ICAC finds former SHFA senior executive corrupt

Friday 16 December 2011

The Independent Commission Against Corruption (ICAC) has found that former Sydney Harbour Foreshore Authority (SHFA) senior executive Andrew Kelly engaged in corrupt conduct by deliberately failing to disclose a conflict of interest while continuing to deal with matters affecting tenancies in The Rocks that were leased to Kazal family businesses.

In its report on the Investigation into the undisclosed conflict of interest of a senior executive of the Sydney Harbour Foreshore Authority, released today, the Commission finds that Charif Kazal engaged in corrupt conduct by holding out the prospect of employment in the United Arab Emirates (UAE) to Mr Kelly and paying him $11,170 for his flight and accommodation expenses from a trip to the UAE in May 2007. This was intended to influence Mr Kelly to exercise his official SHFA functions to favour Kazal business interests.

The report says that Mr Kelly, who was the SHFA's executive director, tenant and asset management services, dealt with Mr Kazal in relation to Kazal business tenancy issues involving properties at The Rocks that were leased to Kazal companies. Mr Kazal was not a director of any of the Kazal companies that leased the relevant premises, but it was he on behalf of the Kazal companies who dealt with the SHFA and Mr Kelly in relation to tenancy issues.

The Commission concluded that Mr Kazal invited Mr Kelly on the May 2007 trip to the UAE because he needed Mr Kelly's expertise to develop possible joint venture business opportunities in property management. The Commission found that Mr Kelly had a common goal with Mr Kazal to work towards the establishment of a joint venture business in the UAE which, if established would financially benefit both of them.

The report says that Mr Kelly's conflict of interest was "substantial", given his role at the SHFA, the $11,170-payment paid to him by Mr Kazal and the substantial reward he would receive by way of employment if a business was established. Mr Kelly should have declared his conflict of interest to the SHFA chief executive officer but did not do so because he knew that he would not be permitted to go on the trip, or would be dismissed if he ignored instructions not to go and continued to work towards the establishment of a joint venture UAE business. Mr Kelly knew that his continued involvement with Mr Kazal in the UAE project, on the one hand, and his continued involvement in matters affecting the Kazal leases, on the other hand, was contrary to his duties as a SHFA employee. For these reasons, he failed to disclose his conflict of interest.

The ICAC has made four corruption prevention recommendations to help the SHFA improve the robustness of the decision-making process to make it difficult to inappropriately influence the process.

The Commission is of the opinion that the advice of the Director of Public Prosecutions (DPP) should be sought with respect to the prosecution of Mr Kelly for the common law offence of misconduct in public office in relation to his failure to disclose his conflict of interest. The Commission is also of the opinion that the advice of the DPP should be sought with respect to the prosecution of Mr Kazal for an offence under the Independent Commission Against Corruption Act 1988 of giving false evidence to the Commission that he never intended to settle Mr Kelly's accommodation account for the May 2007 trip.

The Commission held a public inquiry over eight days in July and August 2011. The ICAC Commissioner, the Hon David Ipp AO QC, presided at the public inquiry, at which 14 witnesses gave evidence.

Media enquiries: ICAC Manager Communications & Media Nicole Thomas 02 8281 5799/0417 467 801

Investigation report

Fact sheet