REPORT ON INVESTIGATION INTO GREATER GEELONG CITY … · GREATER GEELONG CITY COUNCIL INVESTIGATION 7 1. EXECUTIVE SUMMARY This report addresses allegations that Greater Geelong City

REPORT ON INVESTIGATION INTO

GREATER GEELONG CITY COUNCIL

Merv Whelan Inspector of Municipal Administration

May 2006

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Ordered to be printed

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VICTORIAN GOVERNMENT PRINTER 2006

No. 202 of Session 2003 - 2006

GREATER GEELONG CITY COUNCIL INVESTIGATION

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C/- Local Government Victoria

Level 10

1 Spring Street

Melbourne 3000

25 May 2006

The Hon Candy Broad MLC

Minister for Local Government

50 Lonsdale Street

Melbourne 3000

Dear Minister

I have completed an investigation into the Greater Geelong City Council in accordance with

your Terms of Reference issued on 8 February 2006 and submit my report for your

consideration.

I was requested to advise and report on whether any Councillors elected at the annual

elections held in November 2004:-

� received financial assistance from campaign support funds provided to candidates at

that election; and

� properly disclosed having received a gift in accordance with Section 81 of the Local

Government Act 1989.

Six Councillors received financial support from campaign support funds and did not disclose

having done so. I found that five of these Councillors do not appear to have breached the Act

either because the value of amounts so received were below the level required for disclosure

or because the support was obtained by them prior to the commencement of the disclosure

period applicable to their returns.

However, Councillor David Saunderson who was re-elected in November 2004, received

several amounts from campaign donors in October / November 2004 that exceeded the value

of $500 required to be disclosed under the Act and failed to include these amounts in his

ordinary return of interests for the period 21 July 2004 to 30 June 2005. By failing to make

this disclosure he appears to have breached the Act and I have recommended that the matter

be referred to Local Government Victoria for appropriate action.

Yours sincerely

Merv Whelan

Inspector of Municipal Administration


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CONTENTS

1. EXECUTIVE SUMMARY

2. BACKGROUND AND APPROACH

a. Appointment of Inspector of Municipal Administration

b. Terms of Reference

c. Approach Taken

d. Information Sources

3. ELECTION CAMPAIGN FUNDING SOURCES

a. Geelong Businessmen

b. Lascorp Development Group (Aust) Pty Ltd

c. Councillors / Candidates

d. Other Alleged Sources

e. Summary of Campaign Funding Sources

4. DISTRIBUTION OF ELECTION CAMPAIGN SUPPORT FUNDS

a. Campaign Expense Statements

b. Campaign Funding Methodology

c. Support Received by Elected Councillors

5. SECTION 81 OF THE ACT AND DISCLOSURE OF GIFTS

a. Definition of Gift

b. Disclosure of Gifts

6. COMPLIANCE BY NEWLY ELECTED COUNCILLORS

a. Returns by Newly Elected Councillors

b. Review of Compliance

c. Conclusion

7. COMPLIANCE BY RE-ELECTED COUNCILLORS

a. Returns by Re-elected Councillors


c. Conclusions

8. RECOMMENDATION

APPENDICES

1. COUNCILLOR MEDIA RELEASE

2. CAMPAIGN FUNDS STATEMENTS

3. SECTION 81 LOCAL GOVERNMENT ACT 1989


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1. EXECUTIVE SUMMARY

This report addresses allegations that Greater Geelong City Councillors, elected at the annual elections held in November 2004, received gifts from campaign support funds and did not properly disclose them in accordance with Section 81 of the Local Government Act 1989 (the Act). Seventeen candidates participated in election campaign funding support totalling $87,919. This comprised $71,269 in donations given by six Geelong businessmen ($50,000) and Lascorp Development Group (Aust) Pty Ltd ($21,269); and $16,650 in contributions made by several candidates towards financing their own campaigns. Six candidates who were elected to Council received $17,879 from donated funds, while the eleven unsuccessful candidates received $53,390. Cr David Saunderson, who was re-elected to the Council, managed these resources. This involved collecting donations, organising promotional activities, allocating assistance to each candidate and paying the service providers. Disclosure of interest requirements in Section 81 of the Act for newly elected Councillors differ from those applicable to re-elected Councillors. Newly elected Councillors must submit a primary return of interests within one month of taking the oath of office. This return does not require the disclosure of any gift. All Councillors are required to submit an ordinary return of interests annually on 30 June or within thirty days thereafter in which they must declare, amongst other things, the “… particulars of any gift of or above the amount or value of $500 received by him or her…” during the return period. In broad terms the ordinary return periods applicable to the Greater Geelong City Councillors elected in November 2004 were: for newly elected Councillors, January 2005 to June 2005; and for re-elected Councillors, July 2004 to June 2005. No Councillor disclosed having received a “gift” in his/her ordinary return. There is no evidence that Crs Mitchell, Abley, Farrell, Macdonald, Kontelj and Dowling received, or failed to disclose, any campaign gifts. Crs Brazier and O’Connor were newly elected. They received $6,257 and $5,302 respectively in campaign support during October and November 2004. They were not required to disclose these amounts in their primary returns. Further, both Councillors were not required to disclose this assistance in their ordinary returns, having received it prior to the commencement of the return period. Cr McMullin, also newly elected in November 2004, was a participant in the campaign fund. Election costs amounting to $5,000 were incurred from the fund on his behalf. However, he promptly reimbursed this amount in full. Crs Ansett and Harwood were re-elected as Councillors. They received $441 and $221 respectively from campaign support funds during the ordinary return period. These amounts were below the level required for disclosure. Cr Saunderson was re-elected as a Councillor. He obtained $5,649 in support from campaign funds, including $2,968 from Lascorp and $536 from each of four Geelong businessmen. He received these amounts, each of which exceeded $500 in value, during the ordinary return period and did not disclose them in his ordinary return of interests lodged on 21 July 2005. In failing to do so, he appears to have breached Section 81(7)(e) of the Act. It is recommended the matter be referred to Local Government Victoria for appropriate action.


