FREMANTLE COUNCIL EXPOSED TO FRAUD AND CORRUPTION

AUDITOR’S REPORT STATES CITY HAS NO ANTI-CORRUPTION FRAMEWORK: SECRET MEETINGS ARE CAUSE FOR CONCERN

In an extensive report delivered to Fremantle Council the City’s auditors have revealed:

‘The City has no Fraud and Corruption Framework, there is no Fraud and Corruption Prevention Policy nor Procedures’.

The auditors, Paxon Group Pty Ltd, describe themselves as specialists in aspects of urban renewal, development feasibility and the structuring of joint ventures between public and private entities. 

 Paxon Group also reported that the City has no Fraud Prevention Officer.

The audit reveals:

‘Purchase orders have been raised after expenditure’ and ‘Invoices have not been approved by authorised personnel’.

Paxon’s note that issues related to the delegation of authority have “been actioned”.

WARNINGS GIVEN IN 2015  :  REQUIRED TRAINING NOT IMPLEMENTED

Paxon’s findings reveal the lack of Risk Management Analysis dates prior to 2015. They say that under a previous Regulation 17 report of 2015:

“ . . . risk analysis was new to the City and required further refinement and training scheduled for 2015. This did not take place”.

(Links to the auditor’s information published in Council’s agenda and minutes are at the end of this article)

COUNCILLORS MUST HAVE ACCESS TO CONTRACTS  :  MAY HAVE NO LEGAL PROTECTION.

Fremantle is increasingly favoured by developers and at least one, Sirona Capital, has been described in court documents as having questionable professional ethics.

If councillors did not receive advice related to aspects of fraud and corruption they may have a defense against future legal action associated with the financial failure of projects, especially if councillors have not been given full details of projects’ contracts. 

Fremantle Backchat understands councillors have not had access to contracts. Therefore they cannot understand the implications.

Not requesting access to contracts may indicate a lack of due diligence which could expose individuals to legal action in the event of financial or other failures of projects.

By understanding contracts fully, if necessary consulting independent legal advice, councillors would be in a position to question the administration and clarify any doubts they may have. Due diligence may help protect elected members from legal actions and advise the administration to refrain from imprudent management practices. They may also protect ratepayers from costly misinterpretations.

REQUEST FOR CONTRACT IGNORED  :  COUNCIL SECRECY IS CAUSE FOR CONCERN

Lack of transparency within the Council’s administration is palpable. The administrator’s findings cast doubt on past and current administrations and their procedures. The findings should prompt councillors to ensure legal protection which may be assisted by having a  full understanding. of contracts

Fremantle Backchat has written to the City’s CEO, Philip St John, requesting a copy of the contract between the City and Sirona Capital so that it may be independently examined in the interests of Fremantle ratepayers who are repeatedly described as partners with Sirona Capital in the redevelopment of King’s Square. He has not replied.

SECRET DISCUSSION OF  CASH FLOW BY AUDIT AND RISK MANAGEMENT COMMITTEE

Underlining the Council’s lack of transparency a meeting of the Audit and Risk Management Committee was held in camera to discuss the Kings Square Civic Building Cash Flow Summary. The meeting was on 14th May 2019. In some circumstances Government legislation does allow council business to be closed to the public. 

The council has recently contracted Pindan and concerns have been raised that the contract may not have a fixed price. That is not uncommon but ratepayers have been given details of costs which appear to be fixed.

If contracts are not fixed price there may be concerns that substantial increases in construction and fit-out costs can be expected.

Fremantle’s ratepayers who are financial partners in the development of  Kings Square should have considerable cause for concern that contracts and related financial matters which are shrouded in secrecy are not available for inspection.

