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A major land deal is under scrutiny after the New South Wales Government paid three times its value in an urgent "out of session" meeting.
The cost of the land and remediation of the contaminated site is estimated to cost taxpayers more than $100 million.
A NSW property developer, Billbergia, bought the land at 6 Grand Avenue, Camellia, 13 days before the government announced its multi-billion-dollar Parramatta Light Rail project on December 8, 2015.
The polluted site would become critical to the new project as the main depot and stabling yard for the trams.
Billbergia bought the land for $38 million then flipped it months later to Transport for NSW for $53.5 million, with a proviso that the department paid for the remediation of the toxic site. At the time the land, excluding the cost of remediation, was valued by the NSW Valuer General at $15.5 million.
It would give Billbergia, which is owned by brothers John and Bill Kinsella, a $15.5 million windfall gain, excluding stamp duty and other costs.
A joint investigation by 7.30 and The Sydney Morning Herald into the government's purchase of the highly contaminated land can reveal it came after an urgent "out of session" meeting of senior government officials, which resulted in the reversal of earlier plans to get the landowner to pay to remediate the site or seek compulsory acquisition of the property.
The Parramatta Light Rail is currently under construction.(ABC News: Jerry Rickard)With a compulsory acquisition hanging over Billbergia, both parties agreed to a negotiated sale.
The committee that approved the purchase was chaired by Transport for NSW's then-secretary, Tim Reardon, who has since gone on to become the state's top public servant, running the Department of Premier and Cabinet under Gladys Berejiklian.
The deal has sparked calls for a referral to the Independent Commission Against Corruption (ICAC).
"Without a doubt, this should be referred to ICAC," former NSW auditor-general Tony Harris said.
He said the haste of the deal and the amount needed to be investigated so that any appearance of corruption could be ruled out.
"Everyone talks about the Leppington Triangle and the maybe $30 million worth of loss. Here we've got easily $100 million worth of loss," he said.
The Leppington Triangle scandal erupted two months ago when the Federal Auditor-General released a scathing report into the purchase of a parcel of land next to the new Western Sydney Airport which the Federal Government paid $30 million for — 10 times its value less than a year later.
After being contacted for this story, NSW Minister for Transport Andrew Constance said he had asked the NSW Auditor-General to review the matter.
"I expect full openness, transparency and accountability from Transport for NSW," he said in a statement.
"To give the community confidence and full transparency, I have written to the NSW Auditor-General seeking her engagement to independently review this matter."
However, Mr Harris said the NSW Auditor-General was not equipped to investigate the Camellia deal because it involved the private sector and therefore did not have the power to compel some crucial documents.
"The Auditor-General in NSW does not have the capacity either to follow the money or to undertake the kind of work the ICAC would undertake," he said.
Land highly contaminated
Dr Bill Ryall said no one could reliably predict how long it would take to treat the contaminated groundwater at the site.(ABC News)The land at 6 Grand Avenue, Camellia has been described by environmental expert Dr Bill Ryall, one of NSW's leading contamination experts, as having a "cocktail of highly toxic chemicals" in the groundwater and soil.
"The most prevalent is chromium six, which is a proven human carcinogen. It was the principal chemical of concern on the site of which Erin Brockovich was concerned about," Dr Ryall said.
"There is no question this has seeped into the groundwater, and this has been known for 30 years."
Dr Ryall said no one could reliably predict how long it would take to contain and treat the groundwater. "It might take 50 years — it might be more. No one knows at this stage," he said.
In 2018, environmental contractor Ventia entered a contract with Transport for NSW to remediate the property at a cost of $48 million, but internal sources and experts suggest the final cost could be much more.
George Silvino, a senior project engineer working on the project, posted on a social media account that he estimated the remediation project at $65 million.
NSW Opposition spokesman for finance Daniel Mookhey said he had seen estimates that it could cost anywhere from $100 million to $700 million to clean up the site.
"They bought it and then later sold it and made … millions of dollars profit … and they didn't have to clean it up."
'Economics of the project no longer stack up'
NSW Labor MP Daniel Mookhey said stage two of the light rail project may be ditched partly because of the cost of cleaning up the site at Camellia.(ABC News)Sensitive government documents show that the government had been interested in the site, 4-6 Grand Avenue, Camellia, since at least March 2015.
A March 2015 business paper to Transport for NSW's Finance and Investment Committee said it would pay $30 million for the acquisition of the land but noted the "site is contaminated" and listed on the EPA register and that Transport for NSW would negotiate a contract where remediation and associated costs would be at the landowner's cost.
"Settlement would not occur until a Site Audit Statement confirming the site is suitable for a commercial/industrial use signed by an EPA-accredited auditor," the document said.
Over the next few months, the government honed in on a preferred route for the light rail project, which it unveiled on December 8, 2015 with great fanfare, with then-premier Mike Baird, Transport Minister Andrew Constance and Planning Minister Rob Stokes.
Meanwhile, speculation is mounting that the Government will ditch stage two of the Parramatta Light Rail project.
"I think part of the reason is because they now know this site will cost a lot of money to clean up and the economics of the project no longer stack up," Mr Mookhey said.
A spokesperson for Mr Constance said the minister signed a briefing note approving the compulsory acquisition of the land on the advice of Transport for NSW. When asked why a decision was made a month later to instead purchase the property for a negotiated price of $53.5 million and pick up the cost of remediation, the spokesman said, "commercial negotiations are a matter for Transport for NSW".
NSW Transport Minister Andrew Constance has asked the NSW Auditor-General to review the land deal.(AAP Image: Joel Carrett)Transport for NSW said it acquired the property on the basis the site best met the department's needs. It said the property was subject to a competitive Expression of Interest process which it did not win. It subsequently negotiated with the new owners "having previously investigated other potential locations".
It said the land was acquired in accordance with the Land Acquisition (Just Terms Compensation) Act 1992. "Transport for NSW proceeds with a compulsory acquisition if agreement cannot be reached with a property owner," it said.
Mr Reardon referred questions to Transport for NSW.
Billbergia said in a statement it had no knowledge prior to the announcement of the route of the Parramatta Light Rail, nor of any interest Transport for NSW had in the site at 6 Grand Avenue.
It said when approached to sell the property, it was a reluctant seller as it had acquired the site to develop it for industrial purposes. "We understood there was a risk of compulsory acquisition unless, as requested by TfNSW, we agreed to a negotiated sale," it said.
It said it "acted properly and ethically throughout these transactions and has openly provided information in response to media enquiries, within the limits of confidentiality constraints".
Read more by Adele Ferguson about this story at The Sydney Morning Herald.
Watch this story tonight on 7.30.
This article first appeared on www.abc.net.au
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