- Transport for NSW purchased land for $53.5M in 2016
- The report found that formal valuations were obtained after the transaction
- Probity practices were "insufficient" and exposed TfNSW to a greater risk of corruption
Tuesday saw the release of the Auditor-General for New South Wales’ report on Transport for NSW’s (TfNSW) acquisition of 4–6 Grand Avenue in Camellia.
New South Wales Minister for Transport and Roads, the Hon. Andrew Constance MP, requested the audit on 17 November 2020.
The land details
TfNSW acquired the 6.3 hectares of land at 4-6 Grand Avenue, Camellia, on 15 June 2016 “by agreement from Grand 4 Investments Pty Ltd.”
The site is adjacent to Western Sydney’s Rosehill Garden Racecourse, and a number of other industrial properties.
The report said, “TfNSW paid Grand 4 Investments $53.5 million and assumed liability for addressing environmental issues and contamination associated with the site. This took place seven months after the vendor acquired the land as part of a competitive Expression of Interest process, in which TfNSW also participated, for $38.15 million.”
The AG conclusion
The AG’s report concluded that: “TfNSW conducted an ineffective process to purchase 4–6 Grand Avenue, Camellia. TfNSW did not obtain a formal valuation of the site, nor did it assess the financial impact of environmental remediation before the purchase. TfNSW did not have sound probity management controls in place for the transaction, and decision-making was rushed and poorly informed. These omissions from TfNSW’s application of due diligence over the use of public money mean that TfNSW is unable to demonstrate that the acquisition represented value for money for the State.”
In more detail
A number of issues were raised, including the site valuation. The formal valuation was “obtained after the acquisition was finalised”, and ” specifically excluded consideration of environmental contamination risk.”
Further to the environmental contamination risk concern, the AG said “Although TfNSW knew the site was contaminated, it instructed the valuer to disregard the effect of existing site contamination.”
Regarding contamination concerns, the report also said that “At the time of this report, TfNSW has entered into contracts worth $106.9 million for environmental remediation of the site, ground improvement works and other remediation-related consultant costs, such as Environment Protection Authority (EPA) site auditors.”
Beyond this, the report on the land acquisition also considered whether TfNSW staff had the authority to make the purchase.
“TfNSW staff did not have approval to offer $53.5 million to Grand 4 Investments, and the Acting Deputy Secretary who approved the acquisition did not have delegation to do so.”
Auditor-General, New South Wales
The AG also concluded that the acquisition “was at increased risk of fraudulent activity and financial loss but has not investigated whether these risks were realised,” and that “TfNSW’s probity practices were insufficient and exposed TfNSW to a greater risk of corruption, misconduct and maladministration.”
Elaborating on the risks raised, the AG said “Specific risks affecting the acquisition included the short timeframe for negotiating the terms of the agreement and high value of the transaction,” and that “The records show that only one person completed a conflict of interest declaration.”
Questions that have arisen from this include:
- why was there no formal valuation prior to the purchase?
- why was land contamination excluded from the valuation?
- why did only one person declare a conflict of interest?
- why was the deal done in such a relatively quick time?
- why did the department open itself to questions of “corruption, misconduct and maladministration”?