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Ombudsman Reports: Deficiencies uncovered regarding Council Conflicts of Interest and State Government Whistleblower Reforms

January 13, 2021

Council Conflicts of Interest

In December 2019, the NSW Ombudsman's Office finalised an investigation about a Public Interest Disclosure (PID) concerning the actions of Broken Hill City Council. The investigation found the Council had acted contrary to law by holding public functions in 2016 and 2017 in the incompletely refurbished Civic Centre before gaining the required occupation certificate.

For public safety reasons, the use of a building without the necessary occupation certificate is strictly prohibited by the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act).

As well as finding that the Council's actions in using and allowing others to use the Centre were wrong, the investigation highlighted a systemic problem: The Council was responsible for enforcing its own compliance with the EP&A Act, as well as other regulations. The Council took no enforcement action against itself for its own breach of the EP&A Act.

Following the investigation, the Ombudsman surveyed all councils across NSW and found that such conflicts of interest were not uncommon.

Instances such as this highlight the inherent challenges when Councils adopt the dual roles of “Poacher’ and “Gamekeeper”. Whilst most, if not all of Council’s roles, policies, procedures and responsibilities are usually well documented and understood by Council staff, there may be instances where some processes are not treated with the same degree of rigour.

This may include instances that:

  • only arise once over a period of time or because of geographic isolation (such as one or more members of one family having both delegated approval powers and being either sole or one of only a few  providers of a particular product or service);
  • those that only pertain to natural events or disasters; and/or
  • those that were never documented due to being capably managed by one or more long-serving Council staff who have recently retired.

Whilst not common, unless these potential Conflicts are recognised and managed professionally and transparently, there is a real potential for reputational damage and/or financial loss. Councils can address this potential risk by ensuring they have comprehensive and current Legislative Compliance and Corporate Risk registers in place.

You can find further information about this in the Ombudsman's special report to parliament titled 'An inherent conflict of interest: councils as developer and regulator' available here.

State Government Whistleblower Reforms

The Acting Ombudsman, Mr Paul Miller, also recently called on the State Government to finalise its proposed whistleblowing reforms, so the public sector can build a culture that encourages public servants to speak up when they see wrongdoing.

During the pandemic, there have been reports that more whistleblowers have come forward. This may be due to employees feeling more comfortable to speak out while working from home and away from their normal workplace.

This could mean that these employees are working in an organisation that does not have well documented or understood reporting processes and protocols in place. Worse still, there may be a culture of “shooting the messenger” rather than proactively dealing with received complaints or alleged misconduct in a manner that supports those that report such activity.

Organisations that do genuinely value transparency and actively encourage their staff to report any alleged instances of fraud, misconduct or other Code of Conduct breaches are usually those who score highest in workplace culture audits and surveys (such as the NSW People Matter Employee Survey). These organisations become well known as preferred workplaces and therefore attract a wider and better qualified pool of potential employees. 

Building an ethical and conflict-free culture

Centium's Ethical Conduct & Investigations team has over 30 years of experience working with private and public organisations investigating PIDs in the public sector and whistleblower reports in the private sector. 

We also have conducted comprehensive reviews of organisations’ internal reporting processes and practices and made recommendations to improve these. Chris Wheeler, a former NSW Deputy Ombudsman, is a key member of that team. 

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