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2. BACKGROUND AND APPROACH

a. Appointment of Inspector of Municipal Administration On 8 February 2006, Candy Broad MLC, Minister for Local Government (the Minister) requested me, in my capacity as a generally appointed Inspector of Municipal Administration under Section 223A of the Act, to undertake an investigation of the Greater Geelong City Council (the Council). Ms Jenny Morris, Legal Analyst, Local Government Victoria, was appointed to assist me. Ms Morris is also a generally appointed Inspector of Municipal Administration. The investigation was performed using the powers conferred by Sections 223B and 223C of the Act.

b. Terms of Reference

On 8 February 2006 the Minister approved Terms of Reference for conducting the investigation. These were:-

“ 1) To advise in relation to election campaign support alleged to have been

provided to candidates in the Council elections conducted in November 2004, whether councillors have made proper disclosures of gifts in accordance with section 81 of the Act.

2) To advise whether the circumstances considered in relation to item 1 above indicate that there have been apparent breaches of the Act and, if so, the nature of the apparent breaches and the persons who appear to have committed the breaches.

3) To advise if there are any matters arising under other legislation which require further investigation.

4) To report on the above and any issues that may arise as a result of the investigation. “

During the investigation I received allegations about breaches by Councillors of the conflict of interest provisions of the Act. My Terms of Reference did not include examination of breaches of these provisions and I have referred correspondence received by me on this issue to Local Government Victoria for attention. The Terms of Reference also requested that I advise on any matters arising under other legislation which require further investigation. No such matters arose.

c. Approach Taken

I have addressed the Terms of Reference by determining:- o the amounts received by each Councillor from election campaign support

funds; o those Councillors required to disclose gifts, pursuant to Section 81(7)(e) of

the Act; and o whether any Councillor may have breached the Act by failing to disclose such

gifts.

The process has involved:- o ascertaining the total value of election campaign support funding available for

distribution; o reviewing disbursement of the funds to confirm the value of support received

by each Councillor from this source; and


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o assessing the responsibility of Councillors, both newly elected and re-elected, for disclosing the receipt of any gift pursuant to the provisions of Section 81(7)(e) of the Act.

d. Information Sources

i. Interviews with Councillors Prior to commencing the investigation and in response to an invitation to do so, I addressed Councillors to briefly explain the procedures to be followed in relation to their participation in the investigation process.

Each of the twelve Councillors elected in November 2004 were examined under oath (or affirmation). These interviews were tape recorded.

The Councillors are:-

Councillor Ward

Barbara Abley Brownbill

Tony Ansett Windermere

Lou Brazier Corio

Shane Dowling Deakin

Jan Farrell Beangala

Bruce Harwood Kardinia

Strechko Kontelj Kildare

Rod Macdonald Cheetham

Peter Mc Mullin Buckley

John Mitchell Austin

Tom O’Connor Coryule

David Saunderson Cowie

ii. Interviews with Donors and Others

Each of the businessmen or businesses known to have provided financial support to assist candidates in the campaign for the election in November 2004 were interviewed by Inspectors.

Discussions were held with other persons alleged to have contributed campaign support funds and also with several unsuccessful election candidates.

iii. Written Material

Relevant documentation included:- o financial statements submitted by Cr Saunderson; o Council records including minutes of meetings and the register of

interests; o newspaper reports; o statements made by Lascorp Development Group (Aust) Pty Ltd

(Lascorp); o material submitted by other Councillors; and o accounts and invoices provided by suppliers of campaign

services.


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3. ELECTION CAMPAIGN FUNDING SOURCES

a. Geelong Businessmen

Six Geelong businessmen were interviewed by Inspectors about financial contributions made by them for the purpose of assisting candidates to campaign for election to the Council in November 2004. They are:-

o Frank Costa, Executive Chairman, Costa Group of Companies, 2 Myers Street, Geelong;

o Stewart Harrison, Owner, Eureka Sports Saloon Centre, 98 Little Malop Street, Geelong;

o Robert Riordan, Managing Director, United Retail Group Pty Ltd; Suite 4/67 Pakington Street, Geelong West;

o Lino Bisinella, Managing Director, L Bisinella Developments, Pty Ltd, 195 Forest Road, Lara;

o Glynn Harvey, Fruit and Vegetable Wholesaler, 37 Morgan Street, North Geelong; and

o Sean Blood, Proprietor, Blood Toyota, 62 – 72 Fyans Street, Geelong.

Each businessman agreed at my request to provide information by statutory declaration. Mr Costa stated that:-

o higher quality candidates should be encouraged to stand for Council and financial support was needed to achieve this purpose;

o he had spoken to Cr David Saunderson who advised Mr Costa that he had “…a few people…” who could work together and that an amount of $50,000 would be required to conduct a campaign;

o he contacted businessmen seeking contributions and received $40,000 from the following:- Glynn Harvey $10,000, Sean Blood $5,000, Robert Riordan $5,000, Stewie Harrison $10,000 and Lino Bisinella $10,000. These amounts, together with his own contribution of $10,000 were collected by his assistant, Andrew Balaam, and delivered to Cr Saunderson;

o no instructions were given to anyone concerning use of the funds, other than that they be spent on electoral campaign support;

o during the campaign, Cr Saunderson sought extra financial assistance because the funds provided were insufficient. He advised Cr Saunderson that candidates would have to find the additional funds required by them;

o he recently asked Cr Saunderson for a “list of expenditure” to ensure that the monies were properly spent. The list showed that a total of about $87,000 was spent on sixteen candidates.

