A NSW Office for Local Government report has highlighted the failings of Murray River Council in relation to the proposed Moama Ethanol Plant.
The report details “significant breaches” of the Local Government Act, the “failure” to keep adequate records and “mismanagement”.
It examined the MRC’s purchase of land for more than $1.2 million as the potential home for the project and a $900,000 loan to Murray River Energy.
In December 2021, MRC received $1.05 million from the sale of a Gheringhap property owned by Murray River Energy, having secured a first mortgage over the site.
“While council was able to recoup monies lent to the proponents and has not suffered a loss on the sale of the (Gheringhap) land, this cannot excuse the conduct of council,” the OLG report states.
“Both senior staff and councillors failed to exercise sound judgment in their dealing with the proponents.
“Council’s processes were, at best, ad hoc and cavalier.
“Given a demonstrated history of failures by the proponents, an absence of capital and an inability to pay their debts, no council exercising a reasonable care and diligence in carrying out its functions could have provided the level of support provided to the proponents.”
The OLG report said the changes in council since that time had some impact on its final determination.
“Since that time new councillors have been appointed (without the need for an election),” the report stated.
“In other circumstances, a public inquiry would have been recommended.”
The events outlined in the OLG report took place between 2018 and 2020, a period when current mayor Chris Bilkey held the position and Des Bilske was chief executive officer.
Mr Bilske retired from the role of CEO in December 2020.
MRC, which issued a statement following the report’s release, tabled the OLG report at its council meeting on Monday.
“Early in 2021, Murray River Council initiated an independent investigation by management consulting firm Centium into a council project with Murray River Energy,” MRC said.
“The Centium investigation uncovered procedural errors relating to the project by the council’s previous administration, which resulted in council implementing changes to address issues of probity, transparency and establish a best practice project management framework.
“An investigation into the project was also initiated by the NSW Office of Local Government, with the OLG reporting in its findings similar procedural errors that the Centium investigation highlighted a year ago.
“Despite these procedural failures, Murray River Council did not suffer any financial loss in our engagement in the project.
“Murray River Council has accepted all recommendations from both the Centium and OLG investigations and has undertaken extensive steps to ensure that the procedural errors uncovered are not repeated in the future.”
MRC said “there is no continued relationship with Murray River Energy”, but did not respond when questioned on the current status of the 193ha property on Line Rd.
The OLG report said this “is not the first time a NSW council has provided extensive in-kind and/or financial support for a proponent without carefully considering the ramifications in doing so”.
It recommends that this report be considered by councils across the state.