NOTE: For detailed information related to the auditor’s report refer to these links:

Agenda:<https://www.fremantle.wa.gov.au/sites/default/files/Agenda%20-%20Ordinary%20Meeting%20of%20Council%20-%2022%20May%202019.pdf>Starting on pp95

Minutes:<https://www.fremantle.wa.gov.au/sites/default/files/Minutes%20-%20Ordinary%20Meeting%20of%20Council%20-%2022%20May%202019.pdf>Starting on pp111

Roger Garwood, Editor, Fremantle Backchat; <editorbackchat@gmail.com>

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GOVERNMENTS REVEAL FREMANTLE HAS WORST FINANCIAL RECORD & HIGHEST PAID MAYOR IN WA

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                          Work progressing on Fremantle Council’s new Administration Centre 

•Fremantle Has Highest Financial Risk Factor

•Brad Pettitt Top of the Financial League of Mayors

•Government Advise Ratepayers: ‘question council performances

Statistics, published in The West Australian (17th April 2018), show Dr Brad Pettitt has become the highest paid mayor in Western Australia.. These figures are confirmed by Fremantle Council’s accounts and exclude various allowances. 

Additional statistics, published in WA Government’s Financial Health Index (FHI), show that during Dr Pettitt’s tenure the City of Fremantle has fallen to the lowest position in the State with a Financial Health Index  figure of 44

In two of the immediate past three financial years the city had a low score of 42 and 44. In the Financial year of 2016-17 the score was also very low but the city changed its accounting methodology and elevated the FHI to 87. At that time Treasury issued a statement saying: ‘We stand by our original figures’.

Top Mayoral Salaries are:

Fremantle: $139,419

Joondalup: $139,410

Belmont:   $139,409

Bayswater: $139,310

The Financial Health Index of those Councils show:

Fremantle: 44

Joondalup: 61

Bayswater: 86

Belmont:   94

The higher the score, the better the financial health of a council. These scores are an indication of financial management and of services offered to ratepayers. They show ratepayers’ their value for money.

It is interesting to note the second lowest performance is Nedlands with an FHI of 50. Fremantle based consultancy LewiCorp Pty Ltd, owned by Chris Lewis who spearheaded the failed ‘Keep the Dockers in Fremantle’ campaign, is shown as being paid as a council adviser in the accounts of both Fremantle and Nedlands. Lewis was also instrumental in a fundraising campaign for Dr Pettit’s first mayoral campaign. 

GOVERNMENT ADVISES COMMUNITIES TO QUESTION COUNCIL PERFORMANCES

The WA Government website <https://mycouncil.wa.gov.au/Council/CompareAllCouncil> advise to ratepayers states: “A very high or low FHI may be a prompt for questions to be asked by the community about a local government’s revenue, expenses, and service delivery. The FHI is best viewed as a trend over time”

ACADEMIC THEORY- ARE THE CHOOKS COMING HOME TO ROOST ?

When Dr Pettitt was first elected mayor he stated: ‘. . . I’m delighted to be able to put my academic theories into practice in Fremantle . . . ’. but has never detailed his academic theories. After nearly ten years in the top job, and based on the performance of council under his leadership, the theories must be questioned.

A ratepayer-funded, multimillion dollar, public relations campaign has failed to halt the slide in the city’s fortunes. The campaign includes websites, newspaper advertising and a magazine which has ceased publication after council admitted it has failed. 

There is a growing impatience among ratepayers and businesses, a very high proportion of whom have closed shop and left or are struggling to pay higher rents and increasing rates in the face of falling customer numbers.

FAILED PROMISES

The city’s east end now has approximately 80 vacant retail premises with no sign of the resurgence of business promised as a result of the development of a Woolworth’s shopping centre (now prematurely closed). The increase of trade from residents expected from new developments have not materialised. Anectodal evidence indicates the LIV apartments are about 50% occupied following an increase in service personnel taking up residence..

In the instance of the re-development of Atwell Arcade the mayor promised that 300 people would be employed in the new offices. That was three years ago. So far there are about 40.

Without knowing Dr Pettitt’s academic theories it is difficult to comment but there is scant evidence of their success. There is no questioning Brad Pettitt’s youthful enthusiasm but after ten years it is reasonable to question the efficacy of his theories.