The other businessmen advised in summary, that:-

o about a month or so before the November 2004 elections they had been approached by Frank Costa to donate money to assist good candidates to run for Council;

o they agreed to provide financial support for the advancement and benefit of Geelong;

o they were unaware which candidates were being supported, except Mr Riordan who said he was aware of the names of three of them; and

o their contributions were made in cash and cheques payable to “cash”. Andrew Balaam (Mr Costa’s assistant) stated that:-

o Mr Costa was approached by people who wanted the best candidates to be elected to the Council, irrespective of political allegiances;

o Mr Costa agreed to raise the necessary funds to assist with a campaign; o prior to the election, the donated funds were left with him (Andrew) at 2 Myers

Street, Geelong. He visited Cr Saunderson’s work address on two or three occasions to deliver the money;


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o neither Mr Costa nor himself “… had anything to do with the distribution of the money..”.

The total amount contributed from this source was $50,000.

b. Lascorp Development Group (Aust) Pty Ltd

Representatives of Lascorp were interviewed by Inspectors about financial contributions made by the company to assist candidates in the November 2004 election campaign.

Mr Robert Harris, Development Manager, provided a statutory declaration that contains the following:-

o he is development manager for the company, being responsible for sourcing

new projects; o Crs Saunderson and Ansett separately approached him asking if Lascorp

would help with their campaigns; o Lascorp agreed to assist in the belief that a productive Council would be

beneficial to Geelong; o Lascorp assisted by contributing to the printing costs of electoral material; o Cr Saunderson presented Lascorp with invoices he had received from

campaign service providers totalling $20,828.19. The suppliers were paid direct by Lascorp on 1 and 2 December 2004;

o Cr Saunderson said that the payment of campaign expenses by Lascorp would assist himself and other candidates;

o Cr Ansett sought assistance from Lascorp for campaign printing costs he had incurred. Lascorp reimbursed him an amount of $440.72 in November 2004.

The total amount contributed by Lascorp was $21,269.

c. Councillors / Candidates

Councillors provided the following responses, under oath, about their participation in, and receipt of financial support from, the election campaign support funds.

i. Crs Mitchell, Farrell, Macdonald, Abley, Kontelj and Dowling:-

o did not receive any assistance from the November 2004 election campaign fund; and

o had totally funded their own campaigns.

ii. Cr Mc Mullin:-

o costs totalling $5,000 were incurred in support of his Council election campaign. These were paid, in the first instance, from the election campaign support fund;

o he fully reimbursed the $5,000 in November 2004 and therefore received no net financial benefit from the fund; and

o Cr Saunderson had managed campaign support for him.


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iii. Cr O’Connor:-

o his election campaign expenditure from the fund could have

exceeded $10,000 and he contributed about $4,000 towards this cost;

o was aware of the media release statements jointly involving Councillors Saunderson, Brazier and himself which stated that he had received a benefit of $5,607 from the support fund. However, he hadn’t seen the media release, and didn’t sign it. Further, he didn’t know exactly how much benefit he received but thought it would be at least $5,600;

o Cr Saunderson handled the campaign funds and arrangements for printing, mailing and publicity; and

o “…the sooner the truth is told, the better”.

iv. Cr Brazier:-

o received assistance through the election campaign fund and produced a statement to show that the total cost of her campaign was $10,649.88, to which she contributed $4,500 in cash to Cr Saunderson, the campaign manager, “..well within one month..” after the election;

o agreed to a joint media release on or about 1st February 2006

involving Crs O’Connor and Saunderson stating that she had received net assistance of $6,019 from the donated campaign funds and that the Geelong businessmen and Lascorp had provided the funds;

o did not handle any funds, the accounts being paid on her behalf by the campaign manager; and

o Cr Saunderson made the decision as to the level of funds she received.

v. Cr Harwood:-

o funded and managed his own electoral campaign but agreed by

arrangement with Cr Saunderson, to have posters printed, and to be charged for the cost. However, he didn’t receive an account;

o the cost of $221.10 was met by Lascorp. He refunded this amount to Lascorp on 3 March 2006.

vi. Cr Ansett:-

o obtained $440.72 from Lascorp for photocopying, but did not receive

any other financial assistance towards his campaign; o incurred the expense initially and was subsequently reimbursed by

Lascorp.

vii. Cr Saunderson:-

o received “electoral campaign donations, moneys and contributions” in excess of $500 or more towards the cost of his campaign;

o provided a statement to the Inspector showing that his total election campaign expenditure was $6,442.72, to which he had personally contributed $900, leaving a net benefit received by him from the campaign support fund of $5,542.72. This amount was the total he received from all donors towards his campaign.


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He apportioned this support as follows:-

Donor Amount

Lascorp 2,959.85

Costa 516.57

Harvey 516.57

Bisinella 516.58

Harrison 516.58

Riordan 258.28

Blood 258.29 o issued a joint media statement with Councillors O’Connor and Brazier

on or about 1 February 2006 showing that he had received a net benefit of $7,082 from campaign funds. A copy of this statement is attached – refer Appendix 1.

o had since amended this figure to $5,542.72 because the amount shown in the media statement had been prepared in haste and the second calculation was provided after “…going through the figures more carefully”; and

o argued that these donations were not “gifts” referred to in Section 81(7)(e) of the Act;

viii. Candidates:-

o I have confirmed that candidate F contributed $750 towards the cost of his campaign managed by Cr Saunderson;

o According to Cr Saunderson three other unidentified candidates contributed $1,500.

