It follows four letters sent by NSW Member for Murray Helen Dalton to Local Government Minister Shelley Hancock, raising concerns over council’s conduct.
This triggered preliminary inquiries in December last year and as a result the OLG determined to undertake a full investigation.
In 2018, council paid $1.2 million for land on Mathoura Line Rd — selected by MRE – without obtaining a registered valuation, before signing a lease back to the previous owner for $15 an acre.
Council later sought a valuation from registered valuer Eishold, in July 2020, which found a land value of $790,000 and a lease price between $50 and $75 an acre was possible.
Last year, acting chief executive Brian Barrett — who has since moved on — admitted the high price was required to convince an “unwilling seller”.
At its August 2020 meeting, council resolved for an audit investigation to be conducted into the dealings, which is currently being undertaken by external company Centium.
A $900,000 loan was also made to MRE to help pay off its debt to Edward River Council through another investment vehicle, Dongmun Greentec, which received development approval for a Deniliquin ethanol plant in 2016 — three years after the proposal was first floated.
Little progress has been made on the development since then but the company, now known as Deniliquin Ethanol Plant Pty Ltd, made a request last year to purchase the Barham Rd land earmarked for the Deniliquin project. Negotiations are ongoing.
The due date for the loan has been changed multiple times by council, last stated as April 2, but the new date has been kept confidential.
Murray River Council mayor Chris Bilkey welcomed the investigation and said council was notified on Friday, April 16.
“If the OLG want to do a separate study we welcome that and the opportunity to clarify any concerns they might have,” he said.
“We believe the council has operated appropriately in response to council resolutions and if there are any issues raised during either of the investigations, then we’re happy to address that.”
Cr Tom Weyrich said he had never voted in favour of the project.
“I have strenuously and aggressively pushed council to be open, honest and transparent,” he said.
“They have deflected, stalled and come up with all sorts of things to put it off and here we are.
“There are some procedures that have not been adhered to and the whole thing is a smoke and mirrors job — there’s so much more to this it is unbelievable.”
Murray River Council chief executive Terry Dodds, who joined council this year, said the investigation was a “wonderful opportunity to improve processes and outcomes”.
“I’m not concerned because I’ve discovered a lot of things that need addressing myself,” he said.
“I’m already about to introduce a continual management of change process to fix up what I’ve found, so I’m concerned if there’s something I haven’t found in relation to business disciplines and organisational culture, that we end up spinning our wheels and having to repeat something.
“I’m not so much concerned about (a section) 430 investigation because my previous experiences with them has been they’ve been wonderful helps to councils.”
He said a public document would be put to council regarding the change process in the coming months.
Ms Dalton said she was pleased her request for an investigation was accepted.
“I’ve reported a number of matters to the Office of Local Government. They usually tell me they won’t investigate,” she said.
“The fact they are investigating council’s handling of the Moama ethanol plant shows how serious the matter is.
“Councils need to handle ratepayers’ money with great care.”
A spokesperson from the OLG confirmed an investigation had been launched and that it would report its findings to the Local Government Minister.
“As this matter is currently under investigation it would be inappropriate to comment further,” the spokesperson said.
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