Chief Minister Michael Gunner and his Cabinet colleagues approved the $12 million taxpayer grant to the Darwin Turf Club one day after receiving an “official” grant application that contained sparse details of economic benefits for the NT and while the government was in the throes of a financial crisis, the ICAC’s damning investigation has revealed.
Questions have also been raised about chairman Brett Dixon’s large donations to the NT Labor Party through various companies in the lead up to the 2016 election.
The investigation found that Mr Gunner and Cabinet approved the funding less than 24 hours after receiving a hastily produced business case that contained “ill founded and spurious” claims of benefits to the community that were not properly scrutinised.
There were also never any verifiable costings produced to explain the $12 million price tag, which the ICAC found was problematic.
Labor heavyweights including former chief minister Paul Henderson and former treasurer Syd Stirling were also working on behalf of Mr Dixon to gain community and political support to help secure the funding, the report found.
Independent Commissioner Against Corruption Ken Fleming was scathing in his report about the possible influence of donations, free tickets to elite Turf Club events and undisclosed conflicts of interest.
It was revealed in the report that Brett Dixon gave two donations of $50,000 each through different companies to the NT ALP shortly after a meeting with Mr Gunner’s then-chief of staff Alf Leonardi ahead of the 2016 general election, when Mr Leonardi had pledged increased funding for the racing industry if Labor was elected.
Those donations were revealed in disclosures at the time, but the ICAC also found amendments were made about which companies of Mr Dixon’s donated as recently as last August.
Nevertheless, the grant was approved two years after Mr Dixon made the donations, meaning that Mr Gunner and his team were aware of the donations.
Messages show Mr Gunner was a big supporter of the grandstand project as early as June 2018, “without a single written document having been prepared by the [Darwin Turf Club]”.
$12M grant approved without ‘any rigorous process’ in middle of financial crisis
Mr Fleming found the Turf Club’s application for funding had still not been made by the morning of June 13 – the day before Cabinet approved it, although it appeared that the application was “expected”.
“Remarkably, it appears not to have progressed much since the January letter (that Mr Leonardi wrote for Mr Dixon to lobby Cabinet with) and it would seem the ‘business case’ that it was to contain still had not been written,” Mr Fleming wrote.
Mr Dixon sent a hastily assembled grant submission as a “market led proposal” to Department of Trade Business and Innovation chief executive Shaun Drabsch shortly after 1pm on June 13, who then directed it to head public servant Jodie Ryan, who is also Cabinet secretary.
“It is important to note that the application was never considered under, or analysed against, the criteria of the policy,” Mr Fleming wrote.
“It cannot be said that the grant was justified by any rigorous process within the government.
“Such a process could not be carried out, not the least because there was no submission on which it could be based.”
Mr Fleming added that Cabinet privilege prevented him from inquiring further as to what happened after Jodie Ryan received the hasty submission.
Former Labor president Syd Stirling arranged meetings for Dixon with then-treasurer Nicole Manison
The ICAC’s investigation also found that Mr Leonardi had discussed the project with Mr Stirling in 2018, and told him he was waiting for his “time to pounce” in relation to convincing Ms Manison to agree to funding the grandstand.
Mr Stirling’s wife works as Ms Manison’s electorate officer.
Mr Leonardi later arranged a meeting for Mr Dixon with Ms Manison where he obtained her “in-principle support” despite again providing no verifiable business case.
Mr Stirling also arranged another meeting for Mr Dixon with Ms Manison three months before Cabinet approved the funding.
“Hi Brett, Spoke with Nicole will fit us in on 11th. Otherwise first available time. Time to be confirmed,” Mr Stirling texted to Mr Dixon on March 31, 2019. “She said Alf Leonardi has been pushing the case strongly but the financial position continues to worsen. Happy Easter Syd.”
The ICAC report found that “remarkably” the first written proposal describing the grandstand project and seeking funds for it originated in an internal government email sent from Alf Leonardi to Ms Manison’s adviser in June 2018 – a full year before the grant was made public.
“The origin of some of the text is unclear but it is most likely that the source is Mr Dixon, and an earlier email which Mr Dixon had written promoting, without specifics, the concept of a new grandstand to Mr Stirling,” Mr Fleming wrote.
Mr Stirling sits on the board of Thoroughbred Racing NT, the same board Mr Dixon chairs, that oversees the distribution of money to the NT’s racing clubs – an organisation he created while he was racing minister.
No actual costings produced for $12 million grandstand, figure repeated with no supporting documents
On June 14, 2018, the ICAC found Mr Leonardi sent an email to a government staffer about the project, copying Mr Gunner into the email.
On the same day, Mr Dixon had sent Mr Leonardi an email requesting $12 million to build the grandstand in the form of a grant, after Mr Leonardi had contacted him to suggest the government could use the re-allocation of unspent capital works funds at the end of the financial year for it.
