borrowings was proposed. it appears that members of the socalled “dissident group” had been raising questions about the expenditure of the mortgage moneys since the first half of 1999. That forecast had not been fulfilled. interrelated. These may be categorised as follows: (1) to comply with requirements of the mortgagee. and that the mortgagee had requested that the property be transferred to a corporate trustee. local council and other parties including a breakaway group”. with the exception of (4). Bill Smith confirmed to the meeting that the KLALC members at various meetings have discussed the possibility of transferring the joint venture land to a separate Koompahtoo trust. involve considerations specific to the joint venture land. there was evidence that a number of more substantial sources of finance had been approached during the early stages of the joint venture. Further. Dargin etc continue to frustrate our sensible operation of the Land Council. namely to protect individuals against embarrassing questioning by NSWALC. the trust would be controlled by a board of directors. The structure of the joint venture as a partnership. should the need for or expenditure of mortgage funds be questioned in relation to further NSWALC approvals. might well have seemed less than ideal from the point of view of a financier. the original mortgage was proposed for a period of one year. but had apparently questioned when asked to provide further funds. Three factors could have given rise to this belated concern. We confirm that they are currently seeking independent legal advice. on 15 March 2000 the acting Executive Director of © ICAC . There was no clear evidence before the Commission to support any earlier discussion at meetings of KLALC.

40D of the Aboriginal Land Rights Act 1983. advice was sought by Baldwin Oates & Tidbury. “you” (referring somewhat inaccurately to Sanpine) “are proceeding with the transfer”.60 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council NSWALC. The proposed appointment by the trustee of a manager with an irrevocable power of attorney to act on behalf of the trustee was questioned as being an apparently sham transaction. Mr Smith responded indignantly. it would have stripped KLALC of assets. Mr Timothy Thomas. As already noted. That need appears to have been urgent. ie protect the land if an administrator were appointed. on behalf of Sanpine. who advised the joint venture parties in relation to the transfer when the matter became known to the NSWALC in 2001. In short. In his evidence before the Commission. That followed from the fact that KLALC would no longer be able to carry out its obligations . a different financier associated with the same solicitors as the original mortgagee. from a Sydney barrister. Following the execution of the trust deed and transfer on 30 March 2001. Although Mr Smith denied that the transfer of the trust took place. The letter also noted Mr Waters’ advice that should the transfer proceed. The letter concluded by noting that. he accepted in his evidence that the reasons for the transfer which were noted in the joint venture management committee minutes were improper reasons in the context of the Land Rights Act. Ms Kerri Wilkinson. because there was no identifiable threat of government action to reclaim Aboriginal land at that time. to the Secretary of Sanpine. [Mr Waters] advised that the certificate previously issued by the Land Council consenting to the mortgage of the land to Inteq Custodians Pty Ltd. The new mortgage was signed on behalf of KLALC Investments by Mr Bill Smith and Mr Stephen Griffen. Finally. Mr Bob Scott agreed that the proposal for the transfer of the land to the trust was at least partly motivated by concern that the dissident group might gain control of the KLALC executive. Support for that view was also to be found in the evidence of a former Newcastle barrister. dated 10 April 2001. noting that the twelve month term was due to expire. The Commission does not accept that evidence as either accurate or truthful. which provided for a loan of $1. although KLALC would have remained a partner in the joint venture. The Inteq mortgage was then discharged and a new mortgage entered into. was not wide enough to certify disposal of the land by sale in compliance with s. the joint venture agreement would need to be amended. so that any democratic change in the executive would have been unable to regain control of © ICAC the joint venture assets. but there was ample evidence to indicate that those involved with the joint venture were concerned about the threat posed by the dissident group within KLALC. If the transfer of land to a trust company were to be effective. the original mortgage was transferred to LKM Capital Ltd. It is implausible. Mr Smith was unable to give any plausible reason for the difference between his evidence to the Commission and the report in the joint venture management committee minutes noted above. Mr John Waters. Mr Bill Smith stated that his sole objective in pursuing the transfer to the trust was to protect the Morisset property from any possible “government action” to reclaim Aboriginal land. Approximately one week before the execution of the trust deed and the transfer. These considerations suggest that the first three possible purposes for the transfer to a trust are closely interrelated and were probably all factors that motivated Mr Bill Smith to promote that transaction to the KLALC members. in the manner proposed. On the basis that the land was no longer vested in KLALC. had written to Mr Bill Smith enquiring as to the position with the mortgage. Of that sum. suggesting that the resolution of 4 February 1999 absolved KLALC of any further obligation to account to NSWALC. $780. The letter records that Mr Waters: … expressed doubts as to whether the transfer of the land to a trust would achieve your stated result. Mr Waters’ advice was not entirely supportive of the proposal and its effectiveness. He denied that any part of his motivation was to avoid the possibility that a dissident group might gain control. and that there was no disposal by that entity. no approval was sought either from the members or from the NSWALC for the new mortgage and increased borrowings.. at least part of the timing and motivation of the transfer was the need to obtain further finance for the joint venture. The Commission is satisfied that the evidence Mr Bill Smith gave to the Commission was untruthful.65 million. the possibility that the NSWALC might become concerned about financial irregularities could well have raised the possibility in the minds of the joint venture management committee members of a threat of appointment of an administrator. despite Mr Waters’ advice.000 appears to have been used to discharge the earlier mortgage. According to the letter written by Mr Stern of Baldwin Oates & Tidbury.

as there was a meeting between. the KLALC executive appears to have accepted that KLALC’s own processes had been deficient. Mr Smith and Mr Griffen were acting on the basis that they had a free hand to deal with the land as they thought fit. on 3 July 2001. Mr Bradford agreed. the initial mortgage. he concluded the letter as follows: I would very much appreciate it if you would kindly have these motions ratified by the State Land Council [NSWALC] at its meeting this week. properly advertised. As a result. An undertaking in those terms was given by. However. Whether those processes would have satisfied the NSWALC that appropriate steps had been taken to approve the disposal of the land to the trustee company and whether the NSWALC itself would have sought to give retrospective approval to the transaction is not known. The payments to companies associated with Mr Bill Smith and Mr Bob © ICAC . On 16 November 2001 a variation of mortgage was executed by Mr Bill Smith and Mr Griffen increasing the amount secured over the land to $1. for the purposes of the joint venture.000 was paid into the Sanpine account with the National Australia Bank. the Commission has no doubt that Mr Smith understood that to be the position on 9 October 2001. This action by Messrs Smith and Griffen should be seen in the light of the financial circumstances of the KLALC–Sanpine joint venture. It permitted subsequent dealings in the land to be made without any necessary involvement of KLALC or NSWALC. That was no doubt because Messrs Smith and Griffen were happy to take the approach that neither step was legally necessary. Throughout the following year. but it was certainly faxed to Mr Briggs.000. What is not in doubt is that no attempt was made to obtain NSWALC approval for the transfer to the trustee company. a further meeting of the KLALC membership was convened for 9 October 2001. on the other hand. by 31 December 1999. The Commission is satisfied that this was precisely the intended result of the transfer to the trust company.95 million. On 9 October 2001 Mr Smith wrote to Mr Bradford enclosing copies of the advertisement and the motions passed at the extraordinary general meeting of KLALC. All the individuals involved were well aware that approval. he wrote to Mr Bradford enclosing material demonstrating that the relevant resolutions had been passed by KLALC. the Commission is satisfied that Mr Bradford did not say that. wrote to Mr Bill Smith noting that this transaction had been drawn to his attention. The concern expressed by Mr Bradford undoubtedly came to the attention of Mr Bill Smith in early July 2001. Whether KLALC obtained separate legal advice in relation to its obligations under section 40D prior to the transfer is a matter of some doubt. He did not suggest that this material satisfactorily resolved outstanding questions of authority – rather. On 5 June 2001. On 27 June 2001. Mr Bradford and Ms Veronica Graf of NSWALC on the one hand and. no-one thought that Mr Bradford could give it. the account appears to have been kept in credit by sundry payments from companies associated with Mr Steer or Mr Adam Perkins. Mr Bill Smith and Mr Timothy Thomas. The important issue in dispute between KLALC and the CEO of NSWALC concerned the failure of KLALC to obtain NSWALC approval for the transfer. Indeed. less interest. nor to disburse the proceeds of the mortgage. About this time. Nor was any approval sought from NSWALC for the new transaction with the land. did not intend to convey that message and was not perceived by Mr Smith as having conveyed that message. There was no evidence before the Commission suggesting that any meeting of KLALC had been properly convened to consider and pass a resolution with respect to this variation of the mortgage. on behalf of KLALC. in his evidence to the Commission. that he may well have told Mr Smith at a meeting in October 2001 that the steps taken by KLALC constituted an end of the matter “as far as [he was] concerned”. the balance in the account was less than $3. must be forthcoming from NSWALC itself. at the KLALC office. When the letter reached Mr Smith is unclear. when a fraction over $670. On that date. if required. the transfer and the mortgage to LKM were registered on the certificate of title. Although Mr Bill Smith said in his evidence that he was satisfied at that stage that all necessary approvals had been obtained from NSWALC. with the express intention of seeking approval from the membership for the transfer of the land to the trustee company. amongst others. amongst others. Mr Jeffrey Bradford.Chapter 5: KLALC – Sanpine joint venture – part 2 61 in relation to land which it no longer owned. Mr Thomas wrote a letter to Mr Bradford refusing to reveal any details of the expenditure of loan moneys by the joint venture. the Chief Executive Officer of NSWALC. before a meeting of the NSWALC on 20 August 2001. However. Mr Bill Smith and Mr Stephen Griffen. on 16 August 2001. was drawn down on 16 February 1999. As noted above. but if it was necessary. By that time. One outcome of these discussions was agreement that the directors of the trustee company would sign an undertaking not to deal with the Morisset property. KLALC representatives said that such approval was not necessary.

and had been seeking to do so for some time. executed an undertaking. As a result. The only asset the joint venture owned which could be used to secure the necessary funds was the KLALC land. or both. First.000 was deposited from the draw-down on the increase in the loan from LKM Capital. Mr Bradford. the financier was taking the risk of the land not being rezoned for residential subdivision. in his view. the Chief Executive Officer of NSWALC. was apparently willing to provide the necessary security without the need for any accounting as to the expenditure of funds in the past. when a further $300. A number of inferences may be drawn from the document. the Commission does not accept that Mr Smith had a genuine belief in that state of affairs at the time he executed the mortgage in November 2001. In particular. In effect. At the very least. which are dealt with in the following chapter of this report. The document indicates that a copy was sent to Mr Graham Steer.000. First. Whether it was ever provided to the KLALC representatives on the joint venture management committee is not known. a further drawdown of $278. included a price of the Sanpine interest at $16 million. This result was achieved by Mr Bill Smith. Of that amount. the cash flow calculations. In addition. with the exception of certain deposits and payments relating to the Villa World transaction in December 2000. That occurred with the further draw-down of a little more than $280. at the request of NSWALC. From 1 September 2000 the account was virtually static. Thirdly. $233. had expressly told Mr Smith that the transfer to the trustee company was not. Mr Welsh advised that the cash flow calculations would only be provided on the basis of a payment of $50. the owner of the land. by 26 September 2001 the balance had again fallen under $3. The steps taken to that end included two variations of the mortgage and the transfer to the trustee company. he had.000 per month. Secondly. he was reckless as to whether he and Mr Griffen had the legal authority to execute the mortgage.000 was made on 18 June 2001. in part to protect his own financial interest in the joint venture proceeding. © ICAC The dire financial state of the joint venture was clearly a matter of immediate personal financial concern to Messrs Scott and Smith: their monthly payments could not continue unless finance became available. The absence of activity on the account continued until 23 May 2001. Further. on 5 July 2001. Before the Commission. possibly without legal advice. He continued: As stated to you on a number of occasions. Secondly. Mr Smith sought to assert that he did not believe that anything further needed to be done once KLALC had passed the necessary resolutions. which were the purpose of seeking the advice. according to the valuation obtained three years earlier. Mr Bill Smith and other officers of NSWALC and certain members of KLALC. the general ledger for the Sanpine Unit Trust indicates that a series of significant payments were made to a firm known as Welsh Property Consulting Pty Ltd which supplied financial advice to Sanpine in relation to the joint venture. or the proposed future expenditure. At that stage it was owned. valid and effective. The drafting of the undertaking left something to be desired and appears to have been prepared by the officers of KLALC Property & Investment Pty Ltd. The circumstances in which Mr Smith and Mr Griffen signed the second variation of mortgage in November 2001 are extraordinary for two reasons. A letter prepared for Mr Bradford and sent to Mr Timothy Thomas. that it would not in any way deal with the land.000 on 16 November 2001. by KLALC. nor disburse any funds held by it “and used by way of mortgage” on the said land.000 was disbursed in two days.000. as a director of the trustee company. The undertaking came about as a result of discussions between Mr Bradford and Ms Veronica Graf (a Councillor for the Sydney/Newcastle region).62 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Scott were running at approximately $11. either legally. I have spent hundreds of hours on this matter and no fees have been forthcoming as yet. namely KLALC. pending the meeting of the NSWALC on 20 August 2001. It is clear that there was significant financial pressure on the joint venture parties to arrange further finance. On 22 October 2001 the account was overdrawn. Sanpine was attempting to sell its interest in the joint venture. Mr Welsh noted: The asking amount for the sale of the Sanpine interest and the terms which you may be prepared to accept are your decision and I will not attempt to influence you in that decision except to say that I am aware that quite a number of parties have looked at the proposal and to date no one has even come back with a counter-proposal (or have they) and that maybe that is telling us something. or beneficially. However. For reasons given above. Those with a relevant financial interest were in the happy position that they had a financier who was prepared to advance capital to a figure substantially in excess of the market value of the property. largely on account of the outstanding amounts owing to the companies associated with Mr Smith and Mr Scott. a report dated 24 October 2001 was provided to Mr Bob Scott. the barrister then .

responding to Mr Bradford’s letter. merely noted that the undertaking was supplied “on or about 9 July 2001”. on the other hand. Mr Griffen. and from disbursing or committing to disburse in the future or agreeing to disburse any of the moneys obtained through he mortgage of [the land]. the Commission is satisfied that Mr Smith did in fact have a general knowledge of the state of the account. if he did not know but enquired. as the proceeds of the loan were not passed into the joint venture account. © ICAC . The Commission is satisfied that. Accepting that the statement was made on instructions. however. valued at $1.Chapter 5: KLALC – Sanpine joint venture – part 2 63 representing KLALC. that further funds were needed. it is apparent that. to have effect until the relevant approval was obtained from NSWALC. n The undertaking itself was said to operate “pending the meeting of the State Aboriginal Land Council on the 20th of August 2001”. no later than the end of October 2001. he gave very little attention to the documents he signed: he was. The signatories to that account were officers of Sanpine. an amount of approximately $138. At least in terms of probabilities. would have told Mr Smith what was necessary for him to know in order to achieve the further mortgage arrangements.650. the Sanpine parties apparently ensured that Mr Smith continued to receive his monthly payments. or promising to deal with [the land]. Whether that was intended to be a specific time limitation. at least at that stage. makes the following statement: At the meeting it was agreed that Bill Smith would arrange for written undertakings. He received a further payment of $5. If he ever did get such advice in those terms. However. it would appear that he received a cheque for $5.094 on 9 August 2001. which were to their mutual benefit. In his evidence before the Commission. a willing lieutenant who did the bidding of Mr Bill Smith. is unclear. Yet. being the day after the undertaking was sent by facsimile to NSWALC.000 loaned by LKM Capital Ltd.094 on 13 July 2001. Mr Timothy Thomas. to be urgently obtained from each of the Directors of KLALC Property Investments Pty Ltd [sic] and forwarded to NSWLAC [sic] which would have the effect of freezing all dealings with the subject land and the mortgage until the appropriate NSWALC approvals are granted. as proposed in Mr Bradford’s letter. In answer to a request that “the names of the signatories required to access the mortgage for each disbursement” be supplied to NSWALC. said that he had forgotten about the undertaking by the time he came to execute the variation of the mortgage. Whether he knew the precise figures or not. as already noted. Mr Smith must have been aware of significant disbursements to himself. or merely an indication that it was. it had not occurred to the NSWALC representatives that the trustee company might actually have little or no control over the expenditure of the funds: KLALC Property & Investments Pty Ltd was not party to the joint venture. On 16 August 2001. Mr Smith sought to say at one point that he had legal advice from Mr Timothy Thomas to the effect that the trustee company was entitled to execute a further mortgage of the land. in the case of Mr Griffen. is different. Ultimately. he would have known came from the proceeds of the mortgage. Mr Scott had such knowledge and.000 in the month of August 2001. apparently on 13 August 2001. In so doing. He must have known. However. after the money was drawn down from the mortgage variation on 18 June 2001. Mr Smith was not able to explain how he could execute the variation of the mortgage consistently with his undertaking. Mr Thomas replied: The names of the signatories would not seem to be relevant. Although when the joint venture mortgage funds ran out Mr Scott ceased being paid. Whether or not he could have discovered the extent of the disbursements at the time that he gave the undertaking on 5 July 2001. Further. he betrayed the trust placed in him by the membership of KLALC.000 was debited to the Sanpine account in the month of July 2001 and a further $132. it was never obtained in writing and would have depended upon an assessment of the validity of the transfer to the trustee company. it would not be open to Mr Smith to assert that the undertaking he gave was only as a director of the trustee company and could not bind him as a member of the joint venture management committee. The position of Mr Smith. because of their close relationship. none of whom included the KLALC members. containing the terms listed below. even that point is by the way. which. it is apparent that he made no attempt to see that the loan moneys were preserved in a bank account. as their Treasurer. it was precisely because that transfer was in dispute that NSWALC sought undertakings from the directors of the trustee company not to deal with the land or the proceeds of the loan. It was agreed that the undertaking would refrain [sic] the signatories from carrying out the following acts: n from anyway dealing with. In total. but into the account of Sanpine.

Mr Smith’s actions were primarily concerned to promote his own interests and were at the expense of the interests of KLALC. In March 2001. through Mr Bob Scott. In relation to the need for a further approval from the NSWALC under section 40D of the Land Rights Act. it was not a legal . Apart from anything else. A disposal to a third party would have the potential to put it beyond the power of KLALC to comply with its contractual obligations. Sanpine had an immediate interest in any proposal to transfer the land to a third party. because it was a matter which he considered beyond the areas of his competence. Transfer of the land would require compliance with Section 40D of the Aboriginal Land Rights Act 1983. the Commission is satisfied that at all stages during the period from March to November 2001. He advised that the certificate was not sufficiently wide to constitute an approval of the transfer of the land to a trust. Mr Scott said that he relied upon statements made in two letters written in May 1999. Nevertheless. This he did to conceal the fact that he was personally benefiting from loans obtained against the security of the land. Before leaving this issue. sending a copy of the letter to Mr Bill Smith. noting: © ICAC We are instructed to prepare a unit trust where the directors of the corporate trustee shall be the executive committee of the members of the community and that the members of the community shall be the unitholders who shall have voting rights. In a letter dated 9 June 2001. The joint venture agreement will have to be amended. appears to have promoted the proposal to place the land in a trustee company. but the interest which accrued on that payment for as many years as it took to subdivide and sell the property. Sanpine. concerning the effectiveness of the proposed transfer of the land to a trust. Support for the view that Sanpine was intimately involved in the proposed transfer is the content of the letter from Sanpine’s solicitors to Sanpine itself. a conference with counsel went ahead and the partner. he noted Mr Waters’ advice that: There is no certainty that alienation of the land to the trust would be immune from attack from an administrator.64 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Mr Smith’s conduct in signing the undertaking was iniquitous. Each. The Commission is satisfied that he signed it because it cost him nothing to do so and because it might assist in appeasing NSWALC. was substantially ignored. although transfer to the trust would appear to be the best possible protection. Amongst other points referred to in the letter. The letter was prepared by a consultant of the firm: the partner having the conduct of the matter. to have distribution rights shall be the corporate entity of the Land Council itself which shall have no voting rights. one by the then Chief Executive Officer of NSWALC. After signing it he allowed a letter from Mr Thomas to go to NSWALC which continued to conceal the true position as to the recipient of the loan funds and the manner of their disbursement. Although the letter signed by the Chairman of the NSWALC referred to “the signing off on NSWALC responsibility under the provisions of the NSW Aboriginal Land Rights Act”. Mr Stern wrote to both Sanpine and KLALC Property & Investment Pty Ltd jointly. was intended to give some reassurance and comfort to the KLALC after what Mr Bill Smith (and possibly others) had clearly regarded as an intrusive and unnecessary examination of the terms of the joint venture. dated 8 March 2001. as noted above. attended the conference. both Mr Smith and Mr Scott asserted they believed this was not necessary. The possibility was apparently discussed at a joint venture management committee meeting on 16 October 2000. through its solicitors from counsel. Each element of the advice. who was away when the letter was sent. however. set out above. Putting to one side any question of the validity of the transactions. Nevertheless. Ms Norma Ingram. read in its historical context. Mr Waters of counsel also apparently advised in relation to the adequacy of the certificate obtained under section 40D of the Land Rights Act consenting to the mortgage of the land to Inteq Custodians Pty Ltd. and the other written by the then Chairman. viewed from the perspective of the KLALC interests in the joint venture. it is necessary to give some attention to the role played by Mr Bob Scott in the transfer of the land to the trustee company and in the further mortgaging of the land. … 4. Mr Ossie Cruse. The detriment to KLALC was not merely the payment going to Mr Smith on a monthly basis. In support of his view. KLALC was obliged to make the land available in two stages for the purposes of the joint venture. The only unitholder. because that would place it beyond the power of KLALC to carry out its obligations under the joint venture agreement as owner of the land subject to the development. told the Commission that the firm did not in fact prepare the unit trust. Mr Peter Stern. Sanpine sought legal advice.

