Ethics and governance | Locale Learning

Lessons for councillors and councils from the ICAC inquiry into John Sidoti MP

by | 28 July, 2022

ICAC investigation – Operation Whitney

The NSW Independent Commission Against Corruption (ICAC) has recently handed down its report into the investigation of the state member for Drummoyne, Anthony (John) Sidoti MP. The investigation known as Operation Whitney centred on two allegations.

  • First, the allegation that Mr Sidoti improperly influenced, or attempted to improperly influence, several Liberal councillors at Canada Bay City Council (Council) to dishonestly or partially exercise their functions relating to the development controls for Five Dock town centre.
  • Second, that Mr Sidoti engaged in a breach of trust by failing to make a number of pecuniary interest disclosures contrary to the rules.

Importantly, given the involvement of local councillors, the report makes several observations about lobbying in the local government sector and makes numerous recommendations to minimise corrupt conduct in this space. In this article, we share the key takeaways for local council and councillors from the investigation report.

ICAC findings and observations

The ICAC found that Mr Sidoti engaged in serious corrupt conduct by using his official position as a member of Parliament as the local member of Drummoyne to try to improperly influence several Liberal councillors at Council about decisions relating to the development of the Five Dock town centre that would benefit his family’s property interests in the area. This protracted conduct happened over an extended period between late 2013 and February 2017.

The report noted:

Despite his representations that he was acting at all times in the interests of his constituents… the outcomes that he wanted those councillors to deliver were entirely directed to his private interest in increasing the development potential of his family’s growing number of properties in and around the Five Dock town centre. Those outcomes were also inconsistent with what had been determined by CBCC (informed by the recommendations of CCBC staff and the independent expert planning consultants engaged by CCBC following extensive community consultation) to be in the public interest.

In respect to lobbying in local government, the report noted that:

Generally, the lobbying of councillors is a normal and acceptable feature of the relationship between citizens and their elected representatives. Nonetheless, it is in the public interest that lobbying is fair and transparent and does not undermine public confidence in impartial decision-making.

The investigation highlighted the need to improve transparency and promote honesty particularly when matters involve planning decisions.

ICAC recommendations

The ICAC made specific recommendations about potential criminal proceedings for this misconduct by Mr Sidoti. It also made 15 corruption prevention recommendations which seek to improve the systems around the disclosure of interests by members of the Parliament as well as how councillors deal with lobbying, conflicts of interest and environmental planning interests. The recommendations about the local government system generally or Council more specifically are summarised below:

New guidelines for lobbying of councillors

It is recommended that the Department of Planning and Environment includes advice about lobbying of councillors in guidelines issued under section 23A of the Local Government Act 1993 (recommendation 9). This builds on previous recommendations from ICAC in the Operation Eclipse report to extend the Lobbying of Government Officials Act to include local government officials.

In response, the NSW Government has recently announced that it accepts the recommendation in principle but notes that the question of lobbying in local government is “subject to varying views”. As such, further consultation with the sector will be undertaken to determine how lobbying in the sector could be improved and strengthened.

Training for councillors

It is recommended that Council continues to offer training to councillors in the management of conflicts of interest and the planning system in particular in relation to the consideration of planning proposals (Recommendations 12 and 15). Notably, training on conflicts of interest should be offered to councillors at least every two years and should cover the risks of being lobbied by someone that they have a close connection with:

Conflicts of interest are a particular area of vulnerability for councillors, given their strong community ties and the potential for pre-existing relationships to exist between councillors and those who support a planning matter and those who oppose it. As such, any induction or ongoing professional development program for councillors should cover situations where councillors are lobbied over council matters by a constituent they have a connection or association with, and whether the nature of the relationship and the impact of the matter on the person’s interests, gives rise to a non-pecuniary interest or pecuniary conflict of interest.

Updates to the Model Code of Conduct

There are several recommendations that the Model Code of Conduct for councillors be updated to reflect the corruption risks arising from lobbying in a local government setting (see Recommendations 10, 13 and 14). This includes updating the Code of Conduct to:

  • include reference to any councillor lobbying guidelines
  • generally prohibit councillors’ involvement in matters where they have a pecuniary or significant non-pecuniary conflict of interest, beyond exercising the general rights afforded to members of the public. This would include participating in workshops and dealing with proponents.
  • include provisions about the appropriate role of council workshops and that these cannot be used to transact council business.

Council policies

Finally, it is recommended that Council adopts a policy about interactions between council staff and councillors. This policy should cover representations to staff arising from lobbying activities and the attendance of councillors at proponent meetings with staff.

Lessons for councils and councillors

There are a number of lessons for local councils and councillors to be learn from this ICAC investigation and report.

Local councils

There are five key takeaways for local councils:

1. Make sure that workshops or briefings are not quasi decision-making forums. Processes should be in place to require councillors to declare and manage conflicts of interest like a formal council meeting. Make sure there are records of the workshop including who attended, declaration of any interests and the broad outcomes. 

2. Have an up-to-date and adopted policy that regulates interactions between councillors and council staff. This should be based on the new Model Policy for Councillor and Staff Interactions from the Office of Local Government.

3. Provide regular training to your elected council on managing conflicts of interest including what to do if councillors are lobbied by someone they know and how this may give rise to a conflict of interest.

4. Provide targeted training to your elected council on the planning system and the decisions that councillors will make under this system. This includes the planning proposal process.

5. Provide regular training to council staff about the Code of Conduct and the rules about staff and council interactions so that the boundaries in these relationships are known and respected, and staff know how to report any concerns. 

Local councillors

The investigation report highlights several red flags councillors should be aware of when being lobbied by others:

1. Be aware if you are receiving personal submissions outside the formal processes. Always direct people to send their submissions via formal feedback channels.

2. Watch out for excessive communications which feel continual or relentless, or communications providing you with information that instructs you on how to decide the matter. Treat all stakeholders fairly and impartially.

3. Be mindful of power dynamics and pressure from those perceived to be higher up the political food chain.

4. Be careful where you have a pre-existing relationship with the proponent. This gives rise to the real risk that you will have a conflict of interest. History has told us that people are typically bad at seeing their conflicts when it involves people we know and trust. Phone a trusted friend to get an objective view of the situation.

5. Do not attend meetings with proponents alone. Always attend these meetings with a council staff member and on council premises. Do not express a concluded view on the issue and do not pressure or direct council staff about recommendations or outcomes. Keep records of any meetings and remember these are official records.

6. Consider whether your relationships give rise to a conflict of interest that needs to be disclosed and managed outside of the Chamber.

Summing up

Above all else, if you have concerns as a councillor or council staff member about the behaviour of others where you feel your independence and impartially are being compromised, report it. Remember, this is not always easy at the time the conduct is occurring and whilst you might think you are well equipped to handle the pressure or the circumstances, this ICAC report is a timely reminder that as humans we can be fallible.

This is why we also encourage councillors to have a small trusted impartial network of peers, known as a challenge network or an impartial mentor to be a soundboard to support you to remain in your integrity. 

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