Over the next few weeks Fremantle Backchat will examine issues related to the current failure of the city to improve its financial position.

Part Two: Next Week. Council’s Lack of Transparency

Roger Garwood, Editor. <editorbackchat@gmail.com>

FREMANTLE COUNCIL NOT IN BED WITH AirBnB

PUNITIVE TAX WILL FURTHER DAMAGE FREMANTLE’S ECONOMY

The Fremantle Herald recently published a story related to AirBnB (7th July ’18) which suggested Fremantle Council may have been pressured by hotel industry lobbyists to levy a rates surcharge on small accommodation rentals.

That punitive tax, which  raises only $35,000, will inflict further damage to the city’s battered economy.  Another levy on small business will not help the city or its retailers out of their financial crises and it’s doubtful it will help the ailing hotel market.

Visitors who choose to stay in AirBnB establishments may do so because they prefer not to stay in hotels. The offering of comfortable home accommodation to visitors is not necessarily a great deal cheaper than a hotel. Some travellers, often couples or family groups, may have been attracted to visit the city for something other than another festival but simply to enjoy the sights, the variety of restaurants and cafes and also the remaining retailers. Any saving in relation to accommodation costs frees up expenditure for enjoyment in other city attractions.

Hoteliers have a vested interest in encouraging guests to patronise hotel facilities which frequently include restaurants, cafes, spas, bars and small retail outlets. Visitors’ money spent in a hotel’s  in-house attractions is detrimental to local businesses.

Retailers in Fremantle’s West End who  offer a variety of  particularly funky shops are already paying elevated rates, ostensibly to be used by council to promote their businesses. That differential rate levy , originally established to support the BID scheme, has been diverted to a hand picked Destination Marketing committee by the cash strapped council.

One AirBnB operator, Alison Roberts, told The Herald: “All Airbnb and Homeaway owners already use their websites to promote Fremantle as a destination, recommending local eateries, tourism operators, retail outlets and artists”.

TAX CONCERTS INSTEAD

It would have been expedient and a greater revenue raiser for council to levy music festivals and other large scale ‘visiting businesses’ such as Winter World. Minutes from a SW council indicate Sunset Events festivals in their region were levied $20 a ticket. That’s not done here presumably because it was never considered or, as the Mayor publicly demonstrated, one of the Sunset company directors, David Chitty is a ‘mate’ of his. Also a  Chitty family member placed considerable funds into the mayor’s election  campaign.

A $20 per ticket levy to a music festival which attracts 10,000 patrons would raise $200,000 for council. Even a smaller festival of  2,000 patrons would raise  $40,000, considerably more than the Council’s punitive impost on the AirBnB businesses.

Most companies who operate festivals and other events are not based in Fremantle. They arrive, utilise the city’s amenities, make truck loads of money, and leave.  Festival patrons add little to the city’s retail businesses other than to booze barns, cafes (and possibly drug dealers). They also leave expensive clean up liabilities.

AirBnB hosts  offer friendly alternative accommodation services to the city. They attract people who may have responded to the council’s revised Destination Marketing program which, by coincidence, has hoteliers on its advisory board in addition to Chris Lewis. Lewis is the spin doctor who was instrumental with a few members of the G4F group, including Councillor Sullivan, in organising fundraisers for Brad Pettitt’s mayoral campaign.

ELECTED COUNCILLORS SHOULD ASK “DO THESE CONNECTIONS INDICATE CRONY CAPITALISM?”

Lewis’s company, LewiCorp PLC, was paid $22,000 by Fremantle Council for ‘Strategic Services’ rumoured to have been connected to the Keep Dockers in Fremantle campaign spearheaded by Lewis and his confrère, former WA Inc Premier Peter Dowding.