Ms Norma Ingram. Mr Smith. there is no evidence before the Commission to suggest that he had obtained a written advice. He did not tell the Premier that. First. Whilst the reply set out by Mr Thomas in the letter sought to persuade Mr Bradford that no further approval was required. it was said. barrister. The error of KLALC was inadvertent. consistently with the evidence of Mr Smith. however. after the administrator had been appointed to KLALC. Mr Scott significantly did not suggest that KLALC relied upon its own legal advice: rather it was the misleading conduct of the CEO of NSWALC which. when the trust was approved. Although he thought that he had had such advice in writing. he stated that the misleading conduct of the CEO to which he referred in his letter to the Premier was conduct engaged in by Mr Geoff Bradford. … the KLALC made an error. it must have been an error made by the executive who were responsible for obtaining appropriate legal advice in relation to the establishment of the trust and the disposal of the land. led to it not seeking approval for the transfer. Mr Scott well knew that the legal advice obtained on his instructions from Mr Waters. other than the two letters of May 1999. He had agreed there was nothing else. at least in the written record.Chapter 5: KLALC – Sanpine joint venture – part 2 65 document and did not purport in its terms to express a view about the scope of the “signing off” which had occurred. The moving party at KLALC was undoubtedly Mr Bill Smith. There is no suggestion that independent legal advice was obtained at that stage in relation to section 40D. he did not mention any such advice being relied upon in relation to the transfer. As noted above. the land transferred to it and the questions raised by NSWALC. Section 40D sets out the procedure. Further. In transferring the land to the trust. Mr Scott set out in some detail the explanations given to the KLALC executive and to a general meeting of KLALC. that Mr Thomas had confirmed his own opinion that “the section 40D approval obtained in 1999 [for the first mortgage] was the end of the section”. it failed to comply with some requirements of Section 40D of the Land Rights Act. That being established. If he had been misled by the misleading conduct of the CEO of NSWALC at the time. which led him to the view that the NSWALC approval covered the whole of the joint venture. including the transfer now proposed to the trust. KLALC was led into error by the misleading conduct of the CEO of the NSWALC. In his evidence to the Commission. if “KLALC” made an error. Ms Ingram. However. In the context of public criticism of the joint venture. asserted that he had obtained contrary advice from Mr Timothy Thomas. Mr Scott noted that KLALC had formed a trust and resolved to transfer the land to a trust to meet the needs of its financier. when he later returned to the witness box he “corrected” his evidence and stated © ICAC . in January to March 2001. His letter to Mr Bradford of 16 August 2001 referred to Mr Bradford’s letter of 13 August 2001 and noted that his “clients do not concede that a fresh section 40D approval is required” but continued “I have been instructed to reply as set out below”. of May 1999. Although the précis stated that “all the signed documents” were “hand delivered to the legal department of NSWALC” the précis failed to say that that only occurred after the trust had been established. Although in evidence Mr Scott did rely upon the letter from the CEO of NSWALC. in his evidence before the Commission Mr Thomas denied that he had advised Mr Smith that no further approval was required. The first apparent reliance placed upon this correspondence. Whatever Mr Thomas might have said. he surely had the opportunity to provide a copy of the correspondence he received from her to Mr Waters. in his letter to the Premier. If so. In his summary of events relating to the joint venture. prepared for submission to the Premier in December 2002. Aspects of that statement are startling. The letter from the Chief Executive Officer was hardly supportive of the construction sought to be placed upon it after the event: it expressly identified the possibility that NSWALC might have further responsibilities as “required by the law”. Neither he nor Mr Scott put Ms Ingram’s letter in front of Mr Waters as support for a contrary position. appears in a letter written by Mr Bob Scott to the Premier on 3 December 2002. Relying on assurances from the NSWALC (which can be clearly established). was to the effect that a further approval was required. Mr Scott stated. he was asked whether there was anything else. that provided another element of the letter which was misleading: that conduct only occurred after the transfer had been effected. he received from Mr Stern a copy of a letter setting out Mr Waters’ advice. who had advised on the very matter. Although Mr Thomas wrote letters to NSWALC on behalf of KLALC or the trust company. which a Local Aboriginal Land Council must follow before land can be disposed of.

through Mr Smith. in evidence which the Commission accepts as being a substantial reflection of reality. given his motives. For the reasons set out above in relation to the findings of the Commission with respect to his position as Aboriginal Liaison Officer. it may be argued that his conduct in seeking to have the KLALC membership approve a transfer of the Morisset land to the trustee © ICAC . The Commission is also satisfied that. He had attended the meeting with the Registrar of the Aboriginal Land Rights Act in 1999 when questions about Mr Smith’s conduct were raised. Further. it is clear that he was intimately involved in everything Mr Smith did in relation to the Sanpine joint venture and the CKT joint venture discussed in Chapter 8. the Commission is satisfied that both Mr Scott and Mr Smith had persuaded themselves that a transfer to a trust company could be effected without the need to return to the NSWALC and risk further exposure of their own financial interests in the proceeds of the loans which had been and were being obtained. Although Mr Bill Smith is undoubtedly a forceful character in his own right. “to get to Bill Smith you have to go through Bob Scott”. They were at first denied and then recalled. In what way they were relied upon was never made clear. Section 74A(2) statement – Mr Bill Smith Because of the passage of some three years since the conduct relating to the transfer to the trustee company.66 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council that other assurances had been given by people “who were members of the Council at the time”. for the purposes of section 8(1) of the ICAC Act. In relation to the Villa World transaction discussed in Chapter 6. he had been responsible for obtaining legal advice in relation to the proposed trust arrangement and he established the CKT joint venture with KLALC. a continuation of the improper conduct arising from Mr Smith’s position as Aboriginal Liaison Officer. if proceedings for that offence were instituted. no charge could properly be laid for a contravention of the Land Rights Act provisions. an offence. The Commission is satisfied that they constituted a concocted embellishment by Mr Scott. Whether any such additional “assurances” were given is impossible to establish on the evidence. given the period of time which has elapsed and the absence of records in relation to what occurred at various meetings Corrupt conduct? – Mr Bill Smith The Commission was invited to consider whether. More importantly. for that purpose also. The fact that the transfer was approved by the KLALC membership at a properly convened meeting does not excuse Mr Smith’s conduct. namely the common law offence of official misconduct. It was in substance. The Commission is satisfied that the conduct in question falls within section 8(1) of the ICAC Act. On the other hand. being a continuation of the conduct addressed in relation to his role as Aboriginal Liaison Officer. former Chairperson of KLALC. the Commission does not recommend that consideration be given to prosecution for such an offence. Ostensibly. it constituted an instance of the continuing conduct in contravention of section 56B of the Land Rights Act and was. Mr Scott had no role to play in the decisionmaking processes of KLALC. Mr Kim Wilson said. How much influence Mr Scott exercised over Mr Smith is unclear: what is clear is that he encouraged and supported Mr Smith to take the necessary steps to achieve the transfer to the trust and to effect the variations of mortgage without the further approval of NSWALC. engaged in corrupt conduct in relation to his involvement in the transfer of KLALC land at Morisset to KLALC Property & Investments Pty Ltd which involved him in a conflict of interest between his position as Aboriginal Liaison Officer for the joint venture and Chairperson of KLALC. he was influenced to a significant extent by advice given by Mr Bob Scott. as set out above. the Commission is also satisfied that a relevant tribunal of fact could find that such conduct constituted a criminal offence. in the light of the involvement of Mr Bill Smith in the transfer of the Morisset property to the trustee company. the Commission is satisfied that in relation to the business dealings of KLALC. They were only referred to when it became apparent that the letter to the Premier may have been deficient and misleading. as Chairperson. In these circumstances the Commission is satisfied that Mr Bill Smith. company and his own action in signing the transfer (with Mr Griffen) on behalf of the KLALC constituted the dishonest or partial exercise of his official functions. his receipt of significant remuneration in that position and his failure to disclose to the KLALC his interests in that regard. Accordingly. This is because such offences are summary offences and prosecution action must therefore commence within six months of the commission of the offence. which included the failure to disclose to the meeting at which the vote was taken his own personal interest in seeking to have the transfer effected.

The Commission does not consider that there is sufficient admissible evidence to warrant consideration being given to any prosecution of Mr Smith for any offence of giving false or misleading evidence contrary to section 87 of the ICAC Act.Chapter 5: KLALC – Sanpine joint venture – part 2 67 of the KLALC. © ICAC . it should be noted that the Commission’s conclusions do not depend on any view as to the legality of the transfer by a Local Aboriginal Land Council of land owned by it to a trustee company. Further. Whether a Local Aboriginal Land Council has such power is a matter which may be open to genuine differences of opinion. Before leaving this issue. The focus of concern for present purposes is that Mr Smith’s role in the process adopted in the present case was motivated by the improper purposes identified above. it is not satisfied that any other person was implicated in the corrupt conduct identified. because the conclusions of the Commission in that regard relate specifically to Mr Bill Smith. the Commission does not recommend that any prosecution be considered in relation to the common law offence.

At about the time that KLALC declined to approve the construction of the rising sewer main. in their context. At some stage before November 1999. part of which was the subject of the Sanpine joint venture. a company associated with a Mr Spencer Simmons. who operated a native title consultancy business. a company associated with Mr Scott. By the second half of 2000. in 2000. Rather. on the concern that the Wyee Point development would provide competition for KLALC’s own joint venture with Sanpine. That. Mr Wilson had discussions. However. Mr Simmons approached Mr Kim Wilson. the minutes of that meeting record: The meeting agreed that Bronzewing Property Holdings Pty Ltd and Smith & Sons Pty Ltd undertake the necessary detailed studies to assess the benefits/ disadvantages of the proposal and Adam be charged with the responsibility to negotiate a suitable compensation package to meet the costs of this investigation. a property development company based in Queensland. Mr Blackley of Pulver Coper & Blackley Pty Ltd. However. to obtain assistance in dealing with KLALC.000 by Villa World to Sanpine. The sewer line was built in 2001. Mr Wilson recalled Adam Perkins giving him “very strong advice” that in relation to the day-today activities of KLALC and particularly things to do with developments. One question which arises from these circumstances is whether Mr Smith and Mr Griffen had authority to give the consent provided on behalf of KLALC on 13 December 2000. Establishing that connection was an essential part of the Wyee Point development. the owner of the Wyee Point development sought the consent of KLALC to the construction of a rising sewer main.000 received by Sanpine was paid to KLALC. Between May and September 2000. Any excess of this funding will be remitted to the KLALC. Mr Blackley anticipated that the developer would need an extension of the subdivision approval. is not the issue of central relevance for the Commission. connected to the Hunter Water Board sewage system. Goldris sold its interest in the land to Villa World Ltd. the land owned by KLALC adjoined an entirely independent development being undertaken at Wyee Point. However. Whilst he was aware of the KLALC–Sanpine joint venture. operation and maintenance of the proposed sewer line. who was implicated in that conduct.000 were each in the nature of bribes and were understood by the parties involved at the time to have been improper. a company associated with Mr Bill Smith and $40. subject to various conditions.000 of which was paid by Sanpine to Smith & Sons Consultancy Pty Ltd.68 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 6: The Villa World consent At the south-eastern tip of the Morisset Hospital site. and Mr Stephen Griffen. as Chairperson of KLALC. These contacts were discussed at a management committee meeting of the joint venture on 11 September 2000. Ms Lesley Molony. if they did. This opposition appears to have been based. it is necessary to consider the circumstances of the transactions in order to identify which parties were involved. The Commission is satisfied that that description accurately described the relationship of those parties at that time and accepts that Mr Perkins conveyed that message to Mr Wilson. the land at Wyee Point appears to have been owned by Goldris Pty Ltd. Similarly. including an obligation to obtain approval for the rising sewer main. On 11 July 2000. it was unclear whether he believed that Sanpine Pty Ltd had any legal involvement in relation to the consent being sought from KLALC. The most efficient means to achieve that goal was to construct a rising sewer main from south to north. By letter dated 13 December 2000 Mr Bill Smith. The question to be considered by the Commission is whether those payments constituted corrupt conduct and. consultants to the Wyee Point development. Bob Scott and Bill Smith. little progress had been made in obtaining the necessary consent from KLALC. at a practical level. at least in part. a general meeting of KLALC held on 8 November 1999 voted to oppose the passage of the pipeline through the KLALC land. . The other $20. both in person and on the telephone with each of Adam Perkins. through his partner. wrote to Lake Macquarie City Council noting that construction had not been able to commence because of the delays in providing the sewer main. across KLALC’s land. Significantly. This included the payment of $100. but it is clear that Mr Wilson had established contact with Mr Adam Perkins. The Wyee Point development was not. as Treasurer of KLALC. however. advised Hunter Water Corporation that KLALC had approved the construction. By September 2000. The Commission is satisfied that the amounts of $40. Background Prior to the year 2000. the Wyee Point development was owned by Villa World Limited (“Villa World Ltd”).000 to Bronzewing Property Holdings Pty Ltd. $40. the concern of the Commission arises from the circumstances in which the consent was given. Mr Bob Scott and Mr Bill Smith. “you had to talk to Bob Scott to get through to Bill Smith”. various explanations were given as to the purpose and intended effects of the payments which need to be © ICAC addressed.

00 per month as indicated above. The substance of the proposal was that Villa World would appoint both Smith and Scott personally as consultants for a period of three months – … for the purpose of achieving the completion of the necessary documentation by Hunter Water from the Koompahtoo Aboriginal Land Council which will satisfy Hunter Water that it can commence construction of the sewerage transfer line through land owned by Koompahtoo Land Council. what is also clear from this minute is that. Mr Wilson asked: Can you authorise me in principle to forward this on the basis that Scott/Smith indicate that this is the way they wish to proceed. Perkins and Wilson held further discussions in early November. However. The Commission is satisfied that the “committee” referred to in the last sentence was the joint venture management committee.000. There is no suggestion in the minutes that Sanpine was then opposed in principle to the construction of the rising sewer main across the KLALC land.000. on 6 November 2000 Mr Scott sent a memorandum to Mr Perkins stating: I trust that you have made it clear to the Villa World people during your conversations that the consultancy comes with no guarantees whatsoever. The key part of the proposal is of importance and reads as follows: The consultancy will provide for the payment to each of Bob Scott and Bill Smith the sum of $10. On 9 November 2000 the minutes of a further meeting of the joint venture management committee record: In relation to the Villa World matter a lot of work had commenced but to date no agreement has been reached with Villa World. Mr Wilson sent to Villa World an email with an attachment setting out a proposed agreement. when agreement was reached Mr Perkins was adamant that it must not be disclosed to anyone outside Villa World without Sanpine approval. that is $5.000.000 to the Charles Perkins Children’s Trust. at least by September 2000. Whilst little progress was made on the matter until early November. © ICAC . The rising main proposal must be of benefit to the KLALC and the JV – obviously before it can be recommended. members of the joint venture management committee had agreed amongst themselves that any approval would be made conditional on payments to Bill Smith and Bob Scott.69 The Commission is satisfied that.000. that is one half of the $10. including Mr Scott and Mr Smith. On 16 November 2000. Once the relevant approvals have been provided the company will also make a payment of $25. In the event that the necessary approvals are not gained within the three month period the consultants will only be entitled to the amount of money already paid. It will be a condition of entering into the agreement and for the fulfilment of the agreement by Villaworld that Koompahtoo Land Council undertake that there will be no disruption to the construction of the sewerage line so long as Hunter Water and its servants and agents fulfil the requirements of those matters agreed between them and Koompahtoo Land Council for the construction of the pipeline. Whether any view had been formed about the likely outcome of the request is less clear. Before any payments are made all members of the committee are to be informed.00 per month plus relevant GST will be paid to each consultant. As will be noted below.000.00 per month plus GST. There will be an incentive provision that if the required approvals are provided within the first month of the consultancy there will be a bonus payment to each of $20. had decided that money should be obtained from Villa World for the purpose of giving proper consideration to its request. The email stated that the proposal had been formulated by him following a meeting with Adam Perkins and during discussions with Mr Scott. Once the basic terms are settled it would be proposed to draw up and exchange letters of agreement.00. If the necessary approvals are obtained in the second month of the consultancy the bonus payment will be $10. It was agreed that Adam as a matter of urgency complete the negotiation and agree a settlement with Billy or Bob. Messrs Scott. by 9 November 2000. those involved in the joint venture management committee.00 to each and if the approval is obtained in the third month of the consultancy there will be no bonus payment. The method of payment of the basic consultancy fee will be that each month 50% of this amount. Any payments from the amount negotiated should be paid by agreement.

Holt. In order to assess the credibility of those denials. within the Villa World administration. Whilst he did not deny his own knowledge of the contents of the proposal of 16 November 2000. Scott. In addition. he was otherwise vague about the circumstances of the transaction. Mr Merritt denied that he had seen the document and pointed out that the email address would not have been sufficient for it to reach him. with the payment of up to $100. Messrs Perkins. continued to be involved in this particular project in November. Mr Holt came to Sydney with the Villa World team and gave evidence to the Commission on 2 July 2004. However. Mr Holt was the manager responsible for the Wyee Point development in 2000 and was clearly the principal point of contact between Mr Wilson and Villa World. and © ICAC . he sought independent legal advice and. having obtained separate representation. his personal knowledge would probably not constitute knowledge of the company at that time. Accordingly. The tenor of that statement was that: (a) members of the senior management team of Villa World were aware at all stages of the proposed transaction in relation to KLALC and were aware. Mr Merritt also stated that he was no longer involved in the management of Villa World in November 2000 and took no part in the transaction under consideration. (That largely innocuous element was removed by the time the next draft was prepared. although he had attended voluntarily at the request of Villa World management. had neither the authority nor the responsibility for entering into such an agreement. Although he was not a member of the Villa World senior management team. because it contained the name “primus” instead of “iprimus”.70 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council In giving evidence to the Commission. Although he did not provide Villa World’s lawyers with a statement for the purposes of the Commission’s investigation. except that Mr Wilson appeared to accept responsibility for the suggestion that $25. Following the evidence provided to the Commission in February–April 2004. There is no doubt that it reached Mr Holt: whether it reached Mr Merritt is less clear. the Commission is satisfied that Mr Doug Merritt. Scott and Wilson distanced himself from responsibility for the content of the proposal of 16 November 2000. it is necessary to consider to whom the proposal of 16 November 2000 went. However. the next version of the proposed agreement omitted reference to Scott and Smith and provided for an agreement between Villa World and Sanpine. and his answers were unconvincing. As will be seen below. that conclusion does not mean that he received the email of 16 November 2000 from Mr Wilson.000 being made by Villa World to Sanpine. In giving evidence to the Commission. Villa World senior management was adamant that none of the responsible officers knew anything about the proposal to make payments to Smith and Scott or their companies. and that Mr Holt had recently left the company for personal reasons and had been under some personal stress a number of months prior to giving evidence. the Commission was satisfied at that time that numerous answers in which he denied knowledge or recall of particular matters were either untruthful or suggested he was being uncooperative in the sense that he was not applying his mind to the questions put to him.000 be paid to the “Charles Perkins Children’s Trust”. had never been conveyed to senior management and that therefore neither the company nor other individual senior officers had knowledge of the facts which might lead to an inference that the proposed payments were corrupt. on 1 September 2004 made a new and detailed statement to the Commission. (b) he. Smith and Wilson were each aware of the terms of the proposal at the time it was formulated. The email from Mr Wilson was addressed to Mr Dale Holt and copied to Mr Doug Merritt. of the content of the proposal of 16 November 2000.) But responsibility for aspects of the proposal is not of present relevance: the Commission is satisfied that Messrs Perkins. For reasons noted below. Villa World submitted that knowledge of the 16 November 2000 proposal was limited to Mr Holt. nor that he was aware of the content of that proposal prior to the agreement being entered into. Mr Holt appeared to be a reluctant witness. although he ceased to be the Chief Executive Officer of Villa World on 1 September 2000. On learning of the approach being taken by Villa World to exonerate itself. in particular. It was true that the transaction had taken place almost four years earlier. Either way. That evidence asserted ignorance of the ultimate intended recipients of the funds and hence constituted a denial of direct knowledge of the facts which might have rendered the payments corrupt. a charity which appears not to have existed at that time. Mr Holt formed the view that there was a conflict of interest in relation to his circumstances and those of Villa World and its senior management.

Instead of a consultancy agreement between Villa World and Messrs Scott and Smith. existing residences and the proposed development within the Wyee Point area once Koompahtoo grant approval for the sewer line to traverse their land. it is not prepared to approach his evidence generally on that basis. The company also submitted that his intention to be vindictive meant that his earlier evidence. However. Mr Holt moved from being uncooperative to being overassertive. Your clients [sic] company must make representations to the relevant authority viz. Mr Barry Cronin. The Land Council must acknowledge in their letter of consent that they will sign under seal any necessary documents and give consent required by any Statutory or Government authorities to allow the easement to be granted and the sewer line to proceed. rather than a record of his recollections. 65 York Street. Other passages gave the appearance of being a reconstruction of events. the new proposal involved a consultancy agreement between Villa World and Sanpine. n The Agreement will be from the period of signing to 28 February 2001. Accordingly. In a sense. which asserted a lack of recollection on many matters. There is no doubt that several of the criticisms made by the company of Mr Holt’s change in evidence have substance to them. Indeed. the Commission has approached his evidence with a degree of caution. Compensation will be paid to the Koompahtoo Local Aboriginal Land Council by the relevant authorities at fair and reasonable valuation for them granting the easement over their land. The proposal specified that the following points were to be incorporated into the consultancy contract: n Bronzewing Property Holdings are the Project Managers of the venture. n n n n n n The contract is to be between Villa World Pty Limited (or which ever of their companies owns the land at Wyee Point) and Sanpine Pty Limited of level 4. Sydney (for you [sic] information Sanpine is the Joint Venture partner of the Koompahtoo Local Aboriginal Land Council in relation to the land described above and © ICAC . The approval is to be forthcoming no later than the Land Council meeting of February 2001. it is necessary to note the changes made to the proposal of 16 November 2000. In particular. rather than factual. Against that background.Chapter 6: The Villa World consent 71 (c) the changes to the agreement from the proposal of 16 November 2000 were made at the behest of senior management by the company’s in-house legal counsel. should be preferred. This was done on 11 October 2004. again at a nominal salary. both by Counsel Assisting and by independent counsel for the company. and related to matters of which Mr Holt had no direct knowledge. who had not appeared at the earlier hearing. Mr Holt’s later statement was clearly the product of a belief that he had been “set up” by senior management to take responsibility for any adverse inferences that could be drawn about the company’s apparent conduct. a number of passages in his evidence were argumentative. The Chairman of Koompahtoo must seek agreement from the members of the Land Council at a correctly convened meeting. Various matters going to the credibility of Mr Holt’s latter statement were put to him. On 17 November 2000. Mr Scott sent Mr Wilson a further proposal on Bronzewing letterhead. A delegation of Koompahtoo members will meet with yourself and Spencer Simmons at Wyee Point to see first hand the land that is the subject of the current discussions. It is envisaged that at this meeting the Mayor will explain to the delegation the benefits that will flow to the City Council. This change in position led to the company requesting that Mr Holt return to the witness box and be made available for cross-examination. because the Commission is of the view that his earlier evidence was itself unsatisfactory. before the final agreement was reached. Hunter Water Corporation or Public Works Department to the effect that during the construction phase of the easement two (2) members of the Koompahtoo Land Council are to be engaged on a work experience basis for a nominal salary whilst the surveying of the easement takes place and three (3) members of the Koompahtoo Land Council are to be present when the excavation work is being carried out on the basis of Heritage Consultants. Sanpine will meet with the Mayor of Lake Macquarie City Council and ask him to arrange a meeting with a delegation representing the Koompahtoo Local Aboriginal Land Council.

it © ICAC . Mr Scott.000 + GST ($44.000) shall be paid if Koompahtoo Local Aboriginal Land Council grants approval in writing under seal for the easement to be created prior to 31 December 2000. Sanpine Pty Ltd will facilitate the necessary consents and documentation to grant permission to Hunter Water Corporation to approve the construction of the sewerage transfer line through the land owned by Koompahtoo Land Council at Morrisset for the purpose of construction of a rising sewer main. being Mr Wilson’s fee memorandum to Villa World. The draft agreement read as follows: The parties agree that for the consideration set out in this letter.000) to be paid at commencement of consultancy. Having regard to the terms of the document and having heard both Mr Scott and Mr Wilson give evidence.000 + GST ($22. and because he could not deny knowledge of and involvement with the earlier proposal. The next step in the process was the creation. iii) In addition to its (i) and (ii) an additional consultancy bonus fee of $20. The consultancy shall commence immediately upon signing of the agreement.000) to be paid upon receipt of a letter from Koompahtoo Local Aboriginal Land Council (signed by it’s executive) granting permission for the sewer easement to traverse the Koompahtoo land as shown on the Hunter Water Corporation plan. Villa World. of a draft agreement proposed by Villa World Limited and addressed to Sanpine Pty Ltd. may have been because Villa World officers had taken exception to the terms of the 16 November 2000 proposal. the only objective documentary evidence. it would be appropriate for him to put forward a further proposal.72 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council n The consultancy fee is to be $80. The contents of that document were. wanted a consent from KLALC.000) which is to be paid as follows: i) $40. However. Mr Scott was in effect dictating the terms on which that consent might be forthcoming. he stated. … One effect of the changes was to make the proposal relatively anodyne. … Villaworld Limited will arrange for Mr Spencer Simmons and Mr Kim Wilson to attend at a meeting to be nominated by Sanpine Pty Limited with members of the Koompahtoo Land Council to view the land owned by Villaworld Limited at Wyee Point. The substance of that proposal reflected the points identified by Mr Scott in his facsimile of 17 November 2000. The Commission has no doubt that the changes were discussed by Mr Wilson and Mr Scott. Villaworld Limited will provide any reasonable assistance requested by Sanpine Pty Limited in its negotiations with Hunter Water Corporation and the Public Works Department but Sanpine Pty Limited will take primary responsibility for the negotiation of the Agreement with Hunter Water corporation for the permission to construct the pipeline. The one reason why Mr Scott’s claims as to Mr Wilson’s dominant role might be significant relates to the role of Villa World.000 + GST ($88.000 + GST ($44. It is at least likely that Mr Wilson told Mr Scott that. If Mr Wilson dictated the changes. from which it might be inferred that the earlier proposal had been identified as at least potentially improper. records no contact between Mr Wilson and Villa World officers from 16 to 19 November 2000 inclusive. effectively dictated by Mr Kim Wilson leaving him. in his evidence to the Commission. It is unlikely that there was a single author with sole responsibility. As well as obtaining the necessary consents and authorising Hunter Water Corporation to proceed with the necessary works Sanpine Pty Ltd will also ensure that the Agreement entered into by Koompahtoo Land Council with Hunter Water Corporation for such works will not be subject to any disruption in the construction phase so long as Hunter Water Corporation and its servants and agents fulfil the requirements of those matters agreed between it and Koompahtoo Land Council for the construction of the pipeline. Mr Scott. playing a “secretarial” role. repeatedly distanced himself from the negotiation of the arrangements and in particular the facsimile of 17 November 2000. and accepts that Mr Wilson may have had a significant contribution in relation to the content of the November 17 proposal. the Commission finds Mr Scott’s evidence in this respect implausible and unacceptable. if he wished to make changes to the proposal. Perhaps for that reason. on 20 November 2000. Broadly speaking. ii) $40. Mr Wilson’s client. Each of them was aware of the terms of the previous proposal and each may have contributed to the new proposal.

