Contempt, debt and defamation: Crisis of Coober Pedy council
The Coober Pedy Council is enveloped in crisis. It wants one of its own councillors charged with contempt, another is suing a local newspaper, while two councillors are embroiled in their own legal battle — and now residents are getting their say.
SA Business
Don't miss out on the headlines from SA Business. Followed categories will be added to My News.
- Auditor-General: Coober Pedy Council has “unsustainable” debt
- Coober Pedy: Ballot to help community decide how to address debt
Coober Pedy residents will be polled on whether they want their council to continue to be run by an administrator until the next round of elections in 2022.
Local Government Minister Stephan Knoll appointed administrator Tim Jackson to run the beleaguered council in January this year, with a term running until January 2020, after council management came under fire from both the state’s Ombudsman and Auditor-General.
Ombudsman Wayne Lines found last July that the council had committed one of the “most serious examples” of maladministration when it signed a $198 million power deal.
The Ombudsman cited more than 25 “significant errors” by the council in connection with the negotiation and execution of the 20-year power purchase agreement including the failure of elected members to provide “meaningful oversight” of the activities of senior staff.
The council’s financial management was also criticised by Auditor-General Andrew Richardson in a report last year, who found it had no realistic prospect” of balancing its books because of its “unsustainable” debt levels and financial performance.
Mr Jackson will now to poll the Coober Pedy community about a number of issues, including whether the administration should continue until council elections are next scheduled to be held in November 2022.
“One question that has arisen is whether a maximum period of twelve months is sufficient to fix problems of this magnitude,’’ Mr Jackson writes.
Mr Jackson said his role — which is separate to that of the council chief executive — is a full-time position which cost $255,000 for the first year.
“It is envisaged that should the period of administration continue the role would reduce to a half time role at some time in the second year due to the reducing requirements of the role,’’ he writes.
“The total annual cost would be approximately $135,000. If the elected Council is reinstated the total allowances payable to the mayor and councillors would be $73,000 per year.’’
Mr Jackson says voting “yes” to continuing with the administration would give him time to finish the job “particularly in respect of the council’s long term financial sustainability and improved governance.
“It would allow the administrator to make the necessary arrangements for the return of a properly functioning elected Council.’’
Voting “no”, on the other hand, would result in reinstating an elected council, which would be cheaper, and “provide a clear message to the minister that the voters want the return of an elected council’’.
Mr Jackson told the Sunday Mail that while he believed it would be best to continue with the administration, he was firmly committed to letting the community have its say.
To that end he has been running two council meetings a month as well as a monthly town meeting to ensure everyone is kept abreast of what he’s doing.
Mr Jackson said the current Act only allowed for a 12-month suspension, so Local Government Minister Stephan Knoll was considering amending it.
“The poll will assist him in making that decision,’’ Mr Jackson said.
The council’s business plan for 2019-20 acknowledges: “A record of poor financial administration over a number of years which has resulted in continual deficits on council operations and increasing debt levels’’.
In order to address that, a number of goals have been set, including developing and adopting a new strategic plan by October 31, 2020 and updating the long-term financial plan by October 31 this year.
Coober Pedy residents will have until October 21 to vote in the poll with ballots mailed out this from October 1.
COUNCIL SUES OWN MEMBER
The District Council of Coober Pedy is seeking to have one of its own councillors charged with contempt of court for using information it claims he has no right to use, a Supreme Court case file shows.
Earlier this year the Council successfully sought an injunction against Cr George Naumovic using information from 23 emails which he was erroneously given access to by the Council.
The Coober Pedy Council has been suspended since January 24 when it was put under the management of an administrator following a finding of maladministration by the State Ombudsman.
The court documents in the case levelled at Cr Naumovic state that a “technology glitch” which occurred between February 1 and 4 of this year made “numerous” private email folders “publicly available to any councillor who logged into the council’s email system in that period’’.
Mr Naumovic, the documents state, logged in “on “several occasions’’.
