Copy of previous report considered at Council Meeting on 24 November 2008 regarding the Status Report of Implementation of ICAC Recommendations

Item 7.3 - Attachment 1

Copy of previous report considered at Council Meeting on 24 November 2008 regarding the Status Report of Implementation of ICAC Recommendations

CITY LEADERSHIP AND MANAGEMENT

ITEM NUMBER 14.4

SUBJECT Status Report of Implementation of ICAC Recommendations

REFERENCE F2007/01985 - D01070624

REPORT OF Manager Service Audit and Review

PURPOSE:

To provide Council with an updated response to the recommendations of the Independent Commission Against Corruption (ICAC) report into corrupt conduct associated with the regulation of brothels in Parramatta so as to enable an updated report to be provided to the ICAC.

RECOMMENDATION

(a) That Council receive and note this report.

(b) Further, that Council refer this report together with the schedule at Attachment 1 to the ICAC for information.

BACKGROUND

1. The ICAC commenced an investigation into the activities of the Compliance Section of the Development Services Unit in November 2006. In August 2007 the ICAC published a report of their 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 for providing prior warning of inspections.

2. In August 2007 Council provided the ICAC with a status report relating to the thirteen recommendations contained in the ICAC report. A detailed report of improvements arising out of the ICAC report was provided to Council on 29 October 2007 (SAR 34/2007 refers).

3. In May 2008 two reports were provided to Council covering the ICAC Investigation into the Compliance Section (Attachment 2) and the Regulation and Enforcement of Brothels and Massage Parlours (Attachment 3). At its meeting of 26 June 2008, Council referred the two reports to the ICAC for information.

ISSUES/OPTIONS/CONSEQUENCES

4. In a report to Council of 26 June 2008 (Attachment 3), the Strategic Analyst, Crime and Corruption Prevention concluded that “Overall, PCC has either met or exceeded the recommendations from the ICAC report following investigation of the Compliance Section in 2007”. A similar conclusion was drawn in an independent review of the implementation commissioned by the previous Acting General Manager.

5. The re-structure of the Outcomes and Development Group approved by Council in July 2008 has resulted in the Compliance Services Team moving from the Development Services Unit to the Regulatory Services Unit. A number of changes to procedures have been implemented, and further development is required as vacant positions are substantially filled. The updated report to the ICAC reflects a number of these changes.

6. Council’s implementation plan relating to the ICAC recommendations was provided to the ICAC in December 2007. The implementation plan is posted on the ICAC website. Council is required to provide the ICAC with updates on progress of the implementation plan on an annual basis in 2008 and 2009.

7. Following a meeting with ICAC officers in August 2008, the Manager Service Audit & Review secured an extension to the reporting deadline to enable this report to be provided to the newly elected Council. In a letter from the ICAC dated September 2008, the Commission requested a 12 month implementation progress report be provided by 28 November 2008.

8. The current status of implementation of the ICAC recommendations is provided in the pro-forma schedule at Attachment 1.

Michael Quirk

Manager – Service, Audit and Review

Attachments:

1	12 Month Implementation Progress Report	8 Pages
2	Status Report of Implementation of ICAC Recommendations (D00917795)	3 Pages
3	Regulation & Enforcement of Brothels and massage Parlours (D00935148)	5 Pages

REFERENCE MATERIAL

Item 7.3 - Attachment 1

Copy of previous report considered at Council Meeting on 24 November 2008 regarding the Status Report of Implementation of ICAC Recommendations

Investigation into corrupt conduct associated with the regulation of brothels in Parramatta

Corruption Prevention Recommendations

12 month progress report

Please update this schedule with information about the status of each item as at September 2008. Include details of the latest action/update in respect of each initiative, dates where relevant and attach copies of any documents referred to, where possible, in support of implementation of particular initiatives. Should certain systems or structures no longer exist because of restructuring or other event, please indicate how these functions are currently being performed. Please provide the name of a contact person in your agency from whom we can seek more detail if needed. Please return this document to the ICAC in writing and electronically to msland@icac.nsw.gov.au by no later than 28 November 2008.

RECOMMENDATION

STATUS

(implemented, not implemented)

DATE OF IMPLEMENTATION

(or projected date if available)

VARIATION/COMMENT

(include reference documents if appropriate)

Recommendation 1

It is recommended that the Minister for Planning and the Attorney General commission a review of the corruption risks attached to the regulation of brothels by local councils, and develop an appropriate strategy to deal with those risks.

Taskforce formed

Initial information provided to Task-Force members in October 2008

Recommendation 2

It is recommended that the Minister for Planning and the Attorney General consider adopting a system to prevent unsuitable persons operating brothels.

Taskforce formed

Initial information provided to Task-Force members in October 2008

Recommendation 3

It is recommended that the Minister for Planning and Attorney General introduce legislation to require sex industry advertisements to show the relevant development approval number. If the business does not require consent, the advertisement should be required to show an exemption number issued by the local council.

