Conflict of interest concerns exposed over Sydney council’s $8m park sale

Liverpool City Council’s decision to enter direct negotiations over the sale of two parcels of land to Moorebank Sports Club may have fallen foul of corruption watchdog guidelines, a confidential report has found.

The 23-page probity report found the embattled council did not manage conflict of interest declarations and no due diligence was undertaken before the $8 million sale of two lots of Hammondville Park.

The report, prepared by professional services firm O’Connor Marsden and obtained by the Herald, was submitted to council ahead of an extraordinary general meeting on Tuesday called in part to consider proceeding with the Hammondville Park plus the provision of 283 car spaces.

An artist’s impression of the Hammondville pool which will be partially funded by the sale of the two lots to Moorebank Sports Club.Credit: Liverpool City Council

Despite the concerns, Liberal councillors voted to proceed with the sale on Tuesday, which will partially fund the development of the Hammondville aquatic centre, a $50 million joint promise by Liverpool City Council Mayor Ned Mannoun and his wife, Liberal Holsworthy MP Tina Ayyad.

In late December, the Herald reported the commitment to build a “state-of-the-art” aquatic centre in Sydney’s west had raised concerns about a potential fire sale of council assets to pay for the precinct. This included the two lots of Hammondville Park, with opposed councillors at the time saying the process had not been “open and transparent”.

Signed June 13, the report outlined shortcomings throughout the direct dealing process with the sports club, also known as “Sporties”, which may not have complied with Independent Commission Against Corruption (ICAC) guidelines.

While there is no legislative prescription for council to invite tenders during the sale of publicly owned land, the ICAC has outlined circumstances when it is warranted for local governments to undertake direct negotiations with a single buyer.

Of the two relevant to Liverpool Council’s sale, the report concluded: “There does not appear to be detailed justification for the direct negotiations being undertaken rather than the two lots being offered to the market through a competitive process.

“OCM would recommend that Council provide further information in the Council report to the 26 June 2024 meeting to detail the reasons why the divestment of the two lots to Sporties through a direct deal is consistent with the above circumstances outlined in the ICAC guidance document.”

No additional documentation has been provided to council since the report was delivered.

Liverpool Mayor Ned Mannoun in July after Minister Ron Hoenig announced a public inquiry into the council.Credit: Dion Georgopoulos

A council spokesman said the probity review had been commissioned out of “an abundance of caution” and the shortcomings identified had been “addressed”. No clarity was provided as to how the issues have been resolved.

“These issues were addressed, allowing the report to council authorising the sale as best value for ratepayers,” the spokesman said. “This also follows an exhaustive community consultation that strongly supported the sale.”

The report identified a number of failings in the council’s process, and gaps in documents supposed to justify directly negotiating with Sporties, which has been agitating for the sale since 2012.

The lack of documentation included no apparent approval at a senior level within council to enter negotiations with Sporties. The first time formal approval was sought, in March 2020, the recommendation was rejected by council as it did not “sufficiently demonstrate value for money or alignment with Council’s objectives for the precinct”.

The council’s response to the probity issues OCM identified stated that Sporties’ lobbying of councillors “could amount to actionable appended bias”. It urged elected representatives to consider the extent of any lobbying in light of the council’s code of conduct “as a minimum”.

According to a timetable in the report, the matter returned to council in October when a majority of councillors authorised then-chief executive John Ajaka to “explore the disposal” of the park. The council approved the sale in February this year, pending community consultation.

Of the documentation provided, OCM noted there was nothing to indicate any due diligence had been undertaken on Sporties before proceeding with the sale. Of equal concern, none of the individuals involved in the discussions and negotiations with council, or through the remainder of the process, had signed declarations to confirm they were free from conflict.

The report comes as Liverpool Council battles the Minns government in court over an Office of Local Government investigation, which contained allegations of potential corruption, nepotistic hiring practices and councillors interfering in planning matters.

Mannoun and acting chief executive Jason Breton have criticised that report as being riddled with errors. The court case will likely determine whether the council will be suspended pending a public inquiry into the allegations.

After three days in court, a directions hearing is scheduled for August 23. A confidential report about the hearings stated council had already incurred $300,000 in legal fees, double the amount estimated before the matter commenced.

“The risk [of the ongoing legal matter] is deemed to be high with potential financial and reputational impacts,” the report stated.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.