CASE STUDIES OF ACTUAL CORRUPTION INVESTIGATIONSBy John Pritchard*

CASE I: INVESTIGATION INTO THE HANDLING OF APPLICATIONS FOR PUBLIC
HOUSING BY AN OFFICER OF THE DEPARTMENT OF HOUSINGA. The Investigation
On 27 June 2002, the ICAC received a report from the Department of Housing that a Client ServiceOfficer (CSO) of the Department had solicited a bribe from an applicant for housing. It was alleged that theapplicant paid $2000 to the CSO as part payment to approve an application for priority housing. It wasalleged that further payments were to take place.
The ICAC commenced its formal investigations of this matter on 1 July 2002, under the direction of ICAC
Commissioner Irene Moss AO.
The investigation focused on whether any officials of the Department of Housing or anyone acting on
their account had attempted to solicit a corrupt payment in relation to attempting or agreeing to place any
applicant on a priority list for housing.
The ICAC made use of a range of its powers in this investigation.
ICAC investigators searched through all files that were handled by the suspect person from January 2001
to June 2002, served a number of notices to produce relevant documents, obtained a search warrant tosearch the premises of the suspect person and obtained warrants to listen to and record telephone
conversations and private conversations between specific persons.
The ICAC also held a number of private hearings between 4 July 2002 and 19 August 2002. Public
hearings were held on 18 and 19 September 2002. Ten witnesses were summonsed, examined and crossexamined during those hearings.

B. Why did the ICAC Investigate these Matters?
Housing is one of the most basic of personal and social needs in our society. For those who cannot obtainsuitable accommodation in the private sector, whether through cost or other needs, public housing is a vitalsocial support. Just over 5% of householders are in public housing in New South Wales. It is a scarce
resource that needs to be allocated fairly and equitably and there is a public interest in ensuring that thisoccurs.
There is a long waiting list for public housing, and those in greatest need may apply for priority housing.
It is damaging to community confidence in the integrity of allocating scarce public resources if the processes
used to allocate public housing and priority housing are tainted by corruption or other improper means. It isin the public interest to ensure the maintenance of a fair and equitable system designed to provide for thosein real need.
It is also in the public interest to expose conduct by public officials which may weaken the integrity ofpublic institutions. It is essential to the proper functioning of our society that the public has complete
confidence in our public institutions, especially when it concerns the allocation of scarce resources.
The investigation also assessed some suggestions as to how the integrity of allocating housing may bepreserved and how some of the identified risks of corruption and misallocation of public resources may beminimised.
There was a high level of public interest in the ICAC’s hearings, reflecting the substantial importance tothe community of the fair and equitable provision of public housing.
* Deputy Commissioner, Independent Commission Against Corruption Sydney, Australia.

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C. What Happened?
Steven Klimoski was employed as Client Service Officer (CSO) in the Burwood office of the Departmentof Housing. His responsibilities included assessing client needs, determining applicants’ eligibility for public
housing, including priority housing, and providing recommendations to his team leader.
Priority housing is available for those in urgent need of public housing through factors such as unstablehousing circumstances, ‘at risk’ factors such as being a victim of domestic violence and inappropriateness ofcurrent accommodation. The median waiting time for priority housing was 1.7 months in 2001-02, while themedian waiting time for all applicants for public housing was 39 months in the same period.
The ICAC investigation found that Klimoski, using his position as a CSO responsible for assessing andproviding recommendations on applications for priority housing, had offered to expedite an applicant’s
application for priority housing in return for a cash payment of $8000.
In early 2002, the applicant had met an acquaintance, Anthony Severino, and asked him if he knew
anyone working for the Department of Housing who might be able to assist her with an application for public
housing.
Severino contacted Klimoski and arranged a meeting with the applicant. At this meeting Klimoski
informed the applicant that he could assist her to obtain priority public housing, but that he would require
payment. Severino was to secure a portion of the total payment for his role in facilitating the arrangement.
After making an initial payment of $2000 to Klimoski, the applicant told a friend about the payment andafter determining that the payment was improper, informed the Department. The Department reported thematter to the ICAC, pursuant to Section 11 of the ICAC Act.
The ICAC lawfully recorded and videotaped a subsequent meeting between the applicant, Severino andKlimoski during which arrangements for the payment of money to Klimoski were confirmed. At thismeeting the applicant gave Klimoski a further $2000 in cash.
Following this meeting, Klimoski was made aware that the ICAC was conducting an investigation intomatters including his role in processing applications for priority housing. Klimoski subsequently gave
evidence to the ICAC in a private hearing on 4 July 2002.

D. What were the ICAC’s Findings?
The ICAC’s investigation found evidence that Steven Klimoski, an officer of the Department andAnthony Severino, a tenant of the Department, engaged in corrupt conduct.
There is no evidence that any other person employed with the Department discharged their duties
corruptly.
Recommendations are made in the report that the Director of Public Prosecutions give consideration to
the prosecution of Steven Klimoski for the offences of corruptly obtaining benefit [Section 249B of theCrimes Act 1900 (NSW)] and the prosecution of Anthony Severino for the offences of aiding and abetting thereceipt of corrupt benefit [Section 249F of the Crimes Act 1900 (NSW)] and giving false and/or misleading
evidence pursuant to Section 87 of the Independent Commission Against Corruption Act 1988.
A recommendation is made in the report that consideration be given to disciplinary action by theDepartment against Steven Klimoski pursuant to s.74A(2)(b) of the ICAC Act.
The report also makes a number of specific recommendations to the Department for it to review its
systems and policies for priority housing, establish appropriate audit processes to review allocation decisions
and verify the assets of applicants; and strengthen and promote its policy on gifts, benefits and bribes.

