Item 14.4 - Attachment 3

Regulation & Enforcement of Brothels and massage Parlours (D00935148)



ITEM NUMBER         13.3

SUBJECT                   Regulation & Enforcement of Brothels and Massage Parlours

REFERENCE            F2007/01985 - D00935148

REPORT OF              Strategic Analyst, Crime and Corruption Prevention        





This report provides Council with an update on the work of the Strategic Analyst, Crime and Corruption Prevention particularly in relation to the regulation and enforcement of brothels and massage parlours.






(a)       That Council receive and note this report.


(b)       Further, that Council refer both this report and the latest Report of Investigation into Compliance Section to ICAC for information and review.





1.      The Independent Commission Against Corruption (ICAC) commenced an investigation into the activities of the Compliance Section of Council’s Development Services Unit in November 2006 on the basis of information received.  In August 2007, ICAC published a report of its investigation finding that the former Team Leader Compliance Services acted corruptly in accepting cash and sexual favours in exchange for failing to undertake inspections and providing prior warning of inspections.


2.      A detailed report on improvements arising out of the ICAC report was provided to Council on 29 October 2007 (SAR 34/2007 refers) and a further update appears elsewhere on this Agenda, deferred from the Council meeting of 28 April 2008.


3.      In September 2007, a temporary position of Strategic Analyst, Crime and Corruption Prevention (CCPA) was created.  The Workplace Reform Proposal includes the following background comments:


Recent enquiries both within Council and by external agencies have shown the need for a more strategic approach to information gathering and dissemination in relation to crime and corruption trends in the Council area.   The long-term risks to the development and growth of Parramatta posed by organized criminal activity needs to be addressed overtly and effectively.


4.      The key accountabilities for this new position include:


(a)      establish sustainable networks for intelligence sharing in relation to crime prevention and regulatory services


(b)      contribute to the reduction in the level of organized crime within the Parramatta Local Government Area through collaborative operations between Council, law enforcement agencies and Council’s legal service providers


(c)     development of policies, procedures and training strategies that enable an holistic risk-based approach to compliance related services as part of Council’s corruption resistance strategy.

(See Position Description shown at Attachment 1)


5.      Council resolved on 14 April 2008 to receive a progress report on the work carried out to date by the CCPA as detailed below:


(a)     That a progress report be provided by the Strategic Analyst, Crime and Corruption Prevention Officer on the work carried out to date since his appointment and further, that the officer’s view be sought on what actions need to be undertaken in order to oversee the regulatory and development functions of Council, so as to ensure appropriate and responsible standards of approval practices covering brothels, massage parlours, licensed premises, tattooists and piercing establishments.

(b)     Further, that in order to better address the public interest and future integrity of the City’s governance around such issues of brothels, licensed premise, massage parlours, tattooists and piercing establishments, that an independent report be brought forward from an appropriate body as to how those issues mentioned could be addressed and strengthen Council’s adopted Crime Prevention Policy.




6.      The corrupt conduct of the former Team Leader Compliance Services contributed in part to a proliferation of illegal brothels and massage parlours within the Parramatta Local Government Area.  These corrupt activities also enabled some approved brothels and massage parlours within the Parramatta Local Government Area to operate in breach of their consent conditions.  These breaches commonly included operating in breach of operating hours, operating with more sex workers than permitted, operating more service rooms than permitted and serious fire safety defects.

7.      Brothel owners and operators tend to be somewhat transient in nature and are not always focused on complying with conditions of any Development Approval that may be in place. 


8.      Illegal brothel operators have little or no regard for planning and land use laws and tend to shift their operations frequently to evade attention.  The generation of large sums of what is predominantly a cash business is a significant motivator for illegal brothel operators to ply their trade.




9.      In August 2007, ICAC made a number of recommendations relating to Council procedures, systems and staff training.   The changes and improvements that have resulted include:


(a)   modification of the CRM system


(b)   provision training to Compliance Team members including brothel enforcement and investigative training

(c)    formulation and implementation of corruption resistant Operating Procedures for compliance activities involving legal and illegal brothels and massage parlours and

(d)   risk review conducted of Compliance activities.  Identification of OH&S issues.  Equipment issued and training provided to Compliance Team.

Council’s response to the ICAC recommendations are detailed in the separate report on this Agenda titled Report of Investigation into Compliance Section.


10.    The Integrity Steering Committee has been established to oversight Council’s brothel and massage parlour compliance activities, in particular, providing advice on policy and procedural matters.  The Integrity Steering Committee was formed in October 2007 and its membership includes General Manager (Chair), Special Advisor (John Mant), Manager Service Audit and Review, Strategic Analyst Crime and Corruption Prevention, Group Manager Outcomes and Development, Manager Development Services and Group Manager Corporate Services.

11.    Early this year, new procedures were introduced that enable the CCPA to review and provide comment on all development applications relating to brothels, massage parlours, licensed premises, tattoo parlours and piercing salons.  The CCPA can provide information and advice on the appropriateness of any intended land use with in our LGA to supplement any information provided by external agencies such as the NSW Police. Recently this has contributed to a number of applications for brothels and massage parlours being refused.


