Moreton Bay Regional Council helped a financial backer of the mayor and other councillors win more than $20 million-worth of outsourced council work by giving him confidential internal financial documents and letting him write
the performance criteria for the deal, council whistleblowers claim.
In May 2016, the council handed wealthy local businessman Shane Newcombe’s company Moreton Bay Region Industry and Tourism Ltd a three-year contract to run events and promote
tourism worth almost $7 million, without a tender.
This photo of Shane Newcombe and Moreton Bay mayor Allan Sutherland at a Broncos pre-season match in Redcliffe last year was shared on Mr Newcombe's Facebook page. Photo: Facebook
The deal with Mr Newcombe in mid-2016 led to the effective closure of the council’s events department with the loss of more than 10 jobs.
Former council staffers allege councillors voted for the
deal in 2016 with at least some of them not knowing that Mr Newcombe had been given unfettered access to sensitive council documents.
Those councillors were also unaware he had been coached for a key presentation to the full council by a small group
of councillors, all of whom had received financial backing from Mr Newcombe's family.
Confidential council documents handed over to donor
So many confidential documents were downloaded to give to Mr Newcombe, one former staffer said, it set off an alarm in the council’s records department.
staff who raised questions about the lack of a competitive tender were told there was no other company that could do the work.
The contract was
this year enlarged and extended - a year early - for four years, making it worth as much as $23.5 million in total, the council’s biggest single procurement.
The council has published no details of the renewed contract and has refused to respond
to repeated enquiries about it.
No councillors declared conflicts of interest at the
closed-session May 2016 vote. This was in spite of mayor Allan Sutherland and three other councillors having been beneficiaries during the 2016 election campaign three months earlier of a $20,000 donation by the Newcombe family to Moreton Futures Trust, a
vehicle used to fund Cr Sutherland’s mayoral campaigns in the last two local elections.
The main beneficiary of the trust has been Cr Sutherland. But it also supported the electoral campaigns of councillors James Houghton, Julie Greer and Peter
Flannery in 2016. It also provided $2500 to the campaign of deputy mayor Mike Charlton during the 2012 campaign, which was later repaid.
staffer has revealed Crs Charlton and Greer were the only councillors who attended a secret meeting in early 2016 where Mr Newcombe conducted a “dry run” of a presentation on the benefits of the MBRIT deal in front of the mayor and chief executive
The purpose of the meeting was Mr Newcombe “getting feedback to ensure no other councillor prevented (the deal) from going through” at the subsequent formal presentation and vote, the former staffer said.
“It was very secret squirrel,” said the same former staffer.
Fairfax Media understands that key financial information showing how much the MBRIT arrangement would save council was removed from the final
presentation on the instructions of Mr Hitzman.
Mr Newcombe is a director of Newcombes Holdings, the company that donated to Moreton Futures
Trust and owns local car dealership Village Motors. It is controlled by Mr Newcombe’s mother, Marlene.
Cr Sutherland testified at public hearings at the Crime and Corruption Commission last year that he had been “happy not to know”
who the donors to the trust were because “it’s hard to have a conflict when you don’t know who the donor is”.
But he then told the hearing: “I knew Newcombe Holdings had put money in there.”
Fairfax Media revealed last month that the CCC is investigating the circumstances surrounding
the May 2018 contract renewal.
Councillors delegated that decision to chief executive Daryl Hitzman after seven of them declared “perceived conflicts of interest” on the basis they were friends of Mr Newcombe or had attended his
wedding the previous week.
None of the five councillors who had received financial support from Moreton Futures Trust in the 2012 or 2016 elections
mentioned this at the meeting.
Questions are now being raised about the initial award of the contract in 2016, which the councillors present voted for unanimously.
Council insiders have told Fairfax Media the outcome was never in doubt, saying
that since at least late 2015 they had been expected to give Mr Newcombe whatever he asked for to make sure the deal went through.
“It was a done deal,” one former staffer with detailed knowledge
of the dealings with Mr Newcombe said.
“Our directions were very clear. We had to make this happen.”
Shane Newcombe was a regular visitor to Moreton Bay Regional Council
A former council manager said Mr Newcombe had attended “at least 10” meetings at council premises with Mr Hitzman and other senior officers between March and June 2016 to discuss the outsourcing
of council activities and had met regularly with other staff, who he had asked to give him comprehensive information on all the events run by council.
“Shane Newcombe wanted the whole lot,” another former staffer said.
"He wanted as much detail as he could.
“What it cost us, the hire of everything, how many staff and volunteers were needed.
documents were to give him what he needed as quickly as possible.”
