Maladministration and major reform: the mixed legacy of a one-man council

By Stephen Easton

Tuesday May 2, 2017

The South Australian Ombudsman’s recent report into the 17-year reign of Bill Boehm as council administrator of Roxby Downs provides rare insight into a company town where local government is a unique kind of public-private partnership.

Boehm, who resigned last June, accepts some of his administrative processes fell short of the standards for local government in SA. But he strongly denies the most serious allegations and, all things considered, thinks the findings against him were a bit harsh.

He essentially argued the unique circumstances of the remote town near the massive Olympic Dam undergound mine — it is jointly funded and run by the state and BHP Billiton through a special legislative arrangement — should be seen as a huge mitigating factor.

And, he told SA ombudsman Wayne Lines, the fact that he commissioned an independent review of his own role and the unique governance structure before stepping down “to aid the process” of reform should be seen as “evidence of his commitment to good governance” as well.

“I was not required to do so,” Boehm wrote. “Indeed, it was an action that should have been instituted by the State Government.”

Despite having held the job since 1999, Boehm said he had only recently formed the view that the arrangements put the administrator in an “invidious” position.

For some of the mining town’s residents and local business owners, however, it seems a little oversight is a long time coming.

The complaints — which couldn’t be fully investigated because documents had been destroyed — are not exactly new. At the same time, there’s a growing sense that people in the town want more say in how it is run. As the governance review that was Boehm’s final act commented, “community expectations have changed” since the first pegs were hammered in the ground in 1982.

Ombudsman finds cause for ‘considerable concern’

Boehm strongly refutes accusations that he gave jobs to friends and associates, or invented unnecessary jobs for them to do. The ombudsman accepts there is some evidence the contractors in question did real work, but also details a lot of gaps in what he can see, due to the “significantly incomplete” documentation Boehm provided.

Lines reports his “considerable concern” at the third serious allegation — the destruction of official records — but could not prove the administrator was responsible:

“I do not consider there is any evidence that Mr Boehm personally or willfully destroyed records. Instead, my finding is in relation to the council itself, and based on Mr Boehm’s own acknowledgment that a council order book has been destroyed.”

On the balance of probabilities, the ombudsman found Boehm was responsible for maladministration and “substantial mismanagement” through dubious procurement practices.

This involved awarding lucrative contracts without a tender process, or proper record-keeping that could help demonstrate value for money. The one-man council also failed to implement a tender policy for his first few years, then failed to comply with it after it was in place.

However, Lines didn’t find any “evidence of dishonesty” on Boehm’s part and declined the original complainant’s request for a forensic audit and prosecution of the former administrator.

The ombudsman separately found Roxby Council committed maladministration in its engagement of two contractors — although there is little distinction between the council and the administrator, who exercises all its “powers, functions and duties” under ministerial direction, with oversight by BHP Billiton and the relevant department (currently State Development).

As well as disposing of records improperly, the pseudo-council “acted in a way that was wrong” under the Ombudsman Act in two other ways, according to Lines. It failed to put in place clear, comprehensive and appropriate procedures to deal with bullying and workplace violence complaints, and it gave certain duties to an equal opportunity officer in a 2003 workplace policy but failed to appoint anyone to the position. These findings relate to informal bullying complaints that were never acted upon by the council.

In response to a preview of the ombudsman’s report, the complainant argued:

“Given the prolonged nature of the conduct of Mr Boehm and direct complaints made by the community to the SA Government, which appear to have been largely ignored, including the missing paperwork that formed the basis of a previous complaint, the government ministers and advisors should be held accountable for their dereliction of duty in protecting the community of Roxby Downs and for continuing to allow the mismanagement of public funds in their office.”

The ombudsman does not, of course, pass judgement on the joint venture arrangement that gives Roxby Downs a permanent unelected administrator beholden to the company and the state government.

