Glenorchy City Council comes under fire for CT Management engagement by Tasmanian Audit Office

LOCAL Government Minister Peter Gutwein says he will act quickly to “restore democracy” to Glenorchy in the wake of an explosive report into the council’s tendering processes.

The Auditor-General’s report has made some damning findings against the Glenorchy City Council. Picture: SAM ROSEWARNE

LOCAL Government Minister Peter Gutwein says he will act quickly to “restore democracy” to Glenorchy in the wake of an explosive report into the council’s tendering processes.

The report, by Tasmanian Auditor-General Rod Whitehead, has also sparked calls from Denison independent MP Andrew Wilkie and the council’s suspended mayor Kristie Johnston for police to investigate any possible criminal behaviour in the council’s million-dollar engagement of a Victorian company.

The Tasmanian Audit Office on Tuesday handed down a scathing report into the council’s use of CT Management — headed by former Victorian premier Jeff Kennett — to the tune of $1.05 million.

KEY FINDINGS THE COUNCIL failed to comply with the Local Government Act 1993 and its own procurement codes. EVIDENCE was found to indicate the intentional splitting of procurement for certain projects from a single procurement activity into two or more contracts to avoid the requirement to publicly invite tenders. THE COUNCIL failed to meet its procurement principles of open and effective competition, and enhancement of the capabilities of local business and industry. IT DID not document its assessment and decision not to follow its quotation process or seek tenders

Mr Whitehead said the engagement of CT Management by the council, without going to tender, “lacked transparency” and failed to comply with the Local Government Act and the council’s own code for procurement.

EDITORIAL: Enough is enough

And in an explosive allegation against the conduct of the council, Mr Whitehead said evidence was found to indicate the intentional splitting of procurement activities of CT Management into multiple contracts to avoid the requirement to publicly invite tenders.

“What we found was that there was 105 different invoices that were submitted by CT Management over a period of five years,” he said.

“There were 13 distinct projects that were conducted by CT Management in that particular time. What we found is that some of those projects exceeded those thresholds and quotations should have been called. And in one case, we believe that there was the intentionally splitting of the procurement activities across a number of projects to again avoid the requirement to go to tender.”

In State Parliament, Mr Gutwein said it was a “very concerning” report.

“[It] raises very serious questions about its internal practices and governance controls,” he said.

Tasmanian Auditor-General Rod Whitehead. Picture: RICHARD JUPE

The report by the state’s public sector watchdog comes as the Board of Inquiry investigation into the council is still ongoing — having now run for more than two years.

Mr Gutwein said with a further legal challenge by Glenorchy general manager Peter Brooks against the board to be heard by the Full Court next week, there was a possibility that it would still be ongoing next year.

But Mr Gutwein said that, in light of the concerns raised in the Auditor-General’s report and others flagged by the Glenorchy community, he would shortly reveal the State Government’s plan to restore democracy to the city.

“The community quite rightly is concerned and frustrated as the inquiry has been ongoing since October of 2015 and this final report by the Auditor-General will do nothing to alleviate community concerns,” he said.

“For this reason, we are considering our options and in coming days I will have more to say about what we believe is the best way forward to restore democracy and good governance to the city of Glenorchy.”

Federal independent Denison MP Andrew Wilkie.

Suspended Glenorchy Mayor Kristie Johnston.

Mr Wilkie said there was now a pressing need for the Government to refer the report to the police to determine whether there had been any criminal behaviour.

“Questions that need answering include: why exactly was a contract split for ‘the purpose of avoiding the requirement to publicly invite tenders’?” he said.

Ms Johnston echoed his calls, describing this finding as “particularly concerning”.

But a Tasmania Police spokeswoman said it was not a matter for them.

Glenorchy commissioner Sue Smith.

Glenorchy general manager Peter Brooks.

The investigation into the council’s tendering was sparked after complaints from the public and reports in the Mercury.

Mr Brooks — who is on indefinite leave — defended the council’s tendering.

“There was certainly no deliberate intention to split the projects to avoid going to public tender,” he said.

“Each project had a separate proposal — the requirements for each project were not known and there was no full understanding of what would be required to implement the council’s March 2015 decision until some of the earlier projects had been completed. I considered that the projects were not one project and therefore did not exceed the threshold.”

City set to be censured after tender probe

LOCAL Government Director Alex Tay will issue the Glenorchy City Council with a non-compliance notice after a Tasmanian Audit Office investigation into its procurement of services from CT Management.

Auditor-General Rod Whitehead has handed down the report into Glenorchy’s tendering processes, making some scathing allegations of the council’s conduct over a five-year period.

Mr Tay said the council had not complied with the law in engaging the Victorian company to the tune of more than $1 million for mainly organisational reviews of the council’s structure — and he would be telling Glenorchy Commissioner Sue Smith so.

“I will be writing to the commissioner advising that I am intending to issue council with a non-compliance notice on the basis of the Auditor-General’s findings,” he said.

Mrs Smith said the council had a code for tenders and procurement in place during the engagement of CT Management — but she couldn’t say whether it had been “followed appropriately”.

Mrs Smith said CT Management was no longer engaged by the council, but she did not know whether there would be any repercussions for existing staff involved in the tendering processes.

“It [CT Management] had gone on for too long, it was destabilising enough,” she said.

“I told staff to pay their bills and end it. It’s been going on for five years.”

Suspended Glenorchy alderman Matt Stevenson — who notified the Auditor-General’s office about the issues — said some of his fellow aldermen had their heads in the sand regarding just how serious the issues were around the use of CT Management.

It has long been a point of division within the council, with suspended mayor Kristie Johnston adjourning a special meeting where aldermen were due to vote on the company’s recommendation for an operational review of the council.

The fallout from this adjournment, which resulted in the council meeting without the mayor, is viewed as the first time the deep divisions spilt into the public domain.

Mr Stevenson said: “Alarmingly, through significant and sustained questioning on the matter over many months, aldermen were well aware of the risk that council could have breached its obligation under both the Act and its own tender code.”

Labor’s local government spokeswoman Madeleine Ogilvie said the State Government needed to take clear and direct action in the wake of the findings.

“Minister [Peter] Gutwein has no choice but to refer this matter to the Integrity Commission for further investigation,” she said.

“He also needs to take urgent steps to guarantee that these practices are not occurring at other councils, and in the Liberal Government’s own departments.”