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

IMG_9107
                          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>

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.

SUNSET PAY $400 A WEEK

SUNSET PAY LESS THAN SMALL HOUSE RENTAL IN FREMANTLE
Sunset Venues received the keys to J shed’s number 1 studio today (Thursday 6th July) and will pay only $402 per week on the prime property, representing a lower rent than many families pay for a small home or apartment in Fremantle.
The rent, described by Fremantle Council as a ‘startup’ figure, is granted under a scheme designed to help companies establish new businesses in the city.
Sunset’s 21 year lease over no.1 J Shed was activated last Saturday morning, the rent will not increase until 1st July 2018. They will then pay $800 per week and will not pay the full rental figure, $1616 a week, until July 2019. The rent has been described as ‘too low’ and a ‘peppercorn rent’ by critics of the plan.
Had council insisted the site was activated, with full rent, in 2015 ratepayers would have been better off by about $255,000.
The council will only receive approximately $60,000 over two years.
Mayoral candidate Ra Stewart, has mentioned that council should not be responsible for Sunset’s poor management.

ARE THEY SUITABLE TENANTS? – NUMEROUS COMPLAINTS
At a public information meeting in the Council Chamber two years ago David Chitty, a director and principle spokesperson for a number of related companies, was asked, ‘What will you do with regard to public behaviour after your concert events?’
He replied, “I have no responsibility for the behaviour of people when they leave the venue”. In fact he does but seems to be blissfully unaware of laws related to licensed premises.
There have been numerous complaints in relation to concerts held in Fremantle, including those held by Sunset at the J Shed venue. Fremantle residents spoke of people vomitting, defecating and urinating in the streets and doorways after the concerts. There were also complaints of vandalism and excessive noise. Anecdotal evidence suggests that immediately Sunset’s concerts finished security guards, who searched concert patrons before entry to venues, were stood down.
Chitty was also asked what he would do in relation to people listening to concerts from public spaces. He replied that he would ‘call on the police’ to remove people from those locations. That is an indication he may only be interested in guarding profit margins at the expense of legal considerations for public behaviour.

FUTURE CONCERTS ARE POSSIBLE
A licensed bar of 400 people is not likely to be trouble free. There is also an underlying opinion that there will be concerts. The application for the site’s activities says there will be no ‘paid’ music. This could mean that unpaid musicians may be used and the potential remains to apply for professional concerts later.
The Sunset companies are struggling to pay their suppliers and have failed to reactivate the Drill Hall where Fly by Nite operated. Could this lack of activation be because the Sunset companies have a reputation for not paying their suppliers and artists and musicians are not prepared to work for them? Sunset had applied for a delay of lease activation for 12 months. A principle reason was related to financial instability.

COUNCIL APPLY PRESSURE: FICRA  SAY ‘SUNSET IN BREACH OF LEASE’
Council placed Sunset under pressure to perform following a unanimous vote to refuse an additional 12 months grace before the lease’s activation.
The Fremantle Inner City Residents Association (FICRA), in a submission to Council, outlined a number of issues related to Sunset’s inability to manage the site successfully. They say Sunset is already in fundamental breach of the lease by failing to “use its best endeavours” to secure necessary approvals by the required time. They also say, “Given that Sunset have known since the lease was signed in 2015 that they have had no financial success in the interim period it is unlikely they will gain large investment funding”.
It now rests with Fremantle Council to ensure the lease is implemented and, in the event of default, take rapid action, possibly to evict the company and revoke the lease.

CONTINUING FAILURE ‘ALMOST CERTAIN’
FICRA outline, ‘There will almost certainly be a continuing failure by the lessee to meet fundamental obligations saying, ‘The unwillingness or incapacity of [Sunset] to pay the already reduced rent (25%) does not suggest willingness or capacity in the future to provide substantial investment as the lease contemplates’.

HAVE YOUR SAY
A few days remain to contact council and express your opinion in relation to the revised plans for J Shed.

This link will take you to the web site.

[http://mysay.fremantle.wa.gov.au/jshed-unit-1-fleet-street-fremantle]

Roger Garwood : Editor

editorbackchat@gmail.com

SUSTAINABILITY: The Buzzword which led Fremantle Nowhere.

 

THE NEW WEASEL WORD IS DEMOLITION

Fremantle’s current council were voted in on promises delivered by a mantra – Sustainability. But what progress has been made on the back of the buzz? Very little.

NOT PARIS. A neglected building in the heart of Fremantle's West End. Rumour is that this may become a victim of demolition and increased height. A chance for councillors to consider their obligations to voters, not to developers. ©Roger Garwood 2016
NOT PARIS.
A neglected building in the heart of Fremantle’s West End. Rumour is that this  building may become a victim of demolition and increased height. A chance for councillors to consider their obligations to voters, not to developers. 
©Roger Garwood 2016

Councillors  Mute in the Face of Developers

Now, with time running out on several plans, notably the King’s Square development, a new buzzword is worming around the West End – Demolition – and not a single councillor has actively promoted the notion of conservation and restoration and been courageous enough to condemn the plan to demolish 75 High Street. Forgive me if they have but it would be very useful for the public to become  aware of any such notions by their elected members.

