Local government paralysed as Qld corruption watchdog’s council clean-up continues

By Stephen Easton

Tuesday April 30, 2019

Eight Logan City Council members now face criminal charges and are suspended from office after the Queensland Crime and Corruption Commission investigated their February 2018 decision to dump chief executive officer Sharon Kelsey at the end of her probationary period.

The corruption watchdog arrested two-thirds of the southern Queensland city’s local government on Friday afternoon and charged all eight councillors with fraud that “dishonestly caused a detriment” to Kelsey. Included in those charged was Lord Mayor Luke Smith, who was already suspended after being charged with four other crimes last March.

Acting mayor Cherie Dalley joins him on suspension with pay — now an automatic consequence of the charges under state law — along with councillors Russell Lutton, Stephen Swenson, Philip Pidgeon, Trevina Schwarz, Jennifer Breene and Laurence Smith.

The value of the detriment is over $100,000, so the maximum penalty for the alleged fraud is 20 years’ imprisonment, according to CCC chairman Alan MacSporran. All were granted bail and will appear in the Brisbane Magistrates Court in coming weeks.

In addition, the suspended mayor was charged with two counts of misconduct in public office on Friday, each of which carries a maximum penalty of seven years behind bars.

“The CCC will allege that he interfered in a recruitment process with an intent to dishonestly gain a benefit for another person, and secondly, that he commenced a dishonest probation process with an intent to dishonestly cause a detriment to another person,” MacSporran explained at a rare press conference.

Sharon Kelsey

The new charges are only the latest twist in a tale that began soon after Kelsey moved to sunny Logan in mid-2017 to work as the local council’s top administrator, from chilly Melbourne where she had been an executive director at the Independent Broad-based Anti-corruption Commission.

The CCC was already investigating councils, and the new CEO soon became a whistleblower through official channels. Kelsey has linked her public-interest disclosure to the decision to end her employment in a series of legal challenges that first failed to deter the council from terminating her probationary employment but later saw her reinstated last May, before a quick appeal by the council put that order on hold. The case is yet to be resolved by the Queensland Industrial Court.

Meanwhile, in March, then-mayor Luke Smith had been charged with official corruption for failing to update his register of interests, and two counts of perjury; the CCC alleged he “knowingly gave false testimony at a public hearing” related to its earlier and wider Operation Belcarra probe into local government.

He and the seven other councillors charged on Friday could be permanently removed from office by the state government, while Logan’s local government lacks a quorum to pass resolutions. The four remaining councillors, self-described “whistleblowers” who voted to keep Kelsey on as CEO, may also lose their positions if the state decides to put the council under administration until new elections are held.

MacSporran said he took the “rather unusual” step of holding a press conference due to “significant public interest in these matters” and would speak no more of the case to anyone except his parliamentary oversight committee. The head of the CCC reminded journalists the councillors were presumed innocent until proven guilty by the courts.

“This is the first time, to our knowledge, in the 30-year history of the agency that eight elected officials from the same unit of public administration have been the subject of such charges,” he said.

“It is one of the most significant investigations this agency has ever carried out and is a reminder of the importance of having an independent agency dedicated to combatting major crime and public sector corruption for the benefit of all Queenslanders.”

An ‘ordinary council meeting’

Councils were already on the corruption watchdog’s radar in mid-2017, when Kelsey took up her new role as the council’s third CEO in two years. Operation Belcarra was underway, triggered by complaints to the CCC after the previous year’s local government elections, particularly about Ipswich, the Gold Coast, Moreton Bay and Logan City.

Operation Front began in November 2017, on the basis of evidence that emerged during Belcarra. This led to the 10 new charges against the eight Logan City councillors on Friday, and the four that were brought against suspended mayor Luke Smith last March, which are currently before the courts.

“Operation Front was originally focused on the then-mayor of Logan City Council, but as our investigators progressed in their work they identified other allegations that warranted further investigation,” said MacSporran.

A lot transpired between the CEO’s appointment and the council’s February 2018 vote to end her probationary employment, much of it reported by the ABC and other news outlets. The motion was opposed by five councillors, and a group of Kelsey’s supporters reportedly filled the chambers, protesting both the decision and the process, which involved discussion behind closed doors and little public explanation.

She had taken her case to the Queensland Industrial Relations Commission in January, and it granted an interim order to reinstate her in May but she did not return to work. The council successfully applied to the Industrial Court for a stay on the QIRC ruling, leaving acting CEO Silvio Trinca in place until further notice.

In a legal challenge to fight for her job, Kelsey filed documents suggesting her public-interest disclosures seemed to lead to her being excluded from key meetings and that she feared being shown the door as “retaliation” for making a disclosure, regardless of her performance in the role.

Then-mayor Luke Smith said she was only excluded from meetings that concerned legal advice about her public-interest disclosures and her probation period, in the weeks before he received his first four charges.

Cr Smith also maintained “her performance and her performance alone” was the reason for her sacking, but Kelsey disputed that. She told the ABC an independent 360-degree performance review had been positive and clearly showed she was competent, and she wanted to fight on, preferably in an open forum.

The CCC had also written to Logan City Council around that time to point out that ending the CEO’s employment could be illegal if it was a consequence of her assisting their investigations, according to Darren Power, one of the remaining councillors who has supported Kelsey. Power said the letter was “quickly brushed off” by his fellow councillors and the Local Government Association of Queensland chief Greg Hallam.

“Legal advice to me and the council was that the council could make a decision regarding the CEO’s probation without fear of action by the CCC,” Hallam told the ABC back then.

In recent days Hallam has expressed surprise and concern at the charges that proved this confident assertion incorrect. He told Australian Associated Press the matter simply concerned “a council, in an ordinary council meeting, deciding not to approve their CEO’s probation” and did not appear to be a criminal matter.

Cr Power shot back, saying the LGAQ chief was “out of line” making such comments.

The wash-up after Friday’s charges

The council said its “duty of care remains with the community and its staff” in a brief statement after the 10 new charges were laid on Friday:

“Council respects the ongoing legal process and will continue to cooperate with all CCC related matters. On behalf of the Logan community, we hope for a swift resolution of the matter.”

MacSporran said the latest charges were “a stark reminder of the problems in the local government sector” that his team has been investigating in recent years, as have the CCC’s predecessor agencies.

This has led to some spectacular results, like the dismissal of Ipswich Council after 86 charges were filed against 15 individuals, as well as 31 recommendations for law reform the government has begun to implement.

“I’d like to take the opportunity to publicly thank the CCC officers who have worked as one team to bring this investigation to the point it is at,” said the commission’s chair.

“We have quality investigators, lawyers, forensic accountants, forensic computing experts, intelligence analysts and many other support staff that have been able to secure evidence, allowing the CCC to proceed with these charges.

“They work tirelessly for Queenslanders to rid this state of corruption, and for that, they should be congratulated. I’m extremely proud of the team, the work they have done on this extremely difficult investigation.”

The CCC chairman also had a message for the people of Logan and “the many good staff members” working for the council:

“I’d like you all to note that these allegations are not allegations against the Council per se, they are allegations against the currently suspended Lord Mayor and seven other councillors.

“Today’s news may come as a shock to many in the community. It will undoubtedly cause some turbulence for the Council and the community of Logan more generally.

“Whilst these allegations and the merit of the evidence will be tested in court in the coming months, you as community members in Logan, have the right to expect your leaders and/or elected officials will act with the highest levels of integrity, transparency and within the bounds of the many laws that govern how councils and councillors should operate.

“You deserve elected officials who put the needs of your community first.”

Top image: Orderinchaos on Wikimedia Commons

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