Sector profile

Corruption and misconduct risks for local government

Insights on specific corruption risks for the local government sector, councillors and employees, as well as related prevention and detection strategies.

Local councils provide vital community services and are considered public bodies under the IBAC Act. All councils have key responsibilities for planning, building, health services, waste management, emergency management, recreation and culture. They receive funds from their communities via municipal rates, charges and fees for service and fines, as well as grant funding from state and federal governments.

Council areas across Victoria vary significantly in geographical size, population and demographics. The unique characteristics of individual council areas and different make-up of each local government workforce mean that the corruption risks and drivers for each council and employee group can differ and should be considered in their own unique context.

  • Councillors

    • Poorly managed conflicts of interest:
      • kickbacks to local businesses owned by associates
      • decisions related to grants and planning
      • difficulties in appropriately managing conflicts of interest in smaller communities.
    • Improper influence – councillors directing or interfering with council staff.
    • Unauthorised disclosure of information – to further their political status, campaigns or interests.
    • Increased bias with councillor voting blocs on issues raised, with limited oversight and means to prevent this conduct. While this behaviour may be in contravention of the Local Government Act 2020 (Vic), it will not always constitute corruption.
    • Electoral donations and political fundraisers connected to councillors’ political parties – metropolitan and interface councils. This issue was a key focus of IBAC’s Operation Sandon.
    • While council staff are reporting that culture and integrity have been improved, they also perceive councillor conduct to be an area of increasing concern. While the alleged conduct is often in contravention of the Local Government Act 2020, it often would not reach the threshold required for corruption. The alleged conduct could, however, create the conditions for corruption to occur or could be used obscure or cover up corruption if it has occurred, or is occurring.

    Council staff

    • Fraudulent procurement – contract or purchase order variations as well as misuse of contingency funds.
    • Misuse of council assets – cars, machinery and technology.
    • Misuse of grant funding – emergency relief and recovery funding.
    • Improper influence – receiving gifts and hospitality.
    • Favouritism – recruitment; issuing of licenses, permits of approvals; or procurement.


    • Organised crime groups cultivating relationships with council staff and councillors to gain access to information, systems or commodities. Local councils hold valuable personal identifying information (such as addresses, phone numbers etc) and decisions by council can have monetary impacts on businesses and individuals.
    • The May 2022 Insights Report from the Local Government Culture Project identified nine key ideas to address the following themes the project focused on. While this project did not focus on corruption or corruption risks, these three themes impact the culture and integrity of local government and shape the corruption prevention and detection strategies implemented.
      • Leadership experience and capability – issues that relate to how roles could be better defined and how leadership skills could be built and maintained
      • Councillor journey – issues that relate to support for Councillors throughout their journey to ensure they understand and can execute their role, particularly in the social media age
      • Early intervention and effective dispute resolution – issues that relate to resolving conflict and preventing the escalation of poor behaviour and its impacts.
  • Councillors

    • Limited councillor preparedness, capacity and skills to deal with emