This post is actually an article I wrote back in May 2008 for an ethics class at university. It is still very relevant to the current distrust felt by the property industry in Australia. Burwood Council is the latest victim to alleged corruption activities as the Sydney Morning Herald has reported here, and the McGurk case was also another recent example. Read my recent post on the McGurk story here.
The lecturer in the ethics course revealed a very useful fact; "the urban planning industry is the most investigated profession by the Independent Commission Against Corruption (ICAC)". This scary fact demonstrates the critical task that urban planners have to improve their public image and the property industry in general. The famous 'planning handshake' is thankfully not practiced as much as it used to. Lets keep it this way...
Questions for readers;
Do you have ethical problems in the property industry in your city?
What do you believe could be done to regain trust and confidence from the community?
Professional ethics: avoiding unethical behaviour
By Eli Gescheit
15 May 2008
The professionalism of the development industry has attracted wide publicity over the past few years in New South Wales, where there have been a number of incidents involving unethical behaviour practiced by councillors, urban planners, developers and other stakeholders in the planning assessment process. This has caused a negative connotation to the industry and there are currently initiatives to address these issues, in particular by the Independent Commission Against Corruption (ICAC).
At first this essay will set out to define unethical professional behaviour and corrupt behaviour to provide a better understanding of these two controversial actions. Following this, examples of misuse of information, blackmail and bribery will be presented from a range of ICAC cases. The final component will outline the potential problems and solutions associated with the 2007 ICAC position paper “Corruption risks in NSW development approval processes”.
To define these two acts of behaviour one needs to first understand each word comprising the act first in able to understand the entire meaning. 'Unethical' is defined as a practice rejecting common morals causing someone to be disadvantaged, while the other person gains benefit. 'Professional' is the notion of a person with a qualification or expertise in a field and their ability to follow the standard rules of business performance while maintaining a sense of fulfilment. The definition of 'behaviour' is performing an action which is noticeable by others. Thus the term 'unethical professional behaviour' is where an immoral act is practiced by a person regarded an expert in their field of work. 'Corrupt behaviour' is where a person has been dishonest in their dealings with other people and their integrity is criticised.
The ICAC investigates corrupt conduct within the public sector in NSW and facilitates the prevention of such actions. ICAC Reports are produced as a result of investigations which flesh out details of the cases and make it public knowledge. The following is an overview of two such reports relating to misuse of information, blackmail and bribery and the administrative safeguards discussed in the ethics class are mentioned for each case.
There was an investigation of blackmail involving Alfred Tze-Shung Tsang, the then Mayor of Strathfield Municipal Council, Michael Saklaoui, a developer and Strathfield Councillor John Abi-Saab. At a meeting Saklaoui gave $2,500 in cash to Tsang and offered him a bribe of $200,000 if his application for a car park site was successful. Abi-Saab made Tsang aware that he knew of this corrupt behaviour and that Tsang should resign from his position as Mayor or else video evidence of the bribe would be released to the public.
The investigation found that Saklaoui and Abi-Saab had conspired against Tsang as his resignation would prevent him from changing the Draft Local Environmental Plan (LEP) controls associated with Saklaoui’s property which would significantly devalue the property.
The lessons from this case is that one should never take any money from someone, if one is suspicious of corrupt activity, notify the ICAC immediately to allow them to commence investigations and ultimately to support one’s integrity (as Tsang did). One should also be aware that if meetings occur in public places, then one should behave in an ethical manner, otherwise your actions could be noticeable by other people, which would be used as evidence against you.
The case involving an allegation made by Peter Coyte, Manager Commercial Projects and Property at Wollongong Council that Lou Tasich, a developer, offered him a $30,000 bribe (Report on an investigation into allegations of bribery relating to Wollongong City Council 2007). Lou Tasich was negotiating with Council to purchase council owned land at $3 million when the land was really worth $6.5 million. The intention of the bribe was to progress the sale at the lower value, however Peter Coyte refused the bribe.
One of the key elements to Peter Coyte’s involvement was his attention to detail in his recordings of all his meetings and conversations with Lou Tasich in his memos. As discussed in the class, note making is a fundamental tool to ensure one’s integrity is assured and there is evidence to support a person if they are one day criticised for unethical behaviour when in reality their behaviour was not unethical.
In summary, these two ICAC investigations dealing with different types of unethical behaviour highlight the vulnerability of the development industry to misuse of information, blackmail and bribery. Furthermore, the administrative safeguards mentioned to prevent such behaviour should be adopted by all stakeholders in the development industry so that the integrity of the individuals and the industry in general is protected.