Lewis, Dowding and Pettitt  appeared unworried that to retain the team in the city would  cost city ratepayers in excess of $100,000,000.  The campaign failed as did Lewis’s attempt to gain a position on the Dockers’ board.

Fremantle has a Council, many of whose elected members appear to be unwilling or incapable of thinking outside The Square but apparent respond to  pressure from ‘mates’ in business or those who facilitate and lobby on behalf of businesses, including developers. It could be Crony Capitalism at its worst, a reflection of the corruption endemic during the governments of WA Inc. It is becoming clear that councillors should investigate who is behind the scenes, driving the city and advising the Mayor and some colleagues.

Note:
Crony Capitalism is defined as: “An economic system characterised by close, mutually advantageous relationships, between business leaders and government officials.”

 

Roger Garwood

Editor: backchatfremantle@gmail.com

ARE SIRONA SOLVENT?

HAVE FREMANTLE RATEPAYERS  SETTLED SIRONA CAPITAL’S DEBT TO BUILDERS COOPER & OXLEY?
In February this year the administrators for Perth builders Cooper and Oxley implemented legal action to recover a debt of  $6.12m allegedly owed by Sirona Capital, the developers of Fremantle’s King’s Square.
   Last month (May 2018) Sirona Capital’s  Managing Director Mathew MacNeilly quietly announced the case was settled. Presumably the debt had been paid.
   It’s reasonable conjecture to ask whether Fremantle’s councillors may have fallen for a well orchestrated smoke and mirrors trick.
   Over a year ago Sirona Capital requested a twelve month extension to pay for one of several properties purchased from Fremantle ratepayers’ assets.
   The 12 month deferred payment of $6.65m was due on May 9th 2018. It is for Sirona Capital’s acquisition of the Spicer site, one of a number of assets sold to the developer by council but not yet paid for.
   On February 8th this year journalists Kim MacDonald and Grant Taylor reported in  Perth Now  that a Supreme Court writ had been issued against Sirona Capital.
   MacDonald and Taylor outlined the writ claimed Sirona Capital’s directors and other executives had acted “fraudulently”,  “negligently” and made “misrepresentations” related to the conversion of a $5m loan into equity.
Cooper and Oxley’s administrators were seeking $5 million plus 15% interest on that sum since late 2011, about $1.2 million, plus unspecified damages.
WERE, OR ARE,  SIRONA SOLVENT?
   If Sirona Capital did pay Cooper and Oxley Councillors must now ask why did they not pay the $6.65m debt to ratepayers first?
If they did not pay money to Cooper and Oxley, nor to Fremantle the question is: “Were, or are, Sirona Capital solvent?”
   If on May 9th, 2018, Sirona could not pay their debt to Fremantle City Council and/or to Cooper and Oxley, they may have been insolvent,  had a legal obligation to stop trading immediately, or seek settlement with creditors. It appears they did the latter when asking for extended time to pay Fremantle Council.
IS THIS A TIMELINE OF INTRIGUE WORTHY OF WA INC?
APRIL 2017
SIRONA CAPITAL : PAYMENT TO COUNCIL FOR $6.65M DEFERRED

The new due date for payment of the Spicer Site was 9th May 2018.

FEBRUARY 2018
BUILDERS COOPER AND OXLEY CALL IN ADMINISTRATORS
7th FEBRUARY  2018
WRIT ISSUED AGAINST SIRONA CAPITAL FOR $6.12m
It was reported  the administrator of Cooper & Oxley , Cameron Shaw of accountants Hall Chadwick, issued writs against Sirona Capital for $6.12m.
11th APRIL  2018
SIRONA CAPITAL SEEK ADDITIONAL EXTENSION FOR PAYMENT OF THE SPICER SITE : GRANTED BY COUNCIL
   Council members unanimously approved a proposal by Mayor Pettitt and seconded by Cr Hume that Sirona Capital be granted an additional 6 months to pay for the Spicer site.
Council minutes record:
  “That Council authorise the Chief Executive Officer authority to approve extension of the settlement date for the former Spicer property for a period up to 30 September, 2018 and amend the Project Development Deed in accordance with this extension.”
This was probably the earliest possible date the application for an extension could have been put before full council since the writ was issued.
19th APRIL  2018
ACTION DROPPED : WRIT ‘SETTLED’
   Immediately after gaining the  extension Matthew McNeilly, Sirona Capital’s Managing Director, announced action by the Cooper and Oxley administrators has been  withdrawn. Had $6.12m claim has been paid?  McNeill described it as  ‘settled’.
   It is reasonable supposition that the $6.65m for the May 9th payment for the Spicer site may have been used to settle the debt claimed by Cooper and Oxley’s administrators.
17th MAY  2018
SIRONA CAPITAL ANNOUNCE $190m FINANCIAL PACKAGE FOR KINGS SQUARE PROJECT

