ICAC report into Gillman land deal finds maladministration by Urban Renewal Authority executives
PREMIER Jay Weatherill insists he would sign up to the controversial Gillman land deal “every day of the week” despite the ICAC finding that the process had been marred by maladministration. | Kouts: I’m sorry
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PREMIER Jay Weatherill insists he would sign up to the controversial Gillman land deal “every day of the week” despite the state’s corruption watchdog finding that the process had been marred by maladministration.
The current chief executive of Renewal SA, which manages government land development, John Hanlon, also described the deal as “extraordinary” and said he believed the government had been taken advantage of.
Treasurer Tom Koutsantonis was on Wednesday forced to apologise for swearing in meetings with public servants relating to the controversial deal.
Read more: Premier says Tom Koutsantonis’ behaviour ‘falls well short’ of a minister
He was also resolute he would still back the deal if he had his time again.
Independent Commissioner Against Corruption Bruce Lander yesterday handed down a report which found the $100-million deal was unlikely to be a good one for the state and cast doubt on whether it would ever reach its full potential.
Mr Lander’s report is the third high-level inquiry to savage the deal for bad process and not having an up-to-date or relevant valuation to ensure it was good value for taxpayers.
Mr Lander found the Government’s land sale agency, the Urban Renewal Authority, which predates Renewal SA, had “engaged in maladministration in public administration”, which led to “a substantial mismanagement of public resources”.
The agency’s then chief, Fred Hansen, and chief operating officer Michael Buchan were also found to have “engaged in conduct that constitutes maladministration”.
Mr Hansen retired last year. Mr Buchan still works for the agency.
In December 2013, the State Government signed the deal giving private consortium Adelaide Capital Partners (ACP) exclusive rights to buy and develop more than 400ha of industrial land at Gillman for about $100 million.
It was structured into three parcels. The sale of the first, of 150ha at $45 million, provides ACP with exclusive rights to buy the remaining 257ha of the former Multi-Function Polis site with the “advantage of paying in 2013 dollars”.
When the Government announced the deal, it was presented as a future oil and gas hub. Mr Koutsantonis said the site would support 6000 jobs.
But it was later revealed there was no mention of the 6000 jobs in the sale contract for the site and the promised oil and gas hub was not a clear requirement.
Mr Lander said it was clear Mr Weatherill was “excited about ACP’s unsolicited proposal” and that enthusiasm infected Mr Koutsantonis, his office and the Urban Renewal Authority.
Mr Lander spent much of his investigation interrogating people involved about why the Government had not obtained a new valuation on the land. He found the 2008 valuation relied on was for another purpose and that if the site had been valued as industrial land it “would have made the land worth a good deal more”.
“It is necessary to manage public resources properly to be aware of the value of an asset that is to be either sold or acquired prior to the selling or acquisition of that asset,” Mr Lander said.
He said there was “no layer of oversight and the process did not allow for any independent thought or consideration to be given to the transaction”.
He also threw doubt on whether ACP would find the money to buy the whole site. He said “no due diligence had been done” on the proponent.
“I suspect it (the deal) will not be favourable unless all three options are exercised and the transaction represents value. I also suspect that ACP will not exercise all three,” Mr Lander said.
In evidence to the ICAC inquiry, Mr Hanlon said he was “extremely surprised” by the terms of the deal that did not benefit the state.
Mr Hanlon said he did not think those executing the deal understood what they were doing and that Cabinet might not have been aware it would tie up the land until 2024.
“I think it is an extraordinary transaction to make. And I was extremely surprised,” he said.
“You only needed 150ha, so why would you allow them to tie up 400ha over options that you have no control over.
“They (ACP) quite successfully tied up 10 years’ worth of competition while they filled up the first 150ha and then move to the rest of the site by paying options. It is just an extraordinary way of tying up your asset.
“There does not seem to be benefit; there is not benefit to the state in relation to this.”
Mr Hanlon said it appeared the Government had been taken advantage of.
“I think it lacked a sense of understanding on behalf of those people who undertook this transaction from government as to just what ACP were doing,” he said.
“ACP ... certainly took advantage of some people who did not understand the transaction arrangement they entered into.”
But Mr Weatherill insisted he would do the deal again any day of the week.
He said arguments that the land could have been worth more were missing the point.
“It’s never been about that. Our principal concern has been about the creation of jobs,” Mr Weatherill said.
“That’s the thing we said right from the start. We’d have been willing to accept a lower value than market value if it would create jobs.
“What we’ve seen is steps that have been taken by competitors who are very keen to ensure that this process doesn’t conclude, which is making it very difficult for this transaction to reach its ultimate conclusion.
“We still believe it is an important transaction for the future of SA. There is no finding that this does not represent good value for the Government.
“There might be doubts expressed about what may happen, and in the fullness of time we’ll be able to ... decide whether it was a good deal for the state. We firmly believe it is.”
Opposition Leader Steven Marshall said the Government signed up to the agreement without knowing whether or not it was a good deal.
