The Commissioner Independent Commission Against Corruption GPO Box 500 Sydney NSW 2000

2 November 2012

Dear Commissioner, Re: Changes to the Unsolicited Proposals process and the proposal for a second casino at Barangaroo Pursuant to section 10 of the Independent Commission Against Corruption Act 1988 ('the Act'), I write to seek an investigation by the Commission of the circumstances under which changes have been made to the state's processes for the assessment of unsolicited proposals. The matter relates to a proposal by Crown Sydney Resort Project which is described on the NSW government's Unsolicited Proposals website 1 as: "Proposal for development of Sydneys first six star hotel resort at Barangaroo, incorporating a VIP-only gaming facility." The concerns arise from the timing of changes to the process and the failure of the O'Farrell government to provide an adequate explanation for weakening requirements for a private proposal to be subject to a competitive tendering process. The changes were made on 17 August 2012, one week after Premier Barry O'Farrell met with Mr James Packer, the Executive Chairman of Crown Ltd, and a public advocate for the company's Barangaroo proposal. Mr O'Farrell confirmed the fact of this meeting before Budget Estimates hearings this year2 and in numerous undisputed media reports. The nature of the changes were reported in the Sydney Morning Herald 3 on 1 November 2012 and substantiated in documents linked to that story on the paper's website. The changes are such that Crown's proposal is now unlikely to be subjected to a tender process. The Barangaroo project might now avoid a commercial process in which it is
1 2

http://www.nsw.gov.au/unsolicitedproposals http://www.parliament.nsw.gov.au/prod/parlment/committee.nsf/0/8b9ca4004e448acdca257 a92008015df/$FILE/29160831.PDF/Transcript%20-%209%20October%202012%20%20Uncorrected%20-%20Budget%20Estimates%20201213%20-%20Premier%20%20Western%20Sydney.PDF 3 http://www.smh.com.au/nsw/how-casino-dodged-tender-trap-20121031-28kib.html

tested against bids by other potential operators of a second casino at other sites in NSW. The changes removed the requirement for a project to be independently assessed to determine if it should be subjected to tender. In the absence of independent assessment, based on public statements by Premier Barry O'Farrell it appears that Barangaroo will be treated as unique and without comparable competition. The explanation for the changes offered in a media statement 4 released by Acting Premier Andrew Stoner on 1 November 2012 is entirely unconvincing. Mr Stoner suggested that: "The Unsolicited Proposals Guidelines were updated by the Department of Premier and Cabinet to reflect national PPP Guidelines which were developed through a COAG process for all states and territories. This update was not connected in any way to the Crown proposal." This is in fact incorrect. COAG's December 2008 National Public Private Partnership Policy and Guidelines5 state, with respect to unsolicited proposals, that6: "Given their unsolicited/exclusive basis, as a general principle such proposals need to demonstrate unique value for money benefits that allow the government to demonstrate with confidence the reasons for entering into an exclusive arrangement rather than a competitive tender process. Further, as with all projects, unsolicited proposals must demonstrate an overall community benefit and be consistent with the governments plans and priorities. This is an area where government departments and agencies should seek further advice from the relevant PPP Authority. Each jurisdiction will have its own policies and procedures for dealing with unsolicited proposals/exclusive mandates." Nothing in COAG's document justifies the change to the state's process and in fact the quoted materials support the retention of the pre-17 August guidelines. It is alarming that the Acting Premier was unable to provide an explanation for the changes. The awarding of a second casino licence and the development of the facility at Barangaroo is a matter of substantial public interest. It will have significant social, economic and financial consequences. The granting of the first licence occurred in 1992 after four years of public debate, two pieces of legislation and an inquiry conducted by Sir Laurence Street QC. Public scrutiny resulted in strengthened anti-corruption provisions and caution exercised in the awarding of the licence and the conditions placed on it.
4

http://boss.afr.com.au/rw/2009-2014/AFR/2012/10/31/Photos/5ee1b3ce-23a9-11e2-85ea2c86ebffdaee_20121101%20Acting%20Premier%20statement%20%20Unsolicited%20Proposals%20Guidelines.pdf 5 http://www.infrastructureaustralia.gov.au/public_private/ppp_policy_guidelines.aspx 6 Section 3.2, p. 16 of http://www.infrastructureaustralia.gov.au/public_private/files/National_PPP_Guidelines_Overv iew_Dec_08.pdf

It appears that the changes to the state's Unsolicited Proposals process will place limitations on the ability of interested parties other than the government and Crown Limited to influence the conditions surrounding the second licence. Casinos are recognised as corruption risks and the nature and circumstances of the development of a casino can influence the likelihood of that risk translating into reality. It is of concern to the Greens that a second licence might not be subjected to tender and that in the likely event that the current proposal passes through modified process, the social costs and the alleged economic and financial benefits will not have been tested. It is also of concern that this is being facilitated after a meeting between the proponent and the Premier which appears to have resulted in a change to the process. The facts as outlined raise the possibility of corrupt conduct as defined in section 8(1)(a) of the Act, being "(a) any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority" In this case, the impartial functions of assessing the unsolicited bid by Crown may have been adversely affected. I do not believe that the issue is limited by section 9. As section 9 (4) provides, the conduct of a Minister of the Crown which falls within the description of corrupt conduct in section 8 is not excluded by section 9 if it is conduct that would cause a reasonable person to believe that it would bring the integrity of the office concerned, or of the Parliament, into serious disrepute. The matter is of grave public interest and it is likely that many members of the public will perceive that the integrity and international reputation of their state has been compromised. I request you to investigate this complaint with urgency given the rapid progress of the Barangaroo proposal through the unsolicited proposals process. Please contact me if I may be of further assistance to your investigations. Yours faithfully,

John Kaye Greens NSW MP