Adani will bankroll the jobs of local government staff tasked with assessing activities around its Queensland mine proposal – a deal anti-corruption campaigners say raises “serious questions” about independent oversight.
The Indian mining giant has struck an unusual deal to pay up to $1.15 million in wages, housing and vehicle costs for four Isaac Regional Council employees to deal with the “extraordinary workload” created by the Carmichael coal project.
Anti-corruption think tank Transparency International Australia called the scenario unprecedented, saying it would raise questions about the independence of council decisions and perceptions of conflict of interest.
But the council said the staff were under its direction and not controlled by Adani.
It said it was protecting ratepayers from bearing costs for a transnational corporation.
A council resolution last October stated that negotiations with Adani led to the company committing to “fund certain positions within council … to address the extraordinary workloads generated for council by the Adani projects”.
According to council minutes, jobs for an executive and legal support officer, a senior engineering manager and two field officers would be “fully funded (including labour and other on-costs, housing and vehicle costs) by Adani”.
‘Potential for conflict of interest’
Transparency International chief executive Serena Lillywhite said the arrangement raised “real questions around the perception or the potential for a conflict of interest, and for undue industry influence, and certainly questions around the independence of decisions being made by the council”.
She said it took the risk of regulatory capture to “a whole new level”.
“At best there is a perception that the company is just too close to the [local] government with regard to decisions being made,” she told the ABC.
“When you have a situation whereby people who are employed by the council but are in fact being paid for by Adani to undertake responsibilities and tasks – such as legal support and compliance with contractual arrangements, engineering support to check whether or not there is compliance with standards regarding engineering or environmental aspects – it does create some real concerns.
“You can understand how at best there would be a perception that there is not an arm’s-length arrangement between the council and the company.”
Isaac Mayor Anne Baker said the arrangement “didn’t raise any flags” and that the council had sought external legal advice on the matter.
“This whole arrangement and process is about protecting our ratepayers and at no stage should our ratepayers be contributing financially to any portion or part of a multinational project,” she said.
“To be clear, these people are employees of Isaac Regional Council – they are not employees of any company external to council.
“At no point do I believe that we thought we had a conflict.”
Cr Baker said only the executive and legal support officer had been hired so far and “if the mining project doesn’t proceed then potentially there’s no need for those positions to be filled”.
She said the miner would “pay by invoice”.
A council spokesman later said no payment had yet been made by Adani and that the total cost of the jobs, which involved contracts of up to two years, was “estimated to not exceed $1.15 million”.
Mining companies such as Adani are required to pay compensation to councils for their impacts under infrastructure agreements.
Isaac Council cited a 2012 University of Queensland study recommending “companies provide funding to support particular roles within council”.
The study noted companies funding community development officer jobs in Emerald and Dysart, but it is understood these roles had no oversight of the companies’ activities.
No other council has similar arrangement
However, a spokeswoman for the Local Government Association of Queensland (LGAQ) said it was not aware of any other such arrangement between a council and a company where funding was tied to jobs involving oversight of the company’s activities.
The ABC has confirmed this is the case with Rockhampton and Townsville councils, which struck their own deals with Adani that they would pay about $30 million for its airport in return for local hiring guarantees.
But the LGAQ spokeswoman said Isaac Council’s Adani deal was a lawful agreement and “above board”.
Queensland University of Technology public sector ethics expert Mark Lauchs said Isaac Council was trying to create an arm’s-length arrangement by paying staff then seeking reimbursement by Adani.
He said while this meant there was no conflict of interest for council, “there is a management of perception process that also has to be dealt with”.
“Because it looks like there’s a power imbalance between a tiny council and a big company, and it looks like the company can hold influence over the council,” he said.
Mr Lauchs said it would be better to create an extra layer between the council and the company by having a State Government department or other independent body step in to do the work.
Ms Lillywhite said it was unclear whether the arrangement was sufficiently beyond undue influence.
“When you have a situation where the council is paying the salaries and related costs of doing the inspections that are required, when the council pays the salaries but then Adani reimburses the council for all those costs, it raises some pretty serious concerns as to whether or not that is independent,” she said.
An Adani spokeswoman said like all other private companies it complied with council requirements.
“We will continue to meet the council’s requirements for user-pays cost recovery,” she said.
An Isaac Council spokesman said the field officers would oversee Adani’s construction and maintenance works on council roads.
A senior engineering manager would review technical and engineering issues around Adani’s use of council roads and bridges.
A legal support officer would advise the council chief executive “in relation to negotiation and administration of various agreements, approvals, licences and permits”.
The deal enables council to terminate the contracts early or reassign the staff to other projects if they are no longer required for the Adani work, the minutes show.
Queensland Resources Council chief executive Ian Macfarlane declined to say if they were aware of any other miner paying for council jobs.
“[I am] advised Adani is complying with the condition of its approval – that it has an infrastructure agreement with the Isaac Regional Council,” he said.