The total amount contributed by Councillors/ Candidates totalled $16,650.

d. Other Alleged Sources

Allegations were received (anonymously) that certain other prominent persons in the Geelong community had made donations to the election campaign support fund. However, no evidence was produced or obtained to substantiate that any person, other than those listed in this report, contributed to the fund.

e. Summary of Campaign Funding Sources

The amount available for distribution was as follows:-

Campaign Donations

By Businessmen

Frank Costa 10,000

Lino Bisinella 10,000

Stewart Harrison 10,000

Glynn Harvey 10,000

Robert Riordan 5,000

Sean Blood 5,000 50,000


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By Lascorp 21,269

Total Campaign Donations $71,269

Contributions By Councillors / Candidates

Cr David Saunderson 900

Cr Tom O’Connor 4,000

Cr Peter McMullin 5,000

Cr Lou Brazier 4,500

Candidate F 750

Other Unidentified Candidates 1,500

Total Contributions by Councillors / Candidates $16,650

TOTAL CAMPAIGN FUNDS $87,919

According to Cr Saunderson’s financial statements, the amount contributed by Cr Brazier was $4,000. Cr Brazier claimed that she contributed $4,500. When asked about this difference, Cr Saunderson agreed that her record would be more reliable.

Cr Saunderson’s financial statement listed unsuccessful candidate “X” (name withheld) as having contributed $1,500. Candidate “X” disputed having done so. Cr Saunderson acknowledged this was an error on his part and then advised that the $1,500 “...would have been contributed by the candidates”. However, their identities remain unknown. Cr Saunderson did not produce any receipts or bank statements to substantiate the cash and cheques totalling $66,650 given to him by businessmen and candidates (ie $50,000 and $16,650 respectively). However, the amounts shown, other than the contribution of $1,500 by unidentified candidates referred to above, have been confirmed in responses provided by Cr Saunderson, in declarations made by the donors and the courier of the funds, and by discussions with several unsuccessful candidates.

The contribution by Lascorp of $21,269 was recorded in accounts paid by the company direct to those firms which provided election campaign services to candidates ($20,828) and by records of cheques issued to Cr Ansett to reimburse him for expenses ($441).

4. DISTRIBUTION OF ELECTION CAMPAIGN SUPPORT FUNDS

a. Campaign Expenses Statements

I have provided two statements:-

o a distribution statement detailing the benefit received by each candidate from the campaign support fund; and

o a list of service providers and other recipients of cash payments from the fund.

These statements are attached – refer Appendix 2.

The information contained in these statements is based on records provided by Cr Saunderson, information provided by Councillors under oath, details contained in accounts submitted by the suppliers of campaign services and discussions with a number of candidates.


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The distribution statement is fundamental to accurately determining the value of election campaign donations received by each candidate and in particular, the amounts to be disclosed by Councillors under Section 81(7)(e) of the Act. The statements record that:-

o seventeen candidates were involved in the campaign support fund; o six of the candidates were elected to Council in November 2004; o campaign costs totalled $88,019; o these costs were met from:

� donated funds $71.269 � candidate contributions $16,650

(Difference $100) o donated funds spent on campaigning for unsuccessful candidates totalled

$53,390; o donated funds spent on campaigning for candidates elected to Council

amounted to $17,879. The financial statement submitted by Cr Saunderson included a list of election candidates and the amount of support received by each from the campaign funds. All elected candidates were named in the statement while unelected candidates were designated by letter, according to Cr Saunderson, for privacy reasons. I have identified the names of all candidates and have established, based on available evidence, that each one received the campaign assistance specified in the statement, other than those unidentified candidates who contributed $1,500. However, it is evident that elected Councillors neither contributed, nor received benefit from, the $1,500. Unsuccessful candidates have not been named in the report as such disclosure is not required in responding to the Terms of Reference.

b. Campaign Funding Methodology

Support funds totalling $88,019 were spent on election campaigning. Cr Saunderson handled arrangements for fifteen candidates at a cost of $84,078. The remaining $3,941 comprised a contribution of $3,500 made directly from the funds to one unsuccessful candidate and assistance of $441 provided directly to Cr Ansett by Lascorp. As campaign manager, Cr Saunderson decided the amount of assistance to be provided to each candidate and did so based on his appraisal of their individual needs. He spent the funds on printing, advertising, envelopes, mail outs, phone costs, signage, etc. for fifteen candidates. Invoices, statements and other documentation were produced to account for expenditure of $77,243. According to Cr Saunderson the remaining $6,835 (ie $84,078 less $77,243) was for “miscellaneous” items representing his “…best estimate of all unreceipted expenditure” including “..such costs as photography expenses, some candidate deposits, garden stakes, rope, other photo copying expenses and so on ..”. This miscellaneous expense was neither supported by documentary evidence nor apportioned between candidates as part of the benefits derived by them from the campaign fund. It represents a significant proportion of the campaign expenditure, being equivalent to about 10% of the donated funds ($71,269). The level of campaign support allocated to candidates has been understated by this amount. In preparing his financial statement it appears Cr Saunderson allocated campaign costs as follows:-

o where an expense was specifically incurred in support of a particular candidate, then direct to that candidate;


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o where an expense was incurred to benefit a number of candidates, then by apportionment between them according to benefit derived.

This process, except for the failure to properly account for miscellaneous expenses, appears to have been performed equitably. Cr Saunderson provided me with a copy of his campaign support fund statements and supporting information. However, he objected to my request for him to do so on the basis that the documents “…are not relevant to the terms of reference of your investigation.” The reasons for requesting these statements are clear. The Terms of Reference require me to advise whether or not elected Councillors “.. made proper disclosures of gifts in accordance with Section 81 of the Act”. This necessitated that I verify:-

o the total campaign support funds to be distributed; and o the identities of all beneficiaries and the amounts received by them.

Cr Saunderson’s financial statements, prepared by him in the exercise of his role as campaign support fund manager, are directly relevant to the purpose of this investigation.

c. Support Received by Elected Councillors

The amounts received by elected Councillors who participated in campaign support funding, as provided in Appendix 2, were as follows:- Councillor Campaign Costs

Paid from Donated Funds

Personal Contribution by

Councillor

Benefit Received from

Donated Funds

O’Connor

Saunderson

Mc Mullin

Brazier

Harwood*

Ansett

9,302

6,549

5,009

10,757

221

441

4,000

900

5,000

4,500

-

-

5,302

5,649

9

6,257

221

441

$17,879

* Refunded to Lascorp in March 2006

The campaign support benefits received by Crs O’Connor, Brazier and Saunderson differ from those contained in the media release issued by them on or about 1 February 2006, and also from the amounts submitted in the statement given to the Inspector by Cr Saunderson on 27 February 2006. This is because adjustments and refinements were required to improve the accuracy of the figures presented in the earlier statements provided by the three Councillors and by Cr Saunderson.

