SA Ombudsman says Coober Pedy Council guilty of maladministration over handling of $198 million power deal
A SOUTH Australian council has been accused of one of the “most serious examples” of public maladministration over a $198 million power deal that could force it into administration.
A SOUTH Australian council could be placed under external control after a damning Ombudsman’s investigation found it had committed one of the “most serious examples” of maladministration when it signed a $198 million power deal.
Ombudsman Wayne Lines has delivered a stinging critique of Coober Pedy Council’s decision to enter a 20-year purchase agreement with a private supplier Energy Generation finding it did not represent value for money.
But the council has defended its actions saying in part that the State Government had threatened to withdraw a funding subsidy if the council did not sign the contract.
Mr Lines investigation concerned the council’s decision to enter the deal without a competitive tender process as well as actions of the State Development Department and former Energy Minister Tom Koutsantonis over the agreement.
In his report, released today, Mr Lines cited more than 25 “significant errors” by the council in connection with the negotiation and execution of the agreement including the failure of elected members to provide “meaningful oversight” of the activities of senior staff.
He said in his findings that each of the elected members remaining on the council who were involved in the decision should “now consider their position”.
“ … the practices of the council … resulted in the substantial mismanagement of public resources because they cause the council to commit to expend in excess of $100 million in circumstances where the council did not observe established procurement and prudential processes and did not satisfactorily demonstrate that the transaction presented value for money …” he wrote in his 230-page report.
“This remains one of the most serious examples of maladministration in public administration I have observed since the relevant provisions of the ICAC Act were enacted.
“I remain concerned that the elected body appears unwilling to accept ownership and responsibility to execute the agreement …”
The investigation was triggered by two referrals from the Independent Commissioner Against Corruption.
Mr Lines has invited Local Government Minister Stephan Knoll to consider whether to recommend to the Governor that the council be declared a “defaulting council” which could trigger its administration.
Stirling Council in 1990 was the last to be placed in administration.
Council acting chief executive Colin Pitman said the council rejected allegations it had entered into a contract without a prudential review.
In a letter to Mr Lines he said the council believes that the Ombudsman had ‘got the wrong guy’ and that the “substantial waste of public funds rests squarely at the feet” of the Government.
He said the Government and power company had presented a power proposal that had been reviewed by numerous government agenices and external consultants to say it was a “good deal”.
In his report Mr Lines said Mr Koutsantonis and the State Development Department did not commit maladministration at the time.
He said the department undertook “reasonable endeavours” to ensure the project presented value of money to the state, which subsidised payments made by the council under the agreement.
But he did find the department failed to demonstrate in briefings to Mr Koutsantonis that the agreement executed by the council was “fairly and reasonably priced when considered against comparable projects”.
The council power deal involved an upgrading of the town’s power infrastructure from existing diesel generation to include a mix of renewables and battery storage.