Council reports 'designed to obfuscate', inquiry finds
Central Coast Council's investment reports, from October 2019 until the financial crisis, were designed to obfuscate rather than elucidate, the public inquiry into Central Coast Council has found.
"The staff of the Council responsible for those reports bear a significant responsibility for the lack of knowledge on the part of the councillors for the unlawful use of restricted funds," said commissioner Ms Roslyn McCulloch.
However, Ms McCulloch made no comment about the consequences for those staff in bearing that responsibility.
"The unrestricted funds represented the operating capital available to Council at any given time," she said.
"The investment report for October 2019 changed in format in that it no longer included a row within the table describing the value of unrestricted funds.
"The likely reason for its omission was that in October 2019 unrestricted funds fell into the negative."
Ms McCulloch used a graph in her report showing how "unrestricted funds can most easily be demonstrated".
She said: "The financial information provided to councillors was not easy to read and was sadly lacking in attention to trends.
"The information about the decline in Central Coast Council's finances and the use of restricted funds was there, if one knew where and how to look.
"The balance of unrestricted funds could have been calculated by deducting restricted funds from the total of cash and investments as shownin the investment reports."
Ms McCulloch said the author of the investment report for October 2019 was Mr Carlton Oldfield, who was the unit manager of Financial Services.
The executive responsible for that report was chief financial officer Mr Craig Norman, she said.
"Mr Norman had started as chief financial officer on May 27, 2019.
"He had experience in government but no previous experience in local government.
"He frankly acknowledged that he was learning from his staff when he started and that he was not fully aware of the legislative requirements relating to restricted funds until some time into his tenure.
"Mr Norman was not aware of the change to the format for the October 2019 Investment Report nor was he aware that the balance of unrestricted cash had slipped into the negative.
"In fact, he was not aware of the continued deterioration of the unrestricted cash position until after he left Council on April 24, 2020.
"He did accept that the October 2019 Investment Report was signed off by him and that he should have known that the unrestricted cash position had fallen into the negative.
"Mr Norman could not explain why Mr Oldfield did not tell him that the unrestricted cash position had fallen into the negative, believing that Mr Oldfield had taken sick leave at that time.
"Council records show that Mr Oldfield did not take extended sick leave until late August 2020, well after Mr Norman's departure.
"Mr Oldfield was appointed as the acting chief financial officer when Mr Norman left.
"However, he relinquished that role and returned to his position as unit manager of Financial Services on August 11, 2020.
"Regrettably, this Inquiry did not have the benefit of hearing from Mr Oldfield as he was not able to be located.
"It was at the time of Mr Oldfield's departure that Mr Murphy reluctantly took on the role of Responsible Accounting Officer."
Ms McCulloch said the investment report for October 2019 did not contain any additional comment to alert the reader to the fact that unrestricted cash was in the negative. "Unrestricted cash remained negative until the Council was suspended in September 2020.
'At no time was any notation made in an investment report to alert the councillors to that fact.
"Weekly briefings by Council staff were held with those councillors who wished to attend, about various matters, including upcoming reports.
"The councillors were never informed that the unrestricted funds had been exhausted nor were they warned about the consequences of having no unrestricted funds available.
"The general manager at the time, Mr Murphy, stated that he was unaware that the unrestricted cash position had been removed from the Investment Report for October 2019 and did not become aware of that fact until after he left Council on November 27, 2020.
"He also acknowledged that as chief executive officer he was responsiblefor the final agenda review for Council meetings.
Report, 17 Mar 2022
Roslyn McCulloch, Public Inquiry
into Central Coast Council