Jenolan Story

The most beautiful caves in the world filled with deception, lies and dishonesty

Jenolan Story

Jenolan Caves House - Photo by WikipediaThis is our story, a group of 25 people who have been collateral damage as a result of ambitious politicians and public servants within the NSW Government.

In this section we will be posting Chapters of the Jenolan Story.

CHAPTER 1 - THE JENOLAN GAMBLE

A Public-Private Partnership

This is the story about the NSW government’s intricate plan to acquire the historic Caves House without paying for it. It resulted in 25 people being treated as collateral damage.[1]

Documents obtained under FOI explain how the government acquired the hotel at a bargain price when the Jenolan Caves Reserve Trust was being operated without a Trust Board. For the next 10 years, 6 Premiers,[2] 7 Treasurers [3]  and 9 Ministers for the Environment [4] had access to cabinet files that identified the New South Wales government’s plan to acquire the property and the intricate practices they used.

                                041230 Pics Henness

The Jenolan Story is only one example of dishonest conduct by the New South Wales government in public-private partnerships. At the same time, in 2003, the government was investigated for corruption in its handling of the Cross City Tunnel contract. [5] The business owner considered refinancing the investment but was prevented from doing so by the government’s attempt to recover millions in stamp duty.[6] The government also changed the road system, which damaged the tunnel’s profitability.[7] Whilst the circumstances differed slightly, in the Cross City tunnel case the government attempted to purchase the now troubled motorway at a discount. [8]

In 2015, the government is again seeking capital from the public by entering into another public-private partnership, which it will manage. The Jenolan Story explains how the New South Wales government changed legislation,[9] breached contracts with its partners [10] and made it impossible for them to seek damages.[11]

Background

The 99-year lease of Caves House was granted to Jenolan Caves Resort in 1990. A Trust Board was set up by an earlier Liberal government and consisted of commercial and conservation specialist members. In 1996 the Trust Board was restructured, removing the commercial members.[12] The performance of the Trust suffered and infrastructure maintenance backlogs occurred.

Reception Lobby Main Staircase

In 2003, the government commissioned a Special Review of the Trust. The review was carried out by the Council on Cost and Quality of Government (CCQG). It recommended infrastructure funding and purchasing the lease. However, the review and members of the Trust were kept in the dark about a caveat placed on the use of government funds that would benefit the businesses.

Following the review, the Minister invited the Trust Board not to seek reappointment. They would, instead be replaced by an administrator. The government could have carried out this restructuring lawfully under the National Parks and Wildlife Act (1974), however it chose to do this unlawfully instead. The JMA Parties, in 2011, obtained legal advice by Senior Counsel that noted the appointment was unlawful. All members of Parliament received access to this advice on 12 October 2005.[13]

In 2005, the Premier, Treasurer and Environment Minister all had access to this advice.

Key Challenges

In a Cabinet Minute dated 3 September 2003, it was decided that the Council on the Cost and Quality of Government (CCQG) would undertake a Special Review into the Jenolan Caves Trust.[14] This was to enable the optimal business model for the Jenolan Caves precinct to be developed.

 Floor Lounge Area Caves House

The special review outlined a number of key issues facing the Trust:

  • Tension between the Trust’s conservation and commercial objectives;
  • Lack of capital funding to upgrade ageing infrastructure;
  • Declining tourist visitation over the last seven years;
  • Impact of public sector salary increases on expenses;
  • Transport access to Jenolan Caves and the need for road upgrades; and
  • Lease arrangements between Jenolan Caves House (a private operator) and the Trust”.[15]

Infrastructure

As will be explained later in the Jenolan Story, problems regarding government underinvestment in maintenance at Jenolan of electricity, water and paths made ageing infrastructure a matter of public liability.[16] Risk assessments by Trust staff since 1996 revealed that consistent government underfunding of capital works resulted in risk of falls, electrocution, and fumes from degrading lead handrails and old lights.[17]

Library

The Trust was not meeting its statutory obligations to care for the caves infrastructure.[18] Treasury had failed to fund the cost of dealing with the ageing infrastructure despite the Trust’s 1999 Five Year Capital Maintenance Strategic Plan to provide $10.5m in funding. It only granted $1.1m between 1999 and 2003.[19] The CCQG found that in 2003 there existed a $14m capital work deficit.[20] This was a significant problem for the businesses.

Declining Tourist Numbers

Tourist numbers at Jenolan Caves had fallen from 272,443 in 1996-97 to 214,453 in 2002-03.[21] The decline in visitor numbers occurred following the government’s restructuring of the Trust Board to contain no commercial members and this concerned the Jenolan Caves businesses greatly. The businesses also expressed a view that declining visitor numbers were the result of increased ticket prices.[22]

Retail Shop

The Special Review found that the Trust was spending less than industry average on advertising.[23] However, it is unclear whether the Special Review members had sufficient expertise or skills to recommend an investigation into how this decline had occurred during the previous 10 years and how it could be avoided in the future.

Salary Increases

Following government salary increases, the Trust was required to fund a 6% wage increase for staff.[24] These increased costs would have impacted on the long-term finances of the Trust.[25] The Trust had a history of raising ticket prices to fund increased expenses, this concerned businesses greatly when visitor numbers had already declined.

Road Upgrades

Jenolan Caves Road, the main Sydney road access into the caves, was assessed by the Roads and Traffic Authority (RTA) and was found to be one of the most dangerous in the state.[26] The Trust Board’s safety concerns forced the closure of the road for eight days in May 2003. This closure lowered visitation by an estimated 20% from the same period in 2002.[27]

The Special Review recommended urgent road upgrades to avoid placing the public at risk.[28] However, before the review was complete, Minister for Roads, Carl Scully, MP, had agreed to provide funding of $24.5m for three stages of the road repairs.[17] Prior to the Minister attending the Trust meeting on 6 December 2003, the road funding had already been approved.

Lease Arrangements

The Special Review identified problems in the relationship between the Trust and the lessee, especially concerning visitation levels and infrastructure maintenance.[29] It therefore included five options for the government to pursue.

Main Bar

The options included:[30]

Option 1: Vary Lease

Negotiations should take place between the government and lessee to vary the lease. Aspects of the lease that could be negotiated included changing the lease to a 20-year structure with some scope to link rental to visitation levels.[31]

Option 2: Commercial Buy-out

A commercial operator buys the lessee’s interests in Caves House lease and enters into a management agreement with the government to run all tourism functions at Jenolan Caves.[32]

Option 3: NSW Government Buy-out

The government negotiates directly with the lessee to buy out the lease. The government will then contract out the operations of Caves House.[33]

Option 4: Compulsory Acquisition

The government uses the terms of compulsory acquisition legislation to buy back the Caves House lease on just terms.[34]

Option 5: Termination due to Default

The NSW government terminates the lease due default by the lessee. [35]

Impossible Options

The Cabinet approved Minister Debus’ request for a Special Review on 3 September 2003. [36] It included a condition or caveat that was not known to the review members or the Jenolan Caves Reserve Trust.[37] The caveat required no government money be spent that would benefit the lessee.

Therefore, the options 1 to 4 mentioned above could not be considered.

A cabinet minute obtained on 12 February 2015 under FOI revealed the government had no plans to comply with the terms of the public-private partnership agreement.[38] The minute notes that no public money could be used that would benefit the lessee. This caveat had the effect of invalidating the development plans set out in the original tenders for the lease.[39][40] The development application had already been approved by the Trust but was no longer a legitimate option.

One Option: Default

When the Budget Committee were briefed on the Special Review, it would have become evident that with the caveat in place 4 options were not relevant. Only Option 5 could be contemplated. The hotel had to be obtained through the lessee’s default.

By 2004, the hotel’s star rating had increased from 1 to 4½ stars and its current value was $11.5m.[41] To accomplish the default option under the lease and return the hotel to the State Government was in the long term a ‘very high risk’ option.[42][43] The government’s handling of the public-private partnership in 2003 would, over time, become public knowledge. However, the reputation of the Jenolan Caves brand and the financial viability of the tourism businesses in the village would be permanently damaged.[44]

To sum up…

The JMA documents obtained under FOI explain how the government could have acquired the Caves House lease lawfully or unlawfully. Instead, it damaged prospects for future public-private partnerships. The fact that all senior government members had access to this information adds to the heartbreak of this story.

During the next three months, the JMA Parties will publish twenty chapters of this story. It explains how successive governments spent vast sums of money to conceal deception, lies and dishonesty by their colleagues. The story reports on the dismal standards of governance that have continued in New South Wales for the past 20 years.

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography

The supporting documents will be uploaded soon ...  


[1] In 2013, 25 people attempted to resolve their differences with government in relation to managing Jenolan Caves Reserve Trust without a Board.

[2] “Cabinet Leak on tunnel stack not corrupt; ICAC, Anne Davies, State Political Editor, April 20 2006, The Sydney Morning Herald, smh.com.au, http://www.smh.com.au/news/national/cabinet-leak-on-tunnel-stack-not-corrupt-icac/2006/04/19/1145344153561.html

[3] “Sydney’s Cross City Tunnel enters voluntary administration, blames Government for financial woes”, Nonee Walsh, Updated 14 September 2013, 6:11pm, ABC News- http://www.abc.net.au/news/2013-09-14/cross-city-tunnel-owners-blame-government-for-debt-woes/4958084

[4] Ibid

[5] “Cabinet Leak on tunnel stack not corrupt; ICAC, Anne Davies, State Political Editor, April 20 2006, The Sydney Morning Herald, smh.com.au, http://www.smh.com.au/news/national/cabinet-leak-on-tunnel-stack-not-corrupt-icac/2006/04/19/1145344153561.html

[6] “Sydney’s Cross City Tunnel enters voluntary administration, blames Government for financial woes”, Nonee Walsh, Updated 14 September 2013, 6:11pm, ABC News- http://www.abc.net.au/news/2013-09-14/cross-city-tunnel-owners-blame-government-for-debt-woes/4958084

[7] Ibid

[8] “NSW considers buyback of Cross City Tunnel,” Financial Review, September 20 2013 at 8:13am, updated at 8:37am, http://www.afr.com/business/nsw-considers-buyback-of-cross-city-tunnel-20130919-j0dql

[9] 1997 Amendments to NPW Act changing the composition of the Trust Board

[10] Failure to comply with the Services Agreement to supply a continuous supply of potable water.

[11] Mislead the NSW civil and administrative tribunal in relation to its decision to appoint a Trust administrator and comply with the Services Agreement.

[12] reference

[13] Advice by Senior Counsel, Robertson, T that was referred to members of parliament on 12 October 2005.

[14] Cabinet Minute by the Cabinet Standing Committee on the Budget, Review of the Jenolan Caves Trust to be Undertaken by the Council on the Cost and Quality of Government, 3 September 2003  (document accessed 12 February 2015). 

[15] Ibid

[16] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015). page 28

[17] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust: Findings, Tab E, 31 October 2003 (document accessed 12 February 2015), page 17

[18] Special Review, p 28

[19] Ibid

[20] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 29.

[21] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 26.

[22] Reference

[23] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 30.

[24] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 20.

[25] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust: Submission to Budget Committee of Cabinet, 31 October 2003 (document accessed 12 February 2015), page 1.

[26] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 33

[27] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 35.

[28] Letter to Bob Debus, Minister for the Environment, MP, from Carl Scully, Minister for Roads, MP, 19 November 2003.

[29] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 38

[30] Options set out Special Review of Jenolan Caves Reserve Trust pages 53-54

[31] Ibid. Option 1 (risk assessed low to medium) was not possible due to the government’s caveat. Also, the scale of the project set out in the Peppers tender in 1990 required the hotel to be fully developed in line with escalating land rent charges. 

[32] Ibid. Option 2 (risk assessed medium) was again not possible due to the caveat. Also it would not allow the lessee to recover its initial costs in upgrading the hotel to NRMA 4½ star standard. 

[33] Ibid. Option 3 (risk assessed medium) was a sound choice for the government; however it suffered from the decision by the government to impose a caveat on funding. 

[34] Ibid. Option 4 (risk assessed very high) was very high risk because it required the government purchase the hotel on just terms. 

[35] Ibid. Option 5 (risk assessed very high) was very high risk because the lessee and sub-lessee in 2003, had been suffering from the effects of brown water, broken pipes and aging infrastructure.

[36] Cabinet Standing Committee on the budget minutes of the meeting held on Wednesday 3 September 2003; Item 3, page A1.   

[37] Cabinet Standing Committee on the budget minutes of the meeting held on Wednesday 3 September 2003, page A3.

[38] Ibid.

[39] Plans of addition to Caves House, Jenolan Caves, Bill McMahon Architect, May 2002.

[40] Stage 6 Development Caves House, Trust provides owners consent, 30 March 2004

[41] Valuation Report of the Jenolan Caves Resort, prepared for An Intending First Mortgagee, 16 February 2004.

[42] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 54.

[43] At some point the hotel would need to be sold, and if the advice by Robertson T, SC, was not found to be incorrect the resale of the property would not be an option.

[44] Photos that were taken in 2004 depict the high standards of buildings and bedrooms in the resort.

CHAPTER 2 - A TRUST WITHOUT A BOARD

Removing the Board

In July 2003, based on documents the government received from the Trust[1], an opportunity arose for the government to acquire the 99 year lease to Caves House without paying for it.

Chapter 2 is the story of how a government misled the Trust Board members in order to ensure they did not seek reappointment on the expiry of their term, as was the usual practice. In this way administrator could be appointed that reported directly to the Minister following the departure of the Board.

At the request of the Minister, the Premier agreed to commission a Special Review into the operations of the Trust[2]. The review was expected to investigate the major issues and structural options facing the Trust.[3]

There was no dispute that the government had powers under the Act to appoint an administrator in the event the Trust Board failed to care, control and manage karst lands effectively.[4] However, there had never been any suggestion that the board had not properly performed its functions.[5]  

Trust Board’s Responsibilities

The Trust Board administered the karst areas at Jenolan Caves under National Parks and Wildlife Act (1974). The board was made up of environmentalists and people with commercial experience. The latter was essential as the Trust was intended to be financially self-sufficient, earning revenue from cave tours.

The commercial interests were also necessary because Jenolan Caves was furnished with a famous hotel known as Caves House. It had been providing accommodation at the caves for more than 100 years. By 1990, the hotel was in dire condition. The government leased the hotel to a private owner, which was later named Jenolan Caves Resort (JCR).

Government Amends NPWS Act

The relationship between the Trust and the hotel operator worked effective and resulted increased interest in the caves and patronage. This changed, with amendments to the Act and the restructuring of the Trust Board in 1996. Trust board members with environmental and heritage expertise were appointed to the board in place of commercial members.[6] The changed composition of the board narrowed its focus.