5. SECTION 81 OF THE ACT AND DISCLOSURE OF GIFTS

A copy of Section 81 of the Act is attached - refer Appendix 3

a. Definition of Gift

The question has arisen as to whether the word “gift” in Section 81(7)(e) of the Act includes election campaign donations. The lawyer representing Cr Saunderson submitted in summary that:-

o the definition of “gift” in Section 3 of the Act only came into operation on 31 December 2004;


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o Cr Saunderson received campaign donations prior to that date; o before 31 December 2004, the word “gift” in Section 81(7) of the Act was

undefined; o the summary of returns of interest submitted by members of State Parliament

in 2002 shows that no member disclosed a campaign donation as a gift because gifts do not include campaign donations; and

o gifts are something personal, such as jewellery, a vase, etc. The word “gift” was not defined in the Act at the time of the Council election in November 2004. A definition was introduced and became effective from 31 December 2004, concurrently with a new Section 62B, that requires all election candidates to submit campaign donation returns. This new provision does not apply to events that took place in October / November 2004.

Based on advice on this matter given by the Victorian Government Solicitor on 20 March 2006, I have concluded as follows:-

o Section 81(7)(e) is meant to ensure that “gifts” over a certain sum are reported;

o the normal meaning of “gift” is “something given” and donations of $500 and above are “gifts” within the meaning of Section 81(7)(e) of the Act;

o this definition was applied in the case of Watson vs Abbouche (Unreported, Magistrates Court of Victoria, 16 September 2005);

o whether a candidate receives a “gift” of $500 or more directly or via a third person, it must be disclosed in the ordinary return; and

o a “gift” includes the transfer of a tangible asset such as money, this interpretation being applicable both before and after the definition was inserted into the Act.

Accordingly, I have proceeded on the basis that a donation made to a Councillor from election campaign funds be treated as a “gift”.

b. Disclosure of Gifts Disclosure of interest requirements in Section 81 of the Act for newly elected Councillors differ from those applicable to re-elected Councillors.

i. Disclosure By Newly Elected Councillors

Following a Council election, newly elected Councillors are required to submit a “primary return” to the Chief Executive Officer within thirty days of making the oath of office as a Councillor, disclosing information specified in Section 81(6) of the Act, applicable at the date of lodging the return. There is no requirement in a primary return to disclose the particulars of any gift. These Councillors are also required to lodge an “ordinary return” on 30 June or within thirty days of 30 June, disclosing information prescribed in Section 81(7) of the Act including “…particulars of any gift of or above the amount or value of $500 received by him or her from a person, other than a person related to him or her by blood or marriage…” The relevant period for the purposes of this return is the time between the date of the primary return and 30 June next following.


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ii. Disclosure By Re-elected Councillors

All re-elected Councillors are required to submit an “ordinary return” to the Chief Executive Officer on 30 June, or within thirty days of 30 June, disclosing information prescribed in Section 81(7) of the Act including “…particulars of any gift of or above the amount or value of $500 received by him or her from a person, other than a person related to him or her by blood or marriage…” The time frame for disclosing this information is the period between the date of the last ordinary return and 30 June next following. Re-elected Councillors were not required to submit a primary return after the November 2004 election.

6. COMPLIANCE BY NEWLY ELECTED COUNCILLORS

a. Returns by Newly Elected Councillors

Those Councillors newly elected in November 2004 were:-

Councillor Date Primary

Return Lodged

Return Period for First

Ordinary Return Lodged

After Primary Return

John Mitchell 24 December 2004

Jan Farrell 10 December 2004

Rod Macdonald 13 January 2005

Peter McMullin 27 December 2004

Lou Brazier 14 December 2004

From the date each

Councillor lodged his / her

primary return to 30 June

2005.

Tom O’Connor Undated * * Cr O’Connor stated under oath, that he lodged his return prior to 30 December 2004. This explanation is consistent with records produced by the Council staff.

Crs O’Connor and Brazier each received net benefits of $5,302 and $6,257 respectively from the election campaign support fund in October / November 2004. Cr McMullin participated in the campaign but did not receive any material benefit from it, having totally reimbursed the fund for costs of $5,000 incurred on his behalf. Crs Mitchell, Farrell and Macdonald did not become involved in, or receive any support from, the fund. b. Review of Compliance Each newly elected Councillor, in lodging a primary return in accordance with Section 81(6) of the Act, was not required to disclose any donations received in support of his/her Council election campaign for November 2004.

All available evidence confirms that those newly elected Councillors who obtained support to the value of $500 or more from the election campaign fund, namely Crs O’Connor and Brazier, received this assistance prior to the commencement of the return period for the first ordinary return. Therefore they were not required to disclose these donations in their ordinary returns for the period ended 30 June 2005.


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There is no evidence that any of the six Councillors received any gifts for which disclosure was required by them in their ordinary returns for the return period to 30 June 2005. Each stated under oath that they did not receive any such gifts.

c. Conclusion I found no evidence that Councillors Mitchell, Farrell, Macdonald, McMullin, Brazier and O’Connor breached Section 81(7)(e) of the Act.