12.    The CCPA undertakes an assessment of all brothels and massage parlours which includes reviewing relevant Council records and intelligence data from external agencies such as the NSW Police.   Those premises which are of particular interest to such external agencies, whether authorized or operating illegally, are determined to be of special interest and the relevant compliance activities are overseen by the CCPA in consultation with the external agencies.   This ensures that Council’s activities do not compromise the investigations of other agencies nor place its officers in undue risk.

13.    The NSW Police lead investigations into special interest premises and appoint a Team Leader to liaise with other participating agencies, including Council.  These investigations follow the standard operating procedures of the NSW Police and Council’s CCPA and Compliance Officers participate in order to collect evidence in relation to breaches of development consents.

14.    There are presently twelve special investigations in progress which have resulted in entry to premises by way of either inspections pursuant to the Environmental Planning and Assessment Act or by virtue of search warrants executed by NSW Police or the Department of Immigration and Citizenship.

15.    Key matters investigated by way of joint agency operations include brothel owners and operators engaging in activities such as the employment of illegal immigrants as sex workers, sex workers obtained and detained by way of sexual servitude and the use of underage girls as sex workers.   Of concern is that these issues are predominant amongst the licensed brothels within the Parramatta LGA.

16.    Thirty-one Penalty Infringement Notices have been issued by the CCPA to the owners and operators of special interest premises, with a total fine value of approximately $16,500.  None of these fines have been contested within the Courts.

17.    Additionally, the NSW Fire Brigade has issued two Section 10 Emergency Orders against licensed brothels during these joint agency operations.

18.    The majority of brothels and massage parlours in Parramatta Local Government Area are not determined to be of special interest to external agencies.  Compliance activities relating to these premises are managed by Council’s Development Control Team in accordance with internal procedures.   These procedures have been developed to enhance corruption prevention in field activities and cover matters such as management of evidence, use of utility orders and occupational health and safety.

19.    As outlined in the separate Report of Investigation into Compliance Section, some fifty inspections of brothels and massage parlours (both unauthorised and approved) have been carried out by the Development Control Team since October 2007.   These inspections have resulted in fifteen Brothel Closure Orders being issued by Parramatta Council and four Utility Orders being issued by Parramatta Local Court over the last six months.

20.    Staff from Council’s Development Control and Environment and Health teams carry out similar inspections of other types of premises including tattoo parlours and body piercing establishments once development consent has been issued.   Periodic inspections are conducted to ensure compliance with consent conditions as well as in response to complaints which may be received in relation to these land uses.

21.    In summary, significant improvements have occurred in the regulation and enforcement of brothels and massage parlours within the local government area.  The number of these premises has been reduced overall and all premises identified by the ICAC Report have been closed and/or closed and prosecuted by PCC.   The number of illegal brothels and massage parlours establishing in the area has also significantly decreased.


22.    The Special Advisor to the Integrity Steering Committee, John Mant, has reviewed both this report on the recent status report on implementation of the ICAC recommendations and provides the following comments:


There are three lessons from the Council’s regulation and enforcement of brothels and massage parlours:


(a)     The importance of an intelligence based strategic approach, rather than merely responding to complaints.


(b)     The virtue of detailed standard operating procedures that is documented and learnt.


(c)     The usefulness of inter-agency partnerships that build trust.


The CCPA and the Development Control Team are to be commended for their efforts. Council is leading the way in this difficult area of enforcement.  As has been shown in cities such as New York, a no-exceptions enforcement of rules can be an important element in combating crime and improving security.



23.    Council works collaboratively on a variety of crime and corruption prevention activities and receives regular community input through the Community Safety Advisory Committee.  In addition to the recently completed City Centre Crime Prevention Plan, Council is currently working with the NSW Police on the development of a Memorandum of Understanding to support the implementation of this plan.  Council also regularly participates in other forums such as the Parramatta Crime Prevention Partnership and the Parramatta Liquor Accord.   A separate report elsewhere on this Agenda outlines the current operations of the Parramatta Liquor Accord.

24.    As outlined above, Council has established networks with external agencies including NSW Police and Department of Immigration and Citizenship in a whole of government approach to the regulation and enforcement of brothels and massage parlours.   During preparation of this report, Parramatta Local Area Command was invited to provide comment on Council’s recent activities in the regulation and enforcement of brothels and massage parlours including the role of the CCPA.   The response confirms the significant improvements that have been achieved as outlined in the confidential ATTACHMENT 2.




25.    Overall, PCC has either met or exceeded the recommendations from the ICAC report following investigation of the Compliance Section in 2007.  PCC has set the benchmark in this particular field of regulatory function and intends to continue on a path of continuous improvement in this area.   In addition to Council pursuing the recommendations outlined in the ICAC report, Council’s Manager Service Audit and Review has commenced development of a Corruption Prevention Strategy that will help to strengthen corruption resistance across the range of Council activities.


26.    It is recommended that Council refer both this report and the separate status report on the Investigation into Compliance Section, to ICAC for information and review.



Nicholas Mamouzelos                                      Sue Colman

Crime & Corruption Analyst                             Acting General Manager





Position Description - Crime & Corruption Analyst

3 Pages



Confidential Information from NSW Police - Parramatta LAC (Supplied to Councillors ONLY)

1 Page



Memorandum to Councillors of 28th May 2008

2 Pages



Initial Draft Report of Strategic Crime and Corruption Analyst Dated 9th May 2008

5 Pages