Amendments to the Act included section 58ZA, which set out the changed structure of the board[7] and section 58ZE, required the reappointment of a board as soon as possible if an Administrator was appointed. The amendments to the Act noted that if the Minister removed the board members, new members had to be appointed to fill their positions within six months.[8]

While debating amendments to the Act in the Legislative Council on 5 December 1996, Treasurer Michael Egan states:

“Section 58ZE of the Bill will make it clear the appointment by the Minister of an administrator would be a stop-gap measure, pending the early appointment of a new trust board…Therefore the amended section 58ZE more closely reflects the intention of the Government." [9]

When the amendments to the Act were being debated, the public was also told that the trust would be able to obtain government grants for major infrastructure development.[10]

A Special Review

In 2003, Jenolan Caves infrastructure was reported to be 50 years old and had been breaking during the past few years.[11]This fractured the relationship between the Trust and the businesses. Following a report by the Trust, regarding water systems failures in the village,[12] the government, at the request of the Minister, commissioned a Special Review by the Council on Cost and Quality of Government (CCQG)[13]. The review would comment on the “appropriateness, efficiency, effectiveness and prudence” of Trust operations.[14]

The Special Review compiled 56 slides, which were intended to be used by the CCQG to make recommendations to the government. On 31 October 2003, the Special Review[15] was completed and presented to the Budget Committee, along with recommendations by the CCQG[16].

The Special Review analysed:

  • The relationship between the Trust’s conservation and commercial objectives,
  • Transport access to Jenolan Caves, and
  • The relationship between the Caves House lessee and the Trust. [17]

These issues were discussed in Chapter 1, as they were the major issues which impacted on the Trust Board. A Special Review found that the trust board was “not meeting its statutory conservation obligations effectively”.[18] This was, in large part, due to an estimated $14 million deficit in funding for infrastructure.[19]

The review stated that the current lease arrangement of Jenolan Caves House could not be sustained.[20] The “relationship between the Trust and lessee appears to have broken down...There is a need to develop an Exit Strategy”.[21] The review went further claiming that the parties were in dispute over refurbishment and maintenance, the level tourist visitation and its impact on Caves House occupancy, and partnership opportunities between the businesses and the Trust which had not been utilized.[22]

Special Review Lease Options

The Special Review: Jenolan Caves Reserve Trust included a number of lease options.[23] These were discussed in detail and included: varying the lease, a commercial buy-out or the government purchasing the hotel, compulsory acquisition and termination of the lease due to default.[24]  The review also outlined 5 structural options, of which none included the appointment of an Administrator to replace the Trust Board.[25]

CCQG Recommendations

The presentation by the CCQG to the Budget Committee[26], on 31 October 2003, was not considered by the Special Review members. The unnamed author of the CCQG presentation[27] recommended the appointment of an administrator to manage strategic, operational and legislative changes needed for the trust.[28] This was supported three weeks later by the CCQG Chair, Professor Percy Allan. Like the earlier recommendation it failed to justify the removal of the trust board, as required under the Act.[29]

Therefore, on 6 December 2003, the Minister met the Trust Board at Wombeyan Caves and told them that the government would not be reappointing them when their term expired. The Minister did not mention any particular clause in the Act.[30] He stated that an administrator would be appointed under the Act, “who will have all the powers, responsibilities, duties and functions of the Board”.[31] The Minutes note that the government did not remove the Board.

Board Minutes Altered

Draft Minutes prepared following the meeting recorded what was said at the final Trust Board meeting. The board did not approve the Draft Minutes, which stated that the government would appoint an administrator under section 58ZE.[32] According to the full transcript of the Wombeyan Caves meeting[33] and the Minister’s own notes [34] section 58ZE of the Act was not discussed.[35] The Minister’s briefing notes to trust staff[36] and his press statement of 8 December 2003[37] also made no reference to this section.

If the full transcript provided under FOI is accurate then section 58ZE was not discussed at the meeting. It was not mentioned in any documents apart from the Draft Minutes prepared following the meeting. The only other reference to this section was a letter from the Trust’s General Manger to the Minister on 8 December 2003. It claimed the Trust Board recommended the use of section 58ZE when it agreed to the appointing of an Administrator.[38]

Given the legal expertise of certain Trust Board members it would seem unlikely that they would have supported a decision by the government to appoint an administrator in breach of the Act, when it was not discussed by them at the meeting.[39]

The minutes had been altered.

To sum up …

The administrator’s appointment was an essential part of the government’s case that it acquired the Caves House property legally. The documents under FOI explain how the trust allowed an administrator to be appointed under section 58ZE, “Removal of Trust Board members”. [40] The Minister did not discuss removing the Trust Board when he met with them on 6 December 2003.[41] The appointment of an administrator without removing the Trust Board was invalid.

In 2003, the government had choices to appoint an administrator lawfully or unlawfully under the Act but it chose the latter. Chapter 3 will make reference to the benefits which flowed to the government by appointing an administrator.

 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography


 

[1] Review of the Jenolan Caves Water Supply System, 3 July 2003, JCRT Board Internal Report, Steve Reilly; Letter to Greg Smith (copy to Barry O’Farrell) from JMA Parties, dated 14 October 2011.

[2] Request made to Premier by Minister for Environment in 3 July 2003, Review began in August 2003.

[3]Letter from Bob Carr to Bob Debus date 15 August 2003 obtained through FOI-DPC14/05302 (A5) on 12 February 2015.

[4] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003, p3.

[5] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[6] National Parks and Wildlife Act, Section 58ZA.

[7] Ibid.

[8] National Parks and Wildlife Act, Section 58ZE.

[9] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040

[10] Statement of events Jenolan Caves 2004-2006, Part 2, NSW Government and Jenolan Caves Reserve Trust Management 2004-2006, JMA Parties, 9 February 2012.

[11] Draft plan of management 2003.

[12] Review of the Jenolan Caves Water Supply System, 3 July 2003, JCRT Board Internal Report, Steve Reilly.

[13]Letter from Bob Carr to Bob Debus date 15 August 2003 obtained through FOI-DPC14/05302 (A5) on 12 February 2015.

[14] Ibid.

[15] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust. obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A15).

[16] “Special Review: Jenolan Caves Reserve Trust” conducted by the Council on the Cost and Quality of Government, TAB A JCRT Review: CCQG Recommendations, dated 31 October 2003, accessed at 15 February 2015.

[17] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 2.

[18] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 28.

[19] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 29.

[20] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 52.

[21] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 18.

[22] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 38.

[23] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 52.

[24] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 53.

[25] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 41.

[26] “Special Review: Jenolan Caves Reserve Trust” conducted by the Council on the Cost and Quality of Government, TAB A JCRT Review: CCQG Recommendations, dated 31 October 2003, accessed at 15 February 2015.

[27] Ibid.

[28] For the CCQG to rely on s58ZE of the Act, titled ‘Removal of Trust Board’ to appoint an Administrator, they would have to show reason why the Trust Board had not cared, controlled and managed karst lands. It would also be a stop-gap measure. 

[29] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040

[30] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[31] Ibid, page 1.

[32] The following people were present in cabinet when it was decided that no funding would be allowed to benefit the lessee on 3 September 2003: Premier Carr; S Miller, Premier’s Office; C Gellatly, Premier’s Department; Michael Egan, Treasurer; M Coutts-Trotter, Treasurer’s Office; J Pearce, Treasury; K Cosgriff, Treasury; I Neale, Treasury; M Ronsisvalle, Treasury. Amongst the matters agreed at the meeting was that “the government would not support any recommendations that involve public moneys being used to benefit the current lessee of Jenolan Caves House. Cabinet Standing Committee on the Budget: Minutes of the meeting held on 3 September 2003.

[33] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[34] Ibid.

[35] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust.

[36] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[37] “New Lease of Life for Caves,” NSW Attorney General, Minister for the Environment, News Release, 8 December 2003.

[38]Letter from Andrew Fletcher to Minister for the Envrionment The Hon. Bob Debus dated 8 December 2003.

[39] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003, p3.

[40] Ibid.

[41] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

CHAPTER 3 - A GOVERNMENT’S CHOICE

In order for the government to reclaim Caves House from its private owners, it had to remove the Board members responsible for the care, control and management of the precinct. Chapter 2 noted that the government misled the Trust Board, allowing them to believe it was not necessary to seek reappointment.

Chapter 3 is the story of how a government was able to convince experienced board members, including senior lawyers; it could appoint an administrator without removing the board. There was also no explanation as to how the CCQG could recommend the appointment. In fact, the Special Review’s 56 pages presentation made no mention of an administrator at all.[1]

A team of staff from the Performance Measurement and Review Division of Premier’s Department conducted the review. [2] It was chaired by a Cost and Quality of Government expert [3] and would use CCQG methodology.[4] The review had access to the National Parks and Wildlife Act (1974) and later made a recommendation to appoint an administrator without regard to the intentions of the Act.

If the government sought to run the Trust with an administrator it could be no more than a ‘stop-gap measure’[5] or the Act would need to be amended first.

Treasury Funding Issues

By 2003, the Trust Board had become frustrated in obtaining funds for capital works from treasury despite the government’s commitment the Trust could apply for these funds under the Public Reserves Management Fund.[6] The Trust, having applied for funds in 2003, was not able to obtain them from Treasury prior to the Special Review.

On 2 December 2003 funding for urgent safety measures at Jenolan Caves were presented to the Premier[7] and were approved the following day. [8] The following major risks had been noted:[9]

  • Public safety: there are risks to public safety resulting from dilapidated caves and aging tourist infrastructure.[10]
  • Road access: the Jenolan Road (MR253) is in steep terrain, the embankments are unstable and in danger of subsiding. [11]
  • Caves and surface infrastructure: the nature of the underground environment presents a risk to visitors. They identify the significant issues as:
    • Lighting: Power blackouts are common,[12]
    • Paths and handrails: The majority of paths and handrails in the caves date back to the 1940s.The paths in many parts are crumbling and slippery, [13] and
    • Public liability: From 1996 to 1999 the Trust had 25 insurance claims relating to broken legs and other injuries.The ‘fall’ risks were assessed as having severe consequential impact including death and major financial loss.[14]

For the next three years, these issues resulted in angry customers. This damaged the relationship between the Trust and the lessee.[15] Given the very serious problems with caves and surface infrastructure it is difficult understand why the lessee was not informed of them.

Treasury’s decision to withhold funds in circumstances where the government had identified risks of death was very serious. However, this was not as vital as the risk to the public if the road into Jenolan Caves collapsed.[16] This was posing a grave public liability risk to the Trust.

McKay stated in June 2003:


“over the last three weeks, I have devoted a numerous amount of time to issues associated with Jenolan Caves Road. Initially, the Trust was concerned to draw attention to the risk assessments carried out by the RTA, which identified parts of the roads as unsafe … we became increasingly aware that the situation was worse than originally understood.”
[26]


As a result of Treasury’s inaction, the Trust could not replace infrastructure, it was the responsibility of the government.[17]

Closure of MR253

The deterioration of the main road access (MR253) was a major concern to the Trust Board by 2003.[18] The collapse of the road in 1962 had resulted in a bus being forced off the road and the death of four children.[19] If the road collapsed again the Trust Board members would be held accountable for any fatalities. [20]

In May 2003 the main road closed for eight days by request of the Trust.[21] This coincided with a decision by treasury to withhold funding for MR253 repairs and to withdraw funding for alternate access to the village via a gondola. This had been a central issue to the Trust Board, and in particular it’s Chair, for several years.[22]

Denying Gondola Access

Consideration of an alternate access to the caves was important to the Trust Board. The gondola was part of a long-term plan to protect the caves by limiting vehicular access through the Grand Arch into the village. Richard Mackay advised the board on 20 August 2003 that he had received “formal notice from the NSW Treasurer that the Trust’s preferred option for aerial access to Jenolan Caves would not proceed.”[23]

The Chair also advised the Trust Board that at the expiry of the board’s current term he would “not be available to serve on the Board after 31 January 2004.”[24] His resignation led to the government agreeing to a Special Review on 3 September. [25]

This Special Review would be chaired by Byram Johnston under the auspices of the CCQG. [26]

Recommendation: No Trust Board

As mentioned earlier, the Special Review presentation, made no reference to appointing an Administrator. However, the CCQG on 31 October 2003 [27] and its Chair Percy Allan on or about 19 November 2003 [28] recommended such an appointment. The government approved these recommendations on 3 December 2003. [29]

It is unclear how the government could have accepted these recommendations and government members including Premier Bob Carr, Attorney General, Bob Debus and Treasurer, Michael Egan approved the appointment.[30] All of these members were instrumental in amending the Act in 1997, which required the Trust Board to be removed.[31]

When the Trust Board’s term expired on 31 January 2004, the Trust Board was disbanded.

The Appointment

Alan Griffin from the Office of Government Procurement was appointed Administrator of the Trust to carry out the government’s intention to, once more, amend the Act.

On 4 June 2004, the government set out to amend the Act and introduced the National Parks and Wildlife Amendment (Jenolan Caves Reserve trust) Bill into the Parliament. [32] The Minister stated that the government intended to “maintain the highest levels of environmental protection” at the Jenolan Caves.[33]

The bill was unsuccessful on this occasion.

In 2005, the government again attempted to amend the Act.[34] On this occasion the Minister claimed to have advice from the Crown Solicitor that the appointment was legally sanctioned. He told the parliament that the appointment “has been examined by the Crown Solicitor, who found it was valid not only at the time but on an ongoing basis.” [35] This was not correct.

The allegations that the Crown Solicitor validated the government’s appointment coincided with both sides of government being offered access to the Robertson advice.[36] This advice noted the administrator’s appointment was not valid and his actions were nullities.[37]

To sum up…

The government was now the architect of an intricate plan to disregard the impact of breaking pipes and brown-coloured and contaminated water which was unfiltered. This eventually ruined the Jenolan Caves brand and the viability of the businesses in the village.

Chapter 4 of the Jenolan Story explains how the water issues at Jenolan Caves were used to permanently damage the reputation of the most famous inland tourism destination in NSW.

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography 


[1] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust. obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A15).

[2] Special Review of Jenolan Caves Reserve to be commissioned by Budget Committee. obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A6).

[3] Ibid. Byram Johnston, CEO of IQ Business Group.

[4] Premier Bob Carr’s letter to R J Debus, Attorney General, Minister of the Environment of 15 August 2003 (File Number: RRD/01505) obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A5).

[5] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040.

[6] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, Hansard 19 June 1996, p 3185.

[7] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, 2 December 2003, obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A13, 3.2).

[8] DPC14/05302: Cabinet Standing Committee on the Budget minutes of the Meeting held on Wednesday 2 December 2003, was attended by Premier Carr, Environment Minister Debus, Minister for Road Scully and Minister for Police Watkins, Tab A7.

[9] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, 2 December 2003, obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A13, 3.4).

[10] DPC14/05302: CCQG Special Review of Jenolan Caves Reserve Trust: Finding, Document A18 Tab E. It identifies major problems such as dangerous lighting problems, unstable hand rails, steep, slippery and uneven paths.

[11] Ibid. The Trust closed the road for 8 days in May 2003 due to concerns about public safety.

[12] Ibid. The systems in some caves date from the 1930s and 1940s and the majority are from the 1960s. Wires and junction boxes are left exposed to the environment. Trust staff frequently have to make running repairs to keep the lighting system working, giving rise to occupational health and safety concerns.

[13] Ibid. Some handrails are made of lead and have become unstable. In some caves these hand rails do not adequately protect visitors where there are steep drops of 2 to 4 metres. The above ground infrastructure also suffers from unstable handrails and walls, and uneven steep paths.

[14] Ibid. A risk analysis was undertaken by the treasury managed fund in 1996 stated that serious injury and high financial loss for the government are likely to result from slips and trips caused by faulty steps, rusty and aged handrails and cracked, uneven and slippery paths.

[15] The following people were present in cabinet when it was decided that no funding would be allowed to benefit the lessee on 3 September 2003: Premier Carr; S Miller, Premier’s Office; C Gellatly, Premier’s Department; Michael Egan, Treasurer; M Coutts-Trotter, Treasurer’s Office; J Pearce, Treasury; K Cosgriff, Treasury; I Neale, Treasury; M Ronsisvalle, Treasury. Amongst the matters agreed at the meeting was that “the government would not support any recommendations that involve public moneys being used to benefit the current lessee of Jenolan Caves House. Cabinet Standing Committee on the Budget: Minutes of the meeting held on 3 September 2003.

[16] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page33.

[17] DPC15/00019: Letter from Prof Richard Mackay to Bob Debus, in relation to “Resourcing the Management and Operation of the Jenolan Caves Reserve Trust” 17 June 2003, Tab A5.

[18] JCRT Business Papers- Draft Minutes of Board Meeting: “Main Road 253- Stability” 24 July 2002.

[19] DPC15/00019: Michael Bushby RTA Presentation: Jenolan Caves Road “Presentation on the Progress of Geotechnical Investigation” 3 October 2003 Slide 8, Tab A26.

[20] Ibid.

[21] Jenolan Caves access Road Closed- ABC News (Australian Broadcasting Corporation) Posted Sat May 24 2003, 8:02am AEST, accessed on 6 December 2012, at http://www.abc.net.au/news/2003-05-24/jenolan-caves-access-road-closed/1858680.

[22] DPC15/00019: Letter from Prof Richard Mackay to Bob Debus, in relation to “Resourcing the Management and Operation of the Jenolan Caves Reserve Trust” 17 June 2003, Tab A5.

[23] Minutes of the Board Meeting of the JCRT held on Wednesday 20 August 2003, at Billabong Tea House, Trunkey Creek commencing at 2:30pm, Point 1.4(a) Chair’s Report, page 2.

[24] Ibid.

[25] DPC14/05302, A1, ‘Cabinet Standing Committee on the Budget – Minutes of the Meeting 3 September 2003’.

[26] Premier Bob Carr’s letter to R J Debus, Attorney General, Minister of the Environment of 15 August 2003 (File Number: RRD/01505) obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A5).

[27] DPC14/05302 A14 JCRT Review: CCQG Recommendations 31 October 2003, p42.

[28] DPC14/05302 A14 Special Review: JCRT by Percy Allan on or about 19 November 2003, p44.

[29] DPC14/05302: Cabinet Standing Committee on the Budget minutes of the Meeting held on Wednesday 2 December 2003, was attended by Premier Carr, Environment Minister Debus, Minister for Road Scully and Minister for Police Watkins, Tab p16.

[30] Ibid.

[31] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040.

[32] Hansard, 4 June 2004, NSW Parliament, Second reading, National Parks and Wildlife Amendment (Jenolan Caves Reserve Trust) Bill, p 9658.

[33] Ibid, p 9659.

[34] Hansard, 12 October 2005, NSW Parliament, National Parks And Wildlife Amendment (Jenolan Caves Reserves) Bill Hansard, p 18454.

[35] Ibid, p 18460.

[36] Ibid. Richardson Statement.

[37] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003, p4.

CHAPTER 4 - A HOTEL WITHOUT WATER

Unconscionable Behaviour

Chapter 4 is the story of how the New South Wales government would only provide funding for infrastructure repairs and upgrades to the Jenolan Caves Reserve Trust on the condition no funds would benefit the lessee.[1]

As a result, the government provided unfiltered, toxic water to staff and unsuspecting tourists for two and a half years.[2] It only installed filtration once it acquired the 99 year lease to Caves House at a significant discount.[3]

In July 2003, a Trust internal report on water supply system at Jenolan Caves identified that its staff were often not available to repair water failures when they occurred.[4] The Trust’s internal memorandum stated it would ensure a qualified staff member would be available at all times.[5]

The internal memorandum also identified that water failures would place severe constraints on the operation of Caves House and suggested a backup water supply for Caves House be considered.[6] None of these solutions were implemented.

Government Orders: Don’t Fix the Water

On 3 September 2003, a review, approved by the government, stated that no public funds could be used to benefit the lessee of Caves House.[7] The Trust was therefore unable to meet its duty to provide suitable water for human consumption, 24 hours a day. [8]

Item 3 CCQG

Source: DPC14/05302 A1 p9. Cabinet Standing Committee on the Budget, 3 September 2003.

Under the Services Agreement with the lessee, signed in 1990, the Trust was required to:

  • Provide water suitable for human consumption and sewerage disposal at all times;
  • Maintain all equipment related to water supply, sewerage disposal and emergency electricity;
  • Carry out preventative maintenance of worn or faulty equipment every 30 days; and
  • Provide emergency maintenance when requested by the lessee. [9]

The Trust could not meet these obligations.[10] Its failure to replace dilapidated water infrastructure meant that there continued to be regular water failures and breaking pipes.[11] This severely damaged the businesses and their ability to provide services for a number of years.

In 2003, the Trust’s Manager, Peter Austen, wrote to the lessee regarding a complaint about disruption to the water supply. He stated, “the Trust has little control over unpredictable events such as this. The Trust has at all times operated in accordance with the Service Agreement”. [12]

Figure 1 Broken Water Pipes

Photo 1: Water from broken pipe flooding down the roadway

This was not true. Appendix III of the JMA documents lists 35 occasions when water supply failed or Trust equipment malfunctioned. [13] These could have been avoided with regular maintenance and replacement of the aging infrastructure, as required under the Service Agreement.

At times the 4½ star hotel restaurant was preparing meals for up to 200 guests with water being carried in buckets from taps located downstairs in the village. The businesses were desperate. Water failures meant having to deal with frantic staff and angry guests.

 

Figure 2 Water pipes broken undated 2005

 Photo 2: Broken Trust water pipes below Mountain Lodge

Government Denies Supplying Unfiltered, Toxic Water

  1. Figure 3 Fixing water pipes undated 2005Photo 3: Fixing the broken pipes photo taken

The food businesses could not operate successfully without a continuous supply of potable water. [14] The water that the government supplied was often brown and contained sediment.

The Trust stated it was “well aware of its obligations under the services agreement and treats its obligation to supply water fit for human consumption as a serious matter”. [15]

Robert Bruce, a resort manager, disputed the Trust’s statement and took the photograph of the bath water below. [16] In a declaration he said the water was often discolored and unfit for human consumption: “I have, during the past 13 months, worked in the kitchen washing up [with water like this]”. 

Figure 4 Water sitting 15min after being collected

Photo 4: Photo show water samples collected on 9 June 2005 with statutory declarations

Staff claimed the water caused illness. JMA arranged for independent water tests. Ecolab found the water contained E.coli and other pathogens.[17] Tests by Sonic Healthcare supported these results.[18], [19], [20] The Trust dismissed both reports, claiming the water was safe.[21]

The Department of Health also found toxicity in water collected by the Trust. [22] Its results were kept from the lessee and the public for the next six months. [23] The government continued to write to the lessee stating “the Trust denies your claim the water supplied to Caves House is unfit to drink”. [24]

Deception, Lies and Dishonesty about $8,307 Filter

In June 2005, the restaurant staff signed a Petition. It was sent to the Premier and the Trust. Mr Templeton’s letter and the Petition explained why the water was a health hazard. [25] It comments on bacteria from water tanks with open tops and blocked water lines, [26] and claims these problems were the result of having no water filtration.

Mr Greg Wilkinson, lawyer, commissioned Medland Metropoulos to review the water quality issues. It stated “the water supply is currently poorly managed, and lack of actual filtration to remove particles within the water is a critical fault”. [27] This advice was supported by John Humphreys, a specialist engineer. He recommended the Trust immediately advise the public “not to consume water from the taps in the Caves precinct”. [28]

 

The government took no action to deal with the problem. As a result, JMA took the unprecedented step to alert visitors about the contaminated water by erecting signage. In response, the Trust wrote to the lessee instructing it to “remove the banner before 6:00 today”. [29]

                                        Figure 5 051103 water sign outside Bistro

In December 2005, the bank appointed Receivers and Managers. The government immediately removed the signage[30], again placing JMA patrons at risk. This continued until 10 August 2006 when the government acquired the lease and installed filtration.[31] The cost of installation was $8,307.64. [32]

To sum up…

Documents obtained under FOI note the government’s best option to acquire the hotel at a discounted price was to appoint an administrator without removing the board. [33] When questioned in parliament, the Minister said the government believes the appointment was valid and that this appointment does not require an investigation. [34]

On 30 June 2006, the government acquired the hotel lease at a significantly reduced price.[35] Chapter 5 explains how the government was able to destroy the businesses and conceal dishonesty, lies and deception, in order to get away with it. 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography 


[1] Cabinet Minute by the Cabinet Standing Committee on the Budget, Review of the Jenolan Caves Trust to be undertaken by the Council on the Cost and Quality of Government, 3 September 2003, obtained through FOI-DPC14/05302 (A1).

[2] Letter from David Templeton to Attorney General Smith on 14 October 2011

[3] Filter approved on 10 August 2006 Through FOI- DPC11/01813 (A3).

[4] Review of the Jenolan Caves Water Supply System, compiled by JCRT, 14 July 2003, p4.

[5] Ibid.

[6] Ibid.

[7] Cabinet Minute by the Cabinet Standing Committee on the Budget, Review of the Jenolan Caves Trust to be undertaken by the Council on the Cost and Quality of Government, 3 September 2003, obtained through FOI-DPC14/05302 (A1).

[8] Services Agreement between the Trust and Silbard Pty Ltd (now JCR), Annexure A.

[9] Ibid, Annexure C.

[10]Appendix III M: Trust Essential Services (Water and Electricity) Supply Problems.

[11] Document prepared by JMA parties for the government titled ‘Unfiltered water not fit for human consumption’; ‘Trust no providing not providing 24/7 water supply’; ‘Public safety concerns’.

[12] Letter from Peter Austen to Archer Field Regarding the complaint of water supply dated 5 August 2003.

[13] Appendix III M: Trust Essential Services (Water and Electricity) SupplyProblems.

[14] Re: Jenolan Caves Resort Water Quality Inspection, Discussion and Recommendations by J. K. Humphreys, B.E. M.I.E.A. C.P. Eng, 11th October 2005.

[15] Reeves, N., the lawyer for Jenolan Caves Reserve Trust, letter to Greg Wilkinson, the lawyer for Jenolan Caves Resort Pty Ltd., dated 20 July 2005, the lawyer for Jenolan Caves Reserve Trust, letter to Greg Wilkinson, the lawyer for Jenolan Caves Resort Pty Ltd., dated 20 July 2005.

[16] Statutory Declaration by Robert Bruce on 2 February 2005; Photo of water in thebathtub.Declaration by Robert Bruce on 4 February 2005; Photo of water in thebathtub.

[17] “Water Test Results & Recommendations” by Richard Brown, Business Development Manager, Ecolab Water Care Service, 27 January 2005.Test Results & Recommendations” by Richard Brown, Business Development Manager, Ecolab Water Care Service, 27 January 2005.

[18] “Water Quality Report at Jenolan Caves Resort” by Bob Sinclair, Manager Environmental Testing, Sonic Food and Water Testing, 3 March 2005.

[19] Water Samples analysed by Sonic Healthcare, 8 February 2005.Samples analysed by Sonic Healthcare, 8 February 2005.

[20] Water Samples analysed by Sonic Healthcare, 3 March 2005.Samples analysed by Sonic Healthcare, 3 March 2005.

[21] Letter from Alan Griffin to Archer Field dated 18 August 2005.

[22] Reeves, N., Mallesons Stephen Jaques, lawyers acting for Jenolan Caves Reserve Trust, letter to Bryan Belling, Abbott Tout, lawyers acting for Jenolan Caves Resort Pty Ltd., dated 26 September 2005.

[23] Ibid.

[24] Letter from Alan Griffin to Archer Field dated 18 August 2005.

[25] David Templeton letter to NSW Premier Robert Carr on 15 June 2005.

[26] Statutory Declaration by Alison Jones dated 25 January 2005.

[27] Letter from Chris Medland, Medland Mitropoulos Pty Ltd, to Greg Wilkinson, acting lawyer for Jenolan Cave Resort regarding Jenolan Caves Resort Infrastructure, 1 July 2005.

[28] Re: Jenolan Caves Resort Water Quality Inspection, Discussion and Recommendations by J. K. Humphreys, B.E. M.I.E.A.   C.P. Eng, 11 October 2005.

[29] Letter from Andrew Fletcher, General Manager of Jenolan Caves Reserve Trust, to Archer Field, director of Jenolan Caves Resort dated 4 November 2005.

[30] Statutory Declaration signed by the lessee and JCRT cleaner dated 31 August 2007.

[31] Cost of Water Filter installed by Absolute Filters ordered by Jenolan Caves Reserve Trust, 21 August 2006 obtained through FOI-DPC11/02425 (A3).

[32] Quote of order for water filter installation dated 22nd March 2006.

[33] Jenolan Story - Chapter 1: A Trust without a Board.

[34] Special Review: Jenolan Caves Reserve Trust” conducted by the Council on the Cost and Quality of Government dated 31 October 2003, accessed on 12 February 2015.

[35] Jenolan Deed signed by Administrator on 30 June 2006.   

CHAPTER 5 - DAMAGING AN ICON

The Most Corrupt State Government since Federation

New South Wales government from 1995 to 2013 was marred by numerous instances of corrupt politicians operating without regard to government policy [1] or ministerial standards. [2]

The Jenolan Story is an extraordinary example of how government-private partnerships can go wrong. In this case the government withheld treasury funds from the Jenolan Caves Reserve Trust; this created unnecessary risks to public safety and destroyed the commercial viability of the businesses in the village.

Trust Denies Responsibility for Supplying Water

There were repeated problems with breaking water pipes and unfiltered water at Jenolan Caves. This damaged the customer experience at the hotel and the reputation of the Jenolan brand. On or about 30 July 2003, a complaint was made by a hotel guest because water was unavailable due to broken pipes.

Despite the government’s agreement to supply continuous clean water [3], the Trust dismissed the complaint. It stated the Trust had “at all times operated in accordance with the Services Agreement”. [4] At no time did the Trust accept it had a duty to compensate customers staying overnight or businesses operating kitchen facilities without water, nor did they admit they had a duty to carry out preventative maintenance. [5]

In November 2004, Premier Bob Carr was alerted to the disrupted state of water supply at Jenolan Caves.[6] The Premier’s Department replied to JMA concerns by asserting that all water issues had been thoroughly investigated and the Trust had met its responsibilities.[7] In January 2005, the JMA Parties replied stating, they could not continue operating services at Caves House if chronic water problems continued.

The JMA Parties also stated the Premier’s Department was “poorly informed about the Trust meeting its obligations otherwise this situation would not have continued for such a long time.”[8]

Treasury Will Not Fund Government Commitments

At least a few members of government had become concerned about the situation at Jenolan Caves by this time.

On 12 October 2005, The Hon Michael Richardson MP, Shadow Minister for Environment, stated he:

Was of the view that the Government was running the case in an illegal way.

Was suspicious that the Government could not even provide clean water to Caves Hose, the kiosk and other businesses (seeing as Jenolan Caves is NSW’s largest inland tourist attraction).

Questioned whether the Government cared about the health and safety of visitors to the Caves.

Questioned if this was part of the Government’s plan to try to undermine the lessees in the commercial zone and force them out of business, so that it could amalgamate the cave tours with Caves House.[9]

Minister Debus replied to Richardson, claiming that more than 15 years of testing the Jenolan water by the Department of Health showed drinking water complied with the ADW guidelines.[10] These results were contradicted by multiple tests carried out by the government and independent third parties. [11]

The Hon Rick Colless MLC, on 19 October 2005 referred to a letter addressed to members of parliament by Mr Templeton on 15 June 2005.[12] Colless states that if the letter is correct the Government stands condemned.

He continues: “I am concerned about the way in which the Government has been prepared to put people's health at risk to fulfil its objective of gaining control of the commercial zone.”

The Meagher Advice

On 10 November 2005, Jenolan Caves Resort (JCR) referred its water concerns to retired Court of Appeal Judge the Hon Roderick Meagher AO QC. His advice was provided to the Premier’s Department that day.[13] The Meagher advice refers to the water problems and the Plan of Management and states:

“Of these documents, by far the most important is the Plan of Management. It deals with every conceivable aspect of the management of the land on which Jenolan Caves House is situate… It deals with extensively with the provision of essential services such as potable water, eradication of noxious weeds…

The Plan in effect, consists of a series of obligations to be performed… the party who is under a duty to perform the obligation is, and can only be, the Trust...

There is, on the facts, no dispute that the Trust was in default of its obligations. The water it provides (when it does provide it) is hopelessly far from potable. Noxious weeds abound, and nobody has cared to eradicate them. The touring arrangements and the visitors’ accommodation are sub-standard. These facts are not only asserted by Jenolan Caves Resort, but have been admitted by the Trust in a letter from its Chairman.

The second document, the Services Agreement, really reinforces the Trust’s obligations to supply, and keep supplied, potable water. The Trust is in default under this Agreement.”

On 14 November 2005, the Meagher advice was delivered to St George bank. On the same day, a copy was also forwarded to the Bank’s Chief Executive, Gail Kelly. The wording in the advice made it abundantly clear that “the water [the Trust] provides (when it does provide it) is hopelessly far from potable”.[14]

St George Bank Takes Action

On 9 December 2005, St George Bank appointed Receivers and Managers to take over operation of Caves House. The Bank had been financing the further upgrade of the hotel and was aware by this point that the property could not be fully developed, refinanced or sold while there was no Trust Board.

The Trust and the Receivers and Managers, both having received a copy of the Meagher advice, are reported to have immediately removed signage that advised the public not to consume tap water at Jenolan Caves.[15] The public, especially immune comprised people, would no longer be informed that the Jenolan water was not filtered and known to contain E.coli and other contaminants.

Government Buys Hotel – Installs Filtration

On 30 June 2006, the government purchased Caves House from St George Bank at a price significantly below market value.[16]

A few weeks later, on 10 August 2006, the government installed filtration at a cost of $8,307.64. [17] These facts are later disputed by the government’s own statements. The matter was referred to the government through Questions & Answers, on 9 May 2007 by the Shadow Minister for Environment.

The government responded on 13 June 2007, stating that filtration was installed at Jenolan Caves between December 2006 and February 2007.[18] The government noted the cost of the system was approximately $15,000 and was part of a long-term revitalisation works program. The installation of new piping would also be completed within the month. [19] All of these statements were refuted by documents accessed by the JMA parties under FOI on 20 September 2011.[20]

Government’s 3 September 2003 Strategy

On 3 September 2003, when the Special Review of the Trust was authorised by the government, a condition was placed on the use treasury funds. The condition was that no funds could be used to benefit the current lessee of Caves House. [21] The JMA Parties believe that the government’s failure to disclose this caveat meant that its statements in relation to Jenolan water issues were misleading.

To date, the JMA Parties have been unable to obtain evidence that the government informed the Trust of this pre-condition. The funding problems experienced by the Trust were caused by Treasury’s decision not to fund the capital works at Jenolan Caves. While the Trust had commitments to supply potable water[22] and maintain water supply equipment[23] the caveat meant it could not obtain these funds.

The caveat shows that the government had no intention of supplying potable water, or repairing aging water infrastructure to Caves House while the hotel was operated by JCR. By refusing to fund infrastructure repairs the lease was made worthless and the property could not be sold. If the property could have been sold after amendments to the Act came into effect on 1 July 2006, the sale price would be significantly less than valuations of the hotel prior to the disbandment of the Trust in 2004.

There is no doubt there were a multitude of water problems. [24] The government’s response to these concerns between 2003 and 2006 was to reject all allegations that the water supply was not complying with the Service Agreement. [25]

This came to a head on 10 November 2005 when the Environment Minister Bob Debus was offered a sample of the water from the Trust’s tank to drink. He refused.

The Minister was asked to “forget his personal feud with the lessee of Caves House and concentrate on his responsibility to provide clean, safe drinking water for visitors to the Caves”.[26]

To Sum Up...

The following chapters will sum up the government’s deceptive conduct in the period between 2003 and 2011. They will then highlight the bank’s role in working with the government to sell the property at a significant discount.

Later chapters will identify problems that arise when governments enter into public-private partnerships, and choose to amend legislation without any consultation or consent by business partners. The problem is compounded when the private partners have no opportunity to reverse the government’s dishonest and corrupt behaviour.

It will also be explained how subsequent governments have determined that it is in their best interests to rely on misleading statements to disregard all allegations of dishonesty and corruption. This is only possible due to a policy of never investigating serious complaints. 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography


[1] “1. MINISTERS WILL PERFORM THEIR DUTIES HONESTLY AND IN THE BEST INTERESTS OF THE PEOPLE OF NEW SOUTH WALES. 2. MINISTERS WILL BE FRANK AND HONEST IN OFFICIAL DEALINGS WITH THEIR COLLEAGUES”, Code of Conduct for Ministers of the Crown, Annexure A, Ministerial Handbook, p A1.

[2] “Members of Parliament acknowledge their responsibility to maintain the public trust placed in them by performing their duties with honesty and integrity”, Code of Conduct for Members of Parliament, Annexure B, Ministerial Handbook, p B1.

[3] Service Agreement between the Jenolan Cave Reserve Trust and Silkbard Pty Limited dated 29 June 1990.

[4] Letter from Peter Austen, Acting General Manager to Lessee dated 5 August 2003.

[5] Service Agreement between the Jenolan Cave Reserve Trust and Silkbard Pty Limited dated 29 June 1990, Annexure C, p 3.

[6] Letter from David Templeton to Premier Bob Carr dated 4 April 2004.

[7] Letter – Col Gellatly to JMA Parties, 22 December 2004

[8] Letter – JMA Parties to Col Gellatly, 17 January 2005

[9] Hansard, 12 October 2005, NSW Parliament, National Parks and Wildlife Amendment (Jenolan Caves Reserves) Bill Hansard.

[10] Ibid.

[11] See: Results and Recommendations by Ecolab Water Care; Water Quality Report by Sonic Healthcare; Letter regarding Jenolan Caves Resort Infrastructure by Medland Mitropoulos; and Re: Jenolan Caves Resort Water Quality Inspection, Discussion and Recommendations by J. K. Humphreys, B.E. M.I.E.A. C.P. Eng, 11th October 2005.; and D. Templeton’s letter to the Minister for Justice Greg Smith dated 14 November 2011.

[12] NSW Parliament, Hansard, “National Parks and Wildlife Amendment (Jenolan Caves Reserves) Bill”, Debate in the Legislative Council, 19 October 2005.

[13] “Opinion” by R. P. Meagher AO QC dated 10 November 2005.

[14] Letter from Archer Field to G. Kelly, CEO of St. George Bank dated 14 November 2005, including Meagher advice.

[15] Statutory Declaration in relation to conversation between lessee and Trust staff at Lithgow workers Club on 17 April 2007.

[16] Jenolan Deed signed on 30 June 2006.

[17] Absolute Filters Invoice.

[18]Q uestion & Answers Paper No. 12, 0052 Jenolan Caves House Filtration System0052 Jenolan Caves House Filtration System.

[19] Ibid.

[20] DPC11/02425-LB

[21] Cabinet Minute by the Cabinet Standing Committee on the Budget, Review of the Jenolan Caves Trust to be undertaken by the Council on the Cost and Quality of Government, 3 September 2003, obtained through FOI-DPC14/05302 (A1).

[22] Plan of Management 1999

[23] Service Agreement between the Jenolan Cave Reserve Trust and Silkbard Pty Limited dated 29 June 1990.

[24] List titled unfiltered water not fit for human consumption, trust not supplying 24/7 water supply and public safety concerns. Notes the water issues confronting the businesses.

[25] Letter to lessee by Administrator dated 6 January 2005; Letter to lessee by Administrator dated 18 August 2005; Letter from Peter Austen, Acting General Manager to Lessee dated 5 August 2003.

[26] Media Release by M. Richardson, Shadow Min for Environment, 11 October 2005.

CHAPTER 6 - A DECEITFUL ACT

The Jenolan Story has explained the extraordinary circumstances in which the Jenolan Caves Reserve Trust was unable to effectively operate. This chapter explains how this situation occurred and was able to continue for such a long period of time. By 2002, the Trust’s problems were escalating, with little or no funding available from Treasury to remedy the problems.

In May 2003, the Trust closed the roadway into Jenolan Caves for a period of 8 days because of concernswith the high level of risk to life. [1] [2] [3] Road assessments stated there was an imminent risk of the road subsiding. [4] This had occurred previously on several occasions.[5] The Trust was unable to contact the Environment Minister to brief him on the situation.[6]

No Water: Angry Guests

Disruptions to the water supply at Jenolan Caves were common.[7] While the Trust had made applications to Treasury for the necessary capital funding,[8] it was not forthcoming. On 20 August 2003, after Treasury denied funds for the alternate access to the caves, via a gondola, the Trust Chair, Richard Mackay, resigned.[9]

On 3 December 2003, Cabinet agreed to replace the Trust Board with an Administrator.[10] However, to do so the government would need to amend the National Parks and Wildlife Act 1974 (the Act). This was known to Treasurer Michael Egan and to Environment Minister (and Attorney General) Debus. They were both instrumental in amending the Act to include the necessary provisions in 1997.[11]

Government Decides, ‘replace’ Trust Board

The following points explain how this plan is carried out:

  1. On 15 August 2003, Premier Bob Carr approved Minister Debus’ request to initiate an urgent review into the Jenolan Caves Reserve Trust and its relationship with government. [12] The Council on the Cost and Quality of Government (CCQG) would undertake this review.[13]
  2. Two weeks later on 3 September 2003, the Cabinet met and approved the review of the Trust on the condition that treasury “would not support any recommendations that involve public moneys being used to benefit the current lessee of the Jenolan Caves House”. [14] In light of the ongoing water issues at Jenolan Caves,[15] this meant that the water problems would not be solved while the hotel was under the control of the current lessee.
  3. On 31 October 2003 the Special Review presented its findings to the budget committee.[16] The review stated that with its current level of funding the Trust was not able to meet its conservation obligations.[17] The review recommended five structural options for governing the Trust lands, none of which involved the appointment of an Administrator. [18]  
  4. On the same day, the CCQG recommended the appointment of an administrator to replace the Trust board by 31 January 2004.[19] The recommendation did not state how this should be done or whether there was sufficient time to amend the legislation by that date. The CCQG also recommended purchasing the lease to the hotel for $7.5 million. [20]
  5. In November 2003, Professor Percy Allan reinforced the CCQG’s recommendations. [21] He also recommended the appointment and “exiting the lease with a negotiated buy-out”.[22] A memorandum signed by government members and staff approved the recommendation be submitted to the budget committee on 21 November 2003. [23] However, this memorandum gave no additional information on provisions under the Act that would allow for the replacement of the Board. 
  6. On 2 December 2003, Premier Bob Carr signed recommendations that the government would replace the board.[24] When making the decision he had access to the Special Review, which did not recommend the board be replaced.[25] 
  7. On 3 December 2003, Cabinet approved recommendations to ‘replace’ the Trust Board.[26] Item 9.1 of the Minutes, “Approved the appointment of an Administrator…to replace Trust Board on or before 31 January 2004”.[27] It made no mention of how this could be achieved before the deadline. Regardless, Cabinet approved funding of $0.5M over two years for this appointment. [28]

Minister Meets Trust Board

8. On 6 December 2003, the Minister met the Trust Board.[29] He said: “an Administrator, will be appointed (as provided for under the National Parks and Wildlife Act)”. [30] With no members of the Trust Board having sufficient rank to question the Attorney General the board members agreed not to seek reappointment.

The Minister did not tell the board at the meeting which section of the Act he would rely on to appoint the administrator. Neither the Minister’s notes prepared prior to the meeting[31], nor the transcript of the meeting[32] made reference to a section of the Act. Minutes compiled after the meeting state: “the Board recommended to the Minister that at the expiry of the current board’s term on 31 January 2004, an Administrator be appointed pursuant to Section 58ZE of the National Parks and Wildlife Act”. [33] This is the only reference to section 58ZE.

9. On 8 December 2003, two documents were released to the public: a news release by the Minister[34] and a memo by Andrew Fletcher to “All Trust Staff”[35]. Neither made reference to which section of the Act twould be used to appoint the Administrator. On the same day, the Trust General Manger Andrew Fletcher recommended to the Minister, on behalf of the Board, that an Administrator be appointed “pursuant to Section 58ZE”.[36] Again, section 58ZE has not been made public.

10. On 20 January 2004, The Minister made a public notice stating an Administrator would be appointed under section 58ZE of the Act for a period of 6 months “unless extended pursuant to the Act”.[37] This is the first public statement the Minister made that stated he would rely on section 58ZE to appoint the administrator. There were also no provisions under the Act that allowed for an extension of the Administrator’s term beyond six months.[38]

Trust Operating Illegally

11. On 12 December 2004, the Shadow Minister for Environment issued a press release. He said “there is a strong belief that the way the government is running the caves is illegal”.[39] He also said: “the Minister can only appoint an administrator if he sacks the Trust”. He said the appointment of an Administrator was only a “stop-gap measure”.[40] It was understood at the time that the Shadow Minister’s statement represented Coalition views in 2004.


“The government tried to beat this deadline by introducing legislation in June [2004] … but the Bill never got through the Legislative Council, and it is now 10 months since Mr Griffin stepped in as administrator – four months beyond the deadline imposed by the Act.” 41]
 The Coalition understood that section 58ZE would only be a stop-gap measure, not a permanent appointment, as stated by Treasurer Egan on 6 December 1996.[42]

Attempting to Change the Act

12. The amendments to the Act were again before parliament on 12 October 2005. The Minister said the appointment was examined by the Crown Solicitor and was valid on an ongoing basis. [43] This was contradicted by the Coalition's senior counsel advice by Robertson.[44]


The Robertson advice states that: “the only circumstances in which an administrator can be appointed to the Trust is where the Minister has removed all members of the Trust Board from office”.[45] Therefore, the Minster “had no power to renew the appointment”.[46] This advice has never been refuted.

To Sum Up …

The government has been willing to spend an extraordinary amount of public money to mislead the public, to conceal a serious indictable offence. The next few chapters will present the view that the bank, whilst not the mastermind of this arrangement, also engaged in problematic conduct.

A number of submissions presented to the Parliament by the Australian Small Business Council and others during the past 4 years have raised questions as to whether the major bank’s conduct during this period was any less dishonest than that of the government.  

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography


 

[1] JCRT, Special Announcement: Road Closure – Jenolan Caves, 23 May 2003CRT, Special Announcement: Road Closure – Jenolan Caves, 23 May 2003.

[2] Minutes of JCRT board meeting of the JCRT held on Thursday 22 May 2003.

[3] 2002 List Main Road 253 – Stability.

[4] Minutes of JCRT board meeting of the JCRT held on Thursday 22 May 2003.

[5] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 32.

[6] Minutes of JCRT board meeting of the JCRT held on Thursday 22 May 2003.  

[7] Lists entitled: Unfiltered water, Trust not providing 24/7 water supply, and public safety concerns.

[8] Letter to Archer Field from Richard McKay, Trust Chair, dated 8 August 2003.

[9] Minutes of JCRT board meeting of the JCRT held on 20 August 2003, at Billabong Tea House, Trunkey Creek.

[10]DPC14/05302: Cabinet Standing Committee on the Budget minutes of the Meeting held on Wednesday 2 December 2003, was attended by Premier Carr, Environment Minister Debus, Minister for Road Scully and Minister for Police Watkins, Tab A7.

[11] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040.

[12] Letter from Bob Carr to Debus, 15 August 2003.

[13] Ibid.

[14]Cabinet Minute by the Cabinet Standing Committee on the Budget, Review of the Jenolan Caves Trust to be undertaken by the Council on the Cost and Quality of Government, 3 September 2003, obtained through FOI-DPC14/05302 (A1).

[15] Lists entitled: Unfiltered water, Trust not providing 24/7 water supply, and public safety concerns.

[16] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015).

[17] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 28.

[18] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015), page 41.

[19]DPC14/05302 A14,Tab A, JCRT Review: CCQG Recommendations 31 October 2003.

[20] Ibid.

[21] DPC14/05302 A14 Special Review: JCRT by Percy Allan on or about 19 November 2003.

[22] Ibid, p 45.

[23] A12: Performance Measurement and Review Division, Special Review – JCRT – Submission to Budget Committee of Cabinet (document accessed 12 February 2015 through FOI-DPC14/05302).

[24] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, 2 December 2003, obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A13).

[25] Council on the Cost and Quality of Government, CCQG Special Review of Jenolan Caves Reserve Trust, 31 October 2003 (document accessed 12 February 2015).

[26] Attending the meeting was Premier Carr, Treasurer Egan and Attorney General and Environment Minister Debus.

[27]DPC14/05302: Cabinet Standing Committee on the Budget minutes of the Meeting held on Wednesday 2 December 2003, was attended by Premier Carr, Environment Minister Debus, Minister for Road Scully and Minister for Police Watkins, Tab A7.

[28] DPC14/05302: Cabinet Standing Committee on the Budget: CCQG of Government-Special Review of JCRT A9.

[29] Draft Minutes of the Board Meeting of the JCRT held on 6 December 2003, at Wombeyan Caves.

[30] Ibid.

[31] JCRT Board Meeting 1.30pm on 6 December 2003.

[32] Briefing to Board-Minister Debus-6 December 2003.

[33] Draft Minutes of the Board Meeting of the JCRT held on 6 December 2003, at Wombeyan Caves.

[34] “New Lease of Life for Caves,” NSW Attorney General, Minister for the Environment, News Release, 8 December 2003.

[35] Memo, To: All Trust Staff from Andrew Fletcher dated 8 Dec 2003.

[36] Letter from Andrew Fletcher to Minister Debus, 8 December 2003.

[37] National Parks and Wildlife Act 1974 Notice, 20 January 2004.

[38] National Parks and Wildlife Act 1972, section 58ZE.

[39] Media Release by Michael Richardson MP, 12 December 2004.

[40] Ibid.

[41] Ibid.

[42] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996.

[43]Hansard, 12 October 2005, NSW Parliament, National Parks And Wildlife Amendment (Jenolan Caves Reserves) Bill Hansard.

[44] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003.

[45] Ibid.

[46] Ibid.

CHAPTER 7 - SELLING TOXIC CONTRACTS

The lessee had a contract with the St George Bank from 1997. During the next 8 years the loan was paid in accordance with the contract.

By May 2004, the St George Bank invited the lessee of Caves Houses to sign a new contract to replace this older version.[1] Given the previous seven-year relationship between the lessee and the bank there was no reason to expect the bank would act in any other manner than as a model banker. However, this contract did not contain all the relevant clauses. The contract was bound the Code of Banking Practice (the code).[2] However, it was also bound by other relevant documents that were kept from the lessee and bank customers for 10 years. 

During this period, the bank had a contractual duty to investigate complaints.[3] However, the bank was able to avoid its responsibilities under the contract. This is part of a wider problem with the self-regulating banking industry.

Self-regulation

In 2001, following decisions by the federal government and the then Minister for Finance, Joe Hockey, self-regulation in the banking sector was introduced. This would change the dynamics of customer protection for the next fifteen years.

Within a short time, the leading Australian banks restructured the 1996 code produced by the Australian Bankers Association (the ABA). The code was intended to be an integral part of the banking contracts, and prescribed the practices banks were required to follow. It also restricted banks from acting dishonestly. The code was promoted by the ABA as being a binding contract between the bank and its customers.[4] The leading banks stated the code was:

"a binding agreement between you and your bank... [and] will come into effect when your bank adopts it. [It] establishes the banking industry’s key commitments and obligations to its individual and small business customers on standards of practice."[5]

CCMC and its Hidden Constitution

In 2004, after recommendations by an independent review, an external compliance monitoring body was created. This was the Code Compliance Monitoring Committee (the CCMC) and it was initially designed to not only investigate and make determinations on complaints, but to ‘name and shame’ non-complying banks.[6]

However, the CCMC was also forced to operate under a constitution. This was approved by the directors of the ABA and significantly curtailed the CCMC’s ability to investigate complaints and name banks that breached the code.[7] The leading banks were now able to use this constitution to avoid their obligations under the contract to resolve disputes.

The ABA directors had become part of an elaborate scam, which allowed the leading banks to sidestep their promise to investigate complaints.[8] Of most concern was the fact that the constitution had become a major loophole for banks, but was not available to bank customers.

An Intricate Web of Deception

Clause 34 of the code provides an opportunity for customers to file complaints with the CCMC if they believe their bank breached the code. However, the constitution states that the CCMC cannot investigate a complaint or breach of the code where it is, or may be, determined in another forum.[9]

The constitution of the CCMC defines ‘forum’ very widely. It is: “any court, tribunal, arbiter, mediator, independent conciliation body, complaint/dispute resolution body, complaint/dispute resolution scheme… or Ombudsman, in any jurisdiction."[10] 

Any complaint or code breach filed with a leading bank can therefore be deemed by a code-subscribing bank to be a matter for another forum. This denies customers their right to have breaches of the code investigated by compliance monitors.

Under the 2003 code, subscribing banks were required to investigate all "complaints other than those that are resolved to [customer’s] satisfaction … at the time they are brought to our attention”.[11] Subscribing banks told customers in their contracts that the CCMC would monitor compliance under the code, investigate, and make determinations on any allegations of code breaches.[12] 

Between 2004, when the constitution was adopted, and 2012, there were 2.5 million complaints made against the leading banks, but only 200 complaints were investigated.[13] The Code of Banking Practice was obviously no longer effective.

The decision made by the fourteen code subscribing banks to approve a constitution, intended to take away the fundamental rights of customers, was problematic and suspiciously “cartel-like”. Under Section 52 of the Trade Practices Act (1974), this may constitute a crime.[14]

St George Bank’s Contract - What Contract?

On 24 May 2004, the lessee entered into a standard contract with the St George Bank. It relied on three documents: Facility Offer, General Standard Terms and the Code of Banking Practice.[15]

It is apparent that there was a fourth particularly relevant document that was missing from this contract – the constitution of the CCMC.[16]At this stage, the constitution had not been published nor was missing from the contract.

This missing document[17] set out the Terms of Reference for the CCMC. St George Bank was one of fourteen leading banks to approve the constitution. The architects of this constitution were directors of the ABA and Chief Executives of the code subscribing banks. The leading banks would rely on the constitution to escape their contractual duties to customers for the next 10 years.

The JMA Parties filed submissions in relation to the three documents that St George Bank provided to its customers between 2004 and 2013, and the missing fourth document that was concealed, with the Competition Policy Review on 4 November 2014.[18] The submissions allege that the contracts of the St George Bank and other leading banks were unconscionable, because the banks had varied the terms and conditions.[19] The JMA Parties also filed a similar submission with the Financial System Inquiry.[20]

The fourth document, the constitution of the CCMC, negated obligations by the banks to comply with the code and investigate complaints. The constitution severely limited the CCMC’s ability to investigate complaints. Following the St George Bank’s decision to vary the lessee’s contract, the JMA members filed complaints with the bank’s internal complaints manager and to the CCMC. No investigations were made by any party, at any time.

To Sum Up…

Australian banks have yet to explain their unconscionable variation of contracts and the concealment of the CCMC Constitution, which was a key document in all major bank contracts. Similar cases internationally have resulted in successful prosecution of major banks, with large settlements and fines. 

The dishonest conduct by Australian banks would have a significant impact on events at Jenolan in the period following their contract with the lessee. The following chapter will discuss the bank’s knowledge the Jenolan Caves Reserve Trust was being operated unlawfully and that they were not meeting their service obligations. 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

For more information on how major banks have defrauded thousands of customers check out our submission to the Parliamentary Committee on Corporations and Financial Services. They recently published our submission on the impairment of customer loans which you can read at http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/customer_loans/Submissions, the Submission 120 is on the bottom of page 6.

Bibliography


[1] Parliamentary Inquiry into Banking Competition, December 2010, Submission No 109.

[2] Code of Banking Practice 2003, adopted by St George Bank on xxx 2003, as noted under the bank’s General Standard Terms.

[3] Code Banking Practice, 2004, Clause 35.7, Page 20.

[4] 14 May 2004, Code of Banking Practice Finetuned for Guarantors, http://www.bankers.asn.au/Code-of-Banking-Practice-Finetuned-for-Guarantors/default.aspx, accessed on 6 November 2010.

[5] September 2004, Code of Banking Practice Fact Sheets: www.bankers.asn.au/Default.aspx?ArticleID=906,accessed on 6 November 2010.

[6] Clout, J. “A New Code for Banking”, The Sydney Morning Herald, 13 August 2002.

[7] Submission to Review the Code of Banking Practice 2007-2008, CCMC: Annexure B, p2, assessed at 

http://www.reviewbankcode2.com.au/ArticleDocuments/215/Code%20Sub%20AxB-constitution.pdf

[8] Report to the of Small Business Organizations of Australia, “The Australian Bankers Problematic Code”, published by the Australian Small Business Council, p 35

[9] Report to the of Small Business Organizations of Australia, “The Australian Bankers’ Problematic Code”, 5 Dec 2010, p 222.

[10] Ibid.

[11] Clause 35.7, Code of Banking Practice, 2004.

[12] Clause 34 (b)(i)(ii), Code of Banking Practice, 2004.

[13] Wilkie, A. MP. Quoted in Daily Telegraph, “Current Banking Code Doesn’t Work: Wilkie”, 21 August 2012. http://www.news.com.au/national/breaking-news/current-banking-code-doesnt-work-wilkie/story-e6frfku9-1226454963367, accessed on 19 March 2015.

[14] According to Part IV Division 1 of the Trade Practices Act 1974 (Cth), provisions of a ‘contract, arrangement or understanding’ may be taken to be cartel provisions if they directly or indirectly prevent, restrict or limit the capacity of businesses to supply services.
Two criteria must be met in order for an agreement or arrangement to constitute a cartel provision: (1) intention to prevent, restrict or limit the capacity, likely capacity or actual supply of [code monitoring and dispute resolution] services must be present in the agreement, and (2) subscribing banks and financial institutions must either be competitors or would be competitors but for an agreement to the contrary. “The Australian Bankers’ Problematic Code”, 5 December 2010, page 10 and page 26-27.

[15] Parliamentary Inquiry into Banking Competition, December 2010, Submission No 109.

[16] Report to the Council of Small Business Organizations of Australia, “The Australian Bankers’ Problematic Code”, 5 December 2010.

[17] Code Compliance Monitoring Committee Association Constitution, Mallesons Stephen Jaques, 20 February 2004.

[18] Submission to Professor Ian Harper, Chairman, Competition Policy Review, from the JMA Parties and Boyd-Skinner Family, 30 October 2014.

[19] Professor Ian Harper Submissions dated 30 October 2014 and 14 November 2014 at: http://competitionpolicyreview.gov.au/files/2014/12/JMA_Parties.pdf

[20] The Financial System Inquiry, Recommendation 34: Unfair Contract Term Provisions, 2014.

CHAPTER 8 - WRONG PLACE, WRONG TIME

 

In 2005, the bank would have become aware of the realities of the situation at Jenolan Caves. In December 2004, it had been notified by the lessee that the Trust was operating without a board, unlawfully. [1] They were also becoming aware of the dire state of the Trust, which had been unable to maintain the infrastructure and attract the previous number of visitors to the caves.

In the opinion of the JMA parties, any prudent bank would have conducted their own inquiries into accusations of misleading conduct by either party to a lease in which the bank held a multi-million dollar interest. However, the St George Bank supported the conduct of the government and its behaviour at the tourist property.

The Situation in 2005

When the loan extended by the St George Bank fell due in late 2005 the Jenolan businesses were suffering from three key problems:

1. Due to the government’s mismanagement, visitor numbers to the Jenolan were down from 271,672 in 1996-97 to 213,381 in 2002-03.[2]


The reduced visitor numbers led to considerably less income for the Jenolan businesses.[3] Both the government and the bank were aware of falling visitor numbers.[4]

2. The Jenolan Caves businesses were faced with problems stemming from the government’s refusal to comply with the 1989 Parliament-approved Plan of Management. [5]The government failed to maintain infrastructure on Trust lands and struggled to meet its target supply rate of potable water.[6] The lessee and businesses were “hamstrung in what action to take to remedy this problem given the lack of cooperation (by) the Trust”[7]


The St George Bank was fully informed, both from the lessee and from its accountants, the government was not adequately maintaining its property. The bank was aware that failures in the government’s provision of services would ruin the businesses by severely impeding on lessee’s ability to run their 4½ star hotel.

3. St George Bank knew that the businesses were beholden to the government with no Trust Board. An Administrator unlawfully appointed was managing the property for the government.[8]

Minister for Environment, Bob Debus, had no authority under the National Parks and Wildlife Act to appoint an Administrator over the Trust without first removing the Trust Board.[9] This unlawful appointment by the government presented the lessee with intractable problems in refinancing or securing the sale of the Caves House lease.

