An audit of the ACT's former Land Development Agency's rural land purchases has found the agency lacked probity in its acquisition of $43 million worth of land on the city's western fringe over several years.
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The ACT Auditor-General's long-awaited report also found the purchases of a series of rural land blocks in the Western Edge Study area were meant to be the subject of "a potential future urban development front" in the 2012 planning strategy.
But six years on, the audit found, the investigation has still not begun.
In one purchase, the audit found a property the LDA planned to buy, Fairvale, was subdivided at the behest of a Knight Frank valuer working on the deal, who then bought the subdivided land, in an arrangement labelled "irregular" and a "probity risk".
In another, the Milapuru purchase, the LDA ended up paying $3 million more than the $4 million figure the valuation for the property reached, a transaction approved by Chief Minister Andrew Barr, resulting in a loss of $3.3 million for the LDA's coffers.
In yet another, the Huntly purchase, the LDA hired a director of agribusiness transactions at CBRE to help procure a long‐term land manager for the property once bought, but a tenderer for the contract claimed the director was a shareholder and non‐executive director of another company already "engaged under a sub‐contract to manage Huntly".
The director mentioned in the report told auditors the potential conflict of interest on the Huntly purchase was disclosed verbally to the LDA before the appointment, though auditors could not find any written evidence of the disclosure in the agency's records.
The audit examined nine rural leases the now-defunct LDA bought, or was working on, buying, west of Canberra and east of the Murrumbidgee between June 2014 and July 2017.
A total of 3378ha of rural land acquisitions were examined, across the following properties: Lands End, Milapuru, Fairvale, Huntly, Wintergarden, Winslade, Pine Ridge, The Vines and Wagtail Park.
The LDA notified Mr Barr, as Economic Development Minister, of all bar one purchase below $5 million, as required under the then acquisition rules, the only exception being Fairvale.
Also detailed in the report the role of Colliers' ACT branch, an LDA contractor, in providing advice to the LDA "unsolicited" and "free of charge" on a document titled the "District of Stromlo Acquisitions Strategy paper" in late 2014.
The firm later began providing services to the LDA for rural purchases, though the audit office found no evidence of any formal, written agreement for the work, or evidence the LDA disclosed a potential conflict of interest to the board on the matter.
Auditor-General Dr Maxine Cooper reported that probity was lacking in some of the former LDA's actions on its purchases, "there was a lack of accountability and transparency in the engagement and management of agents’
services; and in negotiation and decision‐making leading to the purchase of Fairvale".
"The former Land Development Agency initially sought to purchase the full [Fairvale] property, but subsequently supported its subdivision so that the valuer who undertook a valuation for the vendor could purchase part of the property," the report reads.
"According to the former Land Development Agency’s subsequent planning documents the block secured by the valuer is strategically important.
"There is no contemporaneous documentation that provides reasons as to why the former Land Development Agency agreed to the subdivision of the property to facilitate the valuer’s purchase and thereby forego the opportunity to purchase the whole block."
The report also found inadequate attention was given to the contracts [licences and sub-leases] for the use of some of the rural properties to the west of Canberra examined in the audit.
"This includes not collecting revenue from the first three purchases [Lands End, Milapuru and Fairvale], which the Audit Office estimates could amount to more than $200,000," the report reads.
"There are no executed land management agreements in place even though the first purchase was
almost three years ago. This presents a risk to sustainably managing these rural lands."
The former LDA's board also raised concerns about the now defunct agency's rural land acquisitions raising potentially "unfounded criticism" of the agency "land-banking", at least as early as May 2017.
Both Opposition Leader Alistair Coe and Greens planning spokeswoman Caroline Le Couteur said the audit, one of a series of scathing audits on the former LDA, needed to be investigated by the proposed anti-corruption commission.
Mr Coe said audit showed Mr Barr had approved three sales, including one at $3 million above the official valuation, despite it being called 'speculative', while Ms Le Couteur said the LDA had developed a 'cowboy culture', which is why it was abolished.
Housing Minister Yvette Berry would not answer questions on the report in Estimates yesterday, but released a statement saying the government would respond to the audit in the Legislative Assembly.
"This audit relates to the actions of the former Land Development Agency and does not consider significant improvements made since then," she said.
"Of course where further improvements have been recommended the government will approach these together with the Suburban Land Agency board."
The audit office made a series of recommendations to the Suburban Land Agency regarding procurement practices, improving probity measures and how it procures valuations specifically and follows ministerial directions and Cabinet decisions, among other issues.