Only four weeks after the Cooper and Oxley case was settled McNeilly announced $190m funding for the KSP.  The company had secured the funding from First State Super (FSS) and Altis Property partners. FSS manage the superannuation funds of 800,000 public service employees. McNeill claimed  banks  had ‘lost out’ on the chance to fund the King’s Square project.

A $190m financial package is not achieved overnight.  Sirona Capital must have been aware they had finance arranged, or were sure of getting it, before they asked for additional time to pay for the Spicer site.

  Fremantle’s Councillors may have fallen for a well planned financial manoeuvre.
SIRONA CAPITAL ARE ‘CASHED UP’ BUT FREMANTLE’S ECONOMY HAS COLLAPSED
   Observers are aware that Sirona had difficulty gaining financial backing from investors for the King’s Square redevelopment.
  There are close to 130 empty or demolished retail premises in Fremantle.   That includes shops demolished to make way for the shelved Hilton Hotel development; the Woolworth’s centre next to St Patrick’s Basilica; shops empty in arcades including the Coles Woolstore centre; shops under redevelopment by Sirona Capital and about 85 visually empty premises in the CBD.
   Faced with that scenario it is not surprising  investors display  caution before funding the construction of retail premises which form a substantial part of the King’s Square Plan.
  Fremantle cannot survive on the smell of coffee beans, hop extracts and festivals. The city is now ranked among the least financially secure shires in Western Australia. In short, the city’s economy has collapsed.
COUNCIL LOSING MINIMUM OF $1,000,000 BANK INTEREST
   Councillors must demand Sirona Capital settle for their purchase of ratepayers’ assets. They owe $6.65m for the Spicer site alone. They could be earning considerable interest on  money which is lost to the city and could be in excess of $1,000,000.
   To cover Sirona’s Capital’s non payment for a number of assets the City’s financial managers have removed $12.65m from the reserve fund, thus losing interest on that deposit. Over  3-4 years that could amount to interest of  $3,000,000. The council have described to cost as insignificant.
   Fremantle’s ratepayers – the real financial lifeblood of the city – must ask for an independent inquiry into the Kings Square Plan which has been shrouded by secrecy and spin.

COUNCILLOR PEMBERTON: “FREE BOOB AND ‘F*CK ME’ BOOTS”

FREO COUNCILLOR ENDORSES ‘FREE BOOB AND F*CK ME’ DRESS CODE FOR FALLS FESTIVAL GIRLS

Fremantle City Ward Councillor Rachel Pemberton endorsed a sexually explicit dress code for girls attending the Falls Festival in Fremantle last weekend (6th & 7th December). Following a series of alleged sexual assaults at the Falls Festival in Tasmania Pemberton wrote on her blog:

“Women’s fashion tips from Falls – pants are optional, a transparent bra is a visible alternative to a top or you can simply ‘free boob’, and ‘f*ck me’ boots are back in fashion”.

The statement was revealed by Freo Streetwise, magazine edited and published by journalist Carmelo Amalifi. Streetwise is rapidly gaining a reputation for tackling the hard news in Fremantle and calling the City Council to account.

