Department of Local Government steps in amid City of Nedlands’ financial crisis

The Department of Local Government has stepped in to help unscramble the City of Nedlands’ financial mess.

In the wake of the city’s failed annual audit and ongoing argy-bargy over a council decision to bypass the usual hiring process and fast-track a financial contractor’s appointment to rectify the audit, a spokesperson confirmed the department was now working closely with Nedlands staff to resolve issues raised by the auditors.

Financial auditor RSM’s disclaimer of opinion claiming the city’s 2022-23 financial report was submitted without complete and accurate underlying records continues to loom over the City of Nedlands, with Cr Hengameh Amiry moving two items of “urgent business” at Tuesday night’s meeting.

One instructed the chief executive to cease obtaining legal advice on the matter without council permission and the other was to create a new policy to allow the council to hire an independent expert without going through its existing procurement process.

Both motions were passed.

They come after a special meeting last week where the council voted to bring in independent consultant Craig Ross to fix the audit — despite warnings that doing so on their own volition could be breaking the law.

City officers warned that hiring an independent consultant without going through the proper procurement procedures went against the Local Government Act.

And according to Cr Amiry, Mr Ross turned up to work on Monday after the council’s decision to hire him but was turned away at the door.

A Department of Local Government spokesman said there were clear regulations for all councils to follow relating to procurement.

“Local government officers at the DLGSC are working closely with the City of Nedlands to determine how the department can support and assist the council in resolving the issues that were identified by financial auditors,” he said.

“Clear regulations relating to procurement are set out in the Local Government Act, which all councils in WA are obliged to adhere to.”

Since that hastily called meeting on March 20, the council received further legal advice which prompted Cr Amiry on Tuesday night to move a motion which spelled out that the council had acted lawfully in appointing Mr Ross, according to the legal advice.

Her motion also demanded city staff — currently being led by acting chief executive Tony Free — cease obtaining legal advice on the matter, in particular from McLeods’ Lawyers, without specific council approval.

“What we have noted in this instance is the CEO has a limitless pot of money to go and seek legal advice that suits whatever the CEO wants to do,” Cr Amiry said.

Cr Fergus Bennett asked if the decision to hire Mr Ross had halted the city’s procurement process to find an independent consultant, which corporate services director Michael Cole agreed it had.

“After council’s decision on March 11, the following day I had a number of phone calls from prospective consultants wanting to find out what was going on,” he told the council.

“At that point I was unaware of any other legal advice, so I decided we would remove the request for quotations from the WALGA panel because council had made its decision.

“It stopped because of council’s decision, but with advice from McLeods’ the following day I recommenced it.”

Cr Amiry’s other motion was for a new policy that would allow the council to spend up to $100,000 to make a “timely” appointment of an independent expert without going through the city’s procurement policy.

“When we get independent expert advice, it needs to be totally independent and that can be only chosen, for the interest of ratepayers, by the council,” Cr Amiry said.

“Passing this policy means we are never caught in position where we get legal advice and we have no funds of our own to get independent advice.”

Cr Bennett, who was against the motion, said it was a “reactionary step”.

“It is very ill advised to come up with basically an idea plucked out of a reaction of frustration to receiving advice that the council doesn’t like,” he said.

“Any bills accrued asking for legal advice has been driven by problematic notice of motions which are either unlawful or teeter on unlawful ... as a reaction to this we say we need our own spending money.

“We want to solve the problem of the audit and all of this is further inaction. We keep driving deeper and deeper out into the wilderness and spinning our wheels in the bog.”

It is understood Mr Ross will be hired immediately to assess the audit findings and work with staff to fix the issues. He will be paid $42,000 for the three-month assignment.