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A scathing report by the NSW auditor-general has refused to rule out "misconduct or corruption" after the state government bought land in Sydney's west for three times its value.
The NSW auditor-general's report found the government didn't organise a formal valuation before paying more than $50 million for 6 hectares of land at Camellia.
The controversial sale was first reported on the ABC's 7.30 program, which revealed the price was triple the NSW valuer-general's previous valuation.
Transport for NSW (TfNSW) bought the land in 2016 for the Parramatta light rail project, and paid $53.5 million to developer Billbergia.
Billbergia had bought the land the previous year for $38 million.
Auditor-general Margaret Crawford found the department's decisions were "rushed and poorly-informed", and poor documentation meant "we are unable to exclude the possibility that the transaction was affected by misconduct or corruption".
At the time of Billbergia's purchase — which came about a fortnight before the state government announced the Parramatta light rail project in December 2015 — the land had been valued by the NSW Valuer-General at $15.5 million, excluding remediation costs.
When it changed hands to TfNSW it was on the proviso that the department paid for the remediation works.
Billbergia owners John and Bill Kinsella achieved a windfall of $15.5 million.
An artist's impression of the new light rail line will run through Parramatta, in Sydney's west.(Supplied image: NSW Government
)The auditor-general's report, tabled today, concluded TfNSW only commissioned an independent valuation on the day of settlement, knowing the site was contaminated.
The final valuation report wasn't received until late November 2016, representing a breach of the department's own policies and exposing it to the risk of the price exceeding market value, the report says.
"The lack of analysis and due diligence to support the level of financial offer and the approach to environmental contamination risk constitutes poor governance and ineffective administration," Ms Crawford wrote.
The department could not explain or justify why it accepted the risk and costs of contamination unconditionally, and didn't commission any advice on remediation costs until after the acquisition was finalised.
The department has since entered into contracts worth $106.9 million for environmental remediation.
Ms Crawford described the department's probity practices as "insufficient" and said they exposed TfNSW to "a greater risk of corruption, misconduct and maladministration".
The report found TfNSW staff didn't have approval to offer the $53.5 million and the acting deputy secretary who approved the acquisition didn't have delegation to do so.
Ms Crawford concluded the department's omissions from due diligence meant it was unable to demonstrate the acquisition represented value for money for NSW.
The report recommends Transport Minister Andrew Constance ensure "deficiencies" it has identified are not "systematically diminishing Transport for NSW's effective and ethical stewardship of public resources".
It also calls for the department to conduct an independent investigation into whether the acquisition was affected by maladministration, fraud or misconduct.
In a response published within the report, TfNSW secretary Rob Sharp acknowledged the deficiencies found, and what he called "continuing risks" that could undermine public confidence in the agency.
But he said the department was committed to making necessary changes to meet community expectations.
Last year, a joint investigation by 7.30 and The Sydney Morning Herald revealed the negotiated sale came after an urgent "out of session" meeting of senior government officials.
That meeting resulted in the reversal of plans to force the landowner to pay for remediation of the site or seek compulsory acquisition of the property.
The land will be used for a stabling and maintenance facility for the Parramatta light rail project.
This article first appeared on www.abc.net.au
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