WHEATBELT SHIRE GAMBLES

The WA Auditor General, Colin Murphy, is on public record inferring that the results of financial auditing by external accountants, hired to keep Shire Council’s solvent and fiscally accountable, could be referred to as a compliance governance gamble. It is odds-on for these audits to miss the hand of the corporate credit cardsharp and those who covet their ratepayers’ revenue for personal gain.

With a disturbing number of rural councils, including both Toodyay and Dowerin, this appears to be a sure bet. York makes up a trifecta of Wheatbelt Shires whose audits have been seriously at odds with financial accountability over the years and smell a bit like a dead horse.

As usual with the lack of Local Government enforced compliance, some accountancy firms may feel it is in its best self-interest to maintain a lucrative shire auditing contract than advise everyone that its employer is non-compliant with its accounts and auditing procedures. This is even to the point where senior Local Government Officers can literally have a permanent lend from municipal funds without a query being raised until well after the dead horse has bolted.

Colin Murphy does sniff out the equine decomposition, but he has no remit to do anything about it and the WA Corruption & Crime Commission that does- is an abject failure.

Murphy faces the problem that no government agency or regulatory body deals out punishment for its own ingrained, systemic failures including holding private accountants properly accountable for their inability to find the disappearance of municipal funds, and no contracted, private accountant wishes to lose a lucrative local government contract just because the municipal fund figures do not quite add up.

As a result, both internal and private audit procedures usually fail to produce sufficient evidence to launch successful prosecutions for fraud or misappropriation of funds for personal gain and/or with criminal intent.

Here are examples of the recent track record.

One of the Shire of Toodyay’s dearly departed (and I do mean dear) Chief Executive Officers, Mr. Graham Merrick, was accused by Council of being unjustly enriched by reason of his conduct that including failing in his fiduciary duties to the Shire.

The enrichment practices supposedly took place between 2004 and 2010 and obviously were not revealed by any internal or independent audit for 6-years.

The Shire’s legal cost to pursue Mr. Merrick through the WA court system was recently enumerated as being in excess of $250,000.

Now safely ensconced in his Wembley Downs bunker Mr. Merrick still refuses to concede he allegedly owes the Shire around $351,000 in allegedly unjust enrichment that includes his secret-squirrel termination payout.

In due fairness to Mr. Merrick, he has offered to repay an undisclosed amount which the Shire has refused to accept. This is not an assumption of guilt as a court official’s advice is at long-odds for any meaningful shire debt recovery of unjust enrichment, probably meaning that the auditors have never quite discovered irrefutable evidence of it.

As of today’s date his next guest appearance would have to be in the WA Supreme Court. This is an   unlikely scenario as the fiscal scales of justice are heavily weighted towards a new Lamborghini for the Shire’s Queens Council representative- with these proceedings maybe leaving the Toodyay Shire feeling unsatisfied- and possibly poverty stricken.

Then there is the infamous ‘Dacre of Dowerin’ Alcock, a Chief Executive Officer who for 4-years is said to have had complete control over the Shire of Dowerin’s accountancy and finance systems.

Oddly enough he took the punt and invested around $600,000 in gambling for and on behalf of himself, rather than his ratepayers. Dacre will know how long he will be deprived of direct sunlight in September this year.

While Alcock was off at the TAB, the external auditors, Byfields,  have publically admitted it did not tell the Shire that its accounting procedures were not compliant and it had failed to detect the CEO was taking out large, non-refundable personal loans (now known as gambling grants) of around $150,000 per annum-if divided up on an annual basis.

Now the CCC is holding a Dacre Alcock soirée in Dowerin in a belated attempt to give it some relevance in the corruption and crime industry when at least 80 of its previous prosecutions are considered invalid.

There is the idiom ‘each to his own’ and York certainly had its own in the form of long-term master manipulator and part-time CEO, Ray Hooper, who had complete control of the York Shire’s accountancy and finance systems through himself and his hand- picked proxies.

On April 18, 2013, then Deputy Chief Executive Officer, Tyhscha Cochrane, received an email from the Shire’s auditors, MACRI, asking to ‘show-us-the-money.’ It was with regard to a sizable sum owed to the Shire by Settlers House that had not been settled by Settlers, nor, apparently, by its ownership successors and/or assigns.