Bank Ignores Unlawful Administrator

On 27 December 2004 JMA Parties wrote to Mr Geoffrey Egan, Manager, St George Bank, and raised concerns over the inadequate water supply and the legitimacy of the Administrator.[10]

On 14 November 2005, the lessee wrote to St George’s Managing Director and CEO, Gail Kelly, alerting the bank to the substantial body of evidence supporting their concerns about the water and Administrator. The letter included a copy of independent water test results undertaken by Ecolab, Sonic Healthcare, and by hydraulics engineer, John Humphreys which stated water at Jenolan Caves was not fit to drink.[11] It also notified the bank “the Administrator, Allan Griffin, appears to be operating the Trust outside the Act that governs [the Trust]”.[12]

The JMA members also believe that the St George Bank would have made themselves aware of public debates regarding a property in which it had a multi-million dollar stake. It seems unbelievable that St George Bank would not keep up to date with issues affecting such a property.

The Bank was also informed that the Trust was in default under the Service Agreement it had with the lessee.[13]

A major bank would have been able to understand the damage that inadequate water infrastructure would have on the value of the property at Jenolan Caves and how this would damage the bank’s position.

In August 2005, the law and accountancy firms [14] representing the St George Bank, were asked to carry out a review of the lease, at a cost of $99,194.77. The firms were made aware of claims by the lessee that the Trust was operating unlawfully and in default of the Services Agreement. Their report made no determination on these matters.

Lessee’s Statement of Claim

On 18 November 2005, Archer Field, Director of JCR, met with representatives of the St George bank, and its legal representative[15]. At the meeting the lessee discussed with the bank his intention to present a Statement of Claim to the Trust outlining JCR’s concerns that the Trust was not operating within the Plan of Management or the Services Agreement.[16]

However, at the bank’s request, it was decided that the lessee would not file this Statement of Claim until the bank’s lawyers met with Mr Gellatly from the Department of Premier and Cabinet. This was agreed to after the bank told the meeting that it had more influence with the government. The bank and the lessee agree to not take any legal action until the bank had met with Mr Gellatly.

Instead, on 9 December 2005, without contacting the lessee the St George Bank called in Receivers and Managers to take over the Caves House business.

On 5 January 2006, after being approached by the lessee for permission to challenge the government for its breach of the lease and the Plan of Management, the bank refused. As a result, all efforts to bring the government to account for its statutory breaches [17] were halted.

St George Receivership

On 9 December 2005 the bank took action against the Caves House lessee before meeting with Mr Gellatly, despite their commitment not to do so. Receivers and Managers were appointed and the bank called in its loan to JCR.

During this period, the bank refused to allow JCR to activate the Dispute Resolution Mechanism of the Caves House lease (clause 12.6). It also refused to allow JCR to lodge its Statement of Claim, which it now could not do without the approval of Receivers and Managers. This meant the Trust continued, unchallenged, to provide unfiltered and contaminated water to the public at Jenolan Caves.

The Receivers and Managers either removed, or allowed the removal of, the signage erected by the lessee and JMA that warned the public not to drink the tap water at Jenolan Caves, on or about 10 December 2005. This was done despite the fact the bank was aware of the public health risk of the water.[18] Members of the public visiting the Jenolan Caves drank unfiltered water during the eight month receivership period.

Sale at a Steal

The Receivers and Managers reported the property was unsaleable[19] and acknowledged the lessee’s claim that the government, “provided inadequate services and infrastructure, which impacted upon the ability of the resort to trade profitably”. They did not review “the veracity of these claims”.[20] 

On 27 April 2006, Managers from the Loans Management Unit of St George Bank[21] met with potential financiers and advised “St George Bank want out ASAP”.[22] These statements suggest that after being briefed on the government’s mishandling of the Jenolan matters, the bank made a commercial decision to sell the hotel at a discount and simply walk away without regard to the law.

The sale price included an agreement by the signatories to the deed that they would take no further action in relation to this matter. The settlement amount was paid to the Receivers and Managers for their services without a surplus fund to pay the creditors and shareholders. The price paid was significantly less than the government[23] and bank[24] valuations of the Caves House property.  

Under the Corporations Act, the bank’s appointed Receivers and Managers had a duty to sell the Caves House property at market value.

In a letter from the Receivers and Managers to the lessee on 6 June 2006, it was made clear that they had not offered the Caves House property for sale, nor had they received any unsolicited offers for the 4 ½ star property.[25] This is no evidence to suggest that either the Receivers and Managers or the bank attempted to sell the Caves House lease at its market value.

In 2006, the bank turned down an offer of $3.25 million by the lessee to purchase the bank’s debenture. Instead, it accepted the government’s offer of $1.3 million.

On 30 June 2006, one day before amendments to the National Parks and Wildlife Act 1974 would come into effect, the bank and the government signed a deed to transfer the property. The bank claimed it was unable to sell the lease, and transferred it to the NSW Government for "10 cents in the dollar".[26] The government relied on one signatory on this Deed, the Trust Administrator, Alan Griffin.[27]

Three weeks earlier, on 6 June,  the Receivers and Managers had written to the lessee stating the property had not been offered for sale nor had they received any offers during the past six months, suggesting it was the bank's intention to return the property to the government from the start.[28] 

The bank had previously received complaints from the lessee regarding its conduct during the receivership period.[29] The bank dismissed these complaints and stated it had not breached its duty. The bank did not reference any specific points when it made this allegation.[30]

The bank received further complaints between 2006 and 2012, but continued to activate the complaint policy as outlined in clause 35 the Code of Banking Practice.[31] 

To Sum up...

Despite its awareness that the lessee intended to bring legal action against the Trust, the bank appointed Receivers and Managers to Caves House. The St George Bank knew that by doing so it denied the lessee the right to recover damages from the government. The bank, throughout this period, failed to explain its decisions.

The St George Bank also had a code of ethics. This sets out expectations for staff and included “high-standards of integrity and honesty in all dealings, the avoidance of conflicts of interest and observance of the law”.[32] The enforcement of this code was the responsibility of the bank's directors. They were also responsible for implementing the bank’s governance procedures and overseeing management of bank controls, systems and procedures and ensuring compliance with regulatory and prudential requirements.[33]

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

For more information on how major banks have defrauded thousands of customers check out our submission to the Parliamentary Committee on Corporations and Financial Services. They recently published our submission on the impairment of customer loans which you can read at http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/customer_loans/Submissions

the Submission 120 by the JMA Parites is on the bottom of page 6.                                                                                                                                                                 

Bibliography


 

[1]Letter which referred bank to M Richardson press release

[2] PKF Corporate Advisory, Strategies for the Jenolan Caves Village & Conservation Area”, 09 May 2005, page 2.

[3] Ibid.

[4] Copies of the PKF report were forwarded to Minister Debus, Premier Iemma, CEO Gail Kelly, St George Bank.

[5]Grant Thornton, 2005, “Investigative Accountant’s Report into Jenolan Caves Resort Pty Limited ATF: The Caves House unity Trust”, 23 August 2005, page 35.

[6] Ibid.

[7] Ibid.

[8] Letter to Geoffrey Egan, Manager, St George Bank, from Archer Field, 27 Dec 2004.

[9] Advice by Senior Counsel  Robertson, T. taht was referred to members of parliament on 12 October 2005.

[10] Letter from the lessee to St George Bank CEO Gail Kelly dated 14 November 2005 in response to a review of the water documents by Meagher R, AO QC.

[11] Letter from the lessee to St George Bank CEO Gail Kelly dated 14 November 2005 in response to a review of the water documents by Meagher R, AO QC.

[12] Letter to Geoffrey Egan, Manager, St George Bank, from Archer Field, 27 Dec 2004.

[13]“Opinion” by R. P. Meagher AO QC dated 10 November 2005.

[14] Henry Davis York Lawyers and Grant Thornton LLP.

[15] Archer Field diary notes, “St George – JCR Meeting and Background”, 18 Nov 2005.

[16] Ibid.

[17] “Opinion” by R. P. Meagher AO QC dated 10 November 2005.

[18] Letter from lessee to Gail Kelly, St George Bank, dated 14 November 2005, the lessee set out a number of statements made in Parliament in 2005. The letter noted that the Hon. Michael Richardson said was concerned that the Government was “running the Caves illegally” (p. 11). In the Upper House on 19 October 2005, the Hon. Rick Colless stated the “Government plans to undermine the Lessee and force them out of business so the Government could carry out its preferred option which is to amalgamate caves tours with Caves House operators, gaining control of the commercial zone” (p. 9). Documents provided to the government that confirmed the water was far from potable.

[19] Letter to “The Creditor as Addressed” from S.J. Parberry and C.C. Hill, Administrators, PPB, 14 Aug 2006, p. 24.

[20] Ibid, p 17

[21] Letter to Rod Lawless, Manager, St George Bank, from Archer Field, Director, JCR, 27 April 2006; Rod Lawless and Steven McRitchie.

[22] Needs reference

[23] Colliers International Valuation, Sept 2004 ($9.7 million).

[24] RMB Valuation, 24 May 2004 ($11.3 million).

[25] See Jenolan Caves House, New Dimensions Conferencing Program; Independent Loss Control Pty Ltd, untouched Photos of Jenolan Caves Resort Pty Ltd, 30 December 2004; AAA Tourism Pty Ltd, National Accommodation Classification Scheme, 27 January 2004.

[26] Needs reference

[27] needs reference

[28] Letter from Paul Billingham, Receiver and Manager, to Archer Field, 6 June 2006.

[29]Letter to Gail Kelly, Managing Director and Chief Executive Officer, St George Bank, from Archer Field, Director, JCR, 18 April 2006; Letter to Rod Lawless, Manager, St George Bank, from Archer Field, Director, JCR, 27 April 2006; Letter to John Thame, Chairman and Director, St George Bank, from Archer Field, Director, JCR, 16 June 2006.

[30] Letter to A Field from Michael Bowen, General Counsel and Secretary, St George Bank, 26 June 2006.

[31] See JCR and Archer Field complaints alleging banking code breaches by the St George parties, complied on or about 19 Sept 2007.

[32] Report to the Council of Small Business Organizations of Australia, “The Australian Bankers’ Problematic Code”, 5 December 2010, p.80.

[33] Ibid, p. 156

[33] Ibid, p156

CHAPTER 9 - GETTING OUT AT ANY PRICE

This chapter explains the price that St George Bank was willing to pay in order escape from problems that it had found itself in with the lease at Caves House.

The bank was unable to sell the 4.5 star hotel at any price. The government’s actions at the site had made the property unsaleable. The bank refused to investigate any complaints, as required under its contract with the lessee, and attempted to remove itself from involvement at the property as quickly as possible.

In 2004, the lessee of Caves House, JCR, had entered into a new contract with St George Bank. JMA later obtained documents[1], which demonstrated that the terms in the contract had been varied without the lessee’s knowledge or approval.

The bank made a decision to rely on this problematic contract to exit the lease as quickly as possible. Namely, by engineering default and selling the property to the government at a significant discount.

The Banking Code of Practice contains a requirement for banks to investigate complaints. The appointment of the Code Compliance Monitoring Committee (CCMC) to enforce dispute resolution was ineffective. This raised serious concerns about the effectiveness of banking regulation in Australia.

Banking Bad: A Hidden Constitution

In 2008, an independent review of the Code of Banking Practice was undertaken. The CCMC committee members filed a submission that stated their “firm view is that the constitution is problematic”.[2] The committee argued that the powers of the organisation they ran were inappropriate and inconsistent with its independent role as claimed by the Australian Bankers Association (ABA) and banks.[3] They also suggested the organisation was insufficiently transparent and publically accountable.[4] The review’s findings were published in December 2008 and made no mention of this condemnation from the compliance monitors. Shortly afterwards the three committee members resigned.[5]

The St George Bank was contractually obliged to follow the terms set out in the Facility Offer,[6] General Standard Terms[7] and the Code of Banking Practice[8] in its contract with the lessee. Instead, the bank opted to breach its contract rather than respond to allegations of bank misconduct. The bank stated it was, “not in the interests of the Bank or its shareholders” to investigate wrongdoing.[9] [10]

The lessee's contract invited customers to file complaints, however these were summarily dismissed.

In July 2012, the JMA Parties obtained a copy of the CCMC constitution that had been formulated by the ABA Directors. It showed that the bank was able to avoid its obligation to investigate complaints through clauses in this Constitution. Most suspect of all, this constitution was never made available to bank customers.

The 16 June Complaint

On 16 June 2006, the bank received a detailed complaint from the Caves House lessee.[11] This complaint laid out concerns the bank had disregarded allegations of unlawful government behaviour and that the bank had, therefore, acted dishonestly.[12] 

The complaint referred to specific sections of the Banks’s Code of Conduct to explain how St George Bank breached its contract. Clause 2.2 of the St George Bank’s code of conduct states that the bank will act responsibly and ethically towards its customers.[13] Clause 25.2 of the Code of Conduct states the bank “will try to help customers overcome financial difficulties with any credit facility it has with the bank”.[14] These clauses were not complied with when the bank was dealing with the Jenolan Caves House. Instead of assisting the lessee to sell the hotel for a fair price, the bank took control of the property and sold it at a discount. At no time was the lessee informed by the bank of the dispute process. [15]

The 16 June complaint also referred to two letters sent to the bank on 14 November 2005.[16] The letters presented evidence that the government had been operating the property unlawfully and dishonestly since early 2004.[17] The second letter, provided legal advice by Meagher, R. AO QC stating that the government had committed a statutory breach.[18] 

Two weeks later on 30 June 2006, St George Bank signed over the Jenolan Deed. By refusing to investigate these complaints St George Bank breached its contract with its customers.

The Bank’s Jenolan Gamble

The bank avoided investigating complaints in relation to the Caves House lease for the next six years.

St George Bank relied on the CCMC constitution to achieve this. The constitution restricted the ability of the CCMC to investigate complaints. This state of affairs placed individuals and small businesses at risk when they entered into a contract with a major bank that promised to comply with the Code of Banking Practices. Problematic contracts continued for a period of ten years without the major banks being held to account by regulators.

The Boyd-Skinner Story

The Boyd-Skinner family ran a cleaning business out of Jenolan Caves House. Their family business, Lithgow Industrial Cleaning Supplies, was one of 25 businesses that were collateral damage in an action performed by the lessee’s bank.[19]They were adversely affected when the property was sold to the government at a discount. They identified issues that were at play with the banks and the government during this period in a submission to Competition Policy Review.[20]

The submission states that the government was the “beneficiary of covert banking practices” and that it may have been the St George Bank’s intention to assist the government in addressing its problems.[21] From 2004, the problematic constitution was part of the artillery major banks could fall back on. The constitution put in place by the ABA, was available to all subscribing banks and enabled them to internally decide whether to investigate complaints and breaches of contract.

The submission also states the government:

“took control of a former government owned asset, which had been improved to a very high standard with private money, for a fraction of its actual worth”.

The Boyd-Skinner family argues that Australian banks and governments are very disinterested in “justice and ethics” when dealing with local people and businesses in remote areas[22].

