12 September 2018

Moreton Bay council secretly helped mayor’s donor win $20 million deal

Australia's third-largest council handed a key contract to one of the mayor's political donors without a tender. Now, as the Crime and Corruption Commission investigates, council insiders are questioning how the deal was reached and whether some councillors were kept in the dark.

Moreton Bay Regional Council helped a financial backer of the mayor and other councillors win more than $20 million-worth of outsourced council work by giving him confidential internal financial documents and letting him write the performance criteria for the deal, council whistleblowers claim.

In May 2016, the council handed wealthy local businessman Shane Newcombe’s company Moreton Bay Region Industry and Tourism Ltd a three-year contract to run events and promote tourism worth almost $7 million, without a tender.

This photo of Shane Newcombe and Moreton Bay mayor Allan Sutherland at a Broncos pre-season match in Redcliffe last year was shared on Mr Newcombe's Facebook page.
Photo: Facebook

The deal with Mr Newcombe in mid-2016 led to the effective closure of the council’s events department with the loss of more than 10 jobs.

Former council staffers allege councillors voted for the deal in 2016 with at least some of them not knowing that Mr Newcombe had been given unfettered access to sensitive council documents.

Those councillors were also unaware he had been coached for a key presentation to the full council by a small group of councillors, all of whom had received financial backing from Mr Newcombe's family.
Confidential council documents handed over to donor

So many confidential documents were downloaded to give to Mr Newcombe, one former staffer said, it set off an alarm in the council’s records department.

Councillors and staff who raised questions about the lack of a competitive tender were told there was no other company that could do the work.

The contract was this year enlarged and extended - a year early - for four years, making it worth as much as $23.5 million in total, the council’s biggest single procurement.

The council has published no details of the renewed contract and has refused to respond to repeated inquiries about it.

No councillors declared conflicts of interest at the closed-session May 2016 vote. This was in spite of mayor Allan Sutherland and three other councillors having been beneficiaries during the 2016 election campaign three months earlier of a $20,000 donation by the Newcombe family to Moreton Futures Trust, a vehicle used to fund Cr Sutherland’s mayoral campaigns in the last two local elections.

The main beneficiary of the trust has been Cr Sutherland. But it also supported the electoral campaigns of councillors James Houghton, Julie Greer and Peter Flannery in 2016. It also provided $2500 to the campaign of deputy mayor Mike Charlton during the 2012 campaign, which was later repaid.

A council staffer revealed Crs Charlton and Greer were the only councillors who attended a secret meeting in early 2016 where Mr Newcombe conducted a “dry run” of a presentation on the benefits of the MBRIT deal in front of the mayor and chief executive Daryl Hitzman.

The purpose of the meeting was Mr Newcombe “getting feedback to ensure no other councillor prevented (the deal) from going through” at the subsequent formal presentation and vote, the former staffer said.

“It was very secret squirrel,” the same former staffer said.

Fairfax Media understands that key financial information showing how much the MBRIT arrangement would save council was removed from the final presentation on the instructions of Mr Hitzman.

Mr Newcombe is a director of Newcombes Holdings, the company that donated to Moreton Futures Trust and owns local car dealership Village Motors. It is controlled by Mr Newcombe’s mother, Marlene.

Cr Sutherland testified at public hearings at the Crime and Corruption Commission last year that he had been “happy not to know” who the donors to the trust were because “it’s hard to have a conflict when you don’t know who the donor is”.

But he then told the hearing: “I knew Newcombe Holdings had put money in there.”

Fairfax Media revealed last month that the CCC was investigating the circumstances surrounding the May 2018 contract renewal.

Councillors delegated that decision to Mr Hitzman after seven of them declared “perceived conflicts of interest” on the basis they were friends of Mr Newcombe or had attended his wedding the previous week.

None of the five councillors who had received financial support from Moreton Futures Trust in the 2012 or 2016 elections mentioned this at the meeting.

Questions are now being raised about the initial award of the contract in 2016, which the councillors present voted for unanimously.

Council insiders told Fairfax Media the outcome was never in doubt, saying that since at least late 2015 they had been expected to give Mr Newcombe whatever he asked for to make sure the deal went through.

“It was a done deal,” said one former staffer who had detailed knowledge of the dealings with Mr Newcombe.

“Our directions were very clear. We had to make this happen.”
Shane Newcombe was a regular visitor to Moreton Bay Regional Council

A former council manager said Mr Newcombe had attended “at least 10” meetings at council premises with Mr Hitzman and other senior officers between March and June 2016 to discuss the outsourcing of council activities and had met regularly with other staff, who he had asked to give him comprehensive information on all the events run by council.

“Shane Newcombe wanted the whole lot,” another former staffer said.

"He wanted as much detail as he could.