MACRI, that had done a field audit on the Shire of York’s books, felt that recovering this money would be a real long shot- like Dacre Alcock may have backed.

It clearly states it was gravely concerned regarding the collectability of the debt and what documented evidence was available regarding actions taken against the debtor. Obviously to recoup the debt.     

                                                                                                                                           

MACRI may have felt some poorly structured, legally unenforceable finance gathering activities had taken place and that it had not advised its client, the Shire of York, or anybody else, that the Shire’s books of account and verification may not be compliant.

A hand written notation on the email says ‘holding a certificate of occupancy as leverage for 30 units’? The question mark raises more questions that require answering- than not.

The original planning consent for Settlers was for 50 units approved in April, 2007, with a condition that car parking bays for use by patrons and residents would need to be provided as per the Shire of York Town Planning Scheme No. 2. If the required number of bays could not be provided onsite, the Council would accept a cash in lieu payment per bay.

On December 20, 2008, Chief Executive Officer, Sir Lunch-a-Lot Ray Hooper, along with his merry band of gourmondes Councillors Hooper, Boyle, Lawrance, Randell and Fisher enjoyed a free Christmas lunch with owner Des Mullins at Settlers House. As you do with those who owe you money.

Shortly after, on January 20, 2009, Chief Executive Officer Ray Hooper was back asking for more- another free business lunch with Mr Mullins. This time it was with Peter Stevens, the Shire Building Inspector who had previously been invited to the Xmas lunch but could not attend, thereby missing out on having his trotters in the trough.

So here is the historic overview of this unpaid debt conundrum with the free lunches thrown in.

In July 2009 ‘retrospective planning approval’ was granted for a further 8 units with the same condition requiring the provision of car parking bays or a cash in lieu payment per bay. In the agenda item the reporting officer stated: ‘The proposal is requiring ongoing high staff time and resources input due to ongoing non-compliance with building and planning conditions.’

Why the approval? When the initial debt had not been paid and planning conditions were not being met! 

Then in February, 2010, Council granted planning consent for a further 12 short-term accommodation units bringing the total number to 70. The reporting officer stated “the proponent is required to contribute cash-in-lieu for parking as only minimal parking is expected to be accommodated on site.” The officer then commented: It is proposed to impose the same conditions as in the previously granted planning consents of 2007 and 2009.”

Why the approval? When the initial debt had still not been paid!

The conundrum is that Settlers House had 50 units approved in 2007 and did not pay a single cent of the cash in lieu contributions for the car parking bays provided in Howick Street as agreed to.

So having previously identified the ongoing non-compliance, why did the Shire Council go on to grant permission for further units not once but twice without any payments being made? Maybe long and free lunches cause long term memory loss?

The next conundrum is why did MACRI think this debt was so difficult to collect?

The debt was, and still is, for parking bays required by Settlers House to acquire Certificates of Occupancy from the Shire of York to allow the units to be legally occupied, sold and on-sold. That is end of story.

At least 6 legal advice invoices have been received from McLeods Barristers and Solicitors regarding this debt in the past 7-years. Although the amount is not known- it would be at least $10,000, but possibly more like the amount it costs for a well credentialed yearling at a bloodstock sale.

At the Ordinary Council Meeting on May 16, 2011, the Shire of York Council voted that McLeods initiated legal action against Settlers House Pty Ltd developers to recoup the parking bay debt.

The original amount required as satisfactory payment in 2011 was $361,550. This was reduced by Council to $218,580 through a debt write-off arrangement on September 3, 2012.  

On June 14, 2012 Chief Executive Officer, Ray Hooper and Deputy Chief Executive Officer, Tyhscha Cochrane accepted another invitation to attend a free breakfast with Settlers House. Just a great place to eat and chat about debt recovery!

Then Jacky Jurmann, wrote to Settlers House on 11 September 2012 thanking them for taking the time to meet with Council on September 3, 2012, to discuss outstanding car parking contributions (now reduced to $218,580) and unpaid rates totalling tens of thousands dating back to 2007. (It is not known if this meeting took place with a decent Shiraz, entre, main, sweets and a cheese board.)