26229428_1869962293033590_7758654705970673144_n
Screenshot from Freo Steetwise Facebook page which attracted condemnation of City Ward Councillor Rachel Pemberto’s comment.

 

TACIT SUPPORT FOR PEMBERTON FROM MAYOR AND COUNCIL

The story, published on the Streetwise magazines Facebook page, has resulted in condemnation from the community but gained tacit support from Mayor Brad Pettitt, a former partner of Pemberton, and North Fremantle Councillor Doug Thompson. Instead of offering a reasonable explanation for her statement Pemberton, in the face of concerned critics, simply accused them of cyber bullying.

OPPORTUNITY LOST

Pemberton, a high profile councillor, had the opportunity to condemn the dress code she publicly endorsed. She had an outstanding chance to support the right of women to wear whatever they wish, wherever they wish, without making themselves targets of sexual predators. She promoted the  opposite position,  giving credence to predatory sexual behaviour. Thompson, the city’s longest service councillor, made the observation that comments condemning Rachel Pemberton demonstrated the worst aspects of social media.

Thompson’s comment, endorsed  by Pettitt, ignored the issue of the City Ward Councillor’s sexually explicit post, thus offering tacit support. Nor, (at the time of writing), has any councillor criticised Pemberton. The comments on the Facebook page of Freo Streetwise presented an opportunity for Pemberton to explain in detail her post, maybe to apologise for it. Her only defense was to accuse critics of bullying. They didn’t. They were shocked, wanted an explanation  and called for her dismissal, resignation and an inquiry into council’s code of ethics.The problems faced at Falls in Tasmania were published nationally over a number of days.

PEMBERTON: A QUESTIONABLE ROLE MODEL

Recent Mayoral challenger Ra Stewart said:

“Rachel Pemberton as the mother of two young women attending this event I am appalled at your comments. There was no suggestion about female empowerment in your statement, you provided commentary on a dress code and the inference was most definitely derogative. I would hate to think how your comments are interpreted by young men, let alone my daughters.”

Stewart questioned Pemberton’s position as a role model in the city.

“You’re kidding right… Rachel Pemberton, as a leader in our city, Councillor, and role model (?) for our young women”.

APPALLING & IRRESPONSIBLE:

Claudia Green, an expert in governance – the manner in which all branches of government should operate – and recent City Ward candidate, commented:

“ …Councillor Pemberton is in breach of her role and responsibility as an elected representative and public servant paid from the public purse, apart from the appalling message she is sending. 

“She has claimed a conflict of interest to abrogate her duties to represent her electorate in the Sunset development planning application by accepting freebies from Sunset. Now this awful abrogation of responsibility of her duties as an elected representative of public service. 

“The CEO and the Mayor need to bring her into line and reprimand her and be brought to the appropriate Committee for discipline. She should be sacked. Once verified, a complaint will be laid. She is bringing the Council into disrepute.”

Green is correct in calling on the Mayor and CEO to refer the matter to a disciplinary committee. Together  with other posted comments she asks for Pemberton to be sacked. However the early signs from council indicate that all councillors will offer tacit support to Pemberton’s unconscionable, amoral, advice.

Rachel Pemberton could demonstrate a moral and ethical backbone by admitting her vacuous judgement, apologise and resign immediately. If any councillors have any morality or understanding of professional ethics they will condemn Pemberton, call for her resignation and get on with the job of running a city in crisis.

By not condemning Pemberton’s blog post the mayor and his councillor’s are endorsing an increasing public opinion that they are out of touch with the wishes of the community for higher standards of professional ethics and morality to be demonstrated. At the very least Councillor Pemberton, who receives substantial payments from ratepayers, should be stood down and an independent inquiry, with representation by ratepayers, held. A closed door cover-up will not be acceptable.

NOTE: It appears that Pemberton has recently removed her blog post but no explanation or apology is offered.

 

Roger Garwood

editorbackchat@gmail.com