Currawong: “Holiday Village of the Damned”?

This morning, Tony Kelly, former Labor Minister, becomes the first office holder in six years to have his conduct as a Minister publicly examined by ICAC. It follows an eight year Ministerial career across a range of primary industries, lands, planning and justice responsibilities, where he was generally regarded.

It is not easy to divorce this inquiry from Kelly’s sudden resignation on June 6 as a Member of the Upper House, where after the election he was the Leader of the Opposition in that Chamber, and the leader of the (numerically diminished) Right faction. His resignation and subsequent events and disclosures have suggested an attempt to cauterise any political damage.

However, any such attempt at a pre-emptive strike against the fallout from this investigation is hardly likely to provide much protection. The matters that are the subject of the inquiry go too deep into the long standing controversy around a property, Currawong, long owned, until recently, by the NSW labour movement. They involve matters that flow from the 2007 sale by Unions NSW, then headed by the now Leader of the Opposition, John Robertson.

What ICAC will examine involves the purchase of Currawong for $12.2 million shortly before the March election was to take place. The purchase, from a private entity called “Eco Villages” is said to have been concluded by Warwick Watkins, CEO of the Land and Property Management Authority (LPMA). It is alleged that, while Watkins had the authority, from Premier Keneally and Minister Kelly, to engage in discussions this did not extend to concluding the process by way of a purchase.

The purchase of Currawong occurred in the pre-election caretaker period, where no major decisions or appointments are made by the Government, unless advised and agreed to by the Leader of the Opposition.

When the then Premier and her Director General became aware of the sale, Watkins was stood down and the matter referred to ICAC.

Subsequently, it is alleged that after the sale Kelly prepared a letter of authority for Watkins, but backdated it so that would give cover to the purchase.

It is then alleged that a senior departmental officer used the backdated letter to reassure Treasury on the bona fides of the transaction.

How is it that a lovely beachside estate, consisting of around 20 acres, sees a former Minister, a Director General and a senior department office as subjects of a corruption inquiry? And the former Premier, her Director General  and Treasury officials presumably getting called to give evidence.

Well, when it comes to Currawong it should come as no surprise. It has had a long history of controversy, frustrated ambitions, thwarted greed and now the question of dodgy dealings? On these grounds alone, Currawong deserves special heritage recognition as the “Holiday Resort of the Damned”.

While the manner and authority of the purchase will have centre stage at ICAC’s inquiry, surely there will have to be consideration given as to how the agreed purchase price was settled between Watkins and Eco-Village. It might also need to look at what negotiations there were late last year and early this year between Unions NSW and Eco Villages to finally settle the terms of their 2007 purchase agreement.

Currawong was owned by the NSW Labor Council from 1949 until its sale to Eco-Villages for around $15 million in 2007. In between there was a prolonged period of raised and dashed hopes.

Given that history it remains unfathomable why any prospective buyer in recent years imagined they could make any significant return with any development application almost certain to be refused.  By 2007, the track record of refused development applications should have scared away any sane corporate entity.

From 1975 to 1999 alone, at least five major proposals to sub-divide or undertake development on Currawong were rejected by state and local authorities.

And from 1999, the plans for Currawong started to go from ambitious to stratospherically implausible; naturally again with no success.

But from 2007, the stakes got bigger and bigger

In 2007, the Sun Herald’s Alex Mitchell reported that the hard done by “property investor”, Michael McGurk, had been thwarted in his dreams to acquire Currawong. , Unions NSW had apparently “slashed” $15 million off the value of property by inexplicably not taking up the offer of the “dumbfounded” McGurk.

The “property investor’s” reputation has since become somewhat more colourful in the light of his murder, and his relationship with Ron Medich, who has been charged in relation to the murder.

McGurk, allegedly acting on Medich’s behalf, had offered $30 million for Currawong, contingent on prior approval for development. A book on McGurk’s murder had him even putting a deposit down for the purchase.

The then Unions NSW boss, John Robertson was said to have turned down the offer as no undertaking for development approval could be given.

Incidentally, in early 2010, after McGurk’s murder, the ICAC held an inquiry into allegations that a secret tape, recorded by McGurk, implicated Medich and senior planning officials in corrupt dealings.

During the ICAC’s hearings, Medich’s lawyer insisted that a matter related to Currawong be put to the Commission.  ICAC’s Counsel Assisting protested (and the Commissioner agreed) that the Currawong matter was:

just irrelevant to this inquiry. It hasn’t raised its head in any other way and it’s got no place here.

Anyway, in early 2007, after thirty years of frustrated dreams and dealings, Unions NSW was finally able to conclude a sale, to Eco Villages. But it all ended up looking like a shell game that would have done public private partnerships proud. The contracts went into the murky waters of putting and calling options. An overview of all this is here.

Obviously purchase did not equate to planning approval, so Eco-Village must have been pretty damn confident of the merits of its proposals where no such application had succeeded before. It would have been aware that the any plan would be the subject of intense scrutiny, and where the stance of most of the major players (Pittwater Council, the Heritage Council, the State Opposition) were well known; with all opposed to development.

But Eco-Villages went in big and hard. It’s first post-sale proposal was for a sub-division of 25 lots, upgrading the existing features, and dedicating over 65 percent of the site to national park and public access. According to its own estimates, Eco-Village’s capital investment in this was nearly $34 million.

Eco-Village sought to have the proposal handled by way of the “Part 3A” powers of the Planning Minister, where the decision is taken away from the local council. Nevertheless, after a lengthy assessment process, involving independent assessors, the proposal was refused by the Planning Minister in April 2009.

In September 2010, Eco Villages submitted a scaled down proposal for a $14.4 million development. It seems that even three years down the track it was ever hopeful that it would be able to develop Currawong on a grand scale.

In a curious display of impatience, or perhaps panic, after only three months before the council, Eco Villages appealed to the Land and Environment Court to handle the application as a “deemed refusal”. (Basically an argument that a council has taken too long to make a decision one way or the other, and needs to be taken on by the court to determine).

Ninety days or so for consideration of a $14 million proposal, with substantial interests from at least a dozen or so government departments and the likes of the Rural Fire Service, seems to be a reasonable time to advance the proposal as far as it got.

In January this year, Eco Villages finally paid Union NSW the $9.5 million balance of the sale price, just shy of three years since the announcement of the sale. Six weeks later, and nine days before the election, Warwick Watkins concluded a deal to buy Currawong from Eco Villages for $12.2 million.

And now over to ICAC ….

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