CHAPTER 2 TERM OF REFERENCE 1.10 NATURAL GAS SALES AGREEMENTS 2 CHAPTER 3 TERM OF REFERENCE 1.10 THE DAMPIER TO PERTH NATURAL GAS PIPELINE 3 CHAPTER 4 TERM OF REFERENCE 1.9 BUNBURY FOODS 4 CHAPTER 5 TERM OF REFERENCE 1.5.2 HALLS HEAD DEVELOPMENT 5 TABLE OF CONTENTS 5.1 The term of reference 2 5.2 Statutory background 2 5.3 The composition of the Board at material times 6 5.4 The Halls Head development prior to the involvement of the Board 10 5.5 The reasons why Esplanade Mandurah decided to sell 50% of the Halls Head development 10 5.6 Mr Barton's initial role in the Halls Head development 13 5.7 Negotiations between the Parry group and the Board 15 5.8 The Geraldton land 17 5.9 Expert advice received by the Board prior to the acquisition of 50% of the Halls Head development 17 5.10 The formal documentation 18 5.11 The SB Investment Trust 18 5.12 The agreement to make the section 36A(2) election 25 5.13 The section 36A(2) election — the consent of the Treasurer 30 5.14 The appointment of Mr Brush 37 5.15 The management of the Halls Head joint venture 40 5.16 The donation 41 5.17 The resale by the Board to Esplanade Mandurah 49 5.18 57 5 - 1 5.1 The term of reference 5.1.1 The Commissioners are required by their Commission, as affected by the Royal Commission into Commercial Activities of Government Act 1992, to inquire and report whether there has been — (a) corruption; (b) illegal conduct; or (c) improper conduct, by any person or corporation in the affairs, investment decisions and business dealings of the Government of Western Australia or its agencies, instrumentalities and corporations in respect of the involvement of the Government Employees Superannuation Board (formerly the Superannuation Board) in the Halls Head development and further to report whether — (d) any matter should be referred to an appropriate authority with a view to the institution of criminal proceedings; or (e) changes in the law of the State, or in administrative or decision making procedures, are necessary or desirable in the public interest. 5.2 Statutory background 5.2.1 The Superannuation Board ("the Board") was constituted under the Superannuation and Family Benefits Act 1938. The Board consisted of three members appointed by the Governor: section 9(1). Section 9(2) required that one of the members be a "contributor" elected by contributors. In general, contributors were, persons employed in a permanent capacity by the State in any department who were, by the terms of their employment, required to give their whole time to the duties of their employment. Section 9(3) required the Governor to appoint one of the members of the Board to be the Chairman. No person was eligible to be a member of the Board or to continue as a member after attaining the age of 65 years: section 9(4). Subject to that age restriction, the members of the Board could be appointed for any period not 5 - 2 exceeding seven years, and every member was eligible for re-appointment: section 10(1). Where a member of the Board died or otherwise vacated office, the Governor could, subject to certain restrictions, appoint a person eligible to be a member of the Board to fill the vacancy: section 11. 5.2.2 Section 15 required the Chairman of the Board to preside at its meetings, and conferred on the Chairman a deliberative vote. The Chairman and the other members of the Board were paid such remuneration as the Governor from time to time determined: section 16. By section 17, two members of the Board constituted a quorum for the purpose of transacting the business of any meeting of which notice had been given to all the members. Where the voting on any question was equal, the question had to be postponed until the next meeting of the Board, and notice of the question and of the fact that the voting was equal had to be given in the notice calling the next meeting: section 18(1). If the voting at the next meeting was again equal, the question had to be postponed to a full meeting of the Board: section 18(2). 5.2.3 By section 19(1), the Board was constituted as a body corporate called "The Superannuation Board" with perpetual succession and a common seal. Section 19(2) prohibited the seal of the Board from being attached or affixed to any document except on resolution of the Board, and required that the seal be authenticated by the signatures of two members of the Board. Section 20 permitted the Board, by resolution under seal, to authorise the Chairman to determine such matters as were specified in the resolution. Section 20 also authorised the Board at any time in like manner to revoke such authority. The staff of the Board were appointed under, and were subject to the provisions of, the Public Service Act 1904, and included a secretary: section 21. 