Duty to Investigate

St George Bank was now in breach of its contract with the lessee and subsequently with the JMA Parties. The bank and the government were willing to be in breach of their contracts rather than investigate the lessee’s complaints.

In 2010, the bank knew that by preventing the lessee and the JMA Parties from accessing the complaint mechanism set out in the Code, there would be no avenue for redress outside of the court system. The bank also was aware that those harmed by its actions lacked the resources to seek redress through the court. It seems the bank was satisfied with the outcome.

Complaint to the CCMC

On 3 October 2007 the CCMC received a complaint from the lessee. They responded claiming that they could not investigate complaints that were lodged more than one year after the event or one year after a complainant was known.[23] This was not a condition included in the Code of Banking Practice.

The compliance monitors also stated they could not investigate complaints, “if it is, or becomes, aware that the complaint is or will be heard by another 'Forum'.[24]  These limitations were set out in the CCMC’s constitution, which was not available to customers.

The JMA Parties were not able to obtain the constitution until 27 July 2012.[25] 

On 30 September 2010, 30 June 2012, and 9 July 2012 the JMA Parties submitted further complaints to the CCMC in relation to the bank’s knowledge of the unlawful appointment of the Administrator and the problematic CCMC constitution.[26]  No investigations were carried out in response to these complaints.

2010 – JMA Parties form

While the bank was apparently content with the situation, the twenty-five individuals who had become collateral damage as a result of the bank and government’s behaviour at Jenolan were without compensation for their damages.

In September 2010, these individuals obtained a copy of the Garnsey Advice and formed a group calling itself the JMA Parties.[27] The Garnsey Advice questioned the legal authority of the Minister for the Environment, Bob Debus, to appoint the Trust Administrator in 2004. The advice questioned the actions of the St George Bank and its Receivers and Managers.[28]

Later that year the JMA Parties were provided a copy of the Problematic Bankers’ Code, published by the Small Business Council of Australia in December 2010.[29] The report detailed how the bank managed to avoid complying with the Code of Banking Practice and failing to investigate their complaints.

The 2010 Petition

In 2010 the JMA Parties signed a petition calling for an investigation into allegations that the appointment of the Administrator was not authorised under the National Parks and Wildlife Act.[30] The petition was sent to the St George Bank and its Receivers and Managers as well as to members of the NSW Government. No response to the petition was received from the bank or the government.

The JMA Parties continued to collect evidence in relation to the bank’s misleading and unconscionable behaviour. On 18 March 2011, the JMA Parties obtained a copy of the Robertson Advice, which had been tabled in Parliament in 2005 but not available to the public.[31] The Robertson advice unambiguously stated that the appointment of the Administrator was unlawful.

Reasonable Banks?

The actions St George Bank took in relation to the Jenolan matter were uncommercial. The bank lost a great deal of money in its dealings with the Jenolan Caves Reserve Trust. Effectively, all funds the bank had loaned to the lessee were lost when it sold the lease at far below its valuation price.

Prior to signing the Jenolan Deed, the bank had been informed of the government’s unlawful appointment of the Administrator and its failure to comply with the Plan of Management. They failed to investigate or act appropriately. The bank’s decisions in relation to the property appear to have been driven by its haste to extricate itself from the Jenolan situation. The bank then took advantage of an insufficiently regulated financial system [32] to ensure this happened quickly.

By the end of 2011, the JMA Parties remained firm in their belief the bank’s conduct was unconscionable and that its contract was dishonest.

To Sum Up...

This chapter has demonstrated the ability of banks to take advantage of problematic contracts. It is supported with claims that the major banks have acted dishonestly for the past ten years. The failure of legislation and effective regulation has damaged the JMA Parties and the Boyd-Skinner family. The major banks concealed the CCMC constitution from customers, making them unaware of the true nature of their contracts with the banks.

When legislation is non-existent and regulation is completely ineffective, the 14 subscribing banks become beneficiaries of lies, deception and dishonesty. The public are the victim.

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

For more information on how major banks have defrauded thousands of customers check out our submission to the Parliamentary Committee on Corporations and Financial Services. They recently published our submission on the impairment of customer loans which you can read at http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/customer_loans/Submissions

the Submission 120 by the JMA Parites is on the bottom of page 6.

Bibliography


[1] In July 2012

[2]Submission to review of the Code of Banking Practice 2007-2008, CCMC: Annexure B, P2.

http://www.reviewbankcode2.com.au/ArticleDocuments/215/Code%20Sub%20AxB-constitution.pdf

[3]Ibid.

[4]Ibid.

[5] Report to the Council of Small Business Organizations of Australia, “The Australian Bankers’ Problematic Code”, 5 December 2010, page, p8.

[6] St George Bank Facility Agreement signed 24 May 2004.

[7] General Standard Terms of St George Bank part of the bank contract of 24 May 2004.

[8] Code of Banking Practice (2003) was the third document provided to the lessee when it signed the 24 May 2004 contract.

[9] Memorandum from Archer Field to John Thame, Chairman St George Bank dated 16 June 2006.

[10] Letter from Michael Bowan to Archer Field dated 16 June 2006.

[11] Memorandum from Archer Field to John Thame, Chairman St George Bank, dated 16 June 2006.

[12] Grant Thornton, “Investigative Accountant’s Report into Jenolan Caves Resort Pty Limited ATF” dated 23 August 2005.

[13] Memorandum from Archer Field to John Thame, Chairman St George Bank, dated 16 June 2006, p6.

[14] Ibid, p7.

[15] Ibid, p9.

[16] Letter from lessee to Gail Kelly, St George Bank, dated 14 November 2005, the lessee set out a number of statements made in Parliament in 2005. The letter noted that the Hon. Michael Richardson said was concerned that the Government was “running the Caves illegally” (p. 11);

In the Upper House on 19 October 2005, the Hon. Rick Colless stated the “Government plans to undermine the Lessee and force them out of business so the Government could carry out its preferred option which is to amalgamate caves tours with Caves House operators, gaining control of the commercial zone” (p. 9). Documents provided to the government that confirmed the water was far from potable. Included in the letter to Gail Kelly.

[17] Hansard: “National Parks and Wildlife Amendment (Jenolan Caves Reserves) Bill”, 12 October 2005; and Hansard: “National Parks and Wildlife Amendment (Jenolan Caves Reserves) Bill”, 19 October 2005.

[18] Letter from the lessee to St George Bank CEO Gail Kelly dated 14 November 2005 in response to a review of the water documents by Meagher R, AO QC.

[19] Professor Ian Harper Submissions dated 30 October 2014 and 14 November 2014 at: http://competitionpolicyreview.gov.au/files/2014/12/JMA_Parties.pdf

[20]Ibid.

[21] Ibid.

[22] Ibid, p6.

[23] needs reference

[24] Letter to Archer Field, Director, JCR, from Damian Paull, Chief Executive Officer, Code Compliance Monitoring Committee, 31 August 2008.

[25]Code Compliance Monitoring Committee Association Constitution.

[26] Complaint to Code Compliance Monitoring Committee, St George Bank, and Other, from all JMA Parties, 30 September 2010; Complaint to Nicola Howell, Consumer Representative, Code Compliance Monitoring Committee, from all JMA Parties, 30 June 2012; Letter to Jan Smith, Chief Executive Officer, Code Compliance Monitoring Committee, from Julia Travers, JMA Parties, 9 July 2012.

[27]Needs reference

[28] Memorandum of Advice to Mr Archer Field and St George Bank by John Garnsey QC dated 4 December 2008.

[29] Report to the Council of Small Business Organizations of Australia, “The Australian Bankers’ Problematic Code”, 5 December 2010.

[30] They JMA Parties, Petition, dated 28 August 2010.

[31] Advice by Senior Counsel, Robertson, T that was referred to members of parliament on 12 October 2005.

[32] Code Compliance Monitoring Committee Association Constitution.

CHAPTER 10 - TWO OF A KIND

The Jenolan Story looks at the deceitful practices in the New South Wales government’s public-private partnerships. It explains how the government can, at its discretion, change the law without the approval of stakeholders and partners. The JMA Parties found themselves in such a situation. They were collateral damage in an unusual, high-risk relationship in which the government provided the essential services and held all the power.

Before the Barry O’Farrell government’s term in office, it might be argued that the sixteen-year term of Labor was the most corrupt in New South Wales history. It’s not clear that this changed with governments in 2011. The most beautiful caves in the world continued to be troubled with the conduct of ambitious governments driven by deception, lies and dishonesty.

Refusal to Investigate

On 12 October 2005, the Shadow Minister for the Environment told the parliament he had obtained advice by senior counsel which stated the Minister acted outside of his powers under the Act when he appointed the administrator in 2004.[1] This advice was made available to 24 members of government[2] including future Liberal Premier Barry O’Farrell and future NSW Liberal Party Deputy Leader Gladys Berejinklian.[3]

On that same day, Minister for Environment Bob Debus stated he had received advice from the Crown Solicitor that the appointment of the administrator was valid. [4] This alleged advice from the Crown Solicitor has never been made available by the eight successive Ministers for the Environment.[5]

Debus Resigns

Minister Debus resigned in 2007. From this point, the JMA Parties referred their concerns to the five Labor Ministers who followed Mr Debus as Environment Minister between 2007 and 2011. [6]

Earlier chapters have made several discoveries about the conduct of the government during Debus’ term. His resignation made this conduct apparent. The government, in breach of the Act, appointed an Administrator to the Trust, without first removing the Trust Board.[7] Following a review in 2003, government experts recommended that the government negotiate a buyout of the lease or purchase it for $7.5 million.[8] The government did not adopt its own expert’s recommendations.

The End of Labor

In 2010, the JMA Parties wrote to the now Environment Minister Frank Sartor when the Jenolan property was again being offered up for sale. They stated,

“surely you do not want to sell property you don’t own… if you sell property you don’t own you will go to jail.”[9]

The NSW National Leader and Deputy Premier, Andrew Stoner, said that Labor was “being sneaky by trying to flog-off this Australian icon on the quiet. This news will not be welcomed by people living in the Central West who depend on Jenolan Caves for employment and business”. [10]

In response to correspondence to Premier Keneally, on 15 December 2010, she stated that the JMA Parties’ allegations were primarily the concern of the Minister for Climate Change and the Environment, Frank Sartor.[11]

In early 2011, at the end of the Labor government’s term, Environment Minister Frank Sartor continually stated that there was no problem with the validity of the appointment of the administrator despite evidence JMA provided to the contrary. Writing to the Hon. Don Page on 3 March 2011 the Minister stated “I’m advised that the government does not agree that the deed is invalid. Furthermore, I am advised that there are no issues relating to the validity of the deed, or the validity of actions taken pursuant to the deed”.[12]

Sartor maintained there were “no issues” with the deed, despite he and Page both having received a copy of the Robertson advice, which provided 7 pages of issues. The Minister continued to write to various government MPs making the same statement.[13] These misleading statements to his colleagues breach the Ministerial Code of Conduct.[14]

Minister Sartor had access to the relevant cabinet records in relation to the appointment of the administrator in 2003. These documents noted that he was present when the government made the decision not to provide any funds that would assist the businesses in the village and he also approved the government decision to replace the Trust Board.[15] This latter decision was not consistent with the expert’s recommendation, because the government did not approve the purchase of the lease.

Sartor was also in the parliament when Minister Debus stated that the Crown Solicitor examined the appointment of the administrator and found it was valid, despite alternate Senior Counsel’s advice presented to the parliament by the Shadow Minister that day.[16] This suggests that Sartor was part of a government plan to mislead government MPs and the public in 2010. He consistently denied that the appointment of the administrator was invalid and there were no issues in relation to it. The Minister’s statements were in line with the government in 2010 – they were misleading and intended to mislead.

The Garnsey advice

On 11 May 2010, just less than one year before he became Premier, Barry O’Farrell MP was sent advice by the lessee that the Administrator’s appointment was invalid and that the subsequent actions of the Trust Administrator were illegal.[17] In particular the letter notes that the Trust Administrator signed the Jenolan Deed with St George Bank on 30 June 2006, one day prior to the amendments to the Act coming into effect.

Attached to this letter was a copy of the Garnsey advice.[18] This advice by queen’s counsel states that the appointment in 2004 of a Trust administrator was not authorised under the National Parks and Wildlife Act 1974. [19] According to Garnsey the administrator could not act validly on behalf of the Trust. He states:

“[the administrator] could not bind the Trust by entering into the Jenolan Deed… including acceptance of the transfer of the lease to the Trust...”

Even if the appointment of the administrator was valid, which the Garnsey advice stated it was not, the NPW Act was amended from 1 July 2006. [20] The care, control and management responsibilities of the Trust were then transferred to the Director General of the Office of Environment and Heritage.[21] The Administrator did not have power to accept the transfer of the lease to the Trust on 3 July 2006.[22]

In 2010 after receiving a copy of the Garnsey advice, the 25 people who had become collateral damage by the government’s actions at Jenolan Caves formed the JMA parties. In September 2010 they signed a petition calling for an investigation into the unlawful appointment of the administrator.[23] This was sent to both the government members and staff and to St George Bank.[24] It received no response from either signatory.

Liberal Party Promise

When five Labor Environment Ministers[25] had refused to investigate the Jenolan issues between 2004 to 2006 the JMA parties wrote to Opposition Leader Barry O’Farrell. They sought confirmation that the Jenolan issues would be investigated in order to bring an end to allegations of misconduct by the government. This would also avoid the Liberal Party being implicated in this longstanding situation.[26] O’Farrell referred their concerns to the Shadow Minister for Environment, Catherine Cusack. [27]

Shadow Minister Cusack met with members of the JMA Parties on 19 January 2011 to consider their concerns regarding the appointment of the administrator and the supporting Garnsey advice. At the conclusion of the meeting Ms Cusack reportedly stated ‘I promise I will look at the information you have given me and research the [invalid deed”. [28] Cusack stated in later correspondence that she intended to seek further legal advice on the validity of the appointment after the election. [29]

The Liberal Party did win the 2011 election. Barry O’Farrell’s ‘Contract with NSW’ promised to restore accountability and raise ministerial standards in government. [30] The promise of further investigation by Cusack was enthusiastically received by the JMA Parties.

Despite Premier O’Farrell’s commitment that the Shadow Ministry would be retained if elected, Cusack was replaced with Robyn Parker as the Minister for Environment following the election in 2011. [31] 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.

Bibliography


[1] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003.

[2] The Hon. Greg Aplin, The Hon. Barbara Perry, The Hon. Donald Page, The Hon. Andrew Constance, The Hon. Katrina Hodgkinson, The Hon. Linda Burney, The Hon. Andrew Fraser, The Hon. Cherie Burton, The Hon. Barry O’Farrell, The Hon. Anthony Roberts, The Hon. Thomas George, The Hon. Paul Lynch, The Hon. Michael Daly, The Hon. Carmel Tebbutt, The Hon. Richard Amery, The Hon. Adrian Piccoli, The Hon. Jillian Skinner, The Hon. Andrew Stoner, The Hon. Shelley Hancock, The Hon. Chris Hartcher, The Hon. George Souris, The Hon. Brad Hazzard, The Hon. Gladys Berejiklian, and The Hon. Noreen Hay.

[3] Memorandum to the Administrative Decisions Tribunal dated 30 July 2013 regarding case 133127.