Scott was however very bullish about the likelihood of completion before the end of December. Simmons and Scott and draft proposal”. at his correct email address. Such letter will be in terms that will satisfy Hunter Water Corporation that it can commence construction of the sewerage transfer line through the land owned by Koompahtoo Land Council. describing it as ‘99% certain’. I indicated that I would hope to send it today or early Tuesday. In the event that the necessary approvals are not gained within the period of this agreement Sanpine Pty Limited will only be entitled to the amount of money paid at the commencement of the agreement.00 plus GST will be paid by Villaworld Limited to Sanpine Pty Limited. I await your advice. 3. The Commission accepts that senior management at Villa World became aware of the contents of the attached draft agreement.000. Should the terms of 2 above be completed prior to 31 December 2000 a further payment of $20.000. $40. 4. $40. i.00 plus GST will be paid to Sanpine Pty Limited on receipt of a letter duly signed and authorised by the Koompahtoo Local Aboriginal Land Council addressed to Hunter Water Corporation granting permission for the sewer rising main to traverse the Koompahtoo land as shown on the Hunter Water Corporation plan. your company undertakes to facilitate the obtaining of the appropriate consents and execution of documentation to enable the Hunter Water corporation to enter upon freehold land owned/ controlled by the Koompahtoo Local Aboriginal Land Council (“Land Council”) for the purpose of construction and thereafter use of a rising sewer main pipeline through that land at Morrisset. I have spoken with Scott today and he said that Koompahtoo Aboriginal Land Council does not meet in January so if the approval does not happen in December the next date is February. The letter was dated 24 November 2000 and appears to have been signed by both parties on that date. That document suggests that Mr Kim Wilson spoke (either in person or on the telephone) to the three individuals identified on that day. notes three hours with the explanation “Merritt. This document was sent to Mr Holt at Villa World Limited at 2pm on 20 November 2000 electronically. Kim Wilson The invoice later rendered by Mr Wilson to Villa World.Chapter 6: The Villa World consent 73 The consideration that will be provided by Villaworld Limited will be as follows: 1.00 plus GST will be paid at the commencement of the consultancy and the consultancy will begin once Villaworld Limited receives a signed copy of this letter by Sanpine Pty Limited. under an entry for 20 November 2000. A further $40. The role of Villa World officers The final stage in the settling of the agreement between Villa World and Sanpine was undoubtedly undertaken by Villa World. The substance of the agreement read as follows: … In consideration of the terms of this Agreement and for the monetary consideration referred to later. that is why I have left the agreement in place to cover that eventuality. Once you are prepared to accept this then I would fax a draft to Scott and subject to any suggestions or amendments he has asked you to fax a signed copy to him … and have him return a signed copy. a copy being sent to Mr Doug Merritt. 2. © ICAC .000.00 plus GST.e. The covering email was addressed and commenced as follows: Gentlemen Attached is a draft of a letter setting out an agreement in respect of this matter which I believe would be accepted by Sanpine P/L. An annotation on the covering email records Mr Holt’s instructions that the document should be forwarded to Mr Whitewood and others for their comments. It resulted in a letter setting out the terms of an agreement between Sanpine Pty Ltd and Villa World Limited. For the avoidance of any doubt the term of this contract is from its commencement at the date of signing and return to Villaworld Limited by Sanpine Pty Limited and the Agreement will terminate on 28 February 2001. provided by Villa World and signed by Mr Cronin and Mr Lambert on behalf of Villa World.000.

000. at the end of that statement. Essential term of any agreement reached with the Land Council must incorporate an irrevocable undertaking from the Land Council that it will ensure that none of its members initiate or become involved in any activity. the Land Council will grant © ICAC an easement to the Hunter Water Corporation to secure rights to construct. 2001. … Sanpine Pty Ltd will accept primary responsibility to negotiate and finalise the Agreement between the Land Council and the Hunter Water Corporation for permission to construct and thereafter use the pipeline. With that addition. If required by the Hunter Water Corporation. The consideration payable by Villa World to Sanpine Pty Ltd for the above services is as follows: 1.000. maintain and use the pipeline on terms generally required by the Hunter Water corporation in similar easement documents. All payments payable by Villa World under this Agreement will be made within seven days of receipt of a tax invoice from Sanpine Pty Ltd evidencing the terms of payment.00 plus GST upon receipt by Villa World of a letter under the hand of the appropriate officers of the Land Council addressed to Hunter Water Corporation granting the Land Council’s permission to the construction and subsequent use of the sewerage rising main pipeline to traverse the Koompahtoo land as shown on the Hunter Water Corporation plan. No part of the Agreement will be inconsistent with the terms of this letter. The terms of the letter shall be such as to satisfy the Hunter Water Corporation that it can commence construction of the sewerage rising main pipeline through the Koompahtoo land. $40. Additionally. On the same date. A further $40. this company has certain legal obligations as a public entity. Mr Perkins sent an invoice to Villa World. The term of this Consultancy Agreement will commence on the date of the signing by you and delivery to Villa World Limited of a copy of this letter. 4. The letter should be accompanied by a GST invoice quoting an appropriate ABN. The same situation may well apply within your own company structure. Mr Cronin added. Mr Cronin wrote: At the time of signing Friday’s letter.00 plus GST to be paid upon receipt by Villa World of a copy of the letter duly signed by an appropriate officer of Sanpine Pty Ltd. your company will also ensure the execution of an appropriate Agreement between the Land Council and the Hunter Water Corporation to ensure that there will be no destruction by any parties during the construction phase of the pipeline or any subsequent use of the pipeline. The termination date of the Agreement will be the 28th February. . 2. the facsimile from Sanpine was signed by Mr Cronin and Mr Lambert and returned. Three days later. Mr Perkins sent by facsimile a letter to Mr Cronin seeking acknowledgment for the following statement: This serves to confirm the content of the letter dated 24 November 2000 sent by Villa World to Sanpine and signed by both parties shall remain absolutely confidential between the parties and there shall be no disclosure whatsoever to any third party without the prior consent of Sanpine Pty Limited.000 plus GST “for consulting services in regard to the sewer pipeline on KLALC land at Morisset”.00 plus GST will be paid. complaint or protest to prevent the subsequent development of the Villa World land at Wyee Point but rather cooperate with Villa World to prevent any such impediment restriction or delay in the development of the Villa World land. and Villa World provide any reasonable assistance as may be requested by Sanpine Pty Ltd to achieve this result. a bonus payment of $20. its contents were known to a number of senior personnel within Villa World who have a part to play in this development. seeking an initial payment of $40. I am therefore returning your letter of today’s date duly signed with a minor amendment to allow for the fact that some disclosure of our agreement was already made to key personnel within our Group. objection.000. the following handwritten material: Except as required by law or to each company’s officers and directors. to the attention of Barry Cronin. In the event that clause number is satisfied by the delivery of the appropriate letter prior to 31st December 2000. 3.74 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council In addition to the above. In returning the letter. This condition will be subject to the Hunter Water Corporation meeting its obligations under the Agreement between it and the Land Council for construction of the pipeline.

It is highly implausible that Mr Holt would approve such an expenditure without obtaining the support of senior management. The proposal Mr Wilson was now putting forward was to employ others. Mr Holt is not a lawyer and it seems most unlikely that he would have assumed the authority to approve the terms of a contract. that evidence may be accepted. there again. the terms of the proposal were. the Commission could not be satisfied on the balance of probabilities that the proposal of November 16 was passed on to senior management in the manner Mr Holt suggests. as a consultant. The omission was not satisfactorily explained. to obtain the KLALC consent. who was Mr Holt’s personal assistant at that time. That was a detail which.Chapter 6: The Villa World consent 75 When asked in evidence why he thought that such a confidentiality agreement was sought. curious. whether Mr Smith and Mr Scott or Sanpine. Mr Blackley had experience in dealing with bodies such as the City Council and Hunter Water: he was not. Taken in isolation. on behalf of the company. he did not assert such a recollection. and did not seek one. either a lawyer or a member of Villa World senior management. it is not safe to rely upon such an asserted recollection in the circumstances. the proposal of 20 November 2000. Villa World employed an in-house lawyer. Further. When asked if one purpose of the clause was to maintain its confidentiality from KLALC he agreed that it may well have had this purpose at the time. Mr Holt believes it was forwarded to others in senior management. on 21 November 2000 Mr Holt showed both of the two proposals then in existence to Mr Phillip Blackley. His evidence in this regard cannot be treated as persuasive. Mr Simmons had employed Mr Wilson. at which level it is at least plausible. there are other reasons to suppose that Mr Lambert may have been kept informed of the proposal as it developed. However. Mr Holt asserted that senior management had knowledge of the proposals put forward in relation to KLALC because he passed them on. What Mr Holt described in his evidence may have happened. As noted above. apart from faxing a copy of it to Mr Holt at his home. The reference to “Julie” is a reference to Julie Smith. Cronin and Lambert. Finally. First. however. to the extent that he now asserts an actual recollection of the arrangements made in that regard. as Mr Holt agreed. I also recall Julie advising me that Stuart Whitewood was out of the office (or away) on that day so I reiterated to ensure that she passed the “draft proposal” on to Barry Cronin and Gerry Lambert because both of them were anticipating its arrival. However. There is documentary evidence to support that inference. That arrangement had been continued by Villa World. he said that he had no explanation as to the need for it. Secondly. In his affidavit of 1 September 2004. having been sent it by facsimile by his personal assistant. It is highly unlikely that managers in charge of particular developments would. Mr Holt asserted a recollection of speaking with Ms Smith in relation to the 16 November 2000 email and expressly asking her to hand it to Mr Gerry Lambert. in such circumstances. Mr Stuart Whitewood. it seems unlikely that Mr Holt would have shown them to Mr Blackley had he felt confident in his own judgment or authority to deal with the matters raised. as a member of the senior management team. The position in relation to the earlier draft is less clear. in their context. After the passage of four years. in relation to the 16 November 2000 proposal: I distinctly recall instructing Julie to send it to Whitewood. take it upon themselves to approve the terms of contractual arrangements. he had not included in his detailed statement of 1 September 2004. In his oral evidence. It seems not to be at issue that he arranged for his personal assistant to pass on to his immediate superior. Mr Barry Cronin. However. He could not recall whether the fact that KLALC might want to know how much money Villa World was paying Sanpine was a matter of concern to him. the proposal was intended to become a contractual arrangement. the arrangement involved the expenditure of $100. there are other factors which strengthen that claim. It is unlikely that Mr Holt would have taken the proposals to Mr Blackley and not have shown them to senior management. He received the 16 November 2000 proposal at home. it may not. whom she had seen in the office that day.000. which Mr Holt said he would not authorise. including Mr Gerry Lambert. Given the caution Mr Holt displayed before approving Mr Wilson’s invoices for payment. it seems clear that the failure to obtain the consent of © ICAC . Mr Holt stated. Even at the time of preparing his statement of 1 September 2004. Thirdly. Ms Smith signed a statutory declaration on 21 September 2004 asserting that she had no electronic record of forwarding the proposal of 16 November 2000 to anyone and had no recollection of receiving any instructions or doing anything physically with the document. First. to carry out consultancies at the expense of Villa World for the same purpose. Mr Blackley was an independent consultant working on the Wyee Point project for Villa World. Fourthly. and did not have the authority to authorise. his evidence may be treated as a reconstruction based on practice.

Although that intention was no longer reflected in the proposal of 20 November 2000. Although Mr Blackley appears to have had no role to play in the approval of the agreement by Villa World. who operated as in-house legal counsel for Villa World and was part of its senior management team.000 to an independent consultancy would have been a commercial nonsense without some understanding as to how the payment might in fact facilitate the grant of consent.5 million. presumably. as Mr Barry Cronin explained to the Commission. There can be no doubt from those financial arrangements that the construction of the sewer line was of great importance to the very existence of the development at Wyee Point. It is apparent that Mr Lambert had a greater involvement with the arrangements with Sanpine and was one of two Villa World officers who signed the letter of agreement pursuant to which the $100. Mr Cronin gave evidence to the Commission before Mr Holt made his statement of 1 September 2004. Thus. The significance of the consent to the developers was made clear by Mr Barry Cronin in his evidence. Mr Holt became responsible for authorising payments to Mr Wilson. was that consent be obtained from KLALC for the construction of the rising sewer main. although he had only a vague recollection of the agreement with Sanpine. four days after entering into the agreement with Sanpine. The other signatory to the agreement was Mr Barry Cronin.000 was at risk if the consent was not obtained. but $2 million of that amount was not payable until such time as the approval for the sewer line had been obtained. Indeed. He denied knowledge of the suggestion that payments would be made to Messrs Scott and Smith. KLALC. I recall being of the view that obtaining the consent was sufficiently significant to warrant risking $40. The possible expiry of the development consent would have been no small concern for the development.76 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council KLALC had become something of an embarrassment in the promotion of the project. There are a number of aspects of the proposal of 20 November 2000 which. unless it continued to operate in the manner earlier suggested. it seems likely that he would have been aware of its substance when he approved and signed the agreement with Sanpine on 24 November 2000. It is also clear from their own evidence that. Mr Blackley wrote to Lake Macquarie City Council seeking an extension of the development consent for a further year. influence over. It is inconceivable that Mr Cronin. even as late as 28 November 2000. it is difficult to understand why such a payment would have been authorised. The payment of $100. a member of the family of the late Charles Perkins and that some $40.000 as I believe that the Perkins family were sufficiently well connected with the Aboriginal community to have a good prospect of obtaining the consent of the Land Council. He agreed that he had some information as to the background to the proposal of 20 November 2000 because he had been briefed by Mr Holt with whom he had had “a number of conversations round about that time”. the Chief Executive Officer of Villa World in November 2000. the 20 November 2000 proposal would not have had reasonable prospects of achieving the desired result. each officer knew that Sanpine had close links with and. Although the Commission cannot specifically conclude that Mr Lambert saw the proposal of 16 November 2000. At some stage in 2000. Indeed. My understanding was that Sanpine Pty Ltd was associated with Adam Perkins. stated that. on their face.000 was paid. a trained and experienced commercial solicitor. a condition of the agreement between Villa World and Goldris. are curious. it is entirely possible that the content of the proposal would have been communicated to the Chief Financial Officer. The agreement pursuant to which Villa World purchased the land from Goldris required payment of $4. It was to that end that Mr Simmons (for Goldris) had employed Mr Kim Wilson. If it had not been so communicated. Mr John Potter. He also had a conversation on the telephone . would not have had similar concerns. citing delays with the construction of the rising main frustrating commencement of work on the project. it is clear that Villa World took over the responsibility for Mr Wilson’s consultancy and in September 2000. In fact the agreement of 24 November 2000 reflects changes made by Villa World to the proposal of 20 November 2000: it is reasonable to conclude that those were drafted by Mr Barry Cronin. whatever else the senior management of Villa World knew in November 2000 about Sanpine. Because © ICAC the email from Mr Kim Wilson of 16 November 2000 expressly sought authority to negotiate in principle on the proposal which accompanied that letter. from whom Villa World purchased the Wyee Point development. the comments he made in handwriting on the two draft letters of agreement shown to him by Mr Holt on 23 November 2000 indicate that these curious aspects of the letters were readily apparent at the time to a person with the relevant professional background and an understanding of the nature of the development. It is therefore likely that Mr Gerry Lambert was aware of the intention that a significant part of the sum to be provided was to be paid for the benefit of Messrs Smith and Scott.

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with Mr Kim Wilson. He knew about Mr Adam Perkins’ involvement with Sanpine. In addition, he said he had conversations with other members of the management team including Stuart Whitewood, Gerry Lambert and the CEO. Mr Cronin was asked by Counsel Assisting, in relation to the senior management committee of Villa World: [Counsel Assisting] Q: … The committee were advised that Sanpine were associated with the Perkins family who had an involvement with Koompahtoo. Did anyone query why no payment was being made direct to Koompahtoo? [Mr Cronin] A: No — but Koompahtoo — no — answer, short answer’s no. Q: Right. Did that not strike you as unusual? A: No. Q: And why not? A: Well, running an easement, a series of easements through the Koompahtoo land was, were some advantages. … Q: But didn’t it strike you as odd that a company associated with Koompahtoo would be getting $100,000 to get Koompahtoo’s approval but on the face of it, Koompahtoo wouldn’t be getting a cent? A: Well, it wasn’t $100,000 to get, it was $100,000 if they got it within a certain period of time. … Q: And indeed, did it not strike you as odd that … if the letter was obtained, the $100,000 would go to Sanpine, and not to the party who was actually giving the consent, and not to the party that owned the land? A: No. Mr Cronin was also asked: Q: Did it occur to you in this period that there might be some comfort in ensuring that Koompahtoo was appraised of the terms of the agreement between Villa World and Sanpine? A: No, it did not. Finally, Mr Cronin was asked questions about the request by Sanpine to maintain strict confidentiality in relation to the agreement which had been executed. He said that he received no indication as to why confidentiality was sought, but made a

handwritten variation to the clause in the form received from Mr Perkins. He was then asked: Q: Did it not occur to you that one object of the confidentiality clause was to maintain its confidentiality from Koompahtoo? A: It may well have at the time. Q: Wouldn’t that have struck you as a matter of concern? A: What, that Koompahtoo might want to know how much money we were paying Sanpine? Q: Yes. A: It may have. I can’t recall, to be honest. Mr Cronin was then asked as to his understanding of the respective roles of Mr Kim Wilson and Sanpine. It was put to him that Wilson was negotiating for Villa World and Sanpine for KLALC. Q: Was that your understanding of what had been occurring to that time? A: Well, Sanpine had connections with Koompahtoo. Whether they had a brief from Koompahtoo or not, I didn’t know. Q: Sanpine was certainly indicating that they had a capacity to exercise influence? A: Yes. Q: They were getting a payment for the exercise of that influence? A: From us? Q: Yes. A: Yes. Q: Then they were asking for that payment to be kept confidential? A: Yes. Q: Didn’t those three facts alone raise a concern in your mind as to the propriety of the payment? A: No.

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ICAC REPORT:

Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council

In giving evidence on 2 July 2004, Mr Cronin was also asked questions by counsel for Mr Wilson. The following exchange occurred: [Mr Buscombe] Q: It’s clear, isn’t it, that the proposal that was sent on 20th November 2000 wasn’t simply just holus bolus accepted by Villa World, correct? [Mr Cronin] A: Correct. Q: It was considered and refined, correct? A: Correct. Q: Resulting ultimately in the agreement that is signed on behalf of Villa World and dated 24th November 2000. Correct? A: Correct. Q: The senior management at Villa World including yourself, considered the terms of the agreement the company was going to enter into, correct? A: Correct. Q: Did you seek any external legal advice about its terms? A: We did not. Q: You formed the view yourself signing as legal consultant that there was nothing improper in the agreement. Correct? A: I did. Q: And that was of course after you made substantial amendments to the draft that had been sent to you on 20th November, correct? A: Correct. Because the senior management of Villa World Limited refined and approved the final agreement, the Commission, taking all the circumstances set out above into account, considers it likely that some members of Villa World senior management were informed of the proposal put forward in writing on 16 November 2000 at the time it was received or at least by 20 November 2000.