Taskforce formed

Initial information provided to Task-Force members in October 2008

Recommendation 4

It is recommended that Parramatta City Council implements a system of active staff and performance management in the compliance area.

Implemented

September 2007

Service Manager and Team Leader were recruited and implemented a more formal approach to management control over inspection activities.

Team meetings are held every two weeks with independent challenge member (previously Legal Support) and Strategic Analyst.

A monthly review of brothel advertisements is provided to the Strategic Analyst for further analysis and possible action.

Enhanced standard operating procedures have been implemented covering:

o Legislative and regulatory enforcement;

o Management of evidence;

o Corruption prevention in field activities;

o Court proceedings and utility orders; and

o Occupational Health and Safety.

A tactical, team-based approach to brothel and related inspections has been implemented along with a regular inspection regime for all such premises.

Performance standards have been established for non-compliance timeframes.

A monthly Executive level meeting to oversight brothel compliance matters.

Active networks and liaison have been established with external agencies including the Police and ATO.

Further improvements are being developed and implemented as issues are identified and as part of the re-structure.

Recommendation 5

It is recommended that designated senior staff of Parramatta City Council regularly review closed matters and the information made available to them by the review and audit program recommended in Recommendation 12, and take action if this information suggests the possibility of corrupt conduct. Protocols regarding responsibilities and appropriate actions need to be developed.

Implemented and subject to variation by re-structure

August 2007

Prior to the structural changes in Outcomes and Development in September 2008, all closed matters were reviewed on a monthly basis by the Manager Development Services Unit.

This role will be undertaken by the soon to be appointed Manager, Regulatory Services. Protocols will be updated accordingly.

Recommendation 6

It is recommended that the duties of the strategic analyst, crime and corruption prevention at Parramatta City Council include ascertaining the training needs of team members, service managers and senior managers; and procuring and/or developing relevant training programs.

Implemented

September 2007

Relevant responsibilities included in duty statement for Strategic Analyst. Initial training for compliance staff developed and conducted by Strategic Analyst.

Recommendation 7

It is recommended that Parramatta City Council provide initial and ongoing training tailored to the needs of team members and managers, targeted at recognising and reducing corruption risks.

Implemented and ongoing

September 2007

All compliance officers currently undertaking Certificate 4 Regulatory Course;

Strategic Analyst has provided training to compliance officers in:

o Powers and inspections process arising from introduction of the Brothels Legislation Amendment Act 2007;

o Responsibilities under ICAC Act 1988;

o Updated procedures relating to gathering and management of evidence, court procedures and specific corruption resistance strategies in field activities.

Relevant Team Leaders and Managers attended ICAC Workshop on Corruption Prevention for Managers.

Recommendation 8

It is recommended that senior managers at Parramatta City Council undertake specialised training in risk management and methods for early detection of corrupt conduct..

In progress

December 2008

A series of workshops have been programmed for all managers covering corruption prevention, detection and risk management.

The workshops will be facilitated by the ICAC and an external provider.

Recommendation 9

It is recommended that Parramatta City Council institute a program of rotation of the position of Team Leader, Compliance Services.

Partly implemented

September 2007

The Team Leader Compliance position was regraded to enable a greater capacity for rotation in the Unit. Rotation during periods of leave is being implemented.

The skill sets across the Compliance and Regulatory teams are sufficiently different as to make a more permanent arrangement difficult to implement.

The use of a team approach to all Brothel compliance inspections combined with management and peer reviews act as a compensating controls in this situation.

Recommendation 10

It is recommended that the service matter owner of CRMs concerning brothels should be the Service Manager, Compliance Services, rather than the Team Leader. It is also recommended that the Customer Relationship Management system be upgraded so that this does not remove from the Team Leader the ability to allocate tasks to inspectors in the team.

Partly implemented and subject to variation in re-structure

September 2007

Current business process covered by procedure allocates all relevant Service Requests to the Service Manager as the owner who allocates tasks to the Team Leader. Service Manager is responsible for reviewing action and closing Service Request.

Business rules and procedures have been developed as the CRM system is not capable of building in the level of cross-approval processes required in this use.

A review of procedures in re-structure is looking at further independent review of Service Request actions by the Service Manager being reviewed by a separate Service Manager.

Recommendation 11

It is recommended that the Customer Relationship Management system be upgraded to support the protocol that if an officer undertakes an inspection, he or she cannot close a CRM.

Partly implemented

September 2007

Currently covered by business rule and procedures as discussed above.

Recommendation 12

It is recommended that Parramatta City Council develops a rigorous review and audit system for the compliance function and that a high-level manager oversees that process.

Implemented and subject to variation in re-structure

September 2007

November 2008

Prior to the structural changes in Outcomes and Development in September 2008, all closed matters were reviewed on a monthly basis by the Manager Development Services Unit.

This role will be undertaken by the soon to be appointed Manager, Regulatory Services. Protocols will be updated accordingly.