The staffer revealed that so many documents were downloaded on to USB sticks to give to Mr Newcombe it triggered an alarm on the council’s computer system.
we downloaded the USBs we were contacted by the records department,” the staffer said.
“When you download more than four documents it shows up on their system. We had to explain what it was for
and that we’d been told to do it.
“They were available on the council system but you would only look at it if it was your area. It was confidential. You would not share it with anybody.”
The staffer said Mr Newcombe had requested and been provided information that included detailed budget breakdowns of the cost of running events such as the Urban Country Music Festival, the Decades rock music
event and smaller events such as annual Christmas concerts in various divisions.
The documents included detailed profit and loss statements for each event, and even invoices issued to suppliers.
“They were massive. It was everything that
it cost to run those events - traffic management, food, accommodation, all the hire equipment and alcohol.”
'You do what you have to do to get it across the line'
The former manager said staff had felt under pressure because of the close relationship between Mr Newcombe and the councillors and chief executive and because the deal “was going to happen regardless”.
“We were just facilitating
the outcome,” the former manager said.
“It was a culture of ‘you do what you have to do to get it across the line’.
“You did things that weren’t right but you would have been sacked if you didn’t.”
MBRIT has not staged the Urban Country Music Festival or the Decades music event since it has had the
council events contract. Both were loss-making under council.
When councillors voted for the MBRIT deal, the motion included a requirement for
Council to agree a “service level agreement” with MBRIT that would govern how MBRIT was expected to perform and limit the council’s financial liability.
Documents obtained by Fairfax Media show that this document was authored a month
after the vote - by Mr Newcombe.
An email sent by Mr Newcombe to a council staffer in June 2016 headed “SLA Draft Notes” had attached to it a detailed 20-page document titled “MBRIT Service Level Agreement”, the metadata of which
shows the author was “Shane Newcombe”.
The accompanying email states: “I have put this together the best I can! I will have some time during today to look at it again … But I think
it’s a good first draft to be discussed with Daryl and Stew.”
Fairfax Media understands “Daryl” is chief executive Daryl Hitzman and “Stew” is Stewart Pentland, the council’s director of planning and economic
development since 2015.
The council has declined to provide a copy of the service level agreement, despite repeated requests from Fairfax Media.
The former employees all said Mr Hitzman had informed staff there was no need for a competitive tender because there was only one company that could provide the services and this provided an exception to the usual tendering rules under Queensland local
“We kept asking, doesn’t this have to go to tender?’ one of them recalled.
Council does not reveal details about the deal
Division two councillor Peter
Flannery, the council’s spokesman on economic development, said councillors had accepted there would be no tender for the outsourcing project in 2016 because they had decided no-one else could do the job.
“When we first gave the contract
it was discussed - are there any other businesses? But nobody knew of anyone,” he said.
Cr Flannery received just under $4000 in political
donations from Moreton Futures Trust in the 2016 local elections. He did not declare a conflict of interest in the votes on the MBRIT contract in 2016 or 2018.
The former staffers were unwilling to be identified for fear of recriminations, but said
they would be willing to provide evidence to investigators.
The council did not answer detailed questions. A spokesman said: “Council understands that the CCC is currently investigating a complaint from
a ratepayer. With an investigation underway, it’s not appropriate for council to comment further.
“Please contact us at the conclusion of the CCC’s investigation.”
Fairfax Media submitted questions separately to the mayor Allan Sutherland and each of the other 12 councillors.
Division one councillor Brooke Savige said she had no recollection of councillors being
told prior to the May 2016 vote that Mr Newcombe had been given detailed council financial information to facilitate him winning the outsourcing contract.
If she had known that Mr Newcombe had authored the service level agreement, she said, “that
would be something that would put up a lot of red flags for me”.
“That doesn’t sit well with me at all,” she said.
Councilor Adrian Raedel (division 12), who had previously raised
concerns about the MBRIT deal, said he had not been present at the meeting to award the contract on May 17, 2016 so had not participated in the vote.
Australian has reported Cr Raedel was the subject of an unrelated investigation by the CCC into a complaint made by Mr Hitzman regarding Cr Raedel's relationship with a donor. The CCC confirmed it was investigating a Moreton Bay councillor, without
identifying who it was.
Councillor for division three, Adam Hain, said: “Haven’t our PR department given you press releases on this? I’m not going to comment to Fairfax Media on things from 2016,” before hanging up.
councillors did not respond to questions. Nor did Mr Newcombe.
Moreton Futures Trust came under intense scrutiny during the CCC’s Belcarra hearings into local government last year. The CCC was later
critical of it and organisations like it in its report to the state government, arguing that they obscured the true sources of politicians’ financial support.
Mark Solomons is an investigative journalist for Brisbane Times.