Nature of the transaction The proposal, in its original form, involved a payment of a significant sum of money to Mr Bill Smith in connection with the obtaining of KLALC’s consent to the rising sewer main traversing its property. In giving (or refusing) that consent, the KLALC was acting in its capacity as property owner, albeit in the context of qualified statutory powers. Whether or not the giving of the consent may have involved a disposal of an interest in land which may, in turn, have required the consent of NSWALC does not appear to have been a point considered by anyone. However, given the statutory context in which the KLALC operated, there is some analogy between its powers and functions and those of a local council. Without seeking to press the analogy too far, the possibility that a developer might make a substantial payment to the mayor (say) of a local council from which it seeks development consent would immediately strike most people as improper. Furthermore, it is difficult to conceive of circumstances in which such a payment could be justified as, for example, a payment for services provided by the mayor’s private business. The reason why such a justification would not be acceptable is that a mayor should not operate a business which assesses aspects of development approvals sought from the council. In the present case, the first proposal for payment to Mr Smith was sought to be justified on the basis that he was to provide services to Villa World, in considering whether KLALC should give consent to the rising sewer main. That situation did not change when the proposal became one for a payment to Sanpine for it to provide such services and to subcontract to Mr Smith’s company. The only relevance of the interposition of Sanpine between Smith & Sons and Villa World was that the impropriety of the transaction may have been thought to be less obvious. However, it is highly unlikely that Villa World senior management would have approved a significant payment to Sanpine without knowing what was expected to be provided by Sanpine. It will be necessary to return to these considerations, as they demonstrate the inherently unsatisfactory relationship between Mr Bill Smith and KLALC, of which he was the Chairperson. The elements of impropriety in that relationship may be put to one side for the moment: the Commission is satisfied that the justification for the payment to Smith & Sons was a sham. There are a number of reasons for that conclusion. First, although Smith & Sons was paid $40,000 for its “consultancy”, at no stage were the terms of the

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consultancy formalised by way of a written agreement between Sanpine and Smith & Sons. Had Sanpine believed it was entering into a genuine consultancy, for payment of $40,000, it is at least highly likely that the terms would have been reduced to writing, by way of an exchange of letters. Even more telling is the evidence of Mr Bill Smith himself. He said that the consultancy work required that the line for the rising main needed to be “walked” and “supervised” by members of KLALC during the time of the excavation. The suggestion that any such work was required in relation to the laying of a sewer over this land is little more than a contemptible misapplication, for private profit, of the principle that cultural heritage surveys should be undertaken prior to any developments on land which is of cultural significance to Aboriginal people (this, the KLALC had certified, was not) or land on which Aboriginal relics might be found (much of this land had already been surveyed for this purpose with largely negative results). Secondly, to suggest that Smith & Sons were competent to do such work was to demean the nature of the work. Thirdly, Hunter Water Corporation in fact employed KLALC members to undertake such “work” at the time that the rising sewer main was constructed. The payments for that work were entirely separate from the amount paid by Villa World to Smith & Sons. Thus, the condition which Mr Bill Smith told the Commission he had made clear to Messrs Perkins, Scott and Steer, as the price of KLALC’s consent, had nothing to do with the payment of $40,000 of Villa World funds by Sanpine to his business: it was a separate matter and occurred later. In fact the terms of the proposal agreed to by Sanpine and Villa World unambiguously required that, for Smith & Sons to be paid the full amount of $40,000, KLALC had to give consent to the rising sewer main and had to do so before the end of December 2000. Mr Smith well knew that and eventually conceded in his evidence that he knew that. His evasiveness in dealing with questions going to that state of knowledge demonstrated to the satisfaction of the Commission that he was, at least by the time he came to give evidence, fully conscious of the fact that he had been paid a significant sum of money to give consent on behalf of KLALC. The Commission has no doubt that, at least by the time he gave evidence before it, he was conscious of the fact that it was improper behaviour. In fact it was worse than that. Although Mr Smith was not inclined to accept the factual premises, it is clear to the Commission that prior to 13 December 2000 the only occasion on which the membership of KLALC had been asked to consider at a properly convened meeting the request with respect

to the rising sewer main it formally resolved not to give its consent. When, on 13 December 2000, Mr Smith (with Mr Griffen) signed a letter of consent, he had no authority to do so. The Commission is satisfied that he signed the letter, not because he thought that the KLALC had given or authorised him to give approval, but because he would receive $40,000, which he would not receive unless the letter was signed. His conduct in that regard was a betrayal of the trust placed in him by a majority of the KLALC membership in electing him as Chairperson of the Land Council. As will be explained below, it was undoubtedly corrupt conduct for the purposes of the ICAC Act. The other party to the supposed consultancy agreement with Smith & Sons was Sanpine. As noted above, the joint venture management committee minutes of 9 November 2000 authorised Adam Perkins to reach an agreement with Mr Bill Smith and Bob Scott in relation to payments. This was no doubt a comfortable arrangement, since all three were on the management committee. However, it may be assumed that Mr Perkins was also the authorised agent of Sanpine for the purpose of any agreement between Sanpine and the proposed consultants. Thus, when on 24 November 2000 Mr Perkins wrote to Villa World after the letter of agreement had been signed, he sent an invoice for $40,000 plus GST and wrote: I have instructed both Bob Scott and Bill Smith to commence on your project immediately. He continued: I have reinforced the two deadlines within the agreement and from these conversations feel very positive in regard to a successful outcome. For reasons noted below, the Commission is satisfied that this letter was no more than the carrying through of a fiction, namely the fiction that moneys payable to Bill Smith and Bob Scott were for the provision of services to Sanpine or Villa World. In relation to Mr Bill Smith, Mr Perkins knew that the suggested consultancy was a sham. When asked in evidence about the purpose of the payment to Mr Smith, Mr Perkins was asked and answered as follows: [Counsel Assisting] Q: The clearance work was just a ruse, some form of defence, [if] anyone actually questioned what the payment was for? [Mr Perkins] A: I think the — I agree with you. The money being paid was over the top, however Villa World offered it to us.
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His explanation for the payment to Smith & Sons was that it had been made for work done in assessing “the cultural impact” if the pipeline were to be established. Sanpine could exercise control by requiring KLALC to refuse consent or could have required KLALC to give consent. Sanpine had a role to play in relation to the consent. The explanation was a fabrication to justify the improper arrangement between Sanpine and Villa World. There is no doubt that a significant part of the path of the rising sewer main was across KLALC land which was not subject to the joint venture agreement. Mr Steer was involved. The role of Graham Steer. arising from the initial proposal that the consultancy would be between Villa World and Bronzewing. Sanpine had a controlling vote in relation to the use of the land over which the agreement operated. of which he was a moving party. . There was nothing in the joint venture agreement which could permit Sanpine to require KLALC to use land. presumably Mr Perkins was saying that even if one metre of the land was subject to the joint venture agreement. because it was joint venture development that was required. Mr Scott accepted that this was the initial proposal. in relation to the negotiation of the agreement with Villa World and the payments to Mr Smith. he was a signatory to the agreement on behalf of Sanpine. agreements and payments to do with the Villa World transaction.80 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Mr Perkins went on to say that Mr Smith “did the clearance work”. but the second part does not follow. On the view suggested by Mr Perkins. The Commission understands this answer to mean that because part of the sewer main would go through joint venture land. The first part of the proposition can be accepted. but later sought to deny emphatically that he had knowledge of such a proposal. there is the role of Mr Bob Scott. and thus Sanpine. Because Mr Scott was project manager for the joint venture. there may be some truth in that claim. If he deliberately distanced himself from these arrangements. Sanpine could require KLALC to approve the proposal. It follows that Mr Perkins. was fully aware of the impropriety of the agreement and the payment to Mr Smith. the Commission is satisfied that he was involved in the delegation of authority to Adam Perkins to act on behalf of Sanpine (or possibly the joint venture). For reasons already noted. he was aware that payments were intended to be made to Bill Smith and Bob Scott. There is no suggestion that there was any four week period at this time for which he was not entitled to his remuneration as project manager. with Bronzewing to supply services to Villa World rather than to Sanpine or the joint venture. if the behaviour constituted corrupt conduct in which Sanpine was involved. no consultancy agreement was ever entered into and the nature of the work done remains obscure. was aware that this was a sham. whilst curious in commercial terms. As with Mr Smith. The Commission does not accept that Mr Perkins believed that proposition to be true. because. The Commission is not satisfied that he was a moving party in any of these respects: but it is satisfied that he was aware of the scheme proposed and authorised the arrangements on behalf of Sanpine. the Commission is satisfied that Mr Steer. the payment was clearly made in order to obtain the consent of KLALC to a particular use of its land and. Mr Steer was at pains in his evidence to distance himself from any active involvement in the negotiations. As a member of the management committee. without noting that he was paid separately for that “work”. pursuant to the joint venture agreement. despite the fact that Sanpine purportedly contracted with Mr Smith or his company to provide some form of assessment. it is likely to have been because he was conscious of the impropriety involved. the company associated with Mr Scott’s partner was paid $40. Mr Scott stated in his evidence that this work © ICAC was additional and it took “the large majority of four weeks” to undertake. The reason why Mr Perkins tried to make the second and larger claim was that he wished to deny any connection between the payment to Smith & Sons and the letter of consent provided by Mr Smith and Mr Griffen on behalf of KLALC. As with the company associated with Mr Smith. Finally. however. on the Sanpine/KLALC side. and he authorised the payment to the companies associated with Smith and Scott respectively. in a particular way. There was also a difficulty with Scott’s explanation. like Mr Perkins and Mr Smith. Accordingly. However.000 by Sanpine for work as a consultant. those arrangements could not involve any element of corrupt conduct as defined in the ICAC Act. which was not subject to the agreement. Mr Perkins stated: They are not connected. He would have signed that if we had asked him to do it and paid him nothing. On one view. What is less clear is why Bronzewing should be paid a separate fee for doing something on behalf of the joint venture which it was arguably contracted to do in any event. At first. Mr Scott said he was required to assess the benefits and disadvantages of giving consent from the point of view of the joint venture. part of which was paid by Sanpine to Bronzewing. if Villa World wished to make a payment to Sanpine. is less clear.

to whom Mr Holt was responsible. it is likely that they were aware that parts of the $100. conditional on KLALC providing consent. the question remains as to why Sanpine would have agreed to a payment of $40. that approval came from senior management. the Chief Operations Officer. It is likely that others in Villa World were also aware of the circumstances relating to the payments to Sanpine. who was the Chief Executive Officer of Villa World having taken over that role from Mr Doug Merritt. “to a lesser extent”. On the contrary. The next version of the proposal avoided that express provision. It is clear that Mr Wilson presented the proposal of 16 November 2000 to Villa World. Mr Wilson. through Mr Perkins. These persons included Mr Stuart Whitewood. one had to go through Bob Scott. If anyone of senior management had sufficient knowledge to be implicated in the corrupt conduct.000 would be paid for the benefit of Mr Bob Scott and Mr Bill Smith. however remains: what did Villa World management think that Mr Perkins (with whom they had no contact) could use to persuade KLALC to take a different view of the rising sewer main. Sanpine might be better placed to do so. The Commission is not satisfied. perhaps in recognition of the fact that there might be some diminution in the value of its land from its acceptance of the rising sewer main. He recalled. containing a patently improper proposal. As already noted. they were aware. subject to the changes subsequently made in relation to the identification of the payees. which did not give the authority sought by Mr Wilson on 16 November 2000. seeing the draft letter of 20 November 2000 and discussing the proposal with senior management. In other words. the Commission believes it is likely that. the Commission is satisfied that Mr Holt was aware of all the elements which demonstrated that the proposed payment to Sanpine was a corrupt payment. the Villa World Chief Financial Officer and Mr Barry Cronin. The obvious inference is that the change was made at the instigation of someone in Villa World. Rather. however. Mr Cronin explained the reason for the second agreement as Mr Wilson’s failure to achieve a result and the belief that. Villa World’s in-house legal counsel. a business being run for the private benefit of Mr Scott and Mr Smith. John Potter. that there had been some communication between Villa World and Mr Wilson which suggested that the amount proposed would be acceptable. appear to have worked on that basis and accepted that. that Mr Holt had any authority to approve the proposal on behalf of Villa World. the money was to be paid to a third party. namely the payment of $40. directly or indirectly. as reflected in the agreement of 24 November 2000. because of its contacts with KLALC. Turning from the Sanpine/KLALC side of the equation. Given that he was no longer an officer of the company. For reasons already noted.000 to the Chairperson of KLALC. Sanpine. In the Commission’s view the answer is that the joint venture was. when they signed the agreement on 21 November 2000 on behalf of Villa World. Villa World as a body corporate would be treated as having the relevant intent. was asked to approve the proposal of 16 November 2000 and did so. to get to Bill Smith. both Mr Smith and Mr Scott would have to be remunerated in order to obtain KLALC consent. the 20 November 2000 proposal was not expressly improper. it is also implausible that Mr Merritt would have done so either. beyond such persuasive arguments as Mr Wilson may have been able to muster? © ICAC . The only plausible explanation is that a member of senior management of Villa World. Barry Cronin and. it is implausible that Mr Holt would have given approval to this payment without higher authority. the bulk of which was shared between Mr Scott’s and Mr Smith’s associated companies. The question. The agreement itself was signed by Mr Gerry Lambert. The need for the Villa World development to obtain KLALC consent was used opportunistically as a means of extracting a significant sum of money from Villa World. and therefore Villa World. including Gerry Lambert. in relation to the terms then proposed. it is necessary to complete the picture on the Villa World side. at least in general terms of the reasons for and purposes of the payment being made to Sanpine. Mr Whitewood provided a declaration stating that he had no knowledge of the proposal of 16 November 2000 which included payments to Scott and Smith. For reasons noted above. however.000 to Mr Scott. As Mr Cronin effectively conceded.Chapter 6: The Villa World consent 81 Nevertheless. At least on its face. in terms suggested by Mr Perkins to Mr Wilson. Put somewhat differently. there was no significant difference in the nature of the arrangement entered into by Villa World with Mr Kim Wilson and the arrangement. Mr Scott was being paid for a favourable exercise of his influence over Mr Smith. possibly Mr Lambert or Mr Cronin. who shared the proceeds. with a smaller payment going to KLALC. with Sanpine. by late 2000. in exchange for the Land Council’s consent. It is apparent from the emails of 11 and 20 November. set out above. with no indication of any further payments or arrangements.

in relation to the Wyee Point development. However. The proposal of 16 November 2000. Although it seems possible that Mr Whitewood and Mr Potter were aware of the proposed payment to Sanpine and the eventual intended recipients of the payment. referred to spending three hours discussing a draft proposal with Messrs Merritt. who was responsible for the final draft of the agreement accepted by Villa World. although the extent of that involvement is unclear. the Commission cannot be comfortably satisfied that they had the requisite knowledge as at 24 November 2000. Mr John Potter. denied any on-going involvement with Villa World after his departure from its employment on 31 October 2000. beyond the general material concerning the administration of the company. Whilst the Commission is not satisfied that those denials are reliable.” The persons responsible for that “action” were John Potter and D. to Mr Bill Smith. the state of mind of the company.82 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Secondly. each has denied having such knowledge. It was then to be paid a further $40.000 might achieve success. At least for the purpose of criminal liability. His successor. through Sanpine. Plausible inferences do not lead to a comfortable satisfaction that any individual was implicated in the corrupt conduct. makes no sense. at an hourly rate for the expenditure of his time. DM to attend this meeting on behalf of VW. Mr Wilson was paid. as noted above. Accordingly. was responsible for approving the payment. entirely properly and appropriately. In particular. a payment to KLALC would have been understandable: a payment to Sanpine in this amount with no explanation as to its purpose or intended destination. and Mr Lambert who. Mr Wilson’s invoice also referred to a telephone conversation with Mr Doug Merritt on 2 November 2000. The Commission is satisfied that Mr Merritt continued to have some on-going involvement after 31 October 2000. was addressed to Mr Merritt. Holt. though at an incorrect email address. Whether or not he obtained a copy of the proposal is unclear. It is likely that Mr Cronin. which was paid by Villa World. constituting the minutes of a planning and development meeting held on 7 November 2000. understood what was to happen to the money.000 on receipt of an appropriate letter of consent from KLALC addressed to Hunter Water Corporation. Mr Merritt. and without any questions being asked.000 on signing the agreement. through its senior management. the Commission is not comfortably satisfied that either Mr Cronin or Mr Lambert had the requisite knowledge to be implicated in the corrupt conduct. the Commission is not satisfied that they were implicated in the corrupt conduct. I have caused a search to be made and have not located any records that would indicate Douglas Merritt was paid for attending any such meeting or any travel expenses for such an attendance. but the proposal of 20 November 2000 was sent both to Mr Holt and to him. Clearly Mr Wilson had identified his error of 16 November 2000 and had sent the further proposal to Mr Merritt on 20 November 2000. it cannot be satisfied that they are false in all material respects. the Commission is not satisfied that Villa World. As it was put to Mr Cronin. stated in a statutory declaration of 12 July 2004: I have no recollection of Douglas Merritt carrying out any work on behalf of Villa World Ltd subsequent to his departure on 31 October 2000. a Villa World document. or denied involvement. for his part. Mr Merritt provided evidence © ICAC . Simmons and Scott. the Commission has not treated the knowledge of Mr Holt as the knowledge of the company. Sanpine was to be paid $40. The reference to VW is. a reference to Villa World. Further. In the absence of any documentary or oral evidence. alone or in concert with other members of senior management. noted that a further meeting was to be held “with Kim Wilson and Adam Perkins. he denied meeting with Kim Wilson on 20 November 2000. According to the 24 November 2000 agreement. each claimed lack of recall. at his correct email address. was knowingly implicated in the making of a corrupt payment. of course. Although Mr Holt had quite significant seniority in the company as Development Manager (Qld and NSW) it appears to have been common ground that he had limited authority to approve expenditure. The additional sum of $20. Mr Wilson’s invoice. the Commission does not accept that such approval was given without some understanding of the manner in which the payment of $100. the reference to “DM” is a reference to Doug Merritt. In reaching this conclusion.000 was to be paid if the letter were to be received prior to 31 December 2000. On the other hand. his state of mind was not. Accordingly. As it is possible that no member of senior management was so implicated. For reasons already noted. therefore. was not an appropriate officer to sign a contractual arrangement on behalf of the company and was not part of senior management. there is one dramatic difference between the nature of the agreement with Mr Wilson and the agreement with Sanpine. There was also a question as to the role of Mr Doug Merritt in the activities which took place in November 2000.

93 Pursuant to section 249F. Mr Holt. the Commission is comfortably satisfied that he. That fact is not. the payment to Mr Scott appears to have been a reward for using his influence over Mr Smith. 92 Crimes Act. he could be held to be directly implicated in the arrangement to make a corrupt payment to Mr Smith. but Mr Smith received payment. This. was directly implicated in making the arrangements by which the corrupt payment was effected. However. The position in relation to Mr Scott is more complex. Mr Scott was not an agent acting on behalf of a principal in relation to the business of the principal. like Mr Wilson.) Each person with knowledge of the proposed payment to be made to Mr Smith by Sanpine. out of money provided by Villa World. is a matter of speculation. engaged in corrupt conduct in relation to his involvement in arranging for a payment of $100. however.93 Of members of the management of Villa World.000 to Smith & Sons Consultancy Pty Ltd was a payment made for the personal benefit of Mr Smith in return for his act in procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. about which it is impossible to reach any conclusions. received a benefit – being the payment made to Smith & Sons Consultancy Pty Ltd – as a reward for procuring the consent of KLALC to the construction of a rising sewer main across the KLALC land for the benefit of Villa World. by Villa World. pursuant to section 249F of the Crimes Act. It is now necessary to consider the question of criminal conduct in relation to the payment to Mr Bill Smith. In the case of Mr Smith. Accordingly Mr Holt also. however. nor was he the person responsible for providing a benefit to the agent. Mr Wilson. However. the Commission makes the following findings of corrupt conduct: Mr Dale Holt. For the reasons set out above. As suggested above. was complicit in the corrupt conduct. who negotiated the arrangement involving a payment to Mr Bill Smith could also be found to be complicit in the offence committed under section 249B of the Crimes Act and thus himself guilty of an offence. Mr Scott could be held to be complicit in that arrangement. Corrupt conduct? The Commission is satisfied that the payment of $40. inconsistent with a possible conversation with Mr Wilson on 20 November 2000 and further communication between Mr Merritt and the on-going members of the Villa World senior management team. A similar finding is made in relation to Mr Steer. former Development Manager with Villa World Ltd.000) would be paid by Sanpine 91 For the terms of the provision and generally. The officers of Sanpine who arranged for the payment were complicit in the offence committed by Mr Smith. involving an offence under section 249F of the Crimes Act. Mr Perkins knew that the suggested consultancy with Mr Smith was a sham and. as was the giving of the benefit by Sanpine and. was involved in conduct which could constitute a criminal offence. the payment to him does not fall directly within the terms of section 249B(1) of the Crimes Act. In relation to Mr Smith himself. © ICAC . as Chairperson of the Land Council. section 249F. Mr Dale Holt was most directly involved in the arrangements by which Villa World provided the funds. see Chapter 3. On the one hand there is the payment which his partner’s company (which employed him as project manager) received through the Sanpine arrangements. for the reasons set out above. Although he did not have authority to approve the payment or the terms of the agreement.92 Sanpine authorised Mr Adam Perkins to enter into an agreement with Villa World and with the proposed consultants. The receipt of such a payment is capable of satisfying the requirements of section 249B(1)91 of the Crimes Act.Chapter 6: The Villa World consent 83 to the Commission that he was in Melbourne on other business on 20 November 2000 and did not attend a meeting with Mr Wilson on that date. not only he. Accordingly. part of which were to be paid to Mr Bill Smith’s company. accordingly. Whatever knowledge can be attributed to Villa World in these circumstances.000 from Villa World Ltd to Sanpine Pty Ltd in the knowledge that part of that money ($40. (It is not relevant for this purpose whether the consent given was legally valid. cannot be based upon the on-going involvement of Mr Merritt. Mr Scott was instrumental in setting up the arrangement whereby. indirectly. receipt of the payment was an offence. The benefit was in fact paid from funds received by Sanpine Pty Ltd. As already noted.

and Kim Wilson for offences under section 249F of the Crimes Act. in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. a director of Sanpine Pty Ltd. in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. . It follows that its state of satisfaction in relation to Villa World Limited is not sufficient to find that this company was implicated in corrupt conduct.000) would be paid by Sanpine Pty Ltd to Smith & Sons Consultancy © ICAC Pty Ltd.000 from Sanpine Pty Ltd to Smith & Sons Consultancy Pty Ltd. The Commission recommends that consideration is given to prosecuting Mr Dale Holt for an offence under section 249F of the Crimes Act 1900 (NSW). in signing the agreement on behalf of Villa World. It is possible that Mr Barry Cronin and Mr Geoff Lambert were each aware of the relevant end purpose of the payment to Sanpine and.000 from Villa World Ltd to Sanpine Pty Ltd in the knowledge that part of that money ($40.000 from Sanpine Pty Ltd to Smith & Sons Consultancy Pty Ltd. However. in return for Mr Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. His involvement with the on-going negotiations would have led him to understand that the payments to Mr Smith and Mr Scott were the price for obtaining the consent of Koompahtoo to the rising sewer main. a company associated with Mr Bill Smith. engaged in corrupt conduct in relation to his involvement in the payment of $40. Mr Kim Wilson. the Chairperson of KLALC. engaged in corrupt conduct in relation to his involvement in the payment of $40. Section 74A(2) statement In relation to Mr Holt.84 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Pty Ltd to Smith & Sons Consultancy Pty Ltd. a company associated with Mr Bill Smith. Robert Scott.000 from Sanpine Pty Ltd to Smith & Sons Consultancy Pty Ltd. a company associated with Mr Bill Smith. engaged in corrupt conduct in relation to his involvement in the payment of $40. former Chairperson of KLALC. although he had no authority to approve the payments on behalf of Villa World. engaged in corrupt conduct in relation to his involvement in the payment of $40. it is clear that he received the proposal of 16 November 2000 and therefore had knowledge of the intention that a payment be made to Mr Smith. The Commission also recommends that consideration be given to the prosecution of Mr Bill Smith for an offence under section 249B(1) of the Crimes Act and for the prosecution of Messrs Adam Perkins. On the material before it. a native title and land rights consultant. that evidence did not exonerate him from responsibility in relation to his own involvement. Whilst his later evidence sought to provide a basis upon which the Commission could be satisfied that senior management of Villa World knew of the purpose of the payments. he was complicit in the corrupt conduct. a company associated with Mr Bill Smith. in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. a company associated with Mr Bill Smith. a consultant and project manager. in return for Mr Bill Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. Mr Robert Scott. in relation to them any such conclusion would be based to a significant extent on matters of inference. a chartered accountant and director of Sanpine Pty Ltd. the Commission is not comfortably satisfied as to their knowledge of the critical matter and is therefore not satisfied that they were involved in the corrupt conduct. the Chairperson of KLALC. Mr Graham Steer. a company associated with Mr Bill Smith. Accordingly.000 from Sanpine Pty Ltd to Smith & Sons Consultancy Pty Ltd. were parties to a corrupt act. Mr Bill Smith. engaged in corrupt conduct in relation to his involvement in negotiating a payment of $100. in return for Mr Smith procuring and conveying the consent of KLALC to the installation of a rising sewer main across KLALC land. Mr Adam Perkins.

