A formal investigation.
That is the recommendation of a report in to Murray River Council’s handling of the now abandoned ethanol plant development in Moama.
The executive summary of a ‘‘strictly confidential’’ report in to council’s dealing with proponents Murray River Energy was released on council’s website last week.
A formal investigation is the recommendation in three of four key recommendation areas — council’s involvement with MRE, the provision of loan funds to MRE by council, and acquisition of Lot 3 Main-Line Rd, Moama by council.
The report also suggests significant changes in council policies, particularly in regards to council governance and risk management.
Council purchased the 197ha block on Main-Line Rd for $1.2 million without a registered valuation being obtained.
A memorandum of understanding was signed for MRE to subsequently buy the land and build the ethanol plant and bio-digester.
Council received an independent valuation report on the land in December 2020, which priced the open market value in the range of $840,000 to $940,000 and a special value range (industrial) between $1.15 million and $1.25 million.
It also recommended a rental value for the land of $24,000 per annum — much higher than the current five-year lease back to the previous owner, with a five-year option, of $7312 per annum.
In addition to this, Murray River Council granted a loan to MRE in November 2018, to discharge a debt owed to Edward River Council.
This debt with ERC was linked to the proposal of constructing an ethanol plant in Deniliquin, with negotiations for that project starting with the former Deniliquin Council in 2014.
The company provided a first mortgage on property in Gheringhap, near Geelong, as security, which has been independently valued between $1.5 million and $1.65 million.
In March 2019, Murray River Council approved an increase to the investment to MRE up to $900,000.
When no payments had been made, Murray River was forced to involve Victoria’s Supreme Court earlier this year in an attempt to recover the debt.
The project and MRC’s involvement is already under investigation by the NSW Office of Local Government, and Centium has said further
investigation needs to be undertaken in certain areas.
Its recommendations include:
- Undertake an investigation of the introduction of the MRE project into MRC, in particular matters involving ERC and all persons involved in its introduction, to establish roles and representations made to MRC.
- The identified anomalies relating to the loan agreement should be subject to formal investigation, including (but not limited to) formal interviews of witnesses and examination of all relevant MRC records.
- Further investigation is also required to verify: If MRC has complied with the Local Government Act 1993, No 30 in relation to the provision of loan funds to MRS; whether fund were actually used as intended; the specific circumstances of all caveats in place, in particular how funds relating to this were dispersed.
- The acquisition of the land by MRC be subject to investigation to establish if there have been any breaches of the law.
- Internally, Centium has recommended council review its internal policies to ‘‘ensure that any proposed involvement with commercial activities or joint private partnership projects is appropriately evaluated and documents, prior to council funds or entering into any binding agreement’’.
The report also recommends greater transparency on such dealings with councillors, more specifically that ‘‘MRC provide regular advice to councillors on costs already incurred and those likely to arise in any ongoing engagement with the proponents’’.
Originally handed down to council in May, the report’s executive summary was publicly released on Wednesday.
Council has said several parts of the recommendations have been redacted ‘‘to ensure that the information released is in line with legislation, commercial-in-confidence principles and does not refer to individuals or businesses,’’ council said on its release.
The Moama ethanol project was formally abandoned by Murray River Council earlier this year. The proposed Deniliquin plant is also in question, with no advance on the project in many years.