7. COMPLIANCE BY RE-ELECTED COUNCILLORS

a. Returns by Re-elected Councillors

Re-elected Councillors and their ordinary return periods were:-

Councillor Return Period

David Saunderson 1 July 2004 to 30 June 2005

Shane Dowling 7 July 2004 to 30 June 2005

Bruce Harwood 13 July 2004 to 30 June 2005

Strechko Kontelj 5 July 2004 to 30 June 2005

Barbara Abley 9 July 2004 to 30 June 2005

Tony Ansett 6 July 2004 to 30 June 2005 Each re-elected Councillor who received a gift to the value of $500 or more from the November 2004 Council election campaign fund should have declared it as required by Section 81(7)(e) of the Act. As previously stated, re-elected Councillors are not required to submit primary returns. The ordinary returns of interests submitted by each of the six Councillors contained the following responses:-

Councillor Date Submitted Gift Declaration

Section 81(7)(e)

David Saunderson 21 July 2005 “N/A”

Shane Dowling 01 August 2005 “N/A”

Bruce Harwood 12 July 2005 No Response*

Strechko Kontelj 18 July 2005 “Nil”

Barbara Abley 24 July 2005 “Nil”

Tony Ansett 12 July 2005 “Nil” * Cr Harwood stated under oath that he did not receive any gift that should have been declared in his ordinary return.

The net benefits received by re-elected Councillors from the campaign support fund were as follows:-

o Cr Ansett o Cr Harwood o Cr Saunderson

$ 440.72 $ 221.10 $5,649.36


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i. Crs Abley, Kontelj and Dowling

Each of these Councillors stated under oath that they:- o did not receive any benefit from the election campaign

support fund; o did not receive any gift to the value of $500 or more during

the return period; and o financed their own election campaigns in November 2004.

There is no evidence that Crs Abley, Kontelj and Dowling received any gifts that they were required to disclose in their ordinary returns for the return period to 30 June 2005.

ii. Crs Ansett and Harwood

Crs Ansett and Harwood received contributions from the election campaign support fund of $440.72 and $221.10 respectively. These amounts are less than that required for disclosure pursuant to Section 81(7)(e) of the Act. Each Councillor declared under oath that they did not receive any gift to the value of $500 or more during the return period.

iii. Cr Saunderson

Cr Saunderson advised the Inspector that he received election campaign support from the fund of $5,542.72. [Refer Part 3c vii of this report]. This net benefit has increased to $5,649.36 because of the inclusion of an expense inadvertently omitted by him. Section 81(7)(e) of the Act refers to “…. any gift of or above the amount or value of $500….”. This means that the amount received by Cr Saunderson from each donor must be considered as a separate gift for the purpose of determining his compliance or otherwise with the Act. The amount he received is apportioned as follows:-

Donor Share % Less Personal Contrib’n

Net Campaign

Support

Lascorp *

Businessmen and

Candidates

Costa ($10,000)

Bisinella ($10,000)

Harvey ($10,000)

Harrison ($10,000)

Blood ($5,000)

Riordan ($5,000)

(52.5%) 3,440.46

(47.5%) 3,108.90

621.78

621.78

621.78

621.78

310.89

310.89

20

20

20

20

10

10

472.78

85.45

85.45

85.44

85.44

42.72

42.72

2,967.68

536.33

536.33

536.34

536.34

268.17

268.17

$6,549.36 $900.00 $5,649.36

This method of calculating net campaign support is the same as that adopted by Cr Saunderson in his statement to the Inspectors on 27 February 2006.


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Cr Saunderson’s campaign expenses of $6,549.36 were met by:- o Lascorp $3,440.46 (52.5% ); and o Businessmen/ candidates $3,108.90 (47.5% )

The adjustment to recognise Cr Saunderson’s personal contribution is made by allocating:-

o the $900 between Lascorp and businessmen in proportion to campaign support levels (52.5% / 47.5%); and

o the business proportion in accordance with the size of the individual business donations.

Cr Saunderson stated under oath that he “… received electoral campaign donations, moneys, contributions or assistance…” to the value of $500 or more during the return period of his ordinary return ended 30 June 2005. However, Cr Saunderson, in submitting his ordinary return on 21 July 2005, did not disclose having received any gift to the value of $500 or above. He disputed that the amounts received by him from the campaign support fund were “gifts” within the meaning of the Act.

c. Conclusions

o I found no evidence that Councillors Abley, Kontelj, Dowling, Ansett and Harwood breached Section 81(7)(e) of the Act;

o Cr Saunderson appears to have breached Section 81(7)(e) of the Act in that he:-

� received donations towards his election campaign in November 2004 from the following:-

Lascorp Developments

Frank Costa

Lino Bisinella

Stewart Harrison

Glynn Harvey

$2,967.68

536.33

536.33

536.34

536.34

� received such donations within the return period for his ordinary return lodged on 30 June 2005; and

� completed the relevant part of the return relating to gifts received of $500 or more by showing “N/A” and therefore failed to disclose the amounts received by him.

8. RECOMMENDATION

That this report be referred to Local Government Victoria to take appropriate action regarding Cr Saunderson’s failure to disclose in his ordinary return lodged on 21 July 2005 for the return period to 20 June 2005, gifts in the form of election campaign support received by him from Lascorp Developments $2,967.68, Frank Costa $536.33, Lino Bisinella $536.33, Stewart Harrison $536.34 and Glynn Harvey $536.34.