Although it is not entirely clear whether the letter was ever sent. The motions in relation to members Moran and Green tend to belie unanimity among the KLALC membership. It threatened defamation proceedings and suggested that damages in excess of $1 million might be obtained against the dissidents. Moran is now suspended. What was probably intended was that. Although every motion put to the meeting was apparently “unanimously carried”. A number of resolutions concerning transfer of land. Members are eligible to purchase land under this arrangement once. and Mrs Barbara Green. although it may have been. Resolution of this uncertainty is unnecessary for the purposes of the investigation. For reasons which will become apparent from the record of events set out below. the Commission is satisfied that two elements of the “housing policy” set out in the document were agreed to by members of the KLALC. to persons who had requisitioned an extraordinary general meeting of the KLALC and who sought to raise questions about the joint venture. Nevertheless.85 Chapter 7: Land transfers to KLALC members On 20 November 2002. Accordingly. to sell “all other land parcels”. the page of the minutes available to the Commission provides only a partial record of the events of that evening.” It was at that meeting that Mr Bill Smith apparently “confirmed” that consideration was being given to transferring the joint venture land to a trust. occasion. there was an additional provision which stated: All other land parcels not allocated to Members must be sold at not less than 90% of full market value as provided by a fully qualified valuer at the time. It will also be recalled that on 16 October 2000 a management meeting of the Sanpine joint venture recorded that “issues associated with George Parry. Dargin etc continue to frustrate our sensible operation of the Land Council. Copies of these resolutions were provided by NSWALC. A fourth limb to the resolution is of more significance and reads as follows: Members have the opportunity for Mortgage. The terms of this resolution are – and would have been at the time – almost unintelligible: for that reason alone. The timing of this meeting and subsequent meetings is significant: it will be recalled that dissent had broken out openly within the KLALC membership in 1999 in relation to the arrangements for the Sanpine joint venture. the KLALC Executive signed a “statement” which purported to set out the terms of a resolution with respect to a “housing policy” adopted by members of the Land Council on an earlier. after the fire at the KLALC office in September 2001. but that it was intended to provide some form of justification for the transfer of land to the Chairperson’s son who on-sold at a substantial profit. These elements were: Members only would be eligible to purchase a block of land at the full amount of $5. The first meeting took place on 22 May 2000. passed during the year 2000. he or she would be required to pay not less than 90% of market value. it is unlikely that such a resolution was adopted. In relation to the meeting of KLALC held to discuss transfer of land to members. this motion would have required KLALC. which can only be described as intimidating.000. survived the fire in September 2001. The draft letter available to the Commission was dated 17 May 1999. there is no evidence that KLALC in fact put any such provision into effect. if a member who had already received a parcel of land at $5. There are two other elements of the supposed “housing policy” about which the Commission takes a different view. Mr Glen Green. First. after allowing a period for members to claim parcels at the reduced price. Read literally. the Commission is not satisfied that such a resolution was carried. it appears that the document was created in anticipation of an investigation into the KLALC’s accounts. as recounted below. to whom they had been supplied. after two further motions following Mrs Moran’s suspension. the Commission is satisfied that no such resolution was adopted by the KLALC. unidentified. the Commission accepts that instructions were given by the joint venture to solicitors to send a letter. Accepting that this was the intention of the suggested provision. held on 22 May 2000. Sale for whatever the valuation of the land to ‘Spot Purchase’ elsewhere as a land and housing package deal or build. probably at a meeting between May and October 2000. which might have revealed that a property was transferred to the son of the Chairperson for no consideration. a motion was put in the following terms: To suspend Jillian Green for a period of six months with the option of two years to be held four weeks from tonight.000 wished to obtain a further parcel. In fact. The list of persons identified as dissidents included Mrs Zelma Moran. Nevertheless it commences with the notation: Mrs Z. Three other motions were passed on that © ICAC .

M. Smith are sons of Mr Bill Smith. On 19 June 2000 there was a further meeting.” At the meeting on 24 July 2000 it appears that the lease proposal for this land was made on behalf of Mimaga Wajaar Pty Ltd. Repayments will be suitable to the need’s [sic] of our families and land can be used as collaterol [sic] for home loans. By the time of the meeting on 24 July 2000. Gamble: Asked if Koompahtoo needed to sell land to assist members. and one from a member. as stated by Mr Briggs and as noted in the minutes. Newlin. Smith. Gamble: Asked about others not being able to do it financially. Mr Daniel Heterick. (Whether Mr Briggs had really made two requests is not clear: a motion was passed accepting his application to lease a specified block. The final resolution was in the following terms: That Mr S. but it seems entirely plausible. the Co-ordinator. appears to have been related to the fact that whereas finance may have been available to assist Aboriginal people with housing construction. Smith. S. No outright purchases were approved. Mr Bill Smith. What this matter refers to is not entirely clear: the formal complaint made to the Registrar under the Land Rights Act had been disposed of in December 1999. The copy of the minutes (or part thereof) of 14 August 2000 commenced with the statement: Koompahtoo cleared of charges and acquisitions [sic – accusations?] by the breakaway group. both M. An inference that second mortgages would not be acceptable may have been intended. of which a copy of part of the minutes is available. including one which simply stated: “to sell seven blocks at Morisset”. which would be avoided once the land was transferred to members. Thus. In his evidence. pointing out that it was never within his financial means to obtain land on such terms. Without knowing the market value of the land. At another stage in the discussion.) Of the three Smiths referred to. further requests for land were noted as having been received. Mr Stephen Griffen. as this statement appears to occur in the course of a discussion of matters raised at the NSWALC meeting. but it could not be described as a form of resolution one would expect from a responsible Land Council. Mr Alan Smith is unrelated to the Chairperson’s family. Briggs”. It is clear that a KLALC delegation did attend a meeting of NSWALC on 3 August 2000. The final motion read as follows: A delegation of up to seven members to go to the State Land Council meeting on August 1 to support the above and future applications and also to receive a better understanding of State Land Council business and effects on [our] Land Council. E. J. Mr Briggs. a loan would need to be secured over land owned by the individual. Griffen and W. A. R. The relevance of this material. Seven motions were passed accepting options from members “to lease with the option to buy” identified parcels of land. with an option to purchase. Smith: Told of his experience and how he went about applying for loan. Robertson have option to buy 212 acres at Wyee Point over three years for 5 million dollars. apparently spoke about the burden of rates being incurred by the KLALC. a company in which the Chairperson. R. An explanation was apparently given by the Chair (presumably Mr Bill Smith) as to the resources available through ATSIC and the State government. Mr Griffen treated that motion with some derision. it was resolved to make a number of blocks of land available to various members. Early in the discussion. it is not possible to comment definitively on that statement. and E.86 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council evening. letters requesting blocks had been received from “M. Briggs. Another motion provided that Mr Edward Smith (a son of the Chairperson) “to take 99 year lease ‘Bucketty’ with option to buy at today’s price. the minutes continue: Motions need to be rectified – reading disposal of land. had a significant interest. Nothing seems to have come of that resolution. including one from the Treasurer. The minutes then record: After discussion it was decided to go home and think about it. the following exchange is recorded: J. lease start May. It was clearly not the first time that the matter had been raised because.) It also appears that the NSWALC approved in principle the disposal of land to members “at current market value”. as a response to Ms Gamble’s question. Smith. During the course of the meeting. (The discrepancy in dates probably reflected the fact that NSWALC meetings continued over two or three days. Value of land and payments for 10 © ICAC . It is possible that there had been further complaints to NSWALC.

received instructions in relation to lots 2 and 4 respectively. and proceeded to prepare draft transfers. DP 758041. at least if it is intended to refer to one of the lots apparently approved for sale to Mimaga Wajaar. who worked for the Land Rights Unit at NSWALC. Ms Kim O’Leary. over the hand of the Secretary of KLALC. Ms Veronika Bailey and Mr Stephen Griffen. Awaba”. which was in accordance with the NSWALC requirements. Similarly. and dated 24 September 2001 referred to lots 2 and 4 as noted above. is not known to the Commission. The transfer was signed at the premises of the solicitors on 27 July 2001. the motion in relation to Mr Alan Smith identified only lot 3. and lot 236. Precisely how these changes were made. However. the Executive of KLALC. DP 823726. Mr Malcolm © ICAC . This appears to have been done in compliance with the form of the inprinciple approval given by the NSWALC in August. The motions are all incomplete. There was some delay in taking action on these transfers. on 6 February 2001 Mr Malcolm Smith’s partner. The motion of 17 October 2000. for two reasons. That statement was untrue and would have been known to be untrue by each of the members of the KLALC Executive. It stated that the transferor (KLALC) – Acknowledges receipt of the consideration of $50. Mr Guest then spoke to the KLALC Co-ordinator. identified only lot 2. In relation to the third block of land. the motion is ambiguous as to what lot was to be disposed of to Mr Malcolm Smith. On 23 October 2000 the Co-ordinator. at which some 18 motions were passed approving the disposal of various blocks of land to individual named members.Chapter 7: Land transfers to KLALC members 87 years approx. When the transfers were undertaken. On 1 November 2000 the solicitor for KLALC. Curiously. the motion in relation to Mr Alan Smith refers to a lease with option to buy “partial to lot 11 Mulbring Street. A certificate given for the purposes of section 40D of the Land Rights Act. Mr Robbie Briggs. On the same occasion. Thus. DP 82376. rang to advise that she and Mr Malcolm Smith would be purchasing lots 1 and 2. There is then reference to the need to clarify title details. However. Mr David Guest. in relation to the sale of three lots which Mr Millot identified in a letter confirming the telephone conversation.000. if they had read the document. was executed by Mr Bill Smith. Ms Debbie Barwick. Mr Millott’s letter continued: NSWALC’s approval that the above lands may be disposed of at current market value given at its 170th meeting held on 3 August 2000 is now operative. Stephen Griffen and Veronika Bailey gave report on visit to NSWALC. appears to have rung Mr Terry Millott. secondly. The note taken by the solicitor handling this file.!! Price $50k – pay off. Who prepared that document. in that details of lot numbers and addresses are partly blank and a dollar figure is missing from the price in a number of cases. On 24 September 2001 (almost 12 months later) Ms Bailey signed certificates under section 40D in relation to the approvals given at the meeting held on 24 July 2000. It appears that Mr Dan was also provided with a separate copy of a motion of the KLALC which referred to lots 1 and 2. the land identified by telephone to Mr Millott constituted lots 2 and 4 of Sec 11. the error appears to have been that of Mr Briggs or Mr Millott: the correct block is identified in the certificate. because certificates of title had not been issued. The motions of 17 October 2000 had approved lot 2 for sale to Mr Malcolm Smith and lot 3 for sale to Mr Alan Smith. and his partner. there was confusion as to which sales were to go ahead. Ms Debbie Barwick. A further meeting was held on 17 October 2000. The certificates of title were issued on 19 June 2001. when they were made and why no action was taken on the other approved sales is unclear to the Commission. there was a delay in obtaining certificates of title for the land in the name of KLALC LALC. Those approvals were presumably relied upon because they were the only approvals given prior to the meeting of the NSWALC on 3 August 2000. The transfer in relation to the land being purchased by Mr Malcolm Smith and Ms Debbie Barwick. Similarly. and lots 3 and 4 to Mr Alan Smith and his partner. First. together with lot 236. although every motion ends with the words “which is a price equal to the current market value”. and when. These changes and inaccuracies gave rise to difficulties when it became necessary to register the transfers at the Land Titles Office. but it is clear that one lot only was involved. Mr Nicolas Dan. lots 1 and 2 were sold to Malcolm Smith. Mr Briggs. and no longer simply lot 2. included the following: Understand no consideration passing on sale . in that it referred to a precise lot and a specific price said to be equal to the current market value. At that stage the solicitor appears to have taken no steps in relation to the matter. lot 4 was approved for sale to Ms Michelle McBride.

The copy of the stamped transfer. although she is described in it as the “second purchaser”. His attention was then drawn in a separate question to the further statement that the value was “not less than the full value of the property”. prior to the meeting of 27 July 2001. he paid no attention to the price because he knew that KLALC.The consideration for this purchase is $ and is not less than the full value of the property and is the bona fide consideration paid for the property. However in oral testimony. for the whole four of us. Bill Smith instructed me that KLALC did not require a mortgage or any security over the properties as the transactions were aimed at assisting the transferees to obtain housing. whether or not the consideration was identified. she agreed that details in the declaration were supplied verbally by herself and her partner at the solicitor’s office and were filled in by Mr Guest. the insertion of the amount in paragraph 8 of the form is not a conclusive issue. The declaration was made under the Oaths Act. When Mr Malcolm Smith signed the declaration in relation to the land being transferred to himself and Ms Barwick. not just Malcolm and myself”. as lodged with the Office of State Revenue. namely waiver of stamp duty. The Commission accepts that none of the four purchasers understood that they were required. Thirdly. which was partly blank. was merely that the part of the form in which the value of the land was to be inserted was blank at the time she signed it. being Mr Malcolm Smith and Mr Alan Smith and their respective partners. “it just would have sent alarm bells straight away. Ms Barwick’s evidence was. notes the consideration as $50. The effect of Ms Barwick’s evidence was that she was confident that the amount was blank when Mr Smith signed it. whatever that might be. The declaration was signed in order to obtain a further financial benefit. that the form was entirely blank when she signed it. In addition.000. The printed paragraph reads as follows: 8. Mr Guest on the other hand was firm in his view that all elements of the form were filled in before they were signed by the declarant. at first. He signed the document knowing that the contents of paragraph 8 were false. would not demand payment. Mr David Guest gave evidence that. the declaration asserted that the consideration for the property was the full value. However.000 for the land they were purchasing. there is nothing on the form which suggests that the entries were undertaken at different times. The purpose of the declaration was to obtain an exemption from stamp duty on the transfer. The evidence of Mr Guest in relation to the completion of the declarations conflicted with that of Mr Malcolm Smith and Ms Barwick.000”. nor did she sign a separate declaration. because he knew that they could not afford that sum. He sought to deny that those statements were on the form when he signed it.000 were set out in each declaration prior to it being signed. It is at least unlikely that a responsible justice of the peace would take a declaration. The property was described as vacant land and the consideration for the purchase was identified as $50. under the control of his father. He too said that had it been there he would have noticed it and stopped the process. the declaration was signed by Mr Alan Smith alone. Secondly. because if that amount was there. he had prepared a mortgage and a deed of covenant in addition to the transfer. Mr Malcolm Smith gave evidence to similar effect.000 and that no duty was payable. Her assertion. The reason for that © ICAC was that they all knew that they were not purchasing land for the full value. he stated that when the four transferees.000 and $40. In other words.88 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Smith executed a “declaration by purchaser” stating that this was his first purchase of real estate and was intended to be his principal place of residence. the Commission did not hear evidence from Mr Alan Smith and is not able to form any firm conclusion in relation to his state of mind when he signed the document. as it turned out. However. I undertake to provide evidence of the value of the subject property if required. but the denial can only have been intended to refer to the figure of $50. In relation to the other couple. nor intended. Mr Guest impressed the Commission as a responsible person who understood his legal obligations. and insert the details later. The declaration was not signed by Ms Barwick.000. construction finance would have been difficult to obtain if the land was encumbered by a mortgage. attended at his offices with Mr Bill Smith. being “not less than the full value of the property and is the bona fide consideration paid for the property”. I reiterated the significance of simply transferring an unencumbered title to the purchaser without a mortgage or deed of covenant. to pay any amount beyond $5. His attention was drawn to the part of paragraph 8 which stated “the consideration for this purchase is $50. ie KLALC’s [sic] would be unprotected in . The Commission is also satisfied that the respective amounts of $50. The evidence of Mr Malcolm Smith was to similar effect.

The consideration for the land being transferred to Mr Alan Smith and his partner was identified as $40. received instructions from Mr Malcolm Smith and Ms Debbie Barwick to sell their land. as Treasurer of KLALC. and. the solicitor for KLALC. between 8 August 2002 and 16 August 2002.000. When that handwriting was added is unclear. Some support for that inference may also be obtained from the fact that no contemporary record appears to have been made by way of a receipt book butt or other journal entry on 4 March 2002. If the statutory declaration is true (and in relation to the date it accords with the bank cheque). approximately monthly.535. Bill Smith instructed me that KLALC had decided that this was the only way the purchaser could obtain construction finance and that it was to be done in the manner discussed. (A similar certificate in relation to lot 3.000”. On 4 March 2002 Mr Smith and Ms Barwick withdrew that amount from an account they held with the ANZ Bank in Toronto and obtained a bank cheque payable to KLALC. there is also a handwritten notation “$40. At the time the Council was under considerable stress and this was an unfortunate oversight. if that is correct. no such record exists. being part of the transfer to Mr Alan Smith. Mr Smith and Ms Barwick had available to them an amount of $5. the date on the receipt is false.00. On 27 July 2001.000. however. on 4 March 2002.00 that is to be paid to Koompahtoo Local Aboriginal Land Council for purchase of land parcel at Awaba. The form was not used. However. it is implausible that one part of that amount was used to obtain a bank cheque and the other part was provided to Mr Griffen in cash and that a receipt was not issued for the full amount. This money was utilised for staff wages however on reflection after being informed by our bookkeeper I realise the importance that the money should’ve been shown in our bank records. bringing the total payments to $5. or the contents of the receipt are false. Those © ICAC . That declaration stated: On 4th March 2002 I received from Ms Debbie Barwick the sum of $1. Apparently the certificate was deemed acceptable by the Land Transfer Office. The meeting at which KLALC approved that disposal is described as “a special meeting” but is not identified by date. The other details were apparently obtained by reference to direct deposits into a bank account. lots 1 and 2 for Mr Malcolm Smith and Ms Debbie Barwick.000. Rather. transfer and stamp duty declarations were also executed by Mr Alan Smith. on the receipt dated 18 October 2002. it is apparent that on 16 October 2001 Ms Veronika Bailey signed a further certificate dealing with the disposal of lot 1 to Mr Malcolm Smith. was also accepted.465 outstanding of the total purchase price. signed by all members of the Executive and Louise Charles. In relation to Mr Malcolm Smith and his partner. However.Chapter 7: Land transfers to KLALC members 89 the case of a default. necessary to note that the transfer was not ultimately registered until 22 October 2001.000”. As the officers and Executive of KLALC arranged for the registration of the transfer.) At some time prior to 30 November 2001. no doubt because it included the statement “by way of part consideration” for the transfer of the property.000. It is. made on behalf of Mr Malcolm Smith and his partner. the statutory declaration prepared by Mr Griffen and signed by all members of the Executive and the bookkeeper must have been fraudulent. with a similar defect. However. That receipt was apparently prepared by Ms Julie Williams. there is a statutory declaration prepared in the name of Mr Stephen Griffen. if any.000 in cash.000 for the payment “of” lots 1 and 2 Mulbring Street. In this case the Commission is not able to make any firm finding in relation to the payment. prepared in relation to the purchase by Mr Alan Smith. in cash being part payment of total sum $5. it is apparent that the form of the receipt was prepared by KLALC’s solicitors on 1 March 2002. it should not be based on uncertain inferences. Mr David Guest. curiously. Awaba NSW. A copy of a receipt provided to Mr Alan Smith on 18 October 2002 indicated that payments of between $20 and $80 had been made. Nor is the Commission able to say whose handwriting it is. Manager. although it refers to receiving the sum of $5. but with the date left blank. The delay in registering the transfer was caused by the discrepancy between the Section 40D certificate provided to the solicitors and the identification of the land. Finally. Because a finding that a statutory declaration was made falsely is a serious matter. In addition. a document signed by the three members of the Executive and dated 1 March 2002 purported to be a receipt on KLALC letterhead (not in a receipt book) for an amount of $5. The form of the receipt on KLALC letterhead also contains the handwritten addition opposite the words “received with thanks from:” the sum of “$50. the bookkeeper. The more likely inference is that the only moneys available to the purchasers at that time were those used to purchase the bank cheque. those matters were not within the knowledge of the solicitor.340 was made. and dated 18 October 2002. If. That left an amount of $3. On 16 October 2002 a further payment of $4. However.

The Commission considers it likely that the statutory declaration in relation to the payment of $1. The Commission finds that she was a willing signatory to any document presented to her by Mr Bill Smith or Mr Stephen Griffen without regard to the truth or falsity of its contents. Mr Bill Smith.000. by which the land was sold to two independent purchasers for the sum of $100. He further stated in his evidence: I raised this with them as I needed to clarify whether NSWALC’s approval would be required and secondly. the Commission finds that each was aware of the matters set out above at all material times. The signing of the declarations thus constituted corrupt conduct under the ICAC Act. It is. on unrelated business. there was a lack of clear evidence before the Commission as to his understanding of the statement at the time he signed the declaration and as to his understanding of the purpose of the declaration itself. when he raised with them the matter of the instructions from Malcolm Smith and Debbie Barwick. It is unable to make any findings in relation to Ms O’Leary. and 94 Stamp Duties Act 1920 (NSW). (2) prior to the transfer of the land they were each aware that market value was at least $50. © ICAC (8) the stamp duty exemption declaration was false and known to be false at the time it was executed by Mr Malcolm Smith.000 was paid on signing the contract. Mr Guest. His file note of that date reads: They aware Malcolm and Debbie looking to sell – no objection. the Commission could not be satisfied of the true state of affairs.000 owing was only acted on at a time when their available funds were less than $5. The effect of that would have been to deprive KLALC of money to which it was entitled.000.535 was false and that no such amount was paid on or about 4 March 2002 by Ms Barwick. the primary focus of which was conduct in relation to KLALC and the disposal of its land. not appropriate to make any finding in relation to that conduct. In relation to Mr Bill Smith and Mr Stephen Griffen. (4) the arrangement for purchase involved the transfer to them of an unencumbered title which they could use by way of first mortgage for security for a loan. section 21. To the extent that each stamp duty declaration was knowingly false. prepared a contract of sale dated 16 January 2002. In relation to Mr Malcolm Smith and Ms Debbie Barwick. acting as instructed by Mr Malcolm Smith and Ms Debbie Barwick. accordingly. Mr Guest stated that he had a meeting with Mr Bill Smith and Mr Stephen Griffen.000. While the Commission is satisfied that Mr Malcolm Smith signed the declaration containing the full statement of the purchase price. She adopted that attitude in relation to the statutory declaration which she signed acknowledging the receipt of the cash payment and with respect to the Section 40D certificate she signed in relation to the unidentified meeting at which approval was supposedly given for the transfer of lot 1 to Mr Malcolm Smith and Ms Barwick for $25.90 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council instructions must therefore have been given within five weeks of the transfer being registered in their names. In relation to Mr Alan Smith. (2). (3) and (4). the Commission makes findings (1). accordingly.000 for $50. no finding can properly be made in relation to that conduct. I was concerned about the original purchase price of $50. In relation to the Secretary. the Commission is comfortably satisfied that: (1) they attended the relevant meetings of KLALC at which it was explained that NSWALC approval required that the land transfers would need to be made at “current market value”. and Mr Stephen Griffen. an offence was committed94 and the Stamp Duties Office was induced to forego revenue to which it was entitled. (6) with the express understanding of Mr Malcolm Smith’s father. . (3) they did not believe they were required to pay KLALC more than $5. However. they were permitted to sell the land and dispose of the proceeds without making any payment to KLALC. on 30 November 2001. (7) a request that they make a payment on account of the $5. or by Mr Malcolm Smith. beyond an assessment of the likelihood that the money was not paid and. Ms Veronika Bailey was aware of those matters set out in (1)-(4)above.000. but substituting in (2) $40.000.000 still due to KLALC. A deposit of $10. That was because the signing of the declaration was a peripheral issue in the investigation.000. (5) for personal reasons they decided to sell the property as soon as they had obtained title.