“It is absurd for the Premier to claim that taxpayers got a good deal. How could he possibly know?” he said.
ABOUT THE SITE
What is the Gillman site?
It’s a 407ha parcel of prime industrial land near Port Adelaide.
In 1987, it was the site of a proposed joint venture, between the Federal Government and Japanese investors, called the Multi-Function Polis, to develop futuristic villages containing housing, teaching facilities, business premises and recreational areas for about 100,000 people.
Why is it now controversial?
In December 2013, the Labor State Government signed a deal for the site with Australian Capital Partners, an Australian-based consortium, without putting the sale out to the open market. Premier Jay Weatherill said it was a premium price and that there were no other credible proposals for the land. He added that ACP would have walked away if the site was put out to tender. Since then, industry sources have said the land could be worth up to $400 million and details of at least four other proposals have emerged. Four members of the Government land development agency Renewal SA’s seven-member board resigned over the deal, after advising the Government to reject it.
What is the deal?
The deal gave ACP exclusive rights over 400ha of land, which, as long at it meets conditions set by the Government, will be sold for $122 million: $45 million for the first parcel of 150ha, with options to buy the remaining 257ha.
What is Adelaide Capital Partners?
It is a consortium led by former Santos chairman Stephen Gerlach. The consortium members are Gerlach Asset Development and ResourceCo — run by Simon Brown — which is a waste management company that has a site adjacent to the Gillman land.
What is maladministration?
“Maladministration in public administration is the unauthorised and/or mismanagement of public resources that might be described as improper, incompetent or negligent.” (ICAC website)
HOW IT UNFOLDED
December 23, 2013: The State Government announces in The Advertiser that it has struck a deal with consortium Adelaide Capital Partners to buy and develop the 400ha former Multi-Function Polis site at Gillman.
December 24, 2013: It is revealed that more than half of the board of State Government property developer Renewal SA resigned over the deal after rejecting it twice, believing it should have gone out to public tender.
January 22, 2014: Premier Jay Weatherill said ‘there have not been any offers for this land of any substance for the last 30 years”, adding that a competitive tender process would have driven away the developer’s interest.
January 25, 2014: The Government is accused of short-changing taxpayers for agreeing to sell the site for $100 million, one-quarter of its potential value, without going to tender.
January 30, 2014: Mr Weatherill said the Government had received a “couple” of other proposals for the site but dismissed them as not “credible”. When asked if the Renewal SA board had rejected the proposal, then-Infrastructure Minister Tom Koutsantonis said: “Not that I’m aware of. If you have evidence of that, please show it to me.”
February 6, 2014: Details emerge that civil engineering firm Bardavcol had approached the Government with a detailed proposal for the site in May.
February 7, 2014: It is revealed that waste management company Integrated Waste Services is considering legal action against the State Government after it submitted a detailed proposal for the site the previous year. It is also revealed that Adelaide Resource Recovery had made a proposal but ruled out legal action.
February 11, 2014: Details of Renewal SA board’s advice from November 20 emerge, recommending that Mr Koutsantonis “reject the ACP submission”. Mr Koutsantonis said ‘the Government did not accept the proposal the board was not happy with”.
He said the proposal that Cabinet approved was different.
February 12, 2014: Mr Weatherill admits Renewal SA was lobbied to overturn advice that the sale of the site be put to an open tender.
March 14, 2014: Acquista Investments, known as Integrated Waste Service, and Veolia Environmental Services initiate legal action against the State Government’s land developer Renewal SA over the sale of the site. The waste company hopes the legal row will lead to a sale of the site by public tender.
March 24, 2014: A parliamentary inquiry into the deal is set up. Mr Weatherill and Mr Koutsantonis refuse to appear.
October 2, 2014: The Government decides to overhaul the guidelines for companies making unsolicited bids to develop public land or build infrastructure in the wake of the Gillman land deal controversy, which Premier Jay Weatherill said has scared investors away from the state.
January 12, 2015: Supreme Court Justice Malcolm Blue hands down his final judgment on the deal in which he upholds the validity of the contract but finds serious concerns with the process, calling it “irrational” and “unlawful”.
January 16, 2015: The State’s Auditor General handed down his report into to deal which found that a Cabinet submission that showed the deal was a “good value offer” was misleading because it left out key advice.
January 22, 2015: Independent Commissioner Against Corruption Bruce Lander revealed he was investigating the deal to determine if there was any evidence of maladministration.
January 23, 2015: Mr Koutsantonis admitted the State Government does “make mistakes” and its poor handling of the Gillman land deal should not be repeated.
July 20, 2015: Acquista Investments’ appeal of Justice Blue’s decision to uphold the deal is dismissed. But Auxiliary Justice Bruce Debelle, who led the Royal Commission into the Government’s botched handling of the rape of a child at a western suburbs school, dissented. Mr Debelle said a “prudent” vendor would have investigated further the merits of a competitive sale process.
September 10, 2015: The Government gazetted a rezoning of the Gillman site to allow redevelopment in line with ACP’s proposal.