Central Coast Council email trail shows CEO, CFO knew well before blowout announced: Administrator

Administrator Dick Persson has revealed what he claims to be the two most telling aspects in the documents he released last night, which he says shows the former CEO and CFO knew the council was in financial trouble well before alarm bells were raised.

Administrator Dick Persson has released documents which he says shows that council bosses knew about the financial crisis well in advance.

Central Coast Council administrator Dick Persson has tabled documents at a council meeting — including emails between the former chief executive officer and chief financial officer — that he says reveals they knew about the financial crisis well before it was announced.

At Tuesday night’s meeting, Mr Persson addressed, what he said, were many misleading comments in the community and backed it up by tabling correspondence between former CEO Gary Murphy and former CFO Craig Norman during March and April 2020. He also tabled Mr Norman’s meeting file note from a November 2019 meeting.

Administrator Dick Persson has released emails from former CEO Gary Murphy and former CFO Craig Norman.

Mr Persson said Mr Murphy’s claims that he blew the whistle and informed the Department of Local Government when he realised council was facing liquidity issues were “just not true”.

“I am going to release today a series of emails and personal notes that he filed in the system which confirm the extent of the knowledge of the trouble that they were into a long time before the whistle was blown,” he said at Tuesday night’s meeting.

“They show that he not only had an awareness, they also indicate the cash reserves were running down and the financial train wreck was full steam ahead. His continued denial prompts me to release the documents.”

The file note from 2019 shows the words “financial strategy for financial sustainability, use of restricted funds reserves” and has an arrow pointing to the words “next time”.

The file note from a November 2019 meeting.

In an email dated March 20, 2020, Mr Norman emailed Mr Murphy regarding concerns about cash flow impacts. He outlined cash burn scenarios and stated “Bothe (sic) scenarios result in having to access restricted funds and also putting our current ratio below the OLG Benchmark so there would be a need to advise OLG/Minister”.

Mr Persson told the Express Advocate that the file note and email about cash burn scenarios were two of the most telling aspects of the documents released.

“They knew well and truly that they were getting into the (restricted) reserves issue,” he said.

“I don’t think it’s the biggest sin in all of this. However Mr Murphy has claimed that he blew the whistle and challenged my 30 day report. It’s important for my reputation that I release this information.

“I am going to be releasing more information, I want to release everything I get.”

At the meeting, acting CEO Rik Hart said council continued to spend and nobody asked “where is this money coming from?”

In an email dated March 23, 2020, Mr Murphy wrote to Mr Norman and said: “The cash burn question is getting critical as we close more and more facilities. We need to get a handle on: 1. Daily staff costs circa $800k/day 2. Revenue losses 3. Fixed daily costs.”

In email correspondence between senior staff and Mr Norman on March 27, 2020, questions from councillors were referred to Mr Norman.

Suspended Cr Kyle MacGregor asked: “What is the anticipated impact of the current situation on council’s investments?”

The reply was, “In terms of impact on investments at this stage nil”.

Suspended Deputy Mayor Jane Smith asked: “If funds were unrestricted would approval to use those funds have to go to council or would it be something Gary could do under delegation in consultation with councillors?”

Dick Persson AM.

Mr Norman replied: “For funds to become unrestricted there would need to be legislative change which itself would have to cover off on whether it was able to be delegated to the CEO and/or to what level”.

In April 2020, another email chain regarding council finances saw former financial services unit manager Carlton Oldfield send an agenda of financial areas to cover.

He ended the email saying “the bulk of the discussion should be related to the current circumstances but we need to give some thought as to how we came to be in our current financial position and what areas we need to consider improving to get our way of it”.

Mr Persson said many of the former councillors and the former CEO continued to deny any responsibility for the financial catastrophe, with many blaming the amalgamation.

Central Coast Council’s financial woes became public in October 2020.

“That’s just rubbish, there’s no part of the world where you can’t save money from joining two organisations together,” he said at the meeting. “That’s just basic economics.”

Mr Persson was appointed in November 2020 following the suspension of councillors and revelations that council was facing “liquidity issues”. He has since revealed that over the past four years, council has accumulated a debt of $565m, including $200m to be paid back for the use of restricted funds.

Mr Persson terminated Mr Murphy’s contract in November saying, “I felt the situation has become clear enough that the financial management of the council is not deemed acceptable and as the chief executive officer Mr Murphy had a primary responsibility”.

The Express Advocate has contacted Mr Murphy for comment, however he previously told The Daily Telegraph he “made every effort to safeguard” the financial wellbeing of the council.

“I refute the claims made in the administrator’s (30 day) report. I have written to Mr Persson to clarify the omissions and inaccuracies contained in his report,” he said.

“I am confident that a full and thorough examination of events from the creation of Central Coast Council in 2016 will show that I made every effort to safeguard the financial wellbeing of the council.”