Additionally, an inter-Council peer review and audit process has been negotiated with Bankstown and Ryde Councils with the first audit commenced in November 2008

Recommendation 13

It is recommended that Parramatta City Council introduces a system of fact checking of statements entered into the Customer Relationship Management system by the Compliance Team.

Implemented

September 2007

November 2008

Fact checking is currently undertaken on a sample basis by the Service Manager or Team Leader prior to closing a Service Request in line with the business rule and procedure.

Part of the inter-Council peer review and audit identified above includes fact-checking on a sample basis.

Total fact-checking on other than a sample basis is considered to be of less value given the volatile nature of the industry and the ability to totally reconstruct events some weeks after inspection or enforcement action.

BACKGROUND

1. The ICAC commenced an investigation into the activities of the Compliance Section of the Development Services Unit in November 2006 on the basis of information received. In August 2007 the ICAC published a report of their investigation finding that the former Team Leader Compliance Services acted corruptly in accepting cash and sexual favours relation to inspections and complaints handling 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). At that meeting Council resolved to endorse the closure of illegal brothels and associated activities as a top priority for Regulatory and Compliance Services over the following four months.

REPORT

ICAC RECOMMENDATION – IMPLEMENTATION PLAN

3. In August 2007 Council provided the ICAC with a status report relating to the fourteen recommendations contained in the ICAC report. A final implementation plan relating to the ICAC recommendations was provided to the ICAC in December 2007. The Implementation Plan is posted on the ICAC website. Council is required to provide the ICAC with updates on progress of the Implementation Plan on an annual basis for the next 2 years.

4. The current status of actions in relation to the ICAC report recommendations is shown at Attachment 1.

ENFORCEMENT ACTION OVER LAST 6 MONTHS

5. In providing an emphasis on the control of illegal brothel activity since the introduction of the Brothels Amendment Legislation in October 2007 and the resolution of Council on 29 October 2007, some 50 inspections of brothels and massage parlours (both unauthorised and approved) have been carried out by the Development Control Team.

6. These inspections have resulted in 15 Brothel Closure Orders being issued by Parramatta Council and 4 Utility Orders being issued by Parramatta Local Court over the last 6 months. Additionally, 7 Notices of Intentions to Serve an Order have been issued to brothels which have development consent but are not operating in accordance with the consent conditions.

7. It is noted that Parramatta Council was the first Council in NSW to successfully obtain Utility Orders under the new legislation. These results are pleasing and the efforts of the Development Control Team in carrying out this challenging work and obtaining these positive results should be recognised.

8. Despite priority being given to the closure and inspection of brothels and massage parlours since October 2007 the Development Control Team have also been required to manage the other land use and regulatory complaints received by Council. During this period the team participated in an in-house brothel enforcement training day, and the managers have attended a Crime Prevention Practitioners Seminar and a Corruption Prevention for Managers workshop run by the ICAC.

9. The total number of Service Requests (CRMs) currently allocated to the Development Control Team for investigations is currently 283. Of these, approximately 15% relate to brothels/massage parlours.

10. Despite the success of the brothel closure actions over the last 6 months, the costs in prioritising enforcement action relating to brothels above other compliance matters have included a significant increase to the time taken to finalise the other 85% of service requests allocated to the Development Control Team, this being between 3 and 6 months. Some of the other service requests that the team is responsible in carrying out enforcement work include: buildings not being constructed in accordance with development consents; buildings being constructed with no approval; overland drainage issues and building pollution issues and nuisance issues.

11. To enhance the management of all Service Requests allocated to the Development Control Team the team has commenced an ongoing monitoring program for approved brothels with the aim of ensuring compliance with consent conditions. This program is paralleled by an ongoing program of investigating other breaches of development consent, including illegal brothel activity.

ISSUES, OPTIONS, CONSEQUENCES

12. At its meeting of 14 April 2008 Council sought further information relating to progress by Council’s Strategic Analyst Crime & Corruption Prevention and an independent report into Council’s options to improved city governance in relation to brothels, licenced premises, massage parlours, tattooists and piercing establishments. These reports which will be available in due course will consider the improvements to date as discussed in this report.

Michael Quirk Louise Connolly

Manager Service Audit & Review Manager Development Services

17 April 2008 17 April 2008

Item 7.3 - Attachment 1

Copy of previous report considered at Council Meeting on 24 November 2008 regarding the Status Report of Implementation of ICAC Recommendations

BACKGROUND

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.

WHY FOCUS ON REGULATION OF BROTHELS AND MASSAGE PARLOURS?

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.

IMPROVEMENTS FOLLOWING ICAC INVESTIGATION

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.

CONSULTATION AND PARTNERSHIPS

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.

CONCLUSION

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

Attachments:

1	Position Description - Crime & Corruption Analyst	3 Pages
2	Confidential Information from NSW Police - Parramatta LAC (Supplied to Councillors ONLY)	1 Page
3	Memorandum to Councillors of 28th May 2008	2 Pages
4	Initial Draft Report of Strategic Crime and Corruption Analyst Dated 9th May 2008	5 Pages

REFERENCE MATERIAL