Willoughby City Council – alleged corrupt conduct of Council employee (Operation Churchill)

Year: 2011 Status: Completed

The ICAC investigated allegations that Willoughby City Council employee, Edward Karkowski, corruptly exercised his official functions in favour of various business owners within the Council area in return for financial and other benefits. In its report on this investigation, which was made public on 22 June 2011, the ICAC made findings of corrupt conduct against Mr Karkowski. The ICAC has stated its opinion that the advice of the Director of Public Prosecutions be sought with respect to the prosecution of Mr Karkowski for various offences. The Commission has also made seven corruption prevention recommendations. Six of the recommendations are made to Willoughby City Council, and one recommendation is made to the Department of Planning and Infrastructure.


Findings of corrupt conduct

The ICAC has found that Mr Karkowski engaged in corrupt conduct by:

  • failing to report to the Council that the Oriana Bath House was illegally operating as a brothel, because he was receiving free sexual services there
  • dishonestly submitting a false claim for overtime on 6 July 2010 and accepting payment for that claim when he was not at Council premises but was at the Oriana Bath House, where he received free sexual services
  • writing an Alternative Solution Report relating to shop P8 at Chatswood Central, placing the report on the Council file, and relying on the report to consider the issue of an occupation certificate, all in return for receiving two gift vouchers totalling $750
  • writing an Alternative Solution Report for Chatswood's Red Chilli Sichuan Restaurant, and relying on the report to issue an occupation certificate, in appreciation for having received free hospitality and a Montblanc pen from persons associated with the restaurant
  • issuing an occupation certificate for Chatswood's Red Chilli Sichuan Restaurant without having received at least two outstanding certificates required from the builder, in appreciation for having received free hospitality and a Montblanc pen from persons associated with the restaurant
  • failing to report to the Council that Chatswood's Red Chilli Sichuan Restaurant was trading in public without an occupation certificate in return for free hospitality and a Montblanc pen from persons associated with the restaurant
  • dishonestly submitting claims for overtime and accepting payment for those claims for hours worked after 4 pm on 2 June 2010 and 16 June 2010
  • providing a developer, Sam Koura, with an engineering report and a confidential draft assessment report; divulging to Mr Koura details of an objection lodged with the Council (including details of the objector's identity); and providing a copy of the complaint lodged with the Council against a private certifier to Mr Koura, all in return for benefits received from Mr Koura
  • advising three people to submit false construction cost estimates in development applications so that fees payable to the Council would be reduced in return for free hospitality
  • accepting five bottles of wine for having issued an occupation certificate before all outstanding requirements identified during the building inspection were satisfied
  • dishonestly submitting claims for overtime and accepting payment for those claims for hours worked after 4 pm on 28 April 2009 and 2 August 2010.

Recommendations for prosecutions

The Commission must seek the advice of the Director of Public Prosecutions (DPP) on whether any prosecution should be commenced. The DPP determines whether any criminal charges can be laid, and conducts all prosecutions. The Commission provides information on this website in relation to the status of prosecution recommendations and outcomes as advised by the DPP. The progress of matters is generally within the hands of the DPP. Accordingly, the Commission does not directly notify persons affected of advice received from the DPP or the progress of their matters generally.

The Commission is of the opinion that consideration should be given to obtaining the advice of the DPP with respect to the prosecution of Edward Karkowski for the following offences:

  • offences under section 249B of the Crimes Act 1900 in relation to soliciting or receiving corrupt benefits in return for not reporting to the Council that the Oriana Bath House was operating as a brothel
  • an offence under section 192E of the Crimes Act in relation to dishonestly submitting a claim for overtime and accepting payment for that claim for hours worked between 5.15 pm and 6.50 pm on 6 July 2010
  • offences under section 249B of the Crimes Act in relation to soliciting or receiving corrupt benefits in return for writing an Alternative Solution Report in respect of shop P8 at Chatswood Central
  • offences under section 249B of the Crimes Act in relation to receiving corrupt benefits in return for exercising his official functions to favour the interests of the Red Chilli Sichuan Restaurant
  • common law offences of misconduct in public office for providing Council information for private purposes in return for receipt of benefits in the form of free meals, wines, gifts and visits to massage parlours and brothels where he received massage and sexual services.

On 26 July 2012, Mr Karkowski was sentenced to imprisonment for six months in relation to five counts of corruptly receive a benefit contrary to section 249B(1) of the Crimes Act. On 6 September 2012, Mr Karkowski was assessed as being suitable to serve the sentence by way of home detention.

Mr Karkowski was given a good behaviour bond for a period of two years under the provisions of section 9 of the Crimes (Sentencing Procedure) Act 1999 in relation to two counts of fraud contrary to section 192E(1)(b) of the Crimes Act.