Gobbledgook from the Green’s Corner

We have been blessed with Councillor Sullivan’s obfuscation in relation to the recent application for demolition of 75 High Street. Sullivan is a master of discombobulation, leaving readers and listeners wondering what he actually stands for. Interestingly he lists among his architectural achievements his involvement with the Leighton Beach and the Northshore developments. Beauty is in the eye of the beholder and it is up to individuals to judge those developments. Apart from Sullivan there appear to be no councillors with architectural experience.

Spongy Economics of King’s Square 

If we are to apply demolition tactics to old and singularly unattractive buildings we should look closely at the spongy economics of the King’s Square plan. An obvious option would be to give Fremantle a truly attractive town centre by demolishing the Myer building and the carpark at the rear as well as Queensgate. This area could then become an attractive central park which showcases the Town Hall and St. Patrick’s Church. It would have on one boundary a row of beautifully renovated cottages.   New council administration offices could be built on the Spicer’s site, overlooking the city square and accommodating a library above ground. (The current plan calls for an underground library). That is obviously not going to happen but it may be the best and most economical option for the city in the long run.

One of a number of Parisian shop fronts photographed by Lidia D'Opera. They display a stylish, appealing, shabby chic. A concept which could easily be emulated in Fremantle's West End. © Lidia D'Opera 2016
One of a number of Parisian shop fronts photographed by Lidia D’Opera. They display a stylish, appealing, shabby chic. A concept which could easily be emulated in Fremantle’s West End.
© Lidia D’Opera 2016

Is Conservation Uneconomical? That suppositon is easily disproved

Fremantle’s historic architecture is sustainable. Should the buzzword now be ‘conservation’ which, by its nature, encompasses ‘sustainable’? Critics have said restoration is uneconomical and that people don’t like working in old buildings.

The University of Notre Dame has restored a large part of the West End enclave. Their architect, the late Marcus Collins, successfully designed and directed the renovation of properties while maintaining the architectural integrity and character of the West End and he was able to work within what he described as a limited budget.

It's not difficult to find style, nor follow ethnic backgrounds. In that respect Fremantle has many options. The city has a number of strong ethnic communities who could help promote a colourful cross cultural background. © Lidia D'Opera 2016
It’s not difficult to find style, nor follow ethnic backgrounds in Paris or other major cities in Europe.  In that respect Fremantle has many options. The city has a number of strong ethnic communities who could help promote a colourful cross cultural background.
© Lidia D’Opera 2016

The success of the university in attracting students and staff to work and study in the enclave is patently obvious. Logic demonstrates that stylish, high quality, renovation of properties can be accomplished and make economical sense. Notre Dame have also demonstrated that it is not necessary to increase height. Interestingly so have Match with their east end redevelopment of the old wool stores. In spite of council approving a height increase on the building Match went back to their figures and decided it was more profitable not to increase the building’s height.

World Class Restoration Succeeds: Fremantle needs Civic Pride

The use of colour on shopfronts, and maybe the reconstruction of original shop fronts in the West End, is not beyond the realms of possibility. Conciencious developers and property managers should consider a range of options. © Lidia D'Opera 2016

More use of colour on shopfronts, possibly heritage colour options, and maybe the reconstruction of original shop fronts in the West End is not beyond the realms of possibility. Conciencious developers and property managers should consider a range of options. 
© Lidia D’Opera 2016

Recent world class restorations in Fremantle include The National Hotel, The Federal Hotel with the Warders’ Cottages nearing completion. Shortly the renovated Norwegian Consular Office on the corner of Cliff and Phillimore Streets will be unveiled. These are examples council should be noting and learning from. They should not bow  to pressure from property owners wishing to demolish and rebuild with added height using the developers mantra- ‘It’s the only way to make it economical’

Fremantle needs imagination, cultural nous and civic pride to be demonstrated and promoted by councillors, developers and architects.

Cities such as Paris take an enormous pride in conserving their precincts. So does Napier in NZ where a small group of people, within a relatively short period of time, turned their city’s fortunes around by promoting its architecture. <https://fremantlebackchat.org/2013/05/08/a-tale-of-two-cities/&gt;

Note: Many thanks to my colleague Lidia D’Opera for the use of her pictures. Her web site is at <http://www.lidiadopera.com.au&gt; and is well worth exploring.

A perfect example of conservation in the West End which contains the diverse social and cultural requirements of a city. © Roger Garwood 2016
Perfect examples of conservation in Fremantle’s West End,  containing the diverse social and cultural requirements of a city.
© Roger Garwood 2016