ICAC? (formerly Lipson Estate - Gillman)

[rev]

6000-job plan for former multi-function polis site at Gillman

CAMERON ENGLAND chief business reporter
The Advertiser
December 22, 2013 6:44PM


Former Port Adelaide Mayor Hans Pieters pictured in 1996, at the ex multi-function polis site at Gillman.

Former Port Adelaide Mayor Hans Pieters pictured in 1996, at the ex multi-function polis site at Gillman. Source: News Limited

DEVELOPMENT at the former multi-function polis site at Gillman could start as soon as next year after a deal was struck between the State Government and a consortium led by former Santos chairman Stephen Gerlach.

Adelaide Capital Partners intends to develop a 400ha industrial hub it has dubbed "Lipson Estate" to support the state's growing resources industry.

The company intends to buy the first 150ha of land in 2014-15, subject to finalising its business case.

Mr Gerlach said Lipson Estate would be a key part of realising South Australia's resources potential.

"Apart from meeting the more immediate-term needs of large-scale transport logistics and other local industrial warehousing operators, Lipson Estate is the ideal gateway for the world's major resource companies to establish and support the global-scale projects that will underpin the South Australian economy over coming decades," Mr Gerlach said.

"The Lipson Estate precinct has long been regarded as having state economic significance by successive governments. The capabilities and resources of ACP have solved the challenges of this site and can create the gateway.''

Housing and Urban Development Minister Tom Koutsantonis said once fully developed, the proposed precinct could support more than 6000 jobs.

"Our vision for the Gillman area is a large-scale employment precinct. ACP is keen to join us in turning this vision into a reality," Mr Koutsantonis said.
EPA workers at Adelaide Ship Construction International at Gillman in 2002.

EPA workers at Adelaide Ship Construction International at Gillman in 2002.

"By working with the private sector we hope to create a modern industrial precinct where businesses can flourish and create jobs across a diversity of industries.

"The site is the ideal location for businesses with unparalleled access to road, sea and rail networks and links to Port Adelaide, the broader metropolitan area, regional South Australia, interstate and overseas."

ACP chief executive Andrew Gerlach said the site would also serve the agriculture industry.

"We think it can drive the industrial part of the South Australian economy over 20 or 30 years; it's a critical piece of infrastructure that can be transformational for the state,'' he said.

Mr Gerlach said final development designs would be completed over the next 12 months and potential investors and tenants for the site would also be approached.

The failed MFP project was to be a joint venture between the Federal Government and Japanese investors, and would have included up to 100,000 residents and a hi-tech industrial hub.

In 1998, 11 years after it was first proposed, then state premier John Olsen announced that the MFP, which cost Australian taxpayers about $150 million, would not go ahead.

Adelaide Capital Partners is a joint venture between Gerlach Asset Development and ResourceCo.

http://www.adelaidenow.com.au/business/ ... 6788440573

I'm not sure if this should be listed as Vision or Proposed.

[stumpjumper]

I'm surprised that there is not more interest in the background to Adelaide Capital Partners' proposal, particularly with regard to the 'first 150ha of land' to which Mr Gerlach referred, and which the consortium appears now to have bought, possibly with support from US corporation Halliburton.

The 150ha parcel of land was owned by Adelaide City Council, intended for expansion of ACC's waste facility at Wingfield.

In 2009, the government compulsorily acquired the land from ACC for $1 per sq m, before selling it on to ACP, who made an unsolicited approach to the government, for $25 per sq m - a sale price of $37.5 million, or a profit to the government of $36 million. The board of RenewalSA recommended selling the land by open tender, but were overruled by ministerial direction, after which five members of the RenewalSA board resigned. ACC is now suing the government for compensation. The word around the development industry is that at the time of the sale, the land was worth about $100 per sq m, so on that basis the government undersold its compulsorily acquired public asset by around $112.5 million, after underpaying ACC about $148.5 million.

The land needs remediation by fill, up to 4 metres. However, the fill represents a profit to ACP, as the fill would gross ACP about $20 per ton or $162 million at a fill depth of 2 metres. As well as Mr Gerlach and his son, the ACP consortium includes the McMahon and Brown families, with waste managers ResourceCo among their interests. So ACP stands to make, conservatively, $162 million from dumping fees on the land, which will then be worth between $70 and $240 per sq m. At a conservative value of $100 per sq m, the filled land would represent a further profit of $150 million.

Among the questions are:

Why did the government pay ACC only $1 per sq m when it compulsorily acquired the land?

Why did the minister overrule the RenewalSA board's decision to offer the land to the market by tender?

Why sell the land for $25 per sq m when it is acknowledged to be worth $100 per sq m?

Why would the government sell the land while it is the subject of a court case?

Crucially, when did the government start talking to ACP about the land?

And, was there any maladministration by the government in its dealings with the land?