The ICAC found it was the first time the project had been formalised in writing, but the email contained no actual costings to back up how Mr Dixon had arrived at that figure.
“No written costing was included to support that figure,” Mr Fleming wrote. “None existed. The figure was to be repeated thereafter.
“No such costings ever existed in support of that costing prior to the grant being given.”
The possibility of funding it at that time was later shut down, but communications continued between Mr Leonardi and Mr Dixon, including arranging meetings with senior ministers and providing tickets to events.
On July 31, 2018, during the Darwin Cup, the Gunner Government’s three most senior ministers including Mr Gunner, Ms Manison and Racing Minister Natasha Fyles were all brought to the Wood Lounge as guests of Mr Dixon to discuss “the potential involved with new developments at the Darwin Turf Club”, according to minutes from a board meeting.
The NT Independent previously revealed that Ms Fyles had been quoted in Turf Club promotional material as confirming the Gunner Government had entered into a five-year funding agreement in 2017 with TRNT – but that funding deal was never publicly announced.
The ICAC found the previous Henderson Labor Government had entered into a five-year funding agreement with TRNT that saw the group awarded approximately $79 million of taxpayer money over that period. The CLP had only signed a one year funding arrangement with TRNT on their way out of office.
Mr Leonardi wrote to Mr Dixon in April 2016, pledging to restore Labor’s previous commitment to the organisation and offering a $17.8 million boost for 2016-17 which Mr Leonardi had calculated TRNT had lost as a result of the CLP’s funding agreement.
Three months later, on July 15, 2016, Mr Dixon made two $50,000 donations to the NT ALP through various compnaies.
Upon being elected, the Gunner Labor Government hiked funding to TRNT from $10.8 million in 2016 to $13.2 million in 2019, the ICAC found.
In December 2018, then-treasurer Nicole Manison announced the Northern Territory was in a full-blown financial crisis.
Former chief minister, business leaders lobbied for Dixon
The ICAC’s report found Mr Dixon had lobbied many business leaders and political figures to get their support for funding the grandstand project.
In November 2018, former chief minister Paul Henderson texted Mr Dixon to tell him that he had spoken to Master Builders chief executive Dave Malone on his behalf “about putting an economic narrative over your new grandstand bid”.
“He’s happy to catch up with you and see if he can help,” Mr Henderson wrote.
Then, in January 2019, Mr Leonardi sent the letter Mr Dixon used to lobby Cabinet for funding, in an email entitled “This is the letter you need to write to us”.
Mr Leonardi then wrote to then-chief executive of DTBI, Michael Tennant, to inform him that the Turf Club would be submitting a request for a $12 million development and seeking “guidance” on how to obtain the funding before Mr Tennant vacated his position.
But the project stalled after that, despite the department continually writing to the Turf Club seeking details on the proposal.
Despite the lack of actual details on the project, Mr Gunner offered his in-principle support “through Mr Leonardi” to Mr Dixon, the ICAC found, “in the event a submission was made”.
Mr Leonardi continued to meet with Mr Dixon to discuss the grant application as the deadline for unallocated capital grants approached.
Cabinet approved the funding on June 14, 2019 and Mr Dixon later held a private meeting with Jaytex’s engineers and designers to develop initial plans for the grandstand before informing the Turf Club board of the successful grant application, which the board was unaware of.
The board later awarded his company the tender for the project, which the ICAC found breached the public trust because conflicts of interest were not disclosed and the board issued false statements to the public about the tender process.
Gunner’s current chief of staff was Racing Minister’s chief of staff at time of funding agreements, grandstand grant
The ICAC’s report did not draw any conclusions about the conduct of the Chief Minister, the then-treasurer Nicole Manison or Racing Minister Natasha Fyles because Cabinet privilege prevented further enquiries, he said.
Mr Gunner’s current chief of staff, Emily Beresford-Cane, was Ms Fyles’s chief of staff at the time the funding was arranged for the grandstand and the five-year undisclosed funding agreement to the racing industry was entered into. Mr Gunner replaced Mr Leonardi with Ms Beresford-Cane two months after Cabinet had approved the grandstand grant.
Mr Fleming found Mr Leonardi engaged in misconduct by failing to disclose and seek approval for the receipt of hospitality and benefits received from the Darwin Turf Club, that he failed to adequately manage an actual or perceived conflict of interest, acted dishonestly and breached the public trust.
The ICAC recommended disciplinary action be taken against him in his current job in the NT public service.
In his response to the ICAC’s findings, Mr Leonardi admitted he failed to declare the hospitality, but claimed he did not understand that the declaration policy applied to him in his then-position as chief of staff to the Chief Minister.
Mr Leonardi also rejected the other findings against him, but Mr Fleming found his arguments not substantial enough to change any of his conclusions.