5.2.4 Prior to 1 July 1984, the cost of the administration of the Act had to be paid out of moneys appropriated from time to time by the Parliament for the purpose. Those moneys, and the accounts in connection therewith, had to be kept as part of the public accounts separately from the moneys and accounts of the Superannuation Fund. After 1 July 1984, the cost of the administration of the Act had to be paid out of the Fund: section 22 and amending Act No 30 of 1984. 5.2.5 Prior to 1 July 1986, it was necessary for the Board in each year to submit to the Minister to be laid before both Houses of the Parliament, a report dealing with the general administration and working of the Act. After that date, the provisions of the Financial Administration and Audit Act 1985 regulating the financial 5 - 3 administration, audit and reporting of statutory authorities applied to and in respect of the Board and its operations: section 23 and the Acts Amendment (Financial Administration and Audit) Act 1985. 5.2.6 Section 24(1) required that, for the purposes of the Act, there be a fund, to be called "The Superannuation Fund", which had to be kept at the Treasury and administered by the Board. Section 24(1) further provided that the contributions of employees who became contributors or qualified contributors, and payments by the State under the Act, and any "employer" payments made on behalf of the State for the purposes of the Act, had to be paid into the Fund. Section 24(1) also provided that the benefits provided for in the Act were to be paid out of the Fund. By section 24(2), income derived from the investment of the Fund formed part of the Fund. The income of the Fund was not subject to taxation by the State: section 24(3). 5.2.7 Section 25(1) enumerated the investment powers of the Board. Section 25(1) provided: "(1) The Fund may and shall, as far as practicable, but subject to subsection (2) of this section, be invested in investments of the following kinds, that is to say — (a) any investments which are from time to time authorised by any Act of the State for the investment of trust funds; and (aa) loans secured by mortgages of estates in fee simple; and (b) any debentures or other securities issued or given by any corporate body constituted or established by any law of the Commonwealth of Australia or of any State in the said Commonwealth which authorises the issue of such debentures or the giving of such other securities, and provides that the said debentures or other securities are guaranteed by the Government of the Commonwealth or of the State, as the case may be, under the laws whereof the said debentures are issued or the 5 - 4 said other securities are given as aforesaid; and (c) the acquisition or taking on lease of any land and the construction of buildings and effects or other improvements thereon; and (d) the acquisition from the Government Employees' Housing Authority established under the Government Employees' Housing Act, 1964 of land upon which are erected houses as defined in that Act, upon such terms and conditions as the Board and that Authority, as they are hereby authorised to do, in writing agree upon." 5.2.8 Section 25(2) of the Act provided: "(2) The Board shall not invest the Fund or any portion thereof in any investment of any kind whatever without the consent of the Treasurer being first obtained." 5.2.9 Section 25(4) empowered the Board to sell, alienate, mortgage, charge and lease any land acquired or leased by it under section 25(1)(c). 5.2.10 Moneys in the Fund held uninvested could be lodged at call with any bank approved by the Minister, and while in any bank were to be held to be moneys of the Crown: section 26. 5.2.11 Section 29 empowered the Board to borrow for, and the Treasurer to lend to, the Fund moneys not exceeding two-thirds of the amount of, and on the security of, moneys of the Fund invested in securities of the Commonwealth and in securities of the State. 5.2.12 Section 16(1) of the Trustees Act 1962 prescribed the manner in which a trustee could invest trust funds. Section 16(1)(n) provided: "(1) A trustee may invest any trust funds in his hands, whether at the time in a state of investment or not, in 5 - 5 any investments authorised by the instrument (if any) creating the trust for the investment of money subject to the trust, or in the manner following, that is to say — ..