I have made a formal complaint to SA's Independent Commissioner Against Corruption on this matter, and received a phone call back wanting to know where I had got my information etc. As usual, my source was public material:

Please identify what you suspect this conduct to be (i.e. corruption, misconduct or maladministration in public administration)?

Maladministration in the disposal of former MFP land at Gillman, including failure to act in the best interests of the people of South Australia by failing sufficiently to expose the property to the market as potential industrial land before concluding a sale at a price and on other terms including extended settlement arrangements which are likely to result in a lower return than might otherwise have been obtained.

Please provide details of your complaint. What happened; when it occurred; where it occurred etc.

I submit that decisions which may amount to maladministration occurred between November 2013 when the board of the Urban Renewal Authority advised the government to offer the land by tender and December 2013 when the board accepted an offer for the land from Adelaide Capital Partners.

(End of complaint)

Note: To add insult to injury to the public interest, the consortium is not required to settle for the land for years - not until they've made money out of it.

If there is found to be maladministration, it could be the end of the line for Mr Weatherill, Mr Rau and Mr Koutsantonis. Step up Mr Mulligan... His accession, without experience, to the post of Transport Minister could have been a step in preparation for such an outcome.

The Liberals seem unnaturally quiet on what should be a red hot topic. Perhaps they have a cupboard full of skeletons themselves, or perhaps they have been enjoying some welcome cash donations from the likes of the ACP consortium. The record shows cash donations to Labor from ResourceCo.



I'll keep the board posted.

[Waewick]

good work stuppjumper.

might be time we had a real opposition on this one and started rattling the cage.

I doubt it however, they'll be too busy infighting.

[stumpjumper]

Geoffrey Watson QC (NSW ICAC): "Even a schoolboy can see that this should be referred to a corruption enquiry."

Nick Xenophon and ex-Valuer-General John Darley: Call (17/3/14) for immediate enquiry, to report in 8 weeks.

Brian Martin, AO (retired leading developer): The land should definitely have gone to public tender.

Treasurer Tom Koutsantonis: 'We didn't go to public tender because no-one else was interested.'

Bullsh*t. As soon as the sale was made public several other parties apparently expressed keen interest in the land, and are still interested.

The worst aspect of this lousy deal is that the purchasers don't have to settle for years - not until they have earned their fill fees and sold the land. Of course, they will be settling in future dollars, not today's dollars.

I've spoken to our ICAC again to check on the progress of my complaint. Well, not much is happening. Our ICAC (the Office of Public Integrity ) is a pretty amateurish operation anyway. I've received no written acknowledgement since lodging my complaint on their official form, only a phone call from a young lady who said she wasn't required to identify herself and who seemed very keen to know 'who I had been talking to'. I told her what I could, and asked about a written response.

I don't expect anything to come of this potentially massive maladministration in favour of particular private interests, involving a completely avoidable loss of tens, even hundreds of millions of dollars to the public purse.

I was in a Liberal member's office this afternoon with my claim of maladministration, but it raised barely a yawn. 'It's not something we're actively pursuing at the moment'.

I felt like one of those cranks who bother politicians with tinfoil hat theories.

I suppose that in SA we have be one so used to corruption or at least negligence and incompetence from governments of both parties that no-one cares any more. Even the Opposition isn't interested. I guess their jobs are secure until the 2018 election. If the issue is still live then, I suppose they might get off their arses if there were a few votes in it for them. Until then, what the hell, they didn't suffer, only the public. Maybe governments in this backwater are so used to being played for suckers by savvy developers that they just don't care any more.

[Waewick]

Which member did you see?

[Norman]

From what I understand, the developer was given preference as:
-The developer has good connections within the oil and gas industry, which is what this site is aimed at
-There were no serious or detailed proposals given from any other interested parties

Those were the reasons given by the minister.

[stumpjumper]

The member I saw was Rachel Sanderson, Liberal member for Adelaide.

Reason 1 does not alter the poor outcome of the deal from the public' interest point of view.

Reason 2 ditto, and further, the property was not on the market. ACP's offer was unsolicited.

In cases like this, the end does not justify the means. There are large pieces of government land which could be irresponsibly undersold to a developer who could still build excellent public housing on it or who could create a very good industrial park on the land. The good result does not alter the fact that a publicly-owned asset has been undersold.

RenewalSA's charter requires it to seek maximum returns to the state for the land it sells. I suspect that is why five members of its board resigned rather than agree to the deal.

[how good is he]

I agree with all your points Stumpjumper but struggle with what motive the govt would have to do this? Why would they want to sell land way under cost? I am sure they would have had independent valuations on the land which they should disclose.
Why then do you think the govt did the deal they did?
Do you think the govt could/should re-neg on the deal (they did it with UrbanConstruct at Pt Adelaide) and just put it out to tender now?
However if they flushed out that there is was no other credible/better offers they then could put it to rest, correct?