(4) the consideration stated in each of the transfers was false in the sense that it was not the amount which the transferees were expected by KLALC to pay.000 was payable in relation to both lots. in their favour. Such conduct constituted a misappropriation of KLALC funds in favour. The transfer and the certificate were ultimately taken to the Land Titles Office by Mr Robbie Briggs. The Commission also makes findings (1)-(4) above. and (5) Mr Malcolm Smith and Ms Debbie Barwick. Such an intention was. referred to members being entitled to purchase “a block of land”. (2) each pair of transferees expected to pay no more than $5. according to the address given on correspondence at and around the time of the transfer. in the case of Mr Bill Smith. it was at the relevant time an offence under section 178BB of the Crimes Act to make or publish a false or misleading statement in order to obtain for oneself or another person any financial advantage. and not each lot.000 for their respective lands. each transfer required approval of NSWALC. collected the certificates of title and transfers from Mr Guest to lodge them with the section 40D certificate. The assumption that $5. They had no authority to do so. Stephen Griffen and Robert Briggs each took steps to procure the registration of the two transfers. is. in relation to Messrs Bill Smith and Stephen Griffen. an offence under section 141 of the Real Property Act 1900 (NSW) for any person fraudulently to procure. The transfer of these parcels of land was treated by Mr Bill Smith as a matter of some importance. for the purposes of registration. were allowed to sell their land without payment of the $5. at least.500 only. or be privy to the fraudulent procuring of a recording in the register of land dealings created under that Act. Secondly.000 for the land transferred to them. of his son Malcolm Smith who. was a fraudulent procurement of the transfer of the interest in land. in accordance with earlier KLALC policy. in the context of the wider principles at stake. that each was aware in July 2001 that: (1) to the extent the transfers signed on 27 July 2001 had been approved by KLALC. in accordance with KLALC policy. It followed.000 only was payable. but not (5). but Mr Bill Smith himself. it was inconsistent with resolutions passed by KLALC to that effect. at the time of these transactions. containing a false statement as to the consideration for the transfer. it was to that extent a sham. that they intended to waive a debt in an amount of $45. as formulated in November 2002. In addition. thus conferring an unauthorised financial benefit on Mr Bill Smith’s son and his partner. Mr Bill Smith and Mr Robert Briggs. but only one. The Commission is comfortably satisfied. casts some doubt on the proposition that each lot should be treated as worth $2. The fraudulent procurement flowed from the fact © ICAC . inconsistent with the approval given by NSWALC for disposal of land to members of KLALC at “current market value”. It was not the solicitors who arranged for the registration of the documentation. nevertheless. which approval was expressly conditional on the sales being for current market value. It was. that they did so intend. Although there is reference in a motion of 19 June 2000 to making available residential land of one hectare per member. The Commission is satisfied that Messrs Bill Smith. The “housing policy”. was then living with his father. The discrepancy between the land identified in the certificate and the land being transferred resulted in rejection of the lodgement and the execution by the Secretary of a further certificate dated 24 September 2001. (3) the transfers were not made in accordance with the requirements of section 40D of the Land Rights Act. or assist in fraudulently procuring. It was put to the Commission that the lodgement of the transfer.Chapter 7: Land transfers to KLALC members 91 Although the Commission is not able to make a positive finding that Mr Bill Smith and Mr Griffen intended to ensure that Mr Malcolm Smith and Ms Barwick paid a sum of $5. doubtful. the Co-ordinator of KLALC.000 payable by Mr Malcolm Smith and Ms Barwick to KLALC. the issue is not significant. The purpose was to provide housing for members. assuming (again in their favour) that the sum of $5. nor the amount which the transferees intended to pay: to the extent that the only documented agreement in relation to the sale of the land was the transfer. knowing that the transfers contained false statements with respect to the consideration paid and knowing that the consideration intended by the parties to be payable did not comply with approval granted by NSWALC. the following findings are based on the assumption. in relation to Mr Robert Briggs.000 then outstanding to KLALC. Nevertheless. the fact that Mr Malcolm Smith obtained two blocks.

Although he was not an officeholder of KLALC. namely the amount of consideration. former Co-ordinator of KLALC. however. involved corrupt conduct for the purposes of section 8 of the ICAC Act. be some doubt as to whether those circumstances fall within the intended scope and operation of section 141 of the Real Property Act. or KLALC may be able to require payment of the value recorded in the transfer. the land may be recoverable by the KLALC. when acting in his capacity as a paid employee of KLALC. and . Mr Stephen Griffen. namely the amount of consideration. which they knew to be false or misleading in a material particular. Mr Robert Briggs was also a public official for the purposes of the ICAC Act. On the other hand. it may well be that the section 40D certificate with respect to their transaction is not conclusive evidence that the disposal of the land did not contravene section 40D. In © ICAC that event. the Commission is satisfied that each of Mr Bill Smith. namely the amount of consideration.92 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council that the disposal of the land was not lawful. His own involvement in obtaining NSWALC approval for the transfers and in registering the transfers with the Land Titles Office. engaged in corrupt conduct in relation to his involvement in: a) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Malcolm Smith and Ms Debbie Barwick knowing that the transfer signed on 27 July 2001 contained a false statement. the land transferred to Mr Alan Smith and Ms O’Leary has not been the subject of any further disposal. and being the person who had conversations and correspondence with officers of NSWALC. as well as being responsible for lodging the transfers for registration. namely the amount of consideration. and namely the amount of consideration. being party to the motions in relation to the transfers of land at the KLALC meetings. The purpose of that action was to provide a significant financial advantage to the transferees. The Commission is also satisfied that the two transfers involved a dishonest or partial exercise of an official function by Mr Bill Smith and Mr Stephen Griffen as officeholders of KLALC. signed on 27 July 2001. Mr Stephen Griffen and Mr Robert Briggs was involved in making or publishing a statement in writing. There may. former Treasurer of KLALC. and b) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Alan Smith and Ms Kim O’Leary knowing that the transfer signed on 27 July 2001 contained a false statement. So far as the Commission is aware. engaged in corrupt conduct in relation to: a) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Malcolm Smith and Ms Debbie Barwick knowing that the transfer. engaged in corrupt conduct in relation to his involvement in: a) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Malcolm Smith and Ms Debbie Barwick knowing that the transfer signed on 27 July 2001 contained a false statement. and b) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Alan Smith and Ms Kim O’Leary knowing that the transfer signed on 27 July 2001 contained a false statement. being a member of the delegation which attended NSWALC. within the terms of section 40D of the Land Rights Act. namely the transfer. Mr Briggs had intimate involvement in relation to these matters. former Chairperson of KLALC. Mr Bill Smith. the further sale by them has resulted in the land being acquired by third parties who are almost certainly bona fide purchasers for value. That action therefore constituted corrupt conduct on their part. Barwick. In relation to the land transferred to Mr Malcolm Smith and Ms D. contained a false statement. unless the false statements were true. Corrupt conduct findings The Commission makes the following findings: Mr Robert Briggs. he made or published a statement which he knew to be false in a material particular and thereby committed an offence under section 178BB of the Crimes Act. In lodging the transfers. As it seems likely that they were on notice that the transfer to them did not comply with the approval given by NSWALC. with knowledge of the falsity of the statements concerning the consideration.

In relation to Mr Robert Briggs. Mr Bill Smith. being merely an employee of the KLALC. Mr Griffen was not in the position of Mr Briggs. knew of the intended transaction does little to exonerate Mr Smith. On the other hand. The fact that other members of KLALC. signed on 27 July 2001. He was capable of exercising judgment of his own in respect of the transfers of land. Whilst not directly relevant to the corrupt conduct involved in the original disposal of the land. namely that consideration be given to prosecution for an offence under section 178BB of the Crimes Act. the relevant actions were more morally reprehensible than were those of the other parties involved. Finally.000 for the land at the time they sold for full market value to third parties. Not only was Mr Smith well aware that a transfer for less than current market value did not have the approval of NSWALC. the Commission recommends that consideration be given to prosecution of Mr Smith for such an offence in relation to the transfer of land to his son. in relation to the transfer of land to Mr Malcolm Smith and Ms Debbie Barwick. Further. © ICAC . some of whom may have hoped to benefit from similar arrangements themselves. Mr Stephen Griffen stands in a similar position to Mr Smith in all respects bar one. In relation to Mr Bill Smith. The difference is that Mr Smith was the moving party in the arrangements: the role of Mr Griffen was that of loyal lieutenant. contained a false statement. with responsibility for its financial affairs. namely the amount of consideration. the actions which he undertook were done in his capacity as an employee of KLALC. the dominant member thereof. Nevertheless. the Commission has little doubt that Mr Smith was aware of the fact that his son and Ms Barwick had not paid even $5. The matters themselves are moderately serious. He was the Treasurer of the Land Council. Malcolm Smith and his son’s partner. Accordingly. Ms Debbie Barwick. In these circumstances it is not recommended that consideration be given to his prosecution for a criminal offence. the Commission is satisfied that there is sufficient evidence likely to be available on a prosecution to permit a conviction for an offence under section 178BB of the Crimes Act. Section 74A(2) statement The Commission has given careful consideration to the question whether the relevant authorities should consider prosecution in relation to any of the matters dealt with in this chapter. the conclusions reached by the Commission have in part been based on evidence given before it. it demonstrates an on-going intention on the part of Mr Smith to provide material benefits to his son at the expense of the KLALC. but he pressed ahead with arrangements which would nevertheless result in the transfer of KLALC land to the joint ownership of his son and his son’s partner. but did nothing to recover even that amount from the proceeds of the further sale. State Revenue has been deprived of stamp duty which was properly payable and the KLALC has been deprived of the true benefit of land obtained by it under the Land Rights Act. and particularly.Chapter 7: Land transfers to KLALC members 93 b) procuring the registration by the Land Titles Office of the transfer of land from KLALC to Mr Alan Smith and Ms Kim O’Leary knowing that the transfer. Accordingly. which would not be available in that form in criminal proceedings. Furthermore. the Commission is satisfied that a similar recommendation should be made in respect of Mr Griffen. He was acting on the instructions of the Executive. the matters giving rise to the Commission’s findings cover a period which ended more than three years ago.

is equally unclear. the contribution of CKT is obscure. Mr Smith thought that the agreement was .600 from the development. comprising an area of a little over 8. However. Three months prior to the joint venture agreement. it seems likely that they did not have that information provided to them. On that basis. Bronzewing Property Holdings Pty Ltd. Indeed. as the valuation suggested. At that time. In relation to the matters discussed in the previous chapter. Ourimbah Street. as the land owner. KLALC entered into a joint venture with another party to develop the land as eight residential blocks. It seems unlikely that. Ms Veronika Bailey. This may refer to the Ourimbah Street land. who was to receive payment as project manager. The land was to be made available by KLALC as security for a mortgage. less marketing expenses and a sale commission. one as payment to an “Aboriginal liaison officer”. The accuracy of that figure would have been important commercially. Amongst that material was a copy of a notice. but Mr Gallegos. Apart from Mr Scott. No extant minute refers to the particular proposal in question. If the consideration provided by CKT is unclear. If they did approve it.000 square metres. provided consulting services in relation to land development generally. if KLALC members had received a copy of the one page projected cash flow and had been advised of the valuation. without the burden of the joint venture. It probably refers to other land: but the inference may be drawn that such proposals were put before KLALC members. pursuant to the Agreement. in relation to an aspect of the Sanpine joint venture. KLALC stood to receive $128. who was also expected to receive an amount of $12.000. nor any discussion at a meeting of members concerning it. in her evidence to the Commission Ms Bailey could not recall the CKT joint venture. and possibly better off. © ICAC The joint venture provided for KLALC to provide the Ourimbah Street property for the purposes of subdivision and sale. Expenditure was provided for according to a “projected cash flow” which was annexed to and formed part of the joint venture agreement. Given Mr Scott’s commitment to the project. KLALC had obtained a valuation of the land as one home site. On 29 November 2000. Morisset. The projected cash flow.94 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 8: The KLALC–CKT joint venture At some stage prior to November 2000 KLALC had obtained title to a parcel of land known as Lot 559. Griffen (Treasurer). the proceeds of which were to be received by CKT. however. together with a payment of $25. the other individual beneficiary of the joint venture was likely to be the Aboriginal Liaison Officer. through the agency of his partner’s company. they would have approved of the joint venture. Apart from the disposal of the individual blocks. the agenda noted a proposal from “CKT Developers” and another party. as the expenditure was estimated at $438. although that land is not north of the High School. estimated that seven lots could be obtained following subdivision. The author of the joint venture agreement also remains obscure. On 29 November 2000 a joint venture agreement was entered into between KLALC and a company known as CKT Property Developments Pty Ltd (“CKT”). each proposing to enter into a joint venture to develop residential land “north of Morisset High School”. Nevertheless. it would have been little worse off. she could not recall signing the relevant documents. Mr Bill Smith assured the Commission that the development and sale of the land was an initiative of the members of KLALC.000. CKT was to indemnify KLALC unconditionally in respect of liabilities arising from the loan agreement. although his or her role was not adverted to in any way in the joint venture agreement. KLALC supplied to NSWALC extracts from the minutes of various meetings relating to approval of disposal of particular blocks to individual members. the agreement was signed under seal by Mr Bill Smith (Chairperson).000 each. but the Commission is satisfied that the matter was probably discussed at a meeting and approval given to the CKT proposal.000 from a sale of the unimproved site. dated 4 October 2000. the benefit to be obtained by KLALC. the sole shareholders of CKT were Mr Christopher Lloyd Gallegos and his wife.000. it could have realised $150. Each was a director of the company. as its sole full-time employee. of an extraordinary general meeting to be held on 17 October 2000. The project manager was Mr Bob Scott. Ms Bailey (Secretary) and Mr S. the other for “project management”. No information as to the material put before such a meeting is available. it was to receive 50% of the profit from the subdivision and sale.000 upon Council approval of the subdivision. If. At a later stage. a registered valuer placed a figure of $150. Between 1987 and 2003 CKT had apparently carried out only one development. Assuming the estimated revenue and expenditure figures were accurate. with a total value of $635. Mr Gallegos was apparently introduced to Mr Bill Smith by Mr Graham Steer. The expenditure included two sums of $12. On behalf of KLALC.000 on the unimproved site. there was a proposal to mortgage the land and a certificate under section 40D of the Land Rights Act was signed by the KLALC Secretary.

Nor is there any documentation before the Commission approving the subdivision. although it appears that some rubbish. the Commission is not able to make a finding that there was corrupt conduct and it does not do so. as in the case of the Sanpine joint venture. Mr Le Mottee agreed that he did not undertake that work himself. Mr Griffen and Malcolm Smith. Who did clear the site is not known. ultimately obtained by use of KLALC assets. It is also unclear how any relevant expenses in seeking Lake Macquarie City Council approval for © ICAC . Two of the recipients were the Treasurer of KLALC. The attempt to conceal the identity of the recipients remains curious: however. The contradictions in the evidence extended to the physical delivery of the three cheques. including old car bodies. Although Mr Gallegos stated that he provided them to Mr Scott. in the circumstances of the specific payments made in relation to the CKT joint venture to members of the KLALC. gives rise to situations which are susceptible to corrupt conduct and should be avoided. He believed it was Mr Bob Scott who asked him to do that. The facts which are known to the Commission are that two cheques of $3. to conceal the recipients of those payments. Invoices were prepared by a Mr Paul Le Mottee under a business name operated by him. the agreement was stated to be conditional upon two circumstances. Mr Bill Smith’s son. What happened to those cheques was a matter of some dispute before the Commission. Although the Commission is not satisfied that the third cheque was payable to Rural Magic or Mr Le Mottee. he also requested invoices to cover the work done. The absence of proper recordkeeping and other transparent administrative practices in relation to the distribution of funds. any role or duties to be fulfilled in consideration of the anticipated payment. However. Mr Scott gave similar evidence.95 drafted by Mr Peter Stern. and when. In addition. payable to cash in an amount of $3. Mr Stern denied that he played any role in relation to the joint venture agreement and said he did not see a copy until he was instructed to act in relation to the mortgage in 2001. One cheque was simply unaccounted for. The agreement provided that the joint venture should be at an end if the approvals were not granted within 90 days of the date of the agreement (being 29 November 2000) or such longer period as might be agreed. a development application was submitted to Lake Macquarie City Council for its consent to the subdivision. Mr Le Mottee’s evidence was that the cheques written by Mr Gallegos had already been cashed when he was asked to provide invoices from Rural Magic. whom he had known since 1985. The funds which were allocated to that position were used to make three payments of $3. However. their relatives and associates. the only inference which can be drawn is that. it was probably distributed amongst a number of members of KLALC who gave some limited assistance in clearing the site.950 each. Mr Gallegos agreed to the payments and wrote out three cheques. Mr Gallegos told the Commission that he provided them to Mr Bob Scott. There appears to have been an attempt. Mr Le Mottee was a surveyor and project manager and had undertaken some work on the Sanpine joint venture in that capacity. it is not able to say with confidence to whom it was paid.950 each (a saving of $150 on the budgeted expense) to three members of KLALC for work in clearing rubbish from the site. namely: i. who was KLALC’s lawyer in relation to the mortgage. The joint venture agreement provided that KLALC should “make available to the joint venture” the Ourimbah Street land. Mr Stephen Griffen and Mr Malcolm Smith each asserted that they collected their cheques directly from Mr Gallegos. when money became available for some form of work associated with the KLALC. arrangements were made to distribute the money amongst a small clique involving the officers of the KLALC. instigated by Mr Scott.950 each were paid to the Treasurer of KLALC and the son of the Chairperson. two of the recipients. Mr Bill Smith agreed that there was a proposal for an Aboriginal Liaison Officer but said that none was appointed. The evidence before the Commission tends to support the view that the payments made were for work which was actually carried out and the Commission accepts that that was the case. “Rural Magic”. The documentation before the Commission does not reveal whether. He had an existing relationship with Mr Bob Scott. In any event. the person who drafted the agreement evidently saw no need to specify. If Bill Smith is to be believed. ii the granting of approval for the subdivision of the land abovementioned by the relevant authorities the granting of approval of NSW Aboriginal Land Council for the abovementioned subdivision and sale of the land in accordance with the provisions of section 40D of the Aboriginal Land Rights Act 1983. in respect of the Aboriginal Liaison Officer. nor did he employ or supervise others to do to the work. was removed. The Commission accepts that that was so.

on 18 September 2001 a letter from the Manager. There is no record of any KLALC meeting to approve the mortgage. He recalled travelling to Wagga Wagga for that purpose. The letter goes on to acknowledge receipt of the valuation referred to above that current market value was $150. in relation to the land at Ourimbah Street. a transaction which was executed on 25 October 2001. The valuation of the Ourimbah Street land. Nevertheless. The Morisset land had in fact been transferred (or purportedly transferred) to a trustee on 30 March 2001. the proposed disposal was by way of mortgage to LKM Capital Ltd. It appears that NSWALC simply gave effect to the policy referred to in the previous chapter. That arrangement had been documented by the solicitors for KLALC in June 2001. Ourimbah Street. addressed to Mr Bill Smith. He was also cross-examined as to whether the KLALC members had approved the mortgage. was prepared on the basis of a sale as a single home site. DP 1025295. The Commission is also satisfied that. a mortgage of the Morisset land was made to LKM Capital for the amount of $1. namely of approving disposal of land not of cultural value. That was wrong: in fact. . The Commission has no copy of any material provided to NSWALC when its approval was sought prior to the execution of the mortgage. As was put to Mr Smith. However. NSWALC approval is subject to NSWALC receipt and acknowledgement of (1) a current market valuation prepared by a registered valuer. That mortgage was varied to increase the principal sum to $1.65 million on 10 April 2001. the proposed subdivision. Veronika Bailey. involved subdivision and sale of seven separate lots. namely to avoid enquiry into the arrangements entered into by KLALC with CKT and Mr Bob Scott. However. Thus. obtained in September 2001. (2) confirmation the sale price is equal to or above the valuation. It seems unlikely. entered into in November of the previous year. The Commission accepts that he did so. recall one.95 million on 16 November 2001. Land Rights Units of NSWALC. it appears that no approach was made to NSWALC until the second half of 2001. As discussed in relation to the Sanpine joint venture. The meeting had been held at Wagga Wagga. It must have assumed that it was being asked to approve the sale of the land as a single site. without apparently referring to the joint venture and associated mortgage. That was despite the fact that the joint venture agreement. The same lender was involved. in these circumstances. nor did the Secretary. Had NSWALC been advised of the proposed transaction. The letter then sought a copy of “the agreement for sale of land contract” to establish satisfaction of the second condition. it might have been surprised to learn that the joint venture intended to supply the land as security for a sum exactly double the valuation.96 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council a development application were met prior to the first mortgage being arranged in October 2001. However. this transaction occurred at the time that the Sanpine mortgage was being increased. that NSWALC was advised of the joint venture agreement. No approval was obtained from NSWALC for either of those transactions. the Commission is satisfied that those steps were taken to avoid any further investigation by NSWALC of the dealings in relation to the joint venture. some two months after the execution of the mortgage and four months after the NSWALC approval. Mr Bill Smith deliberately avoided telling NSWALC about the joint venture agreement and proposed mortgage for the same reason. Presumably NSWALC was not advised of that fact. © ICAC Mr Bill Smith gave evidence that he had personally gone to the meeting of NSWALC to obtain the approval.000. she signed a certificate of compliance with section 40D of the Land Rights Act on 20 December 2001. or the intended mortgage. set out the resolution passed by NSWALC in the following terms: That NSWALC approves the disposal by Koompahtoo LALC of Lot 559. Mr Bill Smith was cross-examined in relation to the reason why he appeared to have taken the trouble to go to a distant NSWALC meeting in order to obtain approval for a sale of the land. Morisset for a purchase price equal to the current market value. the Commission is also satisfied that NSWALC was not informed as to the true nature of the proposed transaction. so long as there was evidence that the proceeds obtained were not less than a registered valuer’s assessment of current market value.

that conduct must involve a criminal offence.Chapter 8: The KLALC–CKT joint venture 97 Corrupt conduct and section 74A(2) statement The conduct of Mr Bill Smith in that regard was dishonest: it involved dishonesty in relation to his official function. in order to be corrupt conduct for the purposes of the ICAC Act. It is important to bear in mind that the facts do not demonstrate that Mr Bill Smith himself obtained any financial or other material personal benefit from the CKT joint venture agreement or the mortgage of the land. namely his action as Chairperson of KLALC in seeking the approval of NSWALC in relation to a proposed disposal of land. the Commission makes no finding of corrupt conduct on the part of Mr Bill Smith in relation to this transaction. No submission has been put to the Commission that it involves a criminal offence. © ICAC . Accordingly. Nor does the Commission make a finding of corrupt conduct in relation to any other person with respect to the various aspects of the CKT joint venture discussed above. However.