But, by detailing Boehm’s responses to complaints from residents, alongside his explanations of the difficulties he faced in the unusual role, his report illuminates more about what made him commission the governance review and step down.

An impossible task?

The company town has a fluctuating population, but was home to just under 5000 people as of last year’s Census.

The Roxby Downs (Indenture Ratification) Act 1982 enshrined the joint venture between the state government and WMC Resources (which was later acquired by BHP Billiton) in state law. This makes the town a special case where any other state law can be modified, and specifically names 12 other acts of parliament it overrides.

It gave the administrator all the powers of a normal local government, but “under the control and direction” of the Mineral Resources and Energy Minister, and with their appointment subject to approval and oversight by BHP Billiton. Boehm told the ombudsman:

“The role of the Administrator is akin to the role of the Chief Executive Officer and the governing body of a council under the Act. This dual role often creates confusion within the community and gives rise to practical difficulties arising from the fact that the Administrator is required to concurrently perform the potentially conflicting roles of a Mayor and a Chief Executive of a council.”

When Boehm started in 1999, he found the job an “impossible task” according to one of his statements. He blamed his difficulties on multiple factors including the council’s size, its location and the high cost of recruiting and retaining staff, the “influences of BHP Billiton as the main industry” and the need for external contractors to perform roles that would be done by senior managers in a normal council.

Roxby Downs residents can’t participate in local government decision-making like other South Australians can, and they aren’t entitled to the same transparency and accountability beyond a statutory requirement for basic consultation.

Budgets are subject to approval by the state government and the company. But, Boehm notes, “budget submissions and related correspondence regarding the Council’s annual operations that are provided to the State Government are treated as internal working documents” and are not available to the public. They are treated as confidential “as a matter of longstanding practice” by the department.

“This is beyond the control of the administrator,” writes Boehm, adding later in the passage:

“In my experience, the Council’s unique budget approval process can and does cause a degree of uncertainty for the community. I am and must always be mindful not to improperly raise expectations within the community when BHP Billiton and the State Government have not had an opportunity to consider the Council’s draft Annual Business Plan.”

He accepts it was “not always easily understood by the community” that in essence, the permanently unelected local government known as Roxby Council is simply the “proponent” of the town’s budget, while South Australia and BHP Billiton are the decision-makers.

The town’s somewhat transient population is not specifically represented, though they are consulted and can participate in very limited ways. A lot of the recommendations delivered last August by the governance review go towards increasing engagement: opening up “two-way communications” with residents, open public meetings, and by publishing key documents.

The reviewers also suggested the council administrator look at “accountability and transparency provisions” of the Local Government Act from which they are exempt, and consider whether they could implement them as policy anyway. They also noted that Lines was watching:

“The Ombudsman has an increasing interest in the operations of the Roxby Downs Council and an expectation there will be sound procedural practices in with the normal statutory provision governing councils and a desire to normalise the operation of the Roxby Downs Council within the constraints of the Indenture.”


Review and reform

The review started from the premise that “despite its uniqueness and constraints, the Roxby Downs Council should operate as closely as possible to all other councils in South Australia” and the series of short, medium and long-term recommendations it produced were mostly accepted or supported by Mineral Resources and Energy Minister Tom Koutsantonis.

The review committee recommended appointing a separate chief executive to “make a clear distinction between political and operational responsibility” among their medium-term recommendations, which they designed for a two-year timeframe.

Koutsantonis only agreed “in principle” to the big one — “move to a fully elected Council with Councillors from the Council area” — and put it on the record as a “long-term aim” for the state government.

As to the review of the Indenture Act this would require, he said: “This will be further considered in future when changes to Indenture legislation are contemplated.”

Acting Roxby Downs administrator Geoff Whitbread told the ombudsman that all his recommendations were being addressed. Lines adds:

“Mr Whitbread noted that the matters in my provisional report relate to events of the past and ‘bear little or no relevance’ to the current operation of the council. Mr Whitbread also noted that the learnings from the report are useful.”

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