The ICAC paper titled ‘Corruption risks in NSW development approval process’ published in September 2007, is in response to a significant amount of complaints, almost 35% in the 2005-2006 financial year (ICAC, September 2007) in relation local government and in particular the development approvals process. This paper focuses on a number of issues, however for the purpose of this essay we will focus on only four, being; conflict of interest, engagement and use of consultants, SEPP No. 1 and Planning Agreements. Each issue will now be summarised with the associated recommendations to improve the issue.
Conflict of Interest
According to the paper, there are two types of conflict of interest, one involving non-monetary benefit and the other involving monetary benefit. Councillors and non-monetary conflict of interest is an issue where there is reservation as to whether it is appropriate for the Councillors to use their discretion to admit there is some form of conflict of interest even if there is no monetary benefit. It should be noted that non-monetary conflict of interest is regarded as corruption in the NSW development approval processes.
The paper also discusses the identification of non-monetary interests and management of non-monetary conflicts of interest as being potentially problematic. There are four solutions recommended to manage non-monetary conflicts of interest, including the “Department of Local Government (DLG) to review the Model Code with a view to providing clear guidelines on the identification and management of non-pecuniary conflicts of interest” (page 36) and that councils should ensure there is external advice provided, such as an auditor for Councillors in managing conflict of interest issues.
The issue of council officers involved in conflicts of interest with monetary benefit is regarded as a sensitive issue given that if officers do not distance their relationships between applicants then the assessment of applications will not be based on merits. Additionally there is concern that at a pre-DA meeting, if the planner provides advice to the applicant who later changes their application, then this could raise the issue of conflict of interest at the assessment stage due to the planner’s close involvement with the applicant.
A number of solutions have been recommend to assist council officers in avoiding inappropriate relationships with applicants, including the introduction of a peer review for controversial applications, formation of relationship policies with applicants for council employees and the allocation of different planners to applications lodged by recurrent applicants.
There is also the issue of conflict of interest in relation to consent authorities approving their own applications, which is permissible under the EP&A Act. The ICAC proposed a solution for councils to manage their interests in applications that was closely linked to council. Three types of developments were classified which could result in conflict of interest for councils, and a number of methods provided to improve the current system.
Essentially, conflict of interest is a controversial and complicated issue for councils given that there are many elements which could pose as a conflict, however identifying such risks and measures to address the conflict are the key problems associated with this type of unethical behaviour.
It is common practice by councils to engage external planning consultants to prepare planning instruments and even assess applications. There is a risk in engaging consultants due to the possibility of a conflict of interest arising as a result of the type of work council expects them to complete. The ICAC recommends that consultants could be required to comply with a set of guidelines based on the practice of ethical behaviour. Another solution is to engage a number of different consultants and rotate their roles for different tasks and also promote a competitive selection process for consultants. Therefore engagement and use of consultants is a sensitive issue for councils as they need to be careful that there is no evidence of conflict of interest for the consultant’s involvement and that their integrity is maintained.
The State Environmental Planning Policy No 1 (SEPP 1) permits an applicant to object to a development standard such as FSR, building height and subdivision size. There are benefits to using SEPP 1, although the ICAC has investigated that such a policy could lead to a significant increase in land value, causing the potential for corruption. As demonstrated in the investigation into Rockdale City Council (page 64), the element of corruption is considerable and the Department of Planning were involved in reviewing SEPP 1 to improve its function. A peer review of management of SEPP 1 applications was suggested and also the option of making a list of approved development applications with SEPP 1 objections publicly available.
These are tools used to generate contributions to public uses between planning authorities and a developer. Given the nature of these agreements it could be perceived that the there is an implied notion that the planning authority has automatically granted consent to the development; “If, however, a perception that a developer has improperly used a planning agreement to buy a rezoning or a development consent is a correct perception, the developer and council may have engaged in corrupt conduct “(page 67). The ICAC suggests a number of solutions to handle this perceived problem, including the planning authority should not permit the interest of interest groups or individuals to outweigh the public interest while considering planning agreements.
Overall the ICAC has demonstrated the complexity of policing professional ethical behaviour in the workplace and in particular a council environment, which should exhibit professionalism given that it is a local government agency. It is evident from the ICAC investigations and the report on the development approval process, that there are significant setbacks to professional and ethical procedures in the NSW planning system and the nature of the development industry is unfortunately fraught with corruption regardless of the number of systems in place to avoid such behaviour.
Independent Commission Against Corruption 2005. ICAC Report: Report on investigation into the relationship between certain Strathfield Councillors & developers, Sydney, Australia
Independent Commission Against Corruption 2007. ICAC Report: Report on an investigation into allegations of bribery relating to Wollongong City Council, Sydney, Australi
Independent Commission Against Corruption 2007. Position Paper: Corruption risks in NSW development approval process, Sydney, Australia