The note asserts. There is no reference to the KLALC–Sanpine joint venture. nor any disclosure of the amounts he received. or otherwise failed to comply with section 32 of the Land Rights Act.96 NSWALC was obliged to cease to provide funds to any Local Aboriginal Land Council that failed to obtain a satisfactory audit certificate. The accounts for the year ending September 2000 contained a note referring to the joint venture agreement. as the costs were said to have been incurred by Sanpine.98 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 9: Departures from accounting standards The accounts The Land Rights Act required that Local Aboriginal Land Councils prepare financial statements for each financial year in accordance with section 41B(1) of the Public Finance and Audit Act 1983 (NSW). or for any purpose other than that for which it was prepared. 98 Section 41B(1)(a). is appropriate to the needs of the members. together with the audit certificate. “no profits or losses have yet been generated by the joint venture and hence no profit or losses have yet been equity accounted by [KLALC] in respect of the joint venture”. There is also a note to the accounts referring to the existence of the joint venture agreement. nor to any expenses incurred by it. in relation to the joint venture that: .000 payment made in July 1997 which is described as “income” in the accounts for the year ended 30 September 1997. None of the accounts makes any reference to Mr Bill Smith’s appointment as Aboriginal Liaison Officer. 97 Former section 34C(1). other than the $100. We disclaim any assumption of responsibility for any reliance on this report or on the financial statements prepared as a special purpose financial report to which it related to any person other than the members. in the accounts for the first three years of the period.97 The Public Finance and Audit Act required that financial statements were to be prepared “having regard to current accounting standards and industry practices relating to the statutory body”. Each of the audit reports for the last four years in the period is described as a “General Purpose Financial Report” and contains a statement similar to that set out above.99 The Commission was provided with the audited accounts for KLALC for each of the financial years ending on 30 September. and have determined that the basis of accounting used and described in Note 1 to the financial statements is appropriate to meet the requirements of section 32 of the Aboriginal Land Rights Act 1983 and the needs of the members. The notes to the accounts for the year ended 30 September 2001 refer to an alleged receipt of $850. The financial statements have been prepared for distribution to members for the purpose of 95 Former section 32(2). Note 1 to each set of accounts is headed “Statement of Accounting Policies”.98 It also required that the statements be accompanied by a summary of the land owned or occupied by the relevant body and. Each of them contained a disclosure by the auditor in the following form: The [KLALC] is responsible for the preparation and presentation of the financial statements and the information contained therein. not later than four months after the end of each financial year. The note further asserted that once the rezoning had been completed the proceeds of the development would be disclosed in KLALC’s financial statements. and described in Note 1. No opinion is expressed as to whether the basis of accounting used. The audit reports for each of the first three of those financial years are described as “Special Purpose Financial Reports”.000 for the transfer of the Morisset property to KLALC Investments. 99 Section 41B(1)(d). With all years’ accounts AAS 22 (“Related Party Disclosures”) was identified as a standard not applied. We have conducted an independent audit of the financial statements in order to express an opinion on them to the members of Koompahtoo Local Aboriginal Land Council on their preparation and presentation. No reference is made to any mortgage.95 The financial statements were required to be submitted for verification and certification by an auditor selected by NSWALC and submitted to the Minister for Aboriginal Affairs. being either AAS 6 or AASB 1025 and lists various exceptions. its object. where it was appropriate to value the land and the value could readily be established. 96 See former sub-sections 32(3)-(5). the mortgage with Inteq and the fact that. © ICAC fulfilling the requirements of the Aboriginal Land Rights Act. a statement of the value. It asserts that the accounts have been prepared in accordance with the relevant accounting standards. from 30 September 1996 to 30 September 2002.

It was his understanding that Mr Smith was being paid by Sanpine but working for both parties. Mr South understood that those concepts were synonymous because if KLALC were a “reporting entity” it could not have a Special Purpose Financial Report. He said he had been auditing the accounts of KLALC for some seven or eight years prior to 2003. confirmed that he had known Mr Bill Smith for 25 years and provided accounting services to a number of his businesses. He stated that some time prior to the preparation of the 30 September 1996 accounts he determined that the related party transactions standard would not be applied and he did not reconsider that decision at any subsequent time. In hindsight. he accepted that he could have exempted the application of the accounting standard generally but disclosed some particular transaction or transactions. Mr South said that the determination of what accounting standards would and would not be applied was a judgment that he exercised and not KLALC. He said that he had a discussion with Mr John Carter from NSWALC who requested that Local Aboriginal Land Councils be treated as “general purpose reporting entities”. He said the staff of the KLALC did not prepare draft accounts. He stated there would be possibly two or three meetings with members of the executive of KLALC to discuss the scope of the audit and for him to formally present the audited accounts. the standard was not discussed with the executive or members of the KLALC. He stated he did not consider that at the time. Mr South could not recall whether he specifically addressed whether these amounts should be disclosed or whether he did not address it at all. First.000 in 2002 and $72. Mr South did not discuss with Mr Smith or any other KLALC office-holder or employee whether the payments to Mr Bill Smith should be disclosed in KLALC’s accounts. The accounts contain no reference to KLALC’s joint loan with CKT from LKM Capital for the CKT joint venture. just lists of balance sheet and profit and loss items. He also audited the accounts of a number of other Local Aboriginal Land Councils in that time. He said that the decision not to apply © ICAC . There is no specific reference in the accounts to KLALC’s units in the Unit Trust of which KLALC Property & Investments was the trustee. His understanding of the significance of the change was to widen the scope of persons who could rely on the statements. Mr South confirmed that he was aware that Mr Bill Smith was appointed Aboriginal Liaison Officer for the KLALC–Sanpine joint venture because Mr Smith had approached him for advice on the terms he was negotiating with Sanpine.000 in 2001 may be refundable”. Mr South’s evidence The auditor of KLALC.000 was received by the KLALC which is not refundable”.99 KLALC Property & Investments Pty Limited is to contribute the land for the development while Sanpine Pty Ltd is to arrange the development funding and contribute its expertise. He stated that typically the audit would be conducted in the period from 1 October to the end of the calendar year and involved a verification of the balance sheet items and review of source documentation. These units should have been treated as an asset. The accounts for the year ended 30 September 2002 contain a note referring to both the Sanpine joint venture and the CKT joint venture. although he speculated that a manager within his firm might have done so. The note in relation to the CKT joint venture describes the purpose of the joint venture and notes “a sum of $25. He said that the reason why he did not apply the standard was his perception that there may be a significant volume of transactions between the KLALC and its members. He accepted that there would not have been any difficulty in applying the standard to dealings between KLALC and members of its executive. Each set of accounts from 30 September 1999 onwards referred to KLALC as a “reporting entity” in the context of describing the scope of the report as a “General Purpose Financial Report”. He confirmed that he did not give any fresh consideration at the time of the change to the appropriateness of the identified exclusions from the accounting standards. He conceded that in hindsight the approach he would adopt might be different. The note for the Sanpine joint venture refers to KLALC Property & Investments mortgaging the property and also adds: “Amounts received from the joint venture of $25. Mr South was also questioned about the change in the description of the audit reports from a “Special Purpose Financial Report” to a “General Purpose Financial Report”. contrary to the statement describing the scope of the audit. He stated that he understood the concept of a Special Purpose Financial Report as one prepared for a specific user or a specific use. Mr South was questioned about a number of aspects of his audits. Mr Richard South. only a General Purpose Financial Report.

notwithstanding that they were supposed to be general purpose financial reports.000 in the accounts for the year ended 30 September 2002. (6) the failure to review the documentation concerning the transfer of the Morisset land to KLALC Property & Investments Pty Ltd. At some time in 2001 he was asked by the solicitor acting on the conveyance. He was advised that the property was being transferred to a trust. (In any event it is difficult to see how Mr South could have obtained the necessary information. namely that it was his understanding that prior to the rezoning those costs were “to the account of” Sanpine. Mr Peter Stern. There is no evidence as to when this land was granted to KLALC. Equally.000 each. as noted above. and (9) the omission from the 2002 accounts of reference to KLALC’s joint liability with CKT in respect of the loan for the KLALC–CKT joint venture. Finally. He said that the sale of the blocks for those amounts was brought to his attention by the investigator © ICAC appointed under the Land Rights Act and that he queried the sales with Mr Stephen Griffen. as to the appropriate value to be noted on the transfer.) A question arose concerning Mr South’s knowledge of the transfer of the Morisset property to KLALC Investments & Property Pty Ltd and its treatment in the accounts. He said he would ordinarily expect to see the mortgage but did not do so because of time constraints and because he expected there would be a significant surplus from the proceeds of the joint venture. at least as a contingent liability. (8) the omission from the 2001 and 2002 accounts of the expenditure of the KLALC–CKT joint venture. He agreed that this accounting treatment assumed that KLALC had only acquired the property during that year and he did not check to see if that had occurred. (3) the omission from all of the accounts of reference to Mr Bill Smith’s position as Aboriginal Liaison Officer for the Sanpine joint venture. although he accepted that one would ordinarily expect that to be part of his audit function.100 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Mr South was questioned separately about the disclosure of matters concerning the KLALC–Sanpine joint venture. These may be summarised as follows: (1) the decision to exempt the application of the accounting standard on related party disclosures. He recorded the sales as a profit to the KLALC of $10. and the failure to record the amounts paid to him. . He said he was advised that there had been “an understanding” that members would be able to buy land for reduced amounts. for $5. certificates of title were not issued by the Land Titles Office until July 2001. Mr South was questioned about his knowledge of the sale of the two blocks of land to Malcolm Smith and Alan Smith. He saw the CKT joint venture agreement.000 payment had been made to KLALC. Mr South agreed that accounts for the year ended 30 September 1999 should have raised. He also accepted that it would ordinarily be part of his function as an auditor to check whether there were minutes of a meeting of KLALC members approving the transfer of the property to the trustee company. Conclusions The matters set out above disclose to the satisfaction of the Commission that there were material deficiencies in the audit of the KLALC accounts over a number of financial years. He said that he did not seek to disclose the expenses that had been incurred in the joint venture for the reasons set out in his note to the accounts for the year ended 30 September 2000. (5) the omission in the 1999 accounts of the contingent liability of KLALC under the mortgage to Inteq. He did not enquire as to whether there was any documentation concerning NSWALC approval. and their respective partners. and was aware of the mortgage of the land to LKM and the fact that a $25. KLALC’s exposure under the mortgage to Inteq. given that Sanpine’s officers would not disclose it to him. He said he did not see the records of the transfer nor did he enquire whether there was a receipt for the consideration included on the transfer. This land had not previously been noted in the asset register of the KLALC. (4) the omission from all of the accounts of the expenditure of the Sanpine joint venture. he accepted he would ordinarily expect to see a NSWALC approval for the mortgage but he did not ask for it because of the late inclusion of this item in the accounts. (7) the failure to review the documentation concerning the mortgage of the Ourimbah Street property for the CKT joint venture. (2) the inclusion of a disclaimer limiting the use of the financial reports to KLALC members only. Mr South became aware of the CKT joint venture just prior to signing the audit report for the financial year ended 30 September 2002. However. He could not recall doing that.

noted that the audit report was a special purpose finance report and that there had been an exclusion of the accounting standard pertaining to related party disclosures. and funding was approved. ALCAS evaluated the performance of land councils and provided them with accounting and financial assistance. but there were indications in the case of the KLALC reports which should have alerted NSWALC to at least some of the deficiencies noted above. On 29 March 1999 Mr South and Mr Carter met to discuss KLALC’s accounts and. This was followed by a letter from Mr South to Mr Carter on 31 March 1999 and Mr Carter’s response of 6 April 1999. He commenced work as a senior accountant with NSWALC in June 1989. were filing special purpose finance reports and were excluding the operation of the related party disclosure standard. Mr Carter also recalled discussion about the exclusion of the related party disclosure standard. and requested that all future reports be general purpose finance reports. Mr Carter recalled that there was resistance to disclosing the expenses of the joint venture. It undertook reviews of their financial performance in order to determine eligibility for funding. He said he told Mr South that related party transactions associated with joint ventures had to be disclosed but accepted that related party transactions associated with the rental operations of KLALC need not be disclosed. Mr Carter was a qualified company secretary with qualifications and experience in accounting. ALCAS was disbanded in 1995 and Mr Carter became the Evaluation Manager for NSWALC. Without seeking to exonerate those primarily responsible for the corrupt conduct addressed above. Mr Carter reviewed the KLALC accounts for the year ended 30 September 1997. the treatment of the Sanpine joint venture. Indeed. It was Mr Carter’s view that a special purpose finance report did not satisfy the requirements of section 41B(1) of the Public Finance and Audit Act because he did not regard such a report as being necessarily prepared in accordance with the prevailing accounting standards. the Unit would primarily look at audit certificates rather than performance-related issues. One serious consequence of the deficiencies in the auditing process was that conduct which might have been justifiable if disclosed was not disclosed. a responsible and diligent auditor would have been alert to ensure that necessary disclosures were made on instructions. Mr Carter. was the Director of Land Council Services at NSWALC. He said that. He said he brought to the attention of NSWALC that the report was a special purpose finance report. None of these concerns appear to have been addressed by Mr South. in contrast to ALCAS. The primary evidence in relation to that process came from Mr John Carter. Richard South. He stated that he discussed this with the auditor. In the following year he noted that the report was still a special purpose finance report. particularly the refundable nature of half of the $100.000 advance made in July 1997.Chapter 9: Departures from accounting standards 101 The long-standing business relationship between Mr South and Mr Bill Smith. it was a conflict which should have been apparent to Mr South. albeit a minority. Correspondence between Mr South and Mr Carter revealed discussion about the treatment of the revenue and expenses for the Sanpine joint venture. During this period a number of other Local Aboriginal Land Councils. Shortly after his commencement he supervised the establishment of the Aboriginal Land Council Accounting Service (“ALCAS”). it is apparent that the deficiencies in Mr South’s auditing processes constituted the failure of an important protective measure. but that the Councillors were of the view that an unqualified special purpose report satisfied the legislation. A supervisor cannot necessarily be expected to know what has been omitted from an audit report. prior to his retirement in December 2003. Although the accounts for the year ended 30 September 1999 were described as a general purpose financial report. If Mr Bill Smith was faced with a conflict of interest in relation to disclosure of his remuneration. but that this position later changed. As Head of the Evaluation Unit. or there might be a separate conflict of interest for the auditor. set out above. . A properly conducted audit can both reveal corrupt conduct and prevent circumstances arising in which corrupt conduct may occur. may have contributed to the failure on Mr South’s part to ensure that their distinct and separate interests were kept apart and properly addressed. in particular. Mr Carter considered that the © ICAC The NSW Aboriginal Land Council (NSWALC) At all material times. He enquired of Mr South why that was and was told it was an oversight. he and the one or two staff who worked for him would review the accounts and the budgets of Local Aboriginal Land Councils. NSWALC was responsible for supervising the financial accountability of Local Aboriginal Land Councils.

However. Nevertheless. inappropriately. It may be that the wholesale application of the accounting standard would be cumbersome. the Commission sees no purpose in recommending any further steps be taken in relation to the former councillors responsible. He said he raised his concern with the Auditor-General’s Department. Given the nature of this document and the incompleteness of documents produced. the Commission recommends that NSWALC give consideration to inviting him to show cause why he should be allowed to remain on the list in the light of his conduct in relation to KLALC. notwithstanding the exemption of the related party disclosures. With respect to NSWALC itself. and in the face of partly adverse reports in that respect from its responsible officer. Mr Carter said that following each Local Aboriginal Land Council filing accounts for the year ended 30 September 1999. NSWALC is responsible for appointing auditors who verify and certify Local Aboriginal Land Council financial records. that is not a proper basis for exempting disclosure of transactions between a Local Aboriginal Land Council and its executive. This failure on the part of NSWALC to ensure that proper accounting standards were followed was at least conducive to the perpetuation of corrupt conduct. Mr Carter’s evidence indicates that it was or should have been obvious to NSWALC that KLALC (and possibly other Local Aboriginal Land Councils) were seeking to exclude. apparently prepared by Mr Carter on or about 31 March 2000. © ICAC was taken or even threatened against KLALC as a result. He said it was never explained to him why KLALC’s funding was still being approved by NSWALC. than he was to NSWALC. The Commission sought from NSWALC the reports and correspondence referred to by Mr Carter in his evidence. The documents appear to be in draft form. he believed he would have advised that the KLALC audit report was not satisfactory and did not comply with the legislation. The only relevant material supplied was an electronic version (or versions) of a memorandum and accompanying “status report”. It does not appear that any substantive action 100 See also Aboriginal Land Rights Regulations 2002. To the best of his recollection.102 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council limitation on the use made them “for all intents and purposes . clause 95. Finally. There is no reference to exclusion of relevant accounting standards. If he currently holds such an appointment. Mr Carter said that he reviewed the subsequent years’ reports and again noted the limited nature of the report and the description of the scope of the audit and the exemption of the related parties standard. he prepared a “funding statement” for NSWALC. The draft schedule queried whether KLALC’s accounts were a special purpose financial report. there is the position of the officers of NSWALC. given that the councillors who would have been responsible for that conduct are no longer members of NSWALC and that an administrator has been appointed. actually a special purpose report”. with the qualification that he may have been more robust in his criticism of the KLALC reports to the Commission.. There is also no doubt that he raised a number of pertinent issues with Mr South and sought to have some problems rectified. The memorandum commented on the position of the various Local Aboriginal Land Councils having regard to their most recently filed financial statements. particularly because of the volume of transactions that may occur between a Local Aboriginal Land Council and its members. He believed he would also have stated that it was non-compliant because of the exemption of related party disclosures and the form of disclaimer from the auditor. but otherwise categorised its accounts as only having “minor problems”. It is also not in doubt that he reported his principal concern to . Conclusions Under new section 153(3) of the Land Rights Act. there is a concern that it may have continued to fund KLALC in the absence of proper audit reports and financial records.100 Whether or not Mr South has been so appointed is not known to the Commission.. The exclusion of the related party accounting standard should have raised immediate and serious concerns with any funding body considering such accounts. and in particular Mr Carter. He said he would have prepared a similar report for the subsequent years. it is not possible to draw any conclusions from them which are inconsistent with Mr Carter’s evidence. However. the Commission accepts Mr Carter’s evidence. as noted above. Generally. as set out above. all possible applications of the related party disclosure accounting standard. The Commission was impressed with Mr Carter’s evidence in the sense that he demonstrated a clear understanding of the problems which had arisen in relation to KLALC and as to the correct standards to be applied.

Chapter 9: Departures from accounting standards 103 NSWALC. However. the Commission is firmly of the view that no responsibility for the corrupt conduct which it has identified can properly be placed at the feet of any officer of NSWALC. The lack of a clear distinction between executive or administrative functions (on the one hand) and policy-making by the Council (on the other) was not statutorily entrenched at that time and appears not to have been followed as a matter of practice. from time to time. It is apparent that this situation caused difficulties for the staff. including the CEO. diligently and with integrity. © ICAC . even if he did not. The Commission formed a clear general impression that staff employed by NSWALC who had dealings in relation to the KLALC transactions discussed above acted competently. Whether he reported the full extent of the problems identified above is unclear.

at which time sections 40A-40D were not yet in the Act. A contemporary association may satisfy this criterion. namely those reflected in the cultural and economic values of land. The element of control was provided by the requirements that the Land Council holding the land at a properly convened meeting determine by a special majority that the land is not of cultural significance and that the NSWALC approve the disposal of the interest. in relation to particular land. Land Rights Act. A law which leaves open such opportunities to justify inappropriate conduct requires reform. which. The legislative reflection of these elements of control was. The very name of the Land Rights Act and the events leading to its enactment101 suggest that it was indeed intended to provide land which would be held for Aboriginal people in perpetuity. the criterion has two entirely independent limbs: one concerns cultural significance. there have been instances in which statutory ambiguity and uncertainty has been put forward as a justification for otherwise unacceptable conduct. a primary purpose of section 40D. are to apply is whether the land is “not of cultural significance to Aborigines of the area and should be disposed of”. in part because such a law is likely to cause the conditions in which corrupt conduct is more likely to occur. At all stages during the conduct of this investigation. the term “cultural significance” was not defined and its existence or otherwise was left to the determination of the Local Aboriginal Land Council membership. However. at a properly convened meeting of the Council. Further. and (c) the degree to which the people involved continue to acknowledge and observe such traditional connections. pursuant to traditional laws and customs. the concept of “cultural significance” may not be limited to traditional association. agree that it is not of cultural significance. under traditional law and custom. To the extent that the Commission has made the adverse findings set out above. there is a wide range of degrees of intensity in the relationship between particular Aboriginal people and land. the phrase “cultural significance”. appears to have been to provide a controlled power of disposal of land which was not of cultural significance. principles and mechanisms of the Aboriginal Land Rights Act 1983. introduced in 1990. First. there are at least three separate elements involved in an assessment of any such connection: (a) the identification of particular land. The apparent purpose of section 40D is to ensure that land is not disposed of unless a special majority of members attending and voting at a meeting.102 There seems little doubt that the thinking in this regard was confused. place or site under traditional law and custom. however. there is the question whether the transfer of land to a Local Aboriginal Land Council is intended to provide a land base for future generations of Aboriginal people. © ICAC First. Nor is this ambiguity resolved by reference to the concept of “Aboriginal owners”. Indeed. the Minister who spoke of inalienability also spoke of the separate “dual purposes” of land rights. 102 Section 40(1). is vague and imprecise. However. First. The test which the members. These conflicting goals were not of course unrecognised. it is satisfied that the conduct in question was not motivated by beliefs which were genuinely held. too simplistic. Thus. (b) the significance of that area. or has some different purpose. This was made express in the original Act. which is likely to ensure a failure of members to consider the two limbs separately. the Commission was alert to the possibility that genuine differences of opinion as to the operation of the statutory scheme may have given rise to accusations of corrupt conduct. through development. could not be alienated. treats land as a valuable asset which may be sold or mortgaged. The most intense relationship is between Aboriginal people leading a traditional lifestyle and what are commonly known as “sacred sites”. 103 Section 171. which rendered the title inalienable.103 . However. the other concerns the desirability of disposal of the land. That purpose may not be consistent with the cultural value of land. 101 See Chapter 2 above. Indeed. Secondly. or a place or site.104 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council Chapter 10: Corruption prevention Disposal of land: what is expected Underlying the conduct discussed in this report are profound ambiguities in the purposes. Including the second limb of the criterion (“and should be disposed of”) is apt to confuse the issue. economic use. though mistaken. There are several problems with this criterion. it is almost inevitable that the resolution put before a meeting for consideration will follow the terms of the section. being Aboriginal persons who have a cultural association with land”. It is now well understood that.