 In her final paragraph, Ms Jurmann said “Council look forward to working with you and is pleased to have Settlers House once again operating and contributing to the community”.  Settlers House obviously thought that as it was already contributing to the Shire of York’s waistline, what debt was Council talking about?

So what Shire of York Council Policy did not even make it to be a guideline, had the accountants believing a debt would be hard to recoup and had lawyers enjoying a long ride on the gravy-train?

In October, 2012, Council endorsed a Development Approval Compliance Policy specifically related to all commercial developments in the CBD which authorised legal action for any non-compliance.

Included in the report were compliance options available under the provisions of the usual Local Government omnipotent but impotent Act:

1. Instigate legal action under the provisions of Section 218 of the Act for commencing development without approval and carrying out development not in accordance with the approval.
2. Issue a Planning Direction under the provisions of Section 214 of the Act to stop, not to recommence, remove and to restore the land.
3. Issue an Infringement Notice for a prescribed offence against the Act in accordance with the provisions of Section 227 of the Act.
4. Approve conditionally, upon application, the works carried out retrospectively if assessed to be consistent with the provisions of the Scheme and the R-Codes.

Yet during the subsequent file audit investigations and/or site visits, usually called free-lunches, the Shire failed to identify the outstanding ongoing non-compliance issues at Settlers House and to exercise any of the compliance options available or to enforce a payment request. Maybe all the cars blocking the entrance impaired its vision and the exhaust fumes caused a brain fade, then total amnesia?

As we already know, in April 2013, MACRI was chasing former Deputy Chief Executive Officer Tyhscha Cochrane for an explanation of the likelihood of recovering the huge debt.

Close to 12-months later at a Special Council meeting on February 27, 2014, in an Agenda item relating to Settlers House Pty Ltd-Car Parking Contributions, Council was requested to re-confirm the agreed dealings on the car park contributions for the 70 new units constructed on the Settlers property to allow for dealings with current and future owners and the administrators of the property.

Background information stated that Council had a legal agreement with the previous owner for car park contributions for the first 58 units constructed, however the owner did not abide by this agreement.

Following legal advice in, 2011, Council considered the legal agreement to be void and raised a car park contribution invoice for full fees at the time. (The ubiquitous Legal advice was dated September 15, 2011).
 

Subsequent to this action and in an attempt to have the premises re-opened Council agreed to reduce the amount owing for car parking from $361,550 to $218,580 resulting in a write-off of $142,970 which was affected in 2011/12.

The written off amount of $142,970 was listed on the Doubtful (WTF) Debt Provisions of the balance sheet which also showed an outstanding sundry debtor for Settlers House car parking of $361,550. To ensure that the financial statements were a correct record as at June 30, 2014, it was proposed that various journal entries be made to leave the outstanding Settlers House Car parking fee at $218,580 which is the Council agreed amount to be levied and paid.

At that time Council Resolution 190511 precluded certificates of occupancy / classification from being issued until and unless the entire car parking payments, associated with the development, was paid in full. Obviously that did not work very well.

On January 2, 2015, the then Acting CEO, Graeme Simpson received an invoice for the continuing Settlers settlement saga for $3,398.34 if it was paid within 14 days. This was for the same old debt that should have been actioned against 4-years earlier.

Taking 7-years of late payment penalties, solicitor’s fees and other sundry expenses into account, the original required payment of $361,559 could be in excess of $500,000, approximately half of what the current Council needs to cover the annual cost of essential shire road maintenance.

Being generous again, the reduced fee of $218,580, three years down the track, could be $300,000, around the amount needed to de-dilapidate the Old York Convent building and possibly make it a viable asset.

With tautogram overuse of the letter ’s’, the Settlers House settlement saga will never be settled.

Those who were involved in the administration of this debacle are Ray Hooper, Tyhscha Cochrane and Jacky Jurmann, now all dearly departed, leaving York with more chance of winning Lotto than getting any money from Settlers House. The accountancy firm involved did not believe that the debt could be collected and the legal firm involved spent 7-years sending out invoices for interminable advice regarding a debt that will never be collected.

There is a postscript however. Other businesses were illegally targeted to provide parking bays that were not necessary. These businesses were threatened, lied about and lied to by Shire of York staff.

There has yet to be a reckoning.                           

David Taylor.