[4] Hansard, 12 October 2005, NSW Parliament, National Parks And Wildlife Amendment (Jenolan Caves Reserves) Bill Hansard, p18460.

[5] Ministers for Environment: Phil Koperberg (2 April 2007 to 27 February 2008), Verity Firth (27 February 2008 to 5 September 2008), Carmel Tebbutt (8 September 2008 to 14 September 2009), John Robertson (14 September 2009 to 4 December 2009), Frank Sartor (8 December 2009 to 28 March 2011), Robyn Parker (3 April 2011-23 April 2014), Rob Stokes (23 April 2014-2 April 2015) and Mark Speakman (2 April 2015-present).

[6] Ministers for Environment: Phil Koperberg (2 April 2007 to 27 February 2008), Verity Firth (27 February 2008 to 5 September 2008), Carmel Tebbutt (8 September 2008 to 14 September 2009), John Robertson (14 September 2009 to 4 December 2009) and Frank Sartor (8 December 2009 to 28 March 2011).

[7] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003.

[8] DPC14/05302 A14,Tab A, JCRT Review: CCQG Recommendations 31 October 2003; DPC14/05302 A14 Special Review: JCRT by Percy Allan on or about 19 November 2003.

[9] Letter to Diane Leeson from JMA Parties, 18 July 2012 regarding accessing government information in relation to the appointment of the Trust Administrator.

[10] Melouney, C. 11 April 2010, ‘Lease offered on “Fawlty Towers” guesthouse’, The Sunday Telegraph.

[11] Letter to Anthony Roberts MP from Premier Kristina Keneally MP, 15 December 2010.

[12] Letter to Mr Don Page, MP, from the Hon. Frank Sartor, 9 March 2011.

[13] Letter to Hon. Mike Baird, MP, from the Hon. Frank Sartor, 15 February 2011; Letter to Amanda Fazio, from Bruce Barbor, 15 February 2011;
Letter to Hon. Richard Amery, MP, from the Hon. Frank Sartor, 8 March 2011, 8 March 2011; Letter to Mr Don Page, MP, from the Hon. Frank Sartor, 9 March 2011; Letter to Hon. Andrew Stoner, MP, from the Hon. Frank Sartor, 24 February 2011; Letter to Anthony Roberts, from Bruce Barbor, 7 February 2011; Letter to George Souris, from Bruce Barbor, 14 February 2011.

[14] NSW Government, Ministerial Handbook 2011, Annexure A Code of Conduct for Ministers of the Crown, “Ministers will perform their duties honestly and in the best interest in the people of NSW” and “Ministers will be frank and honest in official dealings with their colleagues”.

[15] Needs reference

[16] Hansard, 12 October 2005, NSW Parliament, National Parks and Wildlife Amendment (Jenolan Caves Reserves) Bill Hansard.

[17] Email from A & C Field to Barry O’Farrell MP, 11 May 2010, Page 1-3, Pager 4-6.

[18] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003.

[19] Ibid, p2

[20] National Parks and Wildlife Amendment (Jenolan Caves Reserves) Act 2005, No 83.

[21] Ibid, p10.

[22] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003,p2

[23] They JMA Parties, Petition, dated 28 August 2010.

[24] needs reference

[25] Ministers for Environment: Phil Koperberg (2 April 2007 to 27 February 2008), Verity Firth (27 February 2008 to 5 September 2008), Carmel Tebbutt (8 September 2008 to 14 September 2009), John Robertson (14 September 2009 to 4 December 2009) and Frank Sartor (8 December 2009 to 28 March 2011).

[26] 26 November 2010 letter

[27] Letter from Barry O’Farrell to JMA Parties, 15 October 2010.

[28] Mrs Rosemarie Bayne’s and Mr Archer Field’s minutes from the meeting between Catherine Cusack and them, dated 19 January 2011.

[29] Email to Archer Field from Hon. Catherine Cusack, 28 July 2011.

[30]Liberals and Nationals Contract with NSW”; Barry O’Farrell 16 March 2011, “O’Farrell says Coalition promises iron clad”, accessed at http://www.abc.net.au/news/2011-03-16/ofarrell-says-coalition-promises-iron-clad/2655200.

[31] “Here comes O’Farrell’s new wave”, Heath Aston, Sydney Morning Herald, 6 February 2011. Accessed 29 April 2015 at, http://www.smh.com.au/nsw/here-comes-ofarrells-new-wave-20110205-1ahmu.html; “Barry O’Farrell line-up breaks pledge” Ean Higgins, The Australian, 4 April 2011, accessed 20 April 2015 at http://www.theaustralian.com.au/news/nation/ofarrell-line-up-breaks-pledge/story-e6frg6nf-1226032933060.

CHAPTER 11 - CHANGING LIBERAL VALUES

In 2010, as Opposition Leader, Barry O’Farrell made a ‘Contract with NSW’ to deliver more accountable and honest government. The Liberals had been vocal critics of the Labor government’s handling of Jenolan Caves whilst in opposition. Throughout 2011, the JMA Parties came to realise that the Liberal government was no more likely to investigate the unlawful administration at Jenolan Caves than the previous government had been.

Barry O’Farrell’s Promise

As discussed in the previous chapter, the JMA Parties had received assurances from Shadow Environment Minister Catherine Cusack prior to the 2011 election that she would investigate whether the appointment of the administrator at Jenolan Caves was lawful. Despite Barry O’Farrell’s earlier promise that the Shadow Ministry would be maintained if the Coalition were elected, Catherine Cusack was overlooked as Environment Minister, and Robyn Parker appointed.

The JMA Parties remained hopeful that the Liberal government, having been outspoken on the appointment whilst in opposition, would look into the matter more thoroughly. However, once elected the Liberals changed their position. Any prospect of an investigation into the appointment vanished. This was in spite of O’Farrell being provided a copy of advice by Garnsey J, QC. on 11 May 2010 [1] and the Liberals in government being briefed on Jenolan matters prior to the election. [2]

This became of even further concern to the JMA Parties when the Liberals abolished the Department of Environment following the election.[3] The Department of Premier and Cabinet (DPC) would be the responsible department for Jenolan Caves Trust and any investigations into deception and dishonest conduct would now be directly supervised by the Premier’s own department.

By this time, Barry O’Farrell was the fifth NSW Premier[4] to be briefed on the Caves House acquisition during the period when there was no Trust Board.

The JMA Challenge

Throughout 2011, JMA members travelled across NSW and briefed government members, or their senior staff, on the issues relating to the conduct of the Trust in 2004 to 2006 and concerns with the government’s mismanagement of the iconic caves.[5] Robyn Parker’s office was also briefed.[6]

The government misleads the public

In early 2011, Assistant Director-General DPC and Trust Administrator Dianne Leeson wrote letters to JMA and government members stating that the government does not agree that there “are any issues relating to the validity of the Deed”. [7] Leeson also suggested that further complaints should be directed to the NSW Ombudsman. This set a precedent for future government correspondence regarding the appointment, despite the change in government on 28 March 2011.

On 21 April 2011, the JMA Parties lodged a GIPA application with Jenolan Caves Trust requesting advice that administer relied on when he executed the Jenolan Deed on 30 June 2006.[8] A response to this application was received from OEH on behalf of the government on 10May 2011.[9] OEH stated that it did not hold any of this information. OEH stated it contacted DPC, but that department did not have any information either. JMA spoke with the OEH by telephone and were advised that if DPC had such a document they would have located it.[10]

On 20 June 2011, Premier O’Farrell involved himself in the debate. In response to a letter from the Hon. Clover Moore MP, Premier O’Farrell stated “the government does not agree that the Jenolan Deed, the transfer of the Lease or the sale of the assets under the Deed, were invalid”.[11] The Premier made no comment on the Garnsey advice and made no reference to legal advice that the government possessed prior to the administrator signing the Jenolan Deed in 2006.

The JMA Parties’ complaints were again referred to the Ombudsman despite the fact they had previously been referred to the Ombudsman without investigation.[12] This previous referral had been supported by the Hon. Peter Debnam MP, previous Liberal Leader.[13] However, the NSW Ombudsman usually does not investigate complaints of events more than 12 months before the complaint was made.[14] The JMA Parties’ concerns that the Ombudsman would not investigate the events surrounding the appointment of the administrator were never addressed by the government. [15]

The Premier based his letter to Clover Moore on a document signed by the Director- General of the DPC.[16] The document agreed how the government would respond to the Hon. Clover Moore’s letter on behalf of the JMA Parties.

Minister Robyn Parker

After having been briefed on the Jenolan issues, Environment Minister Robyn Parker wrote to JMA members and Liberal MPs on 4 August 2011 stating:

“the government does not agree that the Deed, the transfer of the Lease or actions taken pursuant to the Deed, were invalid.”[17]

The Minister did not substantiate this statement and did not refer to any legal advice the government had which conflicted with the JMA Parties’ advice obtained from the government’s files.[18] Tellingly, Parker did not comment on the Garnsey or Robertson legal advice[19]. Once again, the NSW Ombudsman’s services were recommended.

On 12 September 2011, the JMA Parties wrote to Minister Parker,[20] in relation to the Robertson advice.[21] This advice supported Garnsey and had been held by both sides of government since 12 October 2005.[22] The JMA letter questions why the O’Farrell would not accept senior counsel’s advice. It asserted that it was “not proper for you to simply rely on the previous Minister’s assertion that the administrators’ appointment was valid”. [23]

On 12 October 2011, Independent MP Greg Piper asked whether the government would make any investigation into the JMA Parties’ claims. [24]

Despite the Minister Parker’s awareness of the Liberal’s pre-election promise, and the advice it now held by two Senior Counsels, the Minister replied, “No”.[25]                     

Hansard Q and A

Figure 1. The Minister unequivocally states there will be no investigation.[26]

Jenolan Water Issues

The JMA Parties included owners and staff working in the food and beverage business at Jenolan Caves between November 1999 and 2006 when the property was returned to the government. [27] On 14 October 2011, the principle JMA owner, Mr Templeton, referred a detailed chronology on water issues and mismanagement to the Minister for Justice, the Hon. Greg Smith, SC.[28] The letter demonstrated how far the government had gone to make the operation of his and other businesses impossible and to risk public health. His letter and chronology were also sent to Premier O’Farrell[29], Minister for Health Jillian Skinner[30], Minister for Environment Robyn Parker[31], and the members for Bathurst, Paul Toole[32] and Blue Mountains, Rosa Sage[33].

Premier O’Farrell received the letter and stated the Attorney General Greg Smith was the appropriate person to deal with these concerns. [34] The issue was never addressed by the Attorney General.

To sum up…

The Liberals, once critics of the Labor government’s handling of the Jenolan Caves, promised to investigate the JMA claims if the Coalition won the 2011 state election. No investigations followed, despite both the Premier and his Cabinet having advice that the appointment was unlawful and the water was far from potable.

In the three years that Barry O’Farrell was NSW Premier, the government continued to make the same misleading statements that Labor had used whilst in office. At no time did Premier O’Farrell or his Cabinet present advice that supported the Liberal’s view that the appointment of the administrator was valid and the water potable. 

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Bibliography

Supporting documents will be uploading soon...


[1] Letter from A & C Field to Barry O’Farrell MP, 11 May 2010. Part 1 Part 2 

[2]Letter to Hon. Barry O’Farrell from JMA Parties, 21 January 2011.

[3] Nicholls, S and A. Smith, 2011, “O’Farrell slices up landcare control”, Sydney Morning Herald, 4 April, www.smh.com.au/environment/conservation/ofarrell-slices-up-landcare-control-20110403-1ctax.html.

[4] Bob Carr (1995-2005), Morris Iemma (2005-2008), Nathan Rees (2008-2009), Kristina Keneally (2009-2011) and Barry O’Farrell (2011-2014).

[5] They were provided with a copy of the option paper prepared by Professor Grahame Dowling (Australian Graduate School of Management) and Chris White (previously deputy director of ). Briefing on addressing options available to the new government in returning the importance of the Jenolan Caves as a major tourist attraction.

[6] JMA briefed Robyn Parker, Member for Maitland, Liberal Party; Donald Page, Member for Ballina, National Party; Ray Williams, Member for Hawkesbury, Liberal Party; Paul Toole, Member for Bathurst, National Party; Roza Sage, Member for Blue Mountains, Liberal Party; Andrew Gee, Member for Orange, National Party; Steven Bromhead, Member for Myall Lakes, National Party; Grant Troy, Member for Dubbo, National Party; Stuart Ayers, Member for Penrith, Liberal Party; Andrew Fraser, Member for Coffs Harbour, National Party; Geoffrey Provest, Member for Tweed, National Party; Greg Piper, Member for Lake Macquarie, Independent; Leslie Williams, Member for Port Macquarie, National Party; Andrew Stoner, Member for Oxley, National Party.

[7]Letter to Nick Evans from Dianne Leeson dated 24 January 2011, Letter to MacMahon from Dianne Leeson dated 1 February 2011.

[8]GIPA application filed at DPC, 21 April 2011.

[9]Letter from Dr Racho Donef, GIPA/Privacy Officer OEH, to R Bayne dated 10 May 2011.

[10]Letter R Bayne from Nick Evans, dated 12 May 2011.

[11] Letter to the Hon. Clover Moore MP from Premier Barry O’Farrell, 20 June 2011.

[12]27 August 2010: JMA to Ombudsman

[13] 1 September 2010: ref 2/Templeton/28002

[14]6 September 2010, Ombudsman to Templeton

[15] Letter to Barry O’Farrell from Nick Evans, 24 June 2011.

[16] Department of Premier and Cabinet, Briefing for the Premier, ‘Correspondence – Jenolan Caves – Validity of Jenolan Deed 2006’, 2011/24672.

[17]4 August 2011 letters: To the Hon. Don Page MP from Robyn Parker MP; To Mr Nick Evans from Robyn Parker MP; To the Hon. Richard Torbay MP from Robyn Parker MP.

[18]Robertson advice

[19]Garnsey advice

[20]Letter to the Hon. Robyn Parker MP from R. Funke, 12 September 2011.

[21] Robertson advice

[22]Hansard, 12 October 2005

[23] Letter to Parker from Funke, 12 Sept 2011.

[24]Question and Answers Paper No. 48, 12 October 2011; Question and Answers Paper No.59, 15 November 2011.

[25] Ibid.

[26] Source: Question and Answers Paper No. 48, 12 October 2011; Question and Answers Paper No.59, 15 November 2011.

[27] The lessee introduced management agreements for the various businesses at Jenolan Caves including the food and beverage business in 1996. Between 1996 and 1999 the principal owner of these agreements was Harvey World Travel. In 1999 JMA food and beverage purchased the Harvey World Travel rights to operate Trails Bistro and Chisholm’s Dining Room.

[28] Templeton letter

[29] Letter to Greg Smith (copy to Barry O’Farrell) from JMA parties, 14 October 2011.

[30] Jillian Skinner, Minister for Health and Member for North Sydney.

[31] Robyn Parker, Minister for Environment and Member for Maitland.

[32] Paul Toole, Member for Bathurst.

[33] Rosa Sage, Member for Blue Mountains.

[34]Letter to David Templeton from Barry O’Farrell, 15 November 2011.

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