Recommendations for disciplinary action

As a result of the Commission investigation, the Council has dismissed Mr Karkowski, so it is not necessary to make any recommendation in relation to disciplinary action.

Recommendations for corruption prevention

The Commission has made the following seven corruption prevention recommendations. Six of the recommendations are made to Willoughby City Council, and one recommendation is made to the Department of Planning and Infrastructure.

Recommendation 1

That Willoughby City Council improves the supervision and monitoring of its staff in the Environmental Services Division with powers and/or responsibilities under the Environmental Planning and Assessment Act 1979 in order to help reduce opportunities for corrupt behaviour to occur. Specific measures to achieve this should include the need to:

a. review the current organisational structure to ensure managers are able effectively to supervise the work of staff reporting to them and are involved in the reviewing and auditing of work completed by staff

b. assess and implement strategies to manage corruption risks associated with specialisation amongst regulatory staff, such as:

i. introducing staff rotation duties and limiting the role of specialist staff to providing advice on specialist issues to building surveyors, planners and other staff

ii. establishing a periodic auditing by directors and internal auditors of determinations of development applications and construction certificates

iii. introducing or improving existing systems to track the out-of-office movements of Council staff during work hours

c. establish systems to reduce end-to-end control of regulatory approvals by a single Council officer, such as Council officers assessing an application under delegated authority and determining and approving the same application. This may include changing Fast Track Approval System procedures to require the assessing officer to complete a report and a different officer to make the determination.

Recommendation 2

That Willoughby City Council reviews its current practices and develops policies for the awarding of overtime, including: 

a. establishing a formal process for managers to determine and approve in advance the need for staff working overtime

b. retaining a formal process for the claiming of overtime actually worked.

Recommendation 3

That, as an interim measure, Willoughby City Council:

a. produces and makes publicly available a clear list of what activities and work associated with a development are to be included in calculating the estimated costs of works

b. requires any person submitting an application for development or a construction certificate to submit a quote from a builder or suitably qualified and licensed person of the estimated cost of work for the development proposal

c. reinforces to staff who assess development applications that, under clause 255 of the Environmental Planning and Assessment Regulation 2000, there is a need to be satisfied that the estimated cost associated with the construction of the building is genuine and accurate.

Recommendation 4

That the NSW Department of Planning and Infrastructure prepares and makes public guidelines that specify which activities and what work associated with a development are to be used by planning authorities when calculating the estimated costs of works.

Recommendation 5

That Willoughby City Council implements changes to its Gifts and Benefits Policy and section 5 of its Code of Conduct that establish, as a minimum, a prohibition on Council staff and officials who exercise regulatory functions from accepting any gift, benefit or hospitality irrespective of its value. 

Recommendation 6

That Willoughby City Council formalises its practices around the Fast Track Approval System, and publishes these documents as an information pack that is publicly available for use by developers, builders and others in the business community. This should include the following:

a. information required to be submitted by applicants in relation to the development proposal and the estimated cost of works

b. fees payable by applicants

c. level of information to be provided by Council officers assessing and determining the application in their worksheet or report with regard to the matters considered and the reasons for their determination

d. circumstances in which applications should be referred to the Council's Development Assessment Review Committee or the Peer Review Group.

Recommendation 7

That Willoughby City Council:

a. further enhances its campaign to educate the local community, including non-English speaking members, that gifts, hospitality and other benefits are not appropriate and that Council officers cannot accept them

b. develops a program to engage and actively involve the local business community, with a view to establishing a dialogue that communicates the above message

c. establishes an education program on cross-cultural matters for all frontline and regulatory staff.

Implementation Plans

The implementation plans posted below have been provided by Willoughby City Council and NSW Department of Planning and Infrastructure in response to the ICAC's corruption prevention recommendations. Their appearance here is for information only and does not constitute the approval or endorsement of the plans by the Commission.

Willoughby City Council Implementation plan

NSW Department of Planning and Infrastructure

12 month progress reports

The progress reports posted below have been provided by Willoughby Council and NSW Department of Planning and Infrastructure in reponse to the ICAC's corruption prevention recommendations. It's appearance here is for information only and does not constitute the approval or endorsement of the plan by the Commission.

Willoughby City Council progress report

NSW Department of Planning and Infrastructure progress report


Media Releases Witness

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Download the Witness List (PDF)

Transcripts

View all transcripts associated with this investigation. The Commission makes every effort to post the daily transcripts of its public inquiries on its website by 8:00 pm each day when possible. If the Commission sits later than 4:00 pm, the daily transcripts, particularly the afternoon session, may not be available until the next working day.

 

Exhibits Public notices