“What it cost us, the hire of everything, how many staff and volunteers were needed.

“The documents were to give him what he needed as quickly as possible.”

The staffer revealed that so many documents were downloaded on to USB drives to give to Mr Newcombe it triggered an alarm on the council’s computer system.

“When we downloaded the USBs we were contacted by the records department,” the staffer said.

“When you download more than four documents it shows up on their system. We had to explain what it was for and that we’d been told to do it.

“They were available on the council system but you would only look at it if it was your area. It was confidential. You would not share it with anybody.”

The staffer said Mr Newcombe had requested and been provided information that included detailed budget breakdowns of the cost of running events such as the Urban Country Music Festival, the Decades rock music event and smaller events such as annual Christmas concerts in various divisions.

The documents included detailed profit and loss statements for each event, and even invoices issued to suppliers.

“They were massive. It was everything that it cost to run those events - traffic management, food, accommodation, all the hire equipment and alcohol.”

'You do what you have to do to get it across the line'

The former manager said staff had felt under pressure because of the close relationship between Mr Newcombe and the councillors and chief executive and because the deal “was going to happen regardless”.

“We were just facilitating the outcome,” the former manager said.

“It was a culture of ‘you do what you have to do to get it across the line’.

“You did things that weren’t right but you would have been sacked if you didn’t.”

MBRIT has not staged the Urban Country Music Festival or the Decades music event since it has had the council events contract. Both were loss-making under council.

When councillors voted for the MBRIT deal, the motion included a requirement for the council to agree to a “service level agreement” with MBRIT that would govern how MBRIT was expected to perform and limit the council’s financial liability.

Documents obtained by Fairfax Media show that this document was authored a month after the vote - by Mr Newcombe.

An email sent by Mr Newcombe to a council staffer in June 2016 headed “SLA Draft Notes” had attached to it a detailed 20-page document titled “MBRIT Service Level Agreement”, the metadata of which shows the author was “Shane Newcombe”.

The accompanying email states: “I have put this together the best I can! I will have some time during today to look at it again … But I think it’s a good first draft to be discussed with Daryl and Stew.”

Fairfax Media understands “Daryl” is chief executive Daryl Hitzman and “Stew” is Stewart Pentland, the council’s director of planning and economic development since 2015.

The council declined to provide a copy of the service level agreement, despite repeated requests from Fairfax Media.

The former employees all said Mr Hitzman had informed staff there was no need for a competitive tender because there was only one company that could provide the services and this provided an exception to the usual tendering rules under Queensland local government regulations.

“We kept asking, doesn’t this have to go to tender?’ one of them recalled.
Council does not reveal details about the deal

Division two councillor Peter Flannery, the council’s spokesman on economic development, said councillors had accepted there would be no tender for the outsourcing project in 2016 because they had decided no one else could do the job.

“When we first gave the contract it was discussed - are there any other businesses? But nobody knew of anyone,” he said.

Cr Flannery received just under $4000 in political donations from Moreton Futures Trust in the 2016 local elections. He did not declare a conflict of interest in the votes on the MBRIT contract in 2016 or 2018.

The former staffers were unwilling to be identified for fear of recriminations, but said they would be willing to provide evidence to investigators.

The council did not answer detailed questions. A spokesman said: “Council understands that the CCC is currently investigating a complaint from a ratepayer. With an investigation under way, it’s not appropriate for council to comment further.

“Please contact us at the conclusion of the CCC’s investigation.”

Fairfax Media submitted questions separately to Cr Sutherland and each of the other 12 councillors.

Division one councillor Brooke Savige said she had no recollection of councillors being told prior to the May 2016 vote that Mr Newcombe had been given detailed council financial information to facilitate him winning the outsourcing contract.

If she had known that Mr Newcombe had authored the service level agreement, she said, “that would be something that would put up a lot of red flags for me”.

“That doesn’t sit well with me at all,” she said.

Councillor Adrian Raedel (division 12), who had previously raised concerns about the MBRIT deal, said he had not been present at the meeting to award the contract on May 17, 2016, so had not participated in the vote.

The Australian has reported Cr Raedel was the subject of an unrelated investigation by the CCC into a complaint made by Mr Hitzman regarding Cr Raedel's relationship with a donor. The CCC confirmed it was investigating a Moreton Bay councillor, without identifying who it was.

Councillor for division three, Adam Hain, said: “Haven’t our PR department given you press releases on this? I’m not going to comment to Fairfax Media on things from 2016,” before hanging up.

Other councillors did not respond to questions. Nor did Mr Newcombe.

Moreton Futures Trust came under intense scrutiny during the CCC’s Belcarra hearings into local government last year. The CCC was later critical of it and organisations like it in its report to the state government, arguing that they obscured the true sources of politicians’ financial support.

Source: brisbanetimes.com.au

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