Whistleblowers Protection Act 2001 Investigation into the alleged improper conduct of councillors at Brimbank City Council May 2009 Ordered to be printed Victorian government printer Session 2006-09 P.P. No. 188 2 3 LETTER OF TRANSMITTAL To The Honourable the President of the Legislative Council and The Honourable the Speaker of the Legislative Assembly Pursuant to section 103 of the Whistleblowers Protection Act 2001, I present to the Parliament the report of an investigation into the alleged improper conduct of councillors at Brimbank City Council. G E Brouwer OMBUDSMAN 4 CONTENTS EXECUTIVE SUMMARY 8 Dysfunctional council 9 Influence of unelected persons 9 Conflict of interest 10 Improper use of powers 10 Bullying and intimidation 11 Misuse of council funds and equipment 11 Inappropriate release of information 11 Improper use of electoral information 12 Local Government Victoria 12 Next steps 12 RECENT AMENDMENT TO THE WHISTLEBLOWERS PROTECTION ACT 14 DISCLOSURES UNDER THE WHISTLEBLOWERS PROTECTION ACT 16 INVESTIGATION 17 BACKGROUND 18 Local government 18 The role of councillors 19 Brimbank City Council 21 INFLUENCE OF UNELECTED PERSONS 25 The Hon. Theo Theophanous, MLC 26 Mr Hakki Suleyman 36 Mr George Seitz, MP 40 Dr Andrew Theophanous and Mr Craig Otte 43 Conclusions 45 Appointing an administrator 46 Recommendations 46 5 DECISION-MAKING CONTRARY TO THE COMMUNITY INTEREST 47 I. Keilor Lodge Reserve 48 The direction 56 Conclusions 65 Recommendations 67 Expressions of interest 68 Conclusions 76 Recommendations 76 II. Cairnlea Park 77 Background 78 Conflict of interest 83 Demand for changes to the budget 84 Conclusions 89 Recommendations 91 INAPPROPRIATE RELEASE OF INFORMATION 92 In camera resolution - Cr Eriksson 92 Leak to Brimbank Leader – Cr Capar 96 Conclusions 97 Recommendations 98 BREACH OF THE VICTORIAN ELECTORAL ACT Victorian Electoral Commission records 99 Conclusions 103 Recommendations 104 INAPPROPRIATE CONDUCT OF INDIVIDUAL COUNCILLORS 105 Cr Suleyman 107 Cr Capar 126 Cr Abate 140 Other councillor conduct 147 6 MISUSE OF ELECTRONIC EQUIPMENT: PORNOGRAPHIC AND INAPPROPRIATE MATERIAL 152 Conclusions 155 Recommendation 156 INAPPROPRIATE USE OF COUNCIL FUNDS AND PROPERTY 157 Excessive councillor telephone expenditure 158 Conclusions 166 Recommendations 167 Mayoral and councillor gifts 169 Conclusions 173 Recommendations 173 Former CEO’s remuneration package 175 Conclusions 180 Recommendation 180 THE CULTURE OF BRIMBANK 181 Training for councillors 182 The role of the mayor 184 The 2007-08 faction 185 Conclusions 187 LOCAL GOVERNMENT VICTORIA 188 Brimbank 188 Conclusions 195 Recommendations 196 SUMMARY OF RECOMMENDATIONS 197 7 ATTACHMENT 1: Email from Cr Suleyman to Dr A. Theophanous, 18 April 2008 200 ATTACHMENT 2: Email from Dr A. Theophanous to Cr David, 19 April 2008 201 ATTACHMENT 3: Email from Cr David to Dr A. Theophanous, 19 April 200 202 ATTACHMENT 4: Email from Dr A. Theophanous to Cr Suleyman, 14 July 2008 203 ATTACHMENT 5: Emails between Cr Eriksson and Cr Suleyman, 15-16 July 2008 204 ATTACHMENT 6: The direction 205 ATTACHMENT 7: Councillor Code of Governance 206 ATTACHMENT 8: Email from Cr Capar to Petech Minh Chau, 16 September 2007 217 ATTACHMENT 9: Email from Cr Capar to Petech Minh Chau, 7 October 2007 218 ATTACHMENT 10: Analysis of telephone/fax, mobile and broadband over last council term 219 8 EXECUTIVE summary 1. In Victoria, councillors are elected to make decisions on a wide range of matters that directly affect the way people live, work and conduct business in a municipality. The Local Government Act 1989 provides the framework within which councils operate. 2. Councillors are mandated to represent the interests of the community and to faithfully and impartially carry out their functions to the best of their skill and judgment. They are required to act honestly and to exercise reasonable care and diligence; and must not make improper use of their position, or information acquired because of their position, to advantage themselves or any other person, or to cause detriment to the council. 3. Sadly, my investigation into the conduct of councillors at Brimbank City Council (Brimbank) identified that the behaviour of many councillors failed to meet these standards. 4. My investigation was triggered by disclosures made under the Whistleblowers Protection Act 2001 alleging that: • councillors placed Brimbank at financial risk by directing that the Chief Executive Officer (CEO) remove funds from a project in retaliation for a councillor’s failure to gain Australian Labor Party (ALP) pre-selection for the Kororoit by-election • a councillor knowingly released a confidential resolution to the media • a councillor threatened staff, late in the budget process, that the budget would not be carried if approximately $680,000 was not allocated to a sporting ground connected to the councillor’s family. 5. As a result of the disclosures, I decided to investigate whether Brimbank councillors had: a) performed their functions as public officers dishonestly or with inappropriate partiality b) breached public trust c) misused information or material acquired in the performance of their duties d) mismanaged public resources e) conspired with each other to engage in conduct referred to in paragraphs (a), (b), (c) and (d). 