WestConnex issues

This section of the submission was completed by WestCONnex Action Group.

1.0 Corruption allegations and political donations

Several of the firms awarded contracts on the projects stand accused of corruption on a global scale.

In the case of Leighton Holdings(now known as CIMIC) and Samsung C&T, these accusations relate directly to the practices it engaged in to secure billion-dollar government contracts overseas.

In April 2016, a joint Fairfax Media and Huffington Post investigation named both companies as having paid huge bribes to government officials via a Monaco-based intermediary, Unaoil, in order to secure government contracts to build oil industry infrastructure in the Middle East (Leighton) and Africa (Samsung). This investigation can be read in full at: http://www.smh.com.au/interactive/2016/the-bribe-factory/

It is incredibly disturbing that Leighton was bribing government officials overseas at the same time it was making huge donations to the Liberal, National and Labor parties here in Australia, and being awarded contracts to build three stages of WestConnex.

A search by Sydney newspaper City Hub of the Democracy for Sale donations website showed that since 2005, Leightons have donated more than $1,320,968 to Liberal, Labor and National parties during periods when key decisions were being made to support the WestCONnex by NSW and Federal politicians of both major parties. Since the late 1990s, the company and its subsidiaries have donated more than $3 million to the major parties. (Source: http://www.altmedia.net.au/questions-to-be-answered-over-leightons-involvement-in-westconnex/114897)

The accusations are all the more concerning given that this isn’t the first time the company has faced accusations of making corrupt payments to buy its way into government contracts.

For Samsung to have been accused of engaging in the same kind of corruption makes the matter all the more serious, as it has been awarded billion-dollar construction contracts to work with Leighton on the WestConnex M4 East and New M5 by the NSW Government.

Leighton is far from the only company involved in the project to have made huge donations to the Labor, Liberal or National parties at state and/or federal level. A slew of companies involved in its development, construction and financing are also major corporate donors to one or more of these political parties, and made large donations during periods when key decisions about WestConnex were being made.

Given these huge question marks over the companies awarded contracts on these federally funded projects, a National Integrity Commission is sorely needed to investigate these projects, and reassure Australian taxpayers that corruption isn't taking place. This need is all the more critical given the NSW state governments has gone to great lengths to reduce transparency on these projects (see Section 2.0). Australians deserve to know why billions of dollars of our money is being handed to allegedly corrupt companies to build toll roads that multiple independent experts have said are likely to fail, and whether the political donations made by the companies involved in WestConnex have had any influence on the decision-making process.

2.0 Lack of transparency

Transparency is obviously critical to any government project when it comes to avoiding corruption. However, WestConnex has been characterised by a lack of transparency since its inception.

WestConnex is the largest road infrastructure project in Australia’s history, and will see at least $3.5 billion of Federal funds transferred to the NSW Government and ultimately the private companies contracted to construct and operate it.

Yet for such a major piece of infrastructure, it has had a relatively short period of review. It appears to have been ‘fast-tracked’ to bypass important evaluation steps aimed at providing assurance to government and the taxpayers that the project is the best solution. Its long-delayed business case - which was only released following years of public pressure - remains shrouded in secrecy. And the project has been dogged by accusations of poor governance and conflicts of interest.

This lack of transparency and potential for corruption has been evident in many aspects of WestConnex, including the following.

2.1 Lack of independent oversight

There has also been an almost complete lack of independent oversight of the WestConnex project as a whole. The dissolution of the public WestConnex Delivery Authority (WDA) and the transfer of its functions to the private corporation Sydney Motorway Corporation have made the planning processes even less transparent.

It is also disturbing that this merger follows reports of internal problems with the governance of WestConnex, including issues behind the move is conflict over the control of the planning processes. It is also unacceptable that public money has been used to establish a private company, with two NSW government ministerial shareholders, so that the corporation does not have to be publically accountable, or subject to freedom of information requests.

2.2 Long delayed and heavily redacted business case

The business case for this $16.8 billion project was only released in November 2015 - three years after the project was first proposed - and only then after intense public pressure, including a parliamentary petition that gathered more than 10,000 signatures from constituents across NSW opposed to WestConnex.

Even then, the business case that was released contained many redactions, including the key cost and revenue figures that form the cornerstone of any business case. It was lacking in any serious detail that would allow any independent experts to undertake a serious review of the projected costs and benefits of the WestConnex project.

It is hard to believe that a compelling business case that supports the benefits being touted by the NSW and Federal governments would need to redact so much critical information.

“Commercial in confidence” excuses for this secrecy can hardly apply when the project is being funded almost exclusively by taxpayers. Any other project would see investors have full access to the accounts of the project before putting their money at risk. In this case, the NSW and Federal governments have placed billions of dollars of taxpayers’ money at risk on the project without giving the people who provided the funds access to this data.

3.0 Poor governance

WestConnex’s lack of transparency and proper process have also come in for sharp criticism from the NSW Auditor General. Its Performance Audit of WestConnex in 2014 highlighted the importance of proper evaluation and identified some serious deficiencies in the development of the WestConnex project.

The Executive Summary of this audit concluded:

“In the period covered by this audit, the processes applied to WestConnex to provide independent assurance to Government did not meet best practice standards…

“The preliminary business case submitted for Gateway review had many deficiencies and fell well short of the standard required for such a document. Further, on our analysis, the business case put to the Government still included some deficiencies that independent Gateway reviews and external assurance arrangements, if they had occurred, should have identified…

“The post-business case governance arrangements did not clearly separate board-level responsibilities for commissioning from responsibilities for delivering the WestConnex project. After not separating the roles, they also failed to provide mechanisms to effectively manage the conflict between these roles...