Merv Whelan Inspector of Municipal Administration


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APPENDICES

APPENDIX 1 COUNCILLOR MEDIA RELEASE APPENDIX 2 CAMPAIGN FUNDS STATEMENTS

2.1 DISTRIBUTION OF CAMPAIGN FUNDS TO CANDIDATES

2.2 DISBURSEMENT OF FUNDS TO SERVICE PROVIDERS

APPENDIX 3 SECTION 81, LOCAL GOVERNMENT ACT 1989


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APPENDIX 1

COUNCILLOR MEDIA RELEASE ON OR ABOUT 1 FEBRUARY 2006

Joint media statement from Crs Lou Brazier, Tom O’Connor and David Saunderson In the last few days issues have been raised in the media relating to the financing of our council election campaigns. Today each of us have written to the Mayor Geelong about these matters in the following terms. First, we are under no obligation to declare the amounts raised in our campaigns or from whom they were raised. None of us have personal concerns in making public who donated to our campaigns but we are conscious that those who donated to our campaigns would not have expected at the time that their names would have become public. The statements that have been made by Gavan O’Connor and Barbara Abley about this matter have been extreme and in our view designed to do harm to the standing of this council and Geelong as a whole. Nothing illegal or improper has been done. To imply otherwise is highly mischievous. That said, both in the spirit of the new campaign financing regulations that will apply at the next Council election and in order to try and bring closure to this issue we wish to make the following declaration. In making this declaration those named below have been contacted and are willing to have their names made public. Accordingly, in addition to our own money: I, Lou Brazier, received donations in my campaign totalling approximately $6,019. Lascorp, Frank Costa, Glynn Harvey, Robert Reardon and Sean Blood donated to my campaign. I, David Saunderson, received donations in my campaign totalling approximately $7,082. Lascorp, Frank Costa, Glynn Harvey, Robert Reardon and Sean Blood donated to my campaign. I, Tom O’Connor, received donations in my campaign totalling approximately $5,607. Frank Costa, Glynn Harvey, Robert Reardon and Sean Blood donated to my campaign.

We trust this will allay any perceptions that there has been any lack on transparency in the council election process.

**************************************

Inspector’s Comment:

The media statement was not signed. However, the three Councillors each submitted a

signed statement to the Mayor Cr Mc Mullin dated 31 January 2006, the contents of

which were consistent in all material respects with those contained in the media

release, including the donations received by each of them.


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APPENDIX 2.1

CAMPAIGN FUNDS STATEMENT DISTRIBUTION OF CAMPAIGN FUNDS TO CANDIDATES

(to nearest dollar) Donations and

Contributions Spent

Candidate and Ward Lascorp Funds

Business and

Cand’tes

Total Spent

Less Cand’te

Cont’bns

Benefit from

Donated Funds

Cr T O’Connor (Coryule) - 9,302 9,302 4,000 5,302

Candidate F (Brownbill) 1,662 1,353 3,015 750 2,265

Candidate G (Brownbill) 1,056 2,756 3,812 - 3,812

Cr D Saunderson Cowie) 3,440 3,109 6,549 900 5,649

Cr P McMullin (Buckley) - 5,009 5,009 5,000 9

Cr L Brazier (Corio) 3,441 7,316 10,757 4,500 6,257

Candidate D (Corio) 370 307 677 - 677

Candidate I (Corio) - 307 307 - 307

Candidate J (Corio) - 307 307 - 307

Candidate H (Cheetham) 2,352 10,378 12,730 - 12,730

Candidate E (Cheetham) 370 319 689 - 689

Candidate B (Windermere) 6,325 15,372 21,697 - 21,697

Candidate C (Windermere) 370 221 591 - 591

*Cr B Harwood (Kardinia) 221 - 221 - 221

Candidate A (Austin) 1,221 359 1,580 - 1,580

Miscellaneous - 6,835 6,835 - 6,835

Contributions by Unidentified Candidates

1,500 -1,500

Sub Totals – Funds managed by Councillor Saunderson

20,828

63,250

84,078

16,650

67,428

**Candidate K (Brownbill) - 3,500 3,500 - 3,500

Cr T Ansett(Windermere) 441 - 441 - 441

TOTALS $21,269 $66,750 $88,019 $16,650 $71,369

* Refunded $221 to Lascorp - March 2006

** Direct cash payment

Businessmen $50,000

Lascorp $21,269

Total Donated Funds $71,269

(Difference $100)


27

APPENDIX 2.2

CAMPAIGN FUNDS STATEMENT DISBURSEMENT OF FUNDS TO SERVICE PROVIDERS

(to nearest dollar)

FROM FUNDS PROVIDED BY LASCORP

Kosdown Printing Co Pty Ltd

Port Melbourne

8,393

Coa Press Printing

Moolap

9,234

The Sticker Company

South Geelong

3,201

Cr Ansett – Printing costs reimbursed 441 21,269

FROM FUNDS PROVIDED BY BUSINESSMEN & CANDIDATES

Kwik Kopy Printing Centre

Geelong

21,846

Australia Post

Geelong

15,584

On Time Letterbox Distributors

Moolap

4,967

Swift Advertising

Newcomb

4,167

Jennings Signs

North Geelong

3,471

Quick 2 Print

North Geelong

880

Elective Interactive Pty Ltd - Sydney

- Phone Calls,

5,500

Direct Contribution to Candidate K 3,500

Miscellaneous 6,835 66,750

TOTAL EXPENDITURE $88,019

SUMMARY

Invoices from Suppliers 77,243

Direct Contribution to Candidate K 3,500

Assistance to Cr Ansett 441

Miscellaneous Expenses 6,835

$88,019


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APPENDIX 3

SECTION 81, LOCAL GOVERNMENT ACT 1989

81.Register of interests

(1) In this section—

"nominated officer" means the senior officers of the Council and any other member of the Council staff nominated by the Council;

"return period" in relation to the ordinary return of a Councillor, member of a special committee or nominated officer means—

(a) if the last return of the Councillor, member of a special committee or nominated officer was a primary return, the period between the date of the primary return and 30 June next following; or

(b) if the last return of the Councillor, member of a special committee or nominated officer was an ordinary return, the period between the date of that return and 30 June next following.

(2) A person who becomes a Councillor or a member of a special committee must within 30 days of making the oath of office of a Councillor or becoming a member of a special committee submit a primary return in the prescribed form to the Chief Executive Officer.

Penalty: 50 penalty units.

(2A) A Council may exempt a member of a special committee who is not a Councillor from being required to submit a primary return or an ordinary return.

(3) If a person is re-elected or re-appointed or upon completion of his or her term of office as a Councillor or member of a special committee, the Councillor or member of a special committee does not have to submit a new primary return.