[stumpjumper]

How's this for a possible motive: the Urban Construct Group of Companies, which was a development partner in the failed Newport Quays development, was suing the state government in the Sa Supreme Court for unspecified damages as a result of losses it suffered when the Newport Quays project was cancelled. Todd Brown, the leading light of Urban Construct, is the brother and business partner of Simon Brown, who is a director of Adelaide Capital Partners, which is buying the Gillman land.

Urban Construct had knocked back an offer from the government of $5.4 million, and was going for unspecified damages. Figures in the hundreds of millions were being bandied around. Urban Construct was being represented by Michael Abbott QC, and was doing well in court, by all accounts.

Yet, the day after the Gillman deal was agreed, Urban Construct accepted $8.4 million in settlement of their, allegedly, multi-million dollar claim which was proceeding so well for the company.

Why would a company in such a position take a drop like that? Because they were offered a great advantage somewhere else by the party they were suing?

Anyway, far as I know, the board of RenewalSA received an unsolicited offer for the land from ACP. The board felt that the offer was too low and recommended either a higher price (I don't know if a valuation was sought) or putting the land to tender. There were other aspects of the deal, eg the settlement terms, which the board may have found unsatisfactory too.

The government - via a minister - overruled the board and five board members resigned as a result.

As to the reason for the government wanting the deal to go through... I've offered a plausible reason above. The government is being sued for a huge amount of money by Urban Construct, and looks as though it will have to pay up, which could cost government. So the government gives the owners of Urban Construct an even huger payment under the counter, and everyone's happy again. Except the public, who pay for this, but f*ck them.

What actually happened could be cleared up by some transparency, however nothing is available. This is South Australia, after all, and criminal behaviour by the government can be got away with relatively easily. The Opposition is usually asleep, and the public don't care if they're mugged, so it's easy. The Renewal SA board minutes are secret, the resigning board members are gagged and any discussion of this in Cabinet is privileged. The records of the buyer are not available either. Probably the perfect crime.

I believe previous poster Norman is correct. The only justifications given by Minister Koutsantonis for accepting the unsolicited offer are that the projected outcome will be good for the state and that there was no other offer on the table.

An analogous situation would be for me to make the government an unsolicited offer well below market price for, say, the Brompton site, and have it accepted on the basis that I had a good looking proposal for it.

If you would be happy with that, as trustee for the public's interest in the land, then there isn't a problem. On that basis, land which is not on the market should be sold to any purchaser who comes along with a good proposal at the price they choose to pay. If that's how it works, I suggest that valuers find alternative employment.

As the NSW ICAC QC Geoffrey Watson said of this deal, 'Even a schoolboy could see that it should be referred to an ICAC'.

But this is South Australia. Anyone with a few dollars to spend is above the law and the public must just be quiet and get on with their work.

The other problem with this deal is the terms of settlement. As I understand it, the buyer will be able to occupy the land rent free and derive considerable income from it (ie run it as a fill site) for many years before they settle for it.

[pushbutton]

Well let's hope that they at least come up with a (much) better name for it.

Lipson estate? Sounds like the sort of name I'd expect to see for a 1960s council estate in England, comprised of cheaply built and poorly designed high rise flats which by now would be either demolished, or crumbling and in serious need of demolition.

[neoballmon]

This is what comes to mind to me.

(Sorry for bad Photoshop skills, I've not used it for a long time..)

[pushbutton]

This is what comes to mind to me.

(Sorry for bad Photoshop skills, I've not used it for a long time..)

Lol! It doesn't conjurer up any images to do with "quality" though for me.

Even "Gillman Plains" would be better.

Off the top of my head, without having put much time or effort into it (and without having been paid whatever the person who came up with "Lipson Estate" was paid) how about:

Angus Lakes, or
Torrens Waters

I'm sure I could do better if I was paid even a small sum, or gave it any real thought.

[stumpjumper]

For members of a community whose highly paid managers have just incompetently, negligently or corruptly cost them millions of dollars, you lot seem very jovial. I suppose that's what makes us uniquely South Australian - we don't mind being robbed.

[Aidan]

For members of a community whose highly paid managers have just incompetently, negligently or corruptly cost them millions of dollars, you lot seem very jovial. I suppose that's what makes us uniquely South Australian - we don't mind being robbed.

'Tis not that we don't mind being robbed, but rather that we're accustomed to it. Can you think of a state government that's served a full term here without incompetently, negligently or corruptly costing us millions of dollars? But things seem to be just as bad in other states (and worse in NSW).

[stumpjumper]

You have a point about the dodgy dealing that seems to infect all governments, Aidan, but you can't be suggesting that because it's happened before it's ok this time.

'OK, Officer, I robbed the bank, but other people have done the same or worse, so let me go...'

You know that can't be an excuse. When a government Minister, Koutsantonis in this case, personally overrules the responsible decision of a statutory board in such a way that five experienced board members resign out of concern that not to object would breach their fiduciary duty to the public, people should be concerned.

I've received a written response from the IPO, thanking me for my interest and assuring me that my complaint would be investigated with the utmost rigour.

I await results.