together with a range of other relevant factors. A more principled approach to the issue is to seek to reduce any possible resentment by establishing clear guidelines identifying the nature of. Role of the Registrar The present investigation also disclosed limitations on the power of the Registrar to receive. a sense of purpose and self-control is not promoted by unclear legislative provisions. assess the financial viability of a proposal. None of these complexities are reflected in section 40D of the Land Rights Act. has adopted an open and transparent process and can readily justify the benefits of a proposed disposal in accordance with established criteria. In particular. the Commission was not concerned directly with whether the Registrar had made a correct decision. No doubt the point can be made that such resentment is likely to be lessened in a case where a Local Aboriginal Land Council has done its homework. the role of NSWALC can be resented by Local Aboriginal Land Councils and their members. On the other hand. but rather whether his function provided a relevant and useful form of protection against the possibility of corrupt conduct. to assist this process. evidence was presented to the Commission concerning a complaint made to the Registrar. It will provide the appearance of protection. it is unlikely that the Registrar will proceed unless he or she: © ICAC . There is nothing in section 40D. if appropriately redrafted. For example. Further. nor in the Regulations. Concerns were raised in the course of the Commission’s investigation both that the investigation undertaken by the Registrar was less thorough than it should have been and that the Registrar had misconstrued section 56B(2) of the Land Rights Act in assessing the significance of the conflict of interest which had arisen. as intrusive and paternalistic. in traditional society. No doubt the lack of statutory clarity may be explained. significance to father or mother. For the purposes of its investigation. amongst other matters. although the powers of the Registrar extended to any dispute between a Local Aboriginal Land Council and a member (or other individual) relating to any matter concerning the administration of a Local Aboriginal Land Council. On the other hand. being people described as “Aborigines of the area”. Similarly. land may be “disposed of” subject to conditions which ensure that any area of cultural significance is preserved and not treated in an inappropriate manner. such as place of birth. That was a somewhat cumbersome process. Two constraints on the usefulness of a complaint to the Registrar appeared from the matters put to the Commission. which alleged. investigate and resolve complaints arising between members and a Local Aboriginal Land Council or the executive of a Local Aboriginal Land Council. but will depend upon particular mechanisms of association. the presumed inverse relationship between cultural significance and the desirability of disposal may not necessarily be the case in all circumstances.105 Thirdly. They might legitimately prefer that the land be transferred to a trust of which they were the beneficiaries and controlling custodians. to some extent. Given that membership of a Local Aboriginal Land Council may include Aborigines “who have an association with that area” (being the area of that particular Local Aboriginal Land Council) and those who merely reside within that area. the Registrar’s power was to refer the matter to the Land and Environment Court for determination. significance is not to be assessed in a generic fashion. there is a lack of clarity in identifying those in relation to whom the test must be applied. without the reality. and one not likely to be undertaken by the Registrar except in a clear case. A mechanism for control of disposal of land. Accordingly. that Mr Bill Smith had an undeclared pecuniary interest in the Sanpine joint venture. As became clear during the present investigation. resentment is more likely where the purpose and scope of the external inquiry are unclear or undefined. Such provisions need not. unnecessarily limit the scope of a Local Aboriginal Land Council to deal with its land. and the purposes underlying any inquiries or decisions which NSWALC may make. by the policy that members of the Local Aboriginal Land Council concerned have a degree of flexibility which will allow them a greater level of self-determination. All the latent ambiguities noted above apply in relation to the factors which NSWALC should take into account and the degree to which it should. Similar criticisms apply to the requirement that NSWALC approve a proposed disposal. Fourthly. as presumably it was the Registrar who would bear the costs involved. Aboriginal people having a cultural association with a particular area of land may well think it quite undesirable that the land be held by the Local Aboriginal Land Council at all. for example. which does not in fact operate to prevent misuse or abuse of a power conferred on a Local Aboriginal Land Council. First. either legally or factually. it is conceivable that land which has significance for some members of the Council may not have significance for others. can be positively disadvantageous to Aboriginal people.

such a function may more properly be vested in NSWALC than in the Registrar: nevertheless.106 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council (a) has the resources to carry out a thorough investigation and prepare any necessary material for presentation to a court. concerning possible conflicts of interest involving office-holders of a Local Aboriginal Land Council. may now be dealt with under new provisions concerned with complaints under Part 10. Whether it was intended that the Registrar not be able to deal with disputes about matters which could constitute offences is unclear. Div 5. which includes providing a greater level of assistance and advice to associations to assist them to comply with their statutory obligations and to run their affairs effectively. Subdiv 2. Div 5 “Complaints concerning non-disclosure”. including compliance with statutory requirements. The proper functioning of Local Aboriginal Land Councils gives rise to similar issues to those which have been considered by the Commonwealth in recent years in relation to the operation of the Aboriginal Councils and Associations Act 1976 (Cth). questions of the kind raised in the present matter. In relation to the Land Rights Act. should the carrot prove ineffective.107 More recently. 106 Part 10. the need for appropriate assistance should be recognised and the obligation to provide assistance should be expressly vested by statute in the appropriate entity. for the keeping of proper accounts and records and filing copies of relevant reports with the Registrar. pursuant to which several thousand Aboriginal associations have been incorporated for a wide variety of purposes. however. the Registrar suggested. Particular attention has been paid to the role of the Registrar under that Act. For example. . A contravention of either of those provisions gave rise. To leave their proper functioning to the vagaries of the skills of the elected officers or a limited staff is irresponsible and should be unacceptable. Division 5 of the Land Rights Act. the Registrar suggested that this constraint effectively precluded a reference in relation to a matter arising under section 56B or section 56C of the Land Rights Act. to an offence which was a potential subject of proceedings before a local court under section 67 of the Land Rights Act. but is satisfied that the new structure overcomes the constraints noted above in their particular area of operation. The precise scope of section 59(2) is open to doubt.104 The Registrar may decide to take no action concerning such a complaint if satisfied that there is a “satisfactory alternative means of dealing with the matter”.106 The Commission has not been privy to 104 See Part 10. These constraints are likely to limit the practical use of this mechanism as a means of discouraging or exposing possible corrupt conduct. established by the amendments which commenced in 25 October 2002. there is an additional limitation imposed on the power of the Registrar to refer matters to the Court. and (b) is comfortably satisfied that the complaint has merit. In earlier years. 107 Aboriginal Councils and Associations Act 1976. it is at least arguable that this view of section 59(2) is correct and that the role of the Registrar is constrained accordingly. which include the holding of land. Such assistance should not be seen as intrusive or paternalistic: bodies which hold and manage significant assets on behalf of sections of the community need significant levels of managerial and administrative skill and need to be accountable in a public manner. the Land Rights Act provides not only for offences. in the sense that his or her primary focus was on compliance by incorporated associations with formal requirements of the Act. as the Registrar noted in his submission to the Commission. Furthermore. There need be no inconsistency in one body having available to it the carrot of helpful assistance. the Registrar has adopted a facilitative role. 105 Section 192(1)(e). namely that he or she shall not do so “if provision is made for the determination of the dispute or matter under another section of this Act”. As the Registrar also noted. but for appeals with respect to Local Aboriginal Land Council rules to be determined by the Land and Environment Court and for claims in relation to “claimable Crown lands” under section 36 of the Act to be determined by the Land and Environment Court. However. whilst holding the stick of mandatory regulation. Nor should the appropriate entity necessarily be one which has no regulatory functions in relation to a Local Aboriginal Land Council. © ICAC the practical operation (if any) of the new Tribunal. section 59. As noted in Chapter 2. the function of the Registrar was treated as largely regulatory.105 The fact that there is an independent Pecuniary Interest Tribunal established to consider such a complaint would no doubt result in matters involving such conflicts now being left to the Tribunal.

The term “pecuniary interest” is defined as:108 An interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person or another person with whom the person is associated… . They make the following provision in relation to conflicts of interest: 108 Section 182(1). the small pool of people from which some LALCs draw both staff and elected officials has created problems in some of the LALCs examined by the ICAC. go a little further.Chapter 10: Corruption prevention 107 Structural and governance issues for Local Aboriginal Land Councils The discussion set out in Chapter 2 above with respect to section 56B of the Land Rights Act identified a number of deficiencies in the manner in which this provision dealt with conflicts of interest. Corruption Prevention and Research Volume. © ICAC . 109 It is apparent that complaints raised in relation to the conduct of Mr Bill Smith before the Commission could readily have fallen within the new pecuniary interest provisions under the Land Rights Act. should be expressly defined. there may be real doubts as to whether they would have been sufficient to ensure prompt and appropriate disclosure of the potential conflict before it arose. as certified by the Registrar. However. an entity such as a joint venture partnership in circumstances where the remuneration ultimately diminishes the value of the interest held by the Local Aboriginal Land Council in the particular asset or project. However. Thus. With assistance from the ICAC. No such interest will arise if it is “so remote or insignificant that it could not reasonably be regarded as likely to influence any decision the person might make”. is to be the code of conduct prescribed by regulation. the circumstances in which they can be achieved. 109 Section 182(2). those criticisms should be understood in a broader context in which the precise roles of office-holders of a Local Aboriginal Land Council are ill-defined and unclear. The 2002 amendments to the Land Rights Act introduced a new section 79 which provides that an office-holder of a Local Aboriginal Land Council must not be employed as a member of staff of the Council. There is also a new Division concerned with duties of disclosure with respect to pecuniary interests.. and maintain his or her influence over the Local Aboriginal Land Council. until otherwise resolved by a Local Aboriginal Land Council. however. A recalcitrant office-holder is likely to be able to evade the effective operation of those provisions. The Aboriginal Land Rights Regulation 2002 now contains a model code of conduct for Local Aboriginal Land Council office-holders. new section 176 imposes a duty to act honestly and exercise reasonable care and diligence. had they then been in force. or obtain remuneration from. 110 The 1998 report also made the following corruption prevention recommendation: Recommendation 16: Limit scope of office-bearers and staff holding dual positions. The 2002 amendments to the Land Rights Act reformulated the provisions with respect to the obligations of officers and members of staff. Local Aboriginal Land Council office-bearers should be ineligible for appointed positions within their Local Aboriginal Land Council. . the NSW Aboriginal Land Council should develop a staff secondary employment policy and a model staff secondary employment policy for Local Aboriginal Land Councils. that: The optimal way to avoid conflicts of interests is for office-bearers and staff of LALCs not to hold dual positions.. If such positions or remuneration are acceptable. The point is related to the broader issue of whether a member of a Local Aboriginal Land Council should be able to obtain employment with. However. April 1998. Any new provisions restricting the holding of dual positions may need to be relaxed in some circumstances. exist and even then only for the minimum period necessary . unless special circumstances. The Regulations. at least whilst enjoying the broad support of the active membership. or effective disclosure of the conflict after the appointment of Mr Smith as Aboriginal Liaison Officer. The Commission stated. 110 Independent Commission Against Corruption. in its 1998 Report on investigation into Aboriginal Land Councils in New South Wales. Underlying that concern is the need to identify more precisely the appropriateness of an office-holder holding a position of profit in relation to some of the affairs of the Local Aboriginal Land Council. and the level of disclosure required. Report on Investigation into Aboriginal Land Councils in New South Wales. new section 177 provides for a code of conduct which.

develop the land as a residential subdivision and sell individual blocks. The decision taken was to develop the land and sell the blocks for residential use. Apart from the possibility that office-holders might be paid for such work. Whilst Mr Bill Smith was clearly the driving force and inspiration behind much that KLALC did. The preferable course is to identify the circumstances in which such . of which KLALC was one. In any event. nor to undervalue the very real need for Aboriginal employment. In this context. If someone in the position of Mr Bill Smith is to be encouraged to spend time bringing a joint venture to fruition. care must be taken in assuming that cultural heritage supervision or site clearance work is appropriate work which requires remuneration. the Land Council is merely distributing its funds to particular members for no real consideration. No commercial organisation would expect such work to be done on a voluntary basis. Pursuing those goals inappropriately will. diminish their creditability in other circumstances. Upon receiving a large tract of potentially valuable land. but had no means to pay for it. neither he nor anyone else within KLALC either had or professed to have land management and development skills. as a means of providing some form of remuneration. whether a commercial interest or a public corporation. which may well need to be the time of the office-holders. Officers must not enter into any agreement or undertake any activity that may be in conflict with the interests of the [name] Local Aboriginal Land Council. However. the involvement in a joint venture. that would appear to be a diversion of funds which might otherwise have gone to the Council itself. A different issue arises where such “make-work” employment is not funded directly by the Land Council. would require significant investment © ICAC of time and effort by members of the executive. have finally. a more fundamental issue which needs to be addressed. to allow for such arrangements in appropriate circumstances. The story of the Sanpine joint venture is sufficiently described above and need not be repeated here. to pay wages to members of the Land Council for no real purpose. would need to be mortgaged. or use the land for community purposes. The circumstances of the present investigation demonstrate that conflicts of interest must be addressed at both a structural and a procedural level. it must be in a position to commit resources to the project. It reiterates that view. or even to identifying the choices. The Commission recognised in its 1998 report on Aboriginal Land Councils that there was a need for flexibility. of the kind revealed by this investigation. Management and development of those lands (assuming development is deemed appropriate) cannot readily be carried out by an organisation which resembles a community social club. it is doubtful whether any sophisticated consideration was given to the choices. let alone skills at project management. obtained valuable tracts of land. then clear rules must be adopted which would allow for real employment. if a Land Council is to enter into such an arrangement. If that is permitted. he appears to be more a man of ideas than an administrator. In the case of KLALC. The changes made in 2002 were largely directed to the procedural level. These comments are not intended to diminish the value of steps necessary to identify and protect cultural heritage. Not to pay them for their time. If a Land Council is in a position to persuade another entity. if to be developed. there is no reason not to remunerate him for his time. Different skills and resources are required: even the structure of the organisation will need to change. hold the land as a passive investment. in appropriate circumstances. Such a situation may have arisen in the present case in relation to the “supervision” of the laying of the sewer by the Hunter Water Corporation. should be prohibited. however. The important point to note here is that the decision-making process and. Some Land Councils. or that would prejudice the performance of their duties.108 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council 7. If it is not. employment for its members. marketing or other elements essential to a successful land development. however. to those best qualified for the work. but by a third party. will either discourage experienced and competent members of the community from standing for such office or will lead to underhand transactions. on a commercial basis. if thought appropriate. there is no evidence before the Commission that any detailed proposal for use of the proceeds of sale was ever formulated. they were concerned with the circumstances in which conflicts should be disclosed and the circumstances in which a dual role. giving rise to a conflict. Returning to more important aspects of a joint venture arrangement. That is. there is also the question whether it is appropriate for an Aboriginal organisation to insist on providing. where reasonably possible. KLALC needed to decide whether to sell the land and invest the proceeds. They needed external expertise. Their only source of funds was the land which. There is. after many years of existing largely as social clubs. and use the proceeds for community purposes.

These matters will be dealt with further below. one of the major aspects of the 2002 amendments to the Land Rights Act was to provide for a clearer division of functions between the Chief Executive Officer and the Councillors. the actual choice to be made is not as important as the recognition that certain choices need to be considered and expressly dealt with in the legislation. with a realistic appreciation of the resources available to them. To the extent that the evidence before the Commission revealed a willingness on the part of the Land Council to ignore or override views expressed by its CEO or members of its staff in relation to compliance with administrative requirements. the deficiency relates to the manner in which conflicts of interest were dealt with at the time. even if such reforms are introduced. Mr Bill Smith appears to have been content to act contrary to a resolution of the KLALC in general meeting. Accordingly. both formulated Land Council policy and put it into effect. demonstrated to the Commission that they were fully cognisant of the difficulties which had arisen at the NSWALC level in the past and intended to take the necessary steps to avoid repetition. As noted above in relation to governance issues. that clandestine arrangements will be entered into at the expense of the best interests of a Land Council. during the period 1996–2001. The views of the Commission in relation to KLALC. in relation to the joint venture. change must be tailored. Furthermore. The Commission is conscious of the need to understand how procedures and standards operate across the State. Before leaving governance issues. Since the period during which this conduct occurred. As noted above. which had broad terms of reference with respect to reform of that Act. since the events . The circumstances before the Commission reveal that the Executive of KLALC. Thus. in question an Administrator has been appointed who. the Commission is content to avoid detailed recommendations in relation to accounting processes and audit requirements.Chapter 10: Corruption prevention 109 remuneration should be payable. It is not necessary to consider here © ICAC Effective audit requirements In the course of the investigation. they invited the Commission to avoid making recommendations which extended beyond the problems identified in the evidence before the Commission. To be effective. given the statutory reforms that were introduced in October 2002. effectively acting on the say-so of Mr Bill Smith. the appropriate response to a number of the matters raised involves a choice based on policy considerations. the Commission notes its awareness of the on-going inquiry constituted by the Minister and chaired by the Registrar under the Land Rights Act. to ensure that the best qualified person obtains the position and to ensure that any such transaction is transparent and approved by the membership at properly convened meetings. It remains possible. The need for more effective controls in relation to financial matters is clear. For example. be reduced by ensuring that proper arrangements may be entered into following an identified procedures and in specified circumstances. however. it is anticipated that the new structure will prevent a repetition of such events. In other cases. Authority of executive The material before the Commission reveals serious deficiencies in the statutory scheme in relation to the authority of members of the executive of a Local Aboriginal Land Council. whatever approval was given at a general meeting of the KLALC. The members of that Inquiry will have a broader perspective than that obtained by this Commission in conducting an investigation of one Land Council and with respect to specific transactions. These concerns have been set out in the previous chapter. That possibility will. Indeed. a number of changes have taken place in relation to the arrangements for auditing Local Aboriginal Land Council accounts and in the manner that NSWALC deals with reports prepared for it by staff. was expressed in the broadest terms and appears to have been based on meagre information as to the benefits to the KLALC. the Commission was concerned by serious inadequacies of the audit carried out in relation to the KLALC annual financial accounts. together with the Chief Executive Officer. have been sufficiently identified above. From the Commission’s point of view. to the organisations concerned. There is undoubtedly a danger in seeking to generalise from a limited perspective. and in particular in relation to the negotiations with Villa World Limited concerning the rising sewer main. the Commission does not propose to make specific and detailed recommendations with respect to the matters raised above. These are matters which may be taken into account by the Administrator of NSWALC and by the Inquiry established by the Minister to review the Land Rights Act. In part. in a practical way. but briefly.

110 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council whether the acts of Mr Smith and Mr Griffen in signing the letter of consent to the Hunter Water Corporation were later ratified. whether in a full-time or part-time capacity. that result is inevitable. subject to oversight by NSWALC. a similar separation of powers might be thought appropriate in relation to a Local Aboriginal Land Council. and if so on what grounds. Recommendation 2 That consideration be given to the oversight function of the NSW Aboriginal Land Council in relation to Local Aboriginal Land Councils and how this function should be carried out. clear guidelines be laid down as to how such development can be pursued. At present. is not to say that there is any close analogy between a Local Aboriginal Land Council and a private or public company. sections 40B-40D of the Aboriginal Land Rights Act 1983 be amended to reflect the policy so determined. the executive of a Local Aboriginal Land Council is comprised of three honorary appointees who do not receive remuneration for time spent on Council business. Again. (That. Recommendation 1 That consideration be given to whether. then the next question is what criteria the NSWALC should apply in the course of exercising its oversight function. however. if Local Aboriginal Land Councils are to be encouraged or permitted to undertake commercial development of land. and it was not suggested that that arrangement was unusual – given the limited funding available to Local Aboriginal Land Councils on an annual basis. Local Aboriginal Land Councils may dispose of land held by them. the staff of a Local Aboriginal Land Council is often limited to a co-ordinator and a bookkeeper/receptionist. If such ratification was given. there is no statutory or NSWALC policy which appears to prevent that occurring. A body which operates by general meetings of a large and disparate membership cannot readily undertake commercial ventures with the necessary degree of certainty and efficiency which will permit them to find appropriate partners and finance and achieve desirable results. © ICAC . In theory. Local Aboriginal Land Councils also have employed staff. First. it was without disclosure of the personal benefit obtained by Mr Smith and Mr Scott as Chairperson and Treasurer for providing the letter of approval. the Government can specify the criteria or it can leave them to NSWALC. what happened in the present case was that the Chairperson of the Local Aboriginal Land Council usurped the authority and functions of both the general meeting and the administration. Recommendation 4 That. a meeting of members of a Local Aboriginal Land Council is closer to a meeting of shareholders of a company or of members of an association than it is to the meetings of NSWALC. That he did so in circumstances which involved corrupt conduct illustrates the point that unclear guidelines as to the extent of authority and responsibility create an environment where corruption is more likely to occur and less easy to identify. the situations of Local Aboriginal Land Councils are by no means comparable to those of NSWALC. but unlike NSWALC. however. If the intention of the Government is that these matters should rest with the Local Aboriginal Land Councils. That was the case in relation to KLALC. In either case. Recommendation 3 That. In effect.) Further. the above policy matters having been resolved. In practice. The reforms of 2002 incorporated into the Land Rights Act represent a long overdue clarification of the distinct roles of the NSWALC councillors (as those responsible for policy) and the Chief Executive Officer and his or her staff (being those responsible for the execution and administration of the business of the Land Council). a decision must be made whether the purpose of granting Crown land to Local Aboriginal Land Councils is satisfied by the immediate sale of the land and dissipation of the proceeds amongst the current membership. Corruption prevention recommendations The primary recommendations concern the policy issues with respect to the holding of land by Aboriginal land councils in NSW.

the Commission will not require further implementation reports after the final progress report is provided. Recommendation 6 That proper roles for employed staff.au for public viewing. The Commission requests that the Minister provide a progress report on the implementation of recommendations 12 months from the date of tabling of this report and a final progress report on the implementation of recommendations 24 months from the date of tabling of this report. such a function may more properly be vested in NSWALC than in the Registrar: nevertheless.nsw. as an administrative arrangement. In relation to the Land Rights Act. Implementation of corruption prevention recommendations As a further step in performing the functions as required in the ICAC Act. honorary members of the executive and the membership in general meeting be established for Local Aboriginal Land Councils. Recommendation 7 That consideration be given to legislative change to confer an express obligation on an appropriate entity to provide assistance and advice to Local Aboriginal Land Councils to help them to comply with their statutory obligations and to run their affairs effectively.Chapter 10: Corruption prevention 111 Recommendation 5 That processes by which Local Aboriginal Land Councils enter into consultancy or partnership agreements with third parties be required to be open and transparent. to have registers of consultants. All of the recommendations made in this report are to the State Government and requests for reports on implementation of the Commission’s recommendations will be directed to the Minister for Aboriginal Affairs. These reports will be posted on the ICAC’s website www. Similar arrangements should be considered in relation to all land councils operating under the NSW Land Rights Act. timeframes and the responsible organisation or individual. an implementation plan for the recommendations which should include actions. However it remains the responsibility of Government to advise the Commission of any subsequent changes to the status of implementation – these changes will then be posted on the ICAC website. it is important to follow up on the implementation of the Commission’s corruption prevention recommendations with the body to whom the recommendations are made. Unless the Commission determines that an additional follow-up is required or that more detailed examination of the implementation of these recommendations is required.icac. which set out the qualifications of the consultants and the terms on which consultancies will be entered into.gov. The Commission requests the Government to submit to the Commission within three months of the tabling of this report. the need for appropriate assistance should be recognised and the obligation to provide assistance should be expressly vested by statute in the appropriate entity. Representative bodies operating under the Native Title Act 1993 (Cth) are required. © ICAC .

112 ICAC REPORT: Report on investigation into certain transactions of Koompahtoo Local Aboriginal Land Council © ICAC .