9 Dysfunctional council 6. The evidence revealed a council that was generally dysfunctional and marked by in-fighting and interpersonal conflicts. It was clear that the council had split into two groups, the ‘ruling faction’ and the minority councillors, and that the council was unable to govern as a whole. One councillor referred to there being a ‘cold war impasse’ between the factions since May 2007. This impeded the council’s ability to function effectively. Influence of unelected persons 7. It became evident early in my investigation that the operation and governance of the council was influenced by individuals who held no elected local government office, including individuals who would be, or were in the past, precluded from holding office because of criminal convictions. Such individuals have not taken an oath of office to act in the best interests of the community serviced by the council and are not subject to the conduct rules of the Local Government Act. Their influence was exerted behind closed doors and at times for their own personal or political motivations. 8. Where undue influence is exerted it can impede councillors’ ability to make objective and independent decisions in the interests of their community. Where councillors allow such influence to be exercised over them, they place themselves at risk of not being able to exercise their functions in accordance with their statutory obligations. 9. Decisions about Keilor Lodge Reserve and the Sydenham Park Soccer Club were significantly influenced behind the scenes by individuals who held no elected local government office. 10. If this culture at Brimbank persists, there is a risk that those charged with the responsibility of representing Brimbank will make decisions based on factional or political alliances, and not in the best interests of the community. 11. I therefore consider that the Minister should closely monitor the activities of the council. Should the Minister determine that practices similar to those that occurred prior to the 2008 election are occurring, or that outside influences continue to be similarly exercised, he should consider taking action. Such action may include suspending or dismissing the council, with a view to enabling Brimbank to be properly and effectively governed. 10 Conflict of interest 12. My investigation also highlighted that conflict of interest continues to be an issue pervading local government. I concluded that members of the ‘ruling faction’ failed to identify and address conflicts between their public duties and private interests. However, the broader issue of conflict of interest was not solely confined to the ‘ruling faction’. 13. While some of the problems related to conflict of interest resulted from a lack of understanding of conflict of interest principles, others reflected deliberate misconduct on the part of the councillors involved. This included placing their private interests first and using their positions to obtain confidential information. 14. My investigation also identified concerns with councillors working in the offices of Members of Parliament. In my view, this creates a clear conflict of ‘duty’ and ‘duty’. I identified two instances where a councillor’s duty to a Member of Parliament impacted upon the performance of the councillor’s public functions. 15. I was concerned that some individuals failed to recognise the broader ethical obligations of public officers to avoid conflicts of interest, preferring instead to rely on a narrow interpretation of conflict of interest and limited legislative provisions. Improper use of powers 16. My investigation also identified that the behaviour of the ‘ruling faction’ and others was often not concerned with ‘peace, order or good government’, as is required under the Local Government Act. The evidence points to councillors in the ‘ruling faction’ voting in a block to support the faction, even when those decisions were not necessarily in the best interests of the community. 17. Some decisions appear to have been made for personal gain; to cause detriment to the council; or in retaliation for broken promises. In my view, some decisions represent a misuse of position by councillors elected to represent the community and give rise to likely breaches of the Local Government Act. 18. The ‘ruling faction’ demonstrated that it was willing to place the council at financial risk for a personal vendetta. The six majority councillors issued a written direction to the CEO, instructing him to withdraw budget funding for works at the Keilor Lodge Reserve, in spite of the fact that such action could cost the council in excess of $100,000 for breach of contract. 11 Bullying and intimidation 19. My investigation also revealed a culture in which the overbearing attitude of a councillor was allowed to substantially modify how a budget should be developed without the matter going to a full council meeting.