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SEVENTH COURSE ON CORRUPTION CONTROL IN CRIMINAL JUSTICEVISITING EXPERTS

CASE II: INVESTIGATION INTO CORRUPT CONDUCT ASSOCIATED WITH
DEVELOPMENT PROPOSALS AT ROCKDALE CITY COUNCIL
A. The Investigation
This ICAC investigation examined the conduct of two Rockdale City Council (RCC) councillors, Adam
McCormick, the Deputy Mayor, and Andrew Smyrnis in relation to corrupt dealings with certain property
developers. The conduct of persons who acted as intermediaries between Councillor Smyrnis and thesedevelopers in soliciting bribes is also examined.
B. Why did the ICAC Investigate?
Over one third of the matters currently received by the ICAC concern local government. The one issue
that is the subject of most complaints to the ICAC from the public concerns planning decisions made bycouncils. Over 16% of all the complaints received by the ICAC from the public concern development
approvals.
Development Applications represent a significant economic investment. Councillors make decisions daily
on a vast range of projects that impact on our economy, our community and our quality of life. It is vital thatthe public is assured that planning decisions are made on their merits and not out of self interest or financial
gain for the decision makers.
In the present case there was evidence to suggest that two councillors were involved in soliciting
substantial bribes from developers in return for supporting their development proposals. Such actions go to
the core of the integrity of the planning process. There was a clear public interest for such allegations to bethoroughly investigated to determine if they were accurate and if so to identify those involved.

C. What Happened?
There were four areas of interest to the Commission’s investigation
1.

In October 2000 Manuel Limberis, at the request of Andrew Smyrnis sought money from thedeveloper of property at 2-4 Parker Street, Rockdale, knowing that in return Smyrnis would give
favourable consideration as an RCC councillor to the Development Application. The amount ofmoney sought was $150,000 to obtain approval for a five level development and $90,000 for a fourlevel development. He did not tell the developer the money was to be a bribe but was to pay him tolobby Councillor Smyrnis. The developer rejected the offer.

2.

In July/August 2001, Manuel Limberis entered into an agreement with Con Chartofillis, who wasproposing a development at 2-4 Frederick Street, Rockdale, for a payment of up to $320,000
depending upon the number of floors approved by RCC. Money was sought and obtained from
Chartofillis on behalf of Smyrnis with the purpose of influencing Smyrnis in relation to theDevelopment Application and for Smyrnis to organise support from other councillors for theDevelopment Application. Between 28 August 2001 and 14 January 2002, Chartofillis madepayments to Limberis totalling $54,500. Of this sum, $49,500 was transferred to Smyrnis, thebalance being retained by Limberis.
Smyrnis agreed with Councillor Adam McCormick to pay McCormick $70,000 in return for
McCormick supporting the Chartofillis Development Application and obtaining the support of other
ALP RCC councillors. Later, McCormick sought to renegotiate this agreement for the purpose ofobtaining a larger sum of money.

3.

Between October and December 2001 Anthony Retsos, at the request of Andrew Smyrnis, met witha developer codenamed R1 and sought payment from him of between $240,000 and $250,000 inreturn for Smyrnis giving favourable consideration as an RCC councillor to R1’s Development
Application for a proposed development in Rockdale.
Retsos understood that in return for dealing with R1 on behalf of Smyrnis he could expect to receive
a payment of money of at least $20,000 to $25,000.

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Smyrnis agreed with Councillor Adam McCormick to pay McCormick $70,000 in return for
McCormick supporting R1’s Development Application for Site 1, and obtaining the support of other
ALP RCC councillors.
No monies were paid by R1 to Retsos, Smyrnis or McCormick, either directly or indirectly.
In early 2002, a developer, Terry Andriotakis, offered to provide benefits to Councillor Smyrnis by
way of free advice in relation to property deals (which Andriotakis told Smyrnis was worth a lot ofmoney), referring potential customers to a mortgage business in which Smyrnis said he wasinvolved, and assisting Smyrnis in joint ventures, including the possibility of Smyrnis becoming abeneficiary in a development. These offers were made by Andriotakis and accepted by Smyrnis withthe intention that Smyrnis would, in his capacity as a councillor of RCC, lobby other RCC councillors
to ensure that a draft Development Control Plan proposed by Andriotakis for sites at Arncliffe, wasapproved by RCC as soon as possible.

D. What Were the ICAC’s Findings?
The ICAC’s report: Report into Corrupt Conduct Associated with Development Proposals at Rockdale
City Council, published in July 2002, at the conclusion of the investigation, contains findings that Andrew
Smyrnis, Adam McCormick, Manuel Limberis, Tony Retsos, Con Chartofillis and Terry Andriotakis engagedin corrupt conduct.
Recommendations are made in the report that the Director of Public Prosecutions give consideration tothe prosecution of Andrew Smyrnis, Adam McCormick, Manuel Limberis, Con Chartofillis and Tony Retsos
for bribery-related offences and offences of giving false and misleading evidence to the ICAC. A
recommendation is made that the Director of Public Prosecutions give consideration to the prosecution ofTerry Andriotakis for bribery-related offences.
Recommendations were made that consideration be given to the suspension of Councillor Adam
McCormick from civic office under s.440C of the Local Government Act 1993 with a view to his dismissal
for serious corrupt conduct. Councillor McCormick resigned however, the day the report was released. Nosuch recommendation was made in respect of Smyrnis as he resigned from RCC during the course of theICAC hearings.
The evidence before the ICAC did not indicate the level of systemic corruption within RCC to warrant arecommendation that consideration be given to the dismissal of all councillors.
There was no evidence that any staff member of RCC acted other than professionally and properly in thedischarge of their duties and no suggestion that they had acted corruptly.
The report canvasses the need for reform of development control systems, and controls on political
donations and influence at the local government level. Recommendations addressing these issues will bemade in a subsequent report.

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