(4) Any person who becomes a nominated officer must within 30 days of becoming a nominated officer submit a return in the prescribed form to the Chief Executive Officer.


(4A) Any person who becomes a nominated officer solely because of the amendment made to this Act by section 8 of the Local Government

(Amendment) Act 1994 is deemed for the purposes of sub-section (4) to have become a nominated officer on the date section 8 of that Act came into operation.

S. 81(1) def. of "nominated officer" substituted by No. 99/1994 s. 9(a).

S. 81(1) def. of "return period" amended by No. 34/1996 s. 4(1)(a).

S. 81(2) amended by Nos 99/1994 s. 9(b), 109/2003 ss 49(3), 63(a).

S. 81(2A) inserted by No. 13/1990 s. 10.

S. 81(4) substituted by No. 99/1994 s. 9(c), amended by No. 109/2003 s. 63(b).

S. 81(4A) inserted by No. 99/1994 s. 9(c).


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(5) A Councillor, a member of a special committee or a nominated officer must on 30 June or within 30 days of 30 June submit an ordinary return in the prescribed form to the Chief Executive Officer.


(6) A Councillor, a member of a special committee or a nominated officer must disclose the following information in the primary return as at the date of the primary return—

(a) the name of any company or other body in which he or she holds any office whether as a director or otherwise;

(b) the name or description of any company, partnership, association or other body in which he or she holds a beneficial interest which exceeds in value $2000;

(c) the address or description of any land in the municipal district of the Council or in a municipal district which adjoins that municipal district in which he or she has any beneficial interest other than by way of security for any debt;

(d) a concise description of any trust in which he or she holds a beneficial interest or of which he or she is a trustee and a member of his or her family holds a beneficial interest;

(e) any other substantial interest whether of a pecuniary nature or not of him or her or of a member of his or her family of which he or she is aware and which he or she considers might appear to raise a material conflict between his or her private interest and his or her public duty as a Councillor, a member of a special committee or nominated officer.


* * * * *

(7) A Councillor, a member of a special committee or a nominated officer must disclose in an ordinary return the following information in relation to the return period—

(a) if he or she has held an office whether as director or otherwise in any company or body, corporate or unincorporate—the name of the company or body;

(b) the name or description of any company, partnership, association or other body in which he or she held a beneficial interest which exceeded in value $2000;

(c) the address or description of any land in the municipal district of the Council or in a municipal district which adjoins that municipal district in which he or she had any beneficial interest other than by way of security for any debt;

S. 81(5) amended by Nos 99/1994 s. 9(b), 109/2003 s. 63(c).

S. 81(6) amended by No. 109/2003 s. 63(d).

S. 81(6)(a) amended by No. 34/1996 s. 4(1)(b).

S. 81(6)(b) substituted by No. 34/1996 s. 4(1)(c).

S. 81(6)(c) inserted by No. 34/1996 s. 4(1)(c).

S. 81(6)(d) inserted by No. 34/1996 s. 4(1)(c).

S. 81(6)(e) inserted by No. 34/1996 s. 4(1)(c).

S. 81(6A) inserted by No. 43/1993 s. 13, repealed by No. 109/2003 s. 63(e).

S. 81(7)(b) amended by No. 34/1996 s. 4(1)(d)(i)(ii).

S. 81(7)(c) amended by No. 34/1996 s. 4(1)(e).


30

(d) a concise description of any trust in which he or she held a beneficial interest or of which he or she is a trustee and a member of his or her family held a beneficial interest;

(e) particulars of any gift of or above the amount or value of $500 received by him or her from a person other than a person related to him or her by blood or marriage; and

(f) any other substantial interest whether of a pecuniary nature or not of him or her or of a member of his or her family of which he or she is aware and which he or she considers might appear to raise a material conflict between his or her private interest and his or her public duty as a Councillor, member of a special committee or nominated officer.


* * * * *

(9) The Chief Executive Officer must maintain a register of the interests of Councillors, members of special committees and nominated officers consisting of the last 3 returns that those Councillors, members and officers were required to submit under this section.

(10) The Chief Executive Officer must allow a person to inspect the register if that person has previously made written application to the Chief Executive Officer to do so and the application meets the requirements of the regulations.

(11) The register may be inspected at the office of the Council during normal office hours.

(12) The Chief Executive Officer must take all reasonable steps to ensure that no person other than a person who has made application has access to or is permitted to inspect the register or any return.

(13) A person must not publish any information derived from the register unless that information is a fair and accurate summary or copy of the information derived from the register.

(14) A person employed by the Council must not, whether before or after he or she ceases to be so employed, make a record of, divulge or communicate to any person any information in relation to a matter dealt with by this section that is gained by or conveyed to him or her during his or her employment with the Council or make use of that information for any purpose other than the discharge of his or her official duties under this section.


S. 81(7)(d) amended by No. 34/1996 s. 4(1)(f).

S. 81(7)(e) amended by No. 109/2003 s. 63(f).

S. 81(7)(f) amended by No. 13/1990 s. 31(d).

S. 81(8) repealed by No. 99/1994 s. 9(d).

S. 81(9) substituted by No. 99/1994 s. 9(e).

S. 81(10) amended by No. 99/1994 s. 9(f).

S. 81(12) amended by No. 99/1994 s. 9(f).


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(15) The Chief Executive Officer must—

(a) retain the returns of a Councillor, a member of a special committee or a nominated officer for a period of 3 years after the person has ceased to be a Councillor, a member of a special committee or a nominated officer; and

(b) at the end of that period, cause the returns to be destroyed.

(16) As soon as practicable after a person ceases to be a Councillor or a member of a special committee or a nominated officer, the Chief Executive Officer must remove all the returns submitted by that person from the register.

S. 81(15) amended by No. 99/1994 s. 9(f).

S. 81(16) amended by No. 99/1994 s. 9(f)(g).

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