A performance audit into Transport for NSW’s (TfNSW) acquisition of 6.3 hectares of land in Camellia, NSW has found the Agency’s purchase process to be ineffective and the $53.5 million price not professionally valued.
In her report, Acquisition of 4–6 Grand Avenue, Camellia, Auditor-General Margaret Crawford said that in June 2016, TfNSW bought the land and assumed liability for addressing environmental issues and contamination associated with the site.
“TfNSW conducted an ineffective process to purchase 4–6 Grand Avenue, Camellia,” Ms Crawford said.
“TfNSW did not obtain a formal valuation of the site, nor did it assess the financial impact of environmental remediation before the purchase,” she said.
“TfNSW did not have sound probity management controls in place for the transaction, and decision-making was rushed and poorly informed.”
Ms Crawford said TfNSW’s formal valuation of the site, which it obtained after the acquisition was finalised, specifically excluded consideration of environmental contamination risk.
She said the Agency instructed the valuer to disregard the effect of existing site contamination even though it knew the site was contaminated.
“This raises doubts about the purpose and validity of the valuation and whether it provided any genuine basis upon which TfNSW could assure itself that the acquisition represented value for money for the State,” the Auditor-General said.
“Initially, TfNSW was unwilling to accept the costs and risks of contamination, but later changed its position to accepting the risk and costs unconditionally.
“TfNSW could not explain or justify this decision.”
Ms Crawford said TfNSW had entered into contracts worth $106.9 million for environmental remediation of the site, ground improvement works and other remediation-related consultant costs and had already incurred costs of $105.9 million, spent mostly on remediation.
“TfNSW’s probity practices were insufficient and exposed TfNSW to a greater risk of corruption, misconduct and maladministration,” she said.
“Internal policies and procedures to guide the transaction were, and continue to be, insufficient.”
She said TfNSW identified that the acquisition was at increased risk of fraudulent activity and financial loss but hadn’t investigated whether the risks were realised.
Mr Crawford made seven recommendations relating to the event, including that TfNSW improve its accountability and transparency.
The Auditor-General’s 53-page Report can be accessed at this PS News link.