“In particular he reviewed private email folders of other councillors, which only became visible due to the glitch, and made copies of numerous documents.’’
On February 7 the council’s lawyers wrote to Cr Naumovic, the court documents state, asking him to return the documents, but “the defendant did not respond’’.
“The defendant proposes to use the documents for private litigation without the council’s consent,’’ the Council’s claim said.
“To do so was a breach of the fiduciary obligations he owed to the council.
“The defendant’s assertion that he somehow has a right to keep the documents is not grounded in any principle recognised by Australian authorities.’’
“It should be noted that … the defendant could find himself exposed to criminal proceedings for breaches of s 62 of the Act.’’
In his defence, Cr Naumovic says in court documents that he, “much to his surprise, found that some of the emails were about him and his disclosures, were defamatory and were now in the public domain and that some of the emails related to ongoing serious and systemic corruption and maladministration within the DCCP’’.
The court documents indicate that Cr Naumovic and Cr Justin Freytag also have each lodged a separate civil case against each other.
On July 15 Judge Dart made an order that the documents in question be turned in, and an injunction was put in place regarding their use.
Subsequent to that the matter has returned to court, with the Council claiming “the defendant is guilty of contempt of court’’ saying he has used the information in a Magistrates Court matter.
Cr Naumovic has argued he is not in contempt of court.
The matter continues.
COUNCILLOR SUES LOCAL NEWSPAPER
An opinion piece claiming that a Coober Pedy councillor is “nothing more than a toady” to the former chief executive is the subject of a defamation action currently under way in the Supreme Court.
Cr Justin Freytag, who describes himself as a libertarian and an advocate of small government, is suing the Coober Pedy Regional Times and its editor and proprietor Margaret Mackay for defamation.
His case revolves around two opinion pieces published by the newspaper on May 3, 2018.
Court documents show that the first of the strongly-worded pieces, which are still both available online, contains allegations against former council chief executive Fiona Hogan, and Cr Freytag.
The column, entitled “Enough is Enough” goes on to attack Cr Freytag, who, court documents state, was not contacted for his side of the story previous to publication.
“Cr. Justin Freytag, a well known CEO toady (I maintain) must decide whether he is for Fiona Hogan or the Town; he cannot be for both. Justin, what side of the fence are you on? Hers or ours?’’
An opinion piece, headlined “When will the farce end?”, begins: “This council and the present CEO are hopelessly out of their depth’’.
The piece refers to the complexity of the town’s power and water supplies and casts doubt on the CEO’s ability to manage these.
The author writes regarding the councillors: “To the best of my knowledge there is not
a single university degree between them’’.
“Their technical lack of expertise became evident when they signed a power deal, then proceeded to spend hundreds of thousands of dollars of our town’s funding trying to get out of the contract that, in my opinion, they were too illiterate to understand when they signed it.
“You would have to ask this question. Would you have your house built by these guys? When is the state government going to step in and end the farce?’’
The Coober Pedy Regional Times carried an apology from one of its columnists on August 23, 2018, for something which he, in his own words “inadvertently wrote’’.
“Without in any way making an admission of liability I would like to retract in whole the statement I made therein and apologise fully and publicly to him for any ill-feeling that I may have, unwittingly, caused.
“In my opinion Cr Justin Freytag endeavours to put the town first in the execution of his duties, and is totally free of any conflicts of interest. This alone constitutes an outstanding councillor in my view.’’
Cr Freytag’s statement of claim says the newspaper “failed to seek a response prior to publication” and “knew that the matter complained of was false and untrue”.
He also claims that it is implied he “places more importance on attempting to ingratiate himself to the CEO rather than fulfil his duties as an elected member’’.
The case has been referred to a settlement conference on October 15.
BEFORE THE COURTS
■ District Council of Coober Pedy v Cr George Naumovic: contempt of court
■ Cr Justin Freytag v Margaret Mackay, Coober Pedy Regional Times: defamation
■ Cr Justin Freytag v Cr George Naumovic: defamation
■ Cr George Naumovic v Cr Justin Freytag: defamation