“While good internal controls are critical, they are not a substitute for externally managed Gateway reviews. Steering committees and boards cannot be responsible for both project delivery and independent assurance and reporting to the Government. Responsibility for commissioning should be clearly differentiated from the responsibility for project delivery. Challenging deadlines heighten the need for good assurance but, paradoxically, also the risk of departure from best practice.” (p.3-4)

The NSW Auditor-General also called the conflicts of interest that characterise WestConnex into serious question. From its Audit:

“Infrastructure NSW’s roles at this stage of the WestConnex project were in conflict. It was responsible for developing the WestConnex concept and at the same time it was the key agency responsible for providing assurance to Government over major capital projects including WestConnex. A fundamental principle is separation between those providing independent assurance and those developing and delivering a project.” (p. 16-17)

This failure to employ best practice governance from project inception has greatly reduced community confidence in WestConnex. A project of this size and impact should be subject to independent reviews and scrutiny, and be free from internal conflicts of interest that compromise its integrity.

It is disturbing that instead of responding to this criticism by improving processes, the NSW Government chose to ‘address’ them by dissolving the public WestConnex Delivery Authority and transferring its responsibilities to the private Sydney Motorway Corporation (SMC).

By doing so, the NSW Government made the process even less transparent, as the SMC refuses to release contract details or respond to freedom of information requests.

Even before this changeover occurred, very little information about NSW government contracts for WestConnex were made available to the public.

Notices for contracts worth more than $150,000 are published on the NSW Government eTendering website, but are removed soon after a contracts expires. This is in stark contrast to the Federal register, where historic contracts remain available. The NSW system makes it more difficult for the public to track the development process, or to be assured that the process by which these contracts have been awarded is free from corruption or conflicts of interest.

The whole idea that such a massive project could be taken outside the normal rules of basic government accountability is shocking and demands its own investigation. Again, given WestConnex’s Federal ties, this is an area in which a National Integrity Commission could play an important role, and step in where state government processes have failed the public.

4.0 Conflicts of interest

A number of companies have held contracts to work on different elements of the WestConnex project in ways that give rise to grave conflicts of interest. The most serious of these concern the contracts awarded to AECOM.

AECOM was contracted to perform the environmental impact statements (EISs) for the M4 East and New M5 sections of WestConnex. These EISs should have been independent, thorough and objective analyses of the environmental, economic and social impacts of these projects, as well as alternatives that could have delivered the same objectives more effectively.

However, AECOM also has deep interests in the planning and construction of the $16.8 billion motorway project, raising serious questions about the independence and integrity of the planning assessment process for WestConnex.

The same firm is the subject of ongoing legal action in Queensland. Last year, AECOM paid approximately $200 million to settle negligence claims for its traffic modelling for a privately owned toll-road in Brisbane. Legal firm Maurice Blackburn is representing 650 investors who are seeking to recover losses of more than $150 million from AECOM.

Brisbane’s Clem7 RiverCity tunnel carried less than one quarter of the traffic forecasted after it opened in 2010. According to Maurice Blackburn’s website, the case alleges that AECOM made forecasts without reasonable grounds, and left critical information out of its report published in RiverCity's Disclosure Statements.

It also allegedly failed to reveal that earlier traffic forecasts it had developed for Brisbane City Council showed traffic volumes substantially lower than those in the RiverCity Disclosure Statements.

An international spokeswoman for AECOM told the media that the company would not be doing traffic modelling any more. Yet it is responsible for producing much of the traffic modelling for WestConnex as part of its work on these EISs.

Even before its EISs were published or any feedback received, AECOM had already endorsed WestConnex on its website. It claimed - though these references seem to have been removed now - that “WestConnex will assist in making Sydney a more liveable city by reconnecting communities, enhancing centres and significantly improving the urban domain along Parramatta Road” and will “provide welcome relief from congestion on the M4 and Parramatta Road…”

These claims are hotly contested. An independent study commissioned by City of Sydney found that WestConnex will actually increase traffic congestion on Parramatta Road. In May the Sydney Morning Herald reported that the proponent’s own traffic assessments show that the $16.8 billion WestConnex will not stop Sydney traffic from worsening.

AECOM has been awarded at least six contracts for WestConnex. The contracts have a combined value of over $9 million, and cover a range of services. The company may have been awarded more recent contracts since the SMC took responsibility for WestConnex and stopped publishing the project’s contracts. Its previous contracts can be found here: http://whywestconnex.herokuapp.com/

These are huge conflicts of interest when it comes to its contracts to deliver EISs for other parts of the project. Perhaps this is why the EISs produced by AECOM reading as a sales document in many instances, rather than an independent evaluation. Every serious objection that is raised is simply batted away as insignificant. Many areas of analysis were profoundly deficient.

Our organisations believe such conflicts of interests raises serious doubts over the quality and independence of these critical EISs for WestConnex, and that this is another area in which Federal oversight through a National Integrity Commission would be vital.

Recently we have learned that Arup, a company that was also involved in developing the early WestConnex business case and has held other WestConnex contracts, is being paid by the NSW Department of Planning and Environment to assist in the assessment of Stage 2 of WestConnex. More on this conflict of interest issue can be found in this New Matilda report: https://newmatilda.com/2016/04/20/company-assessing-westconnex-for-government-also-had-paid-contracts-with-westconnex/

5.0 Conclusion

The information provided above is simply a brief overview of the issues involved in WestConnex to substantiate our support for a National Integrity Commission, and why we believe this project could and should be referred to such a commission for investigation. Should the Select Committee require more information about any of the claims we have made, WAG is happy to provide it. Please email us at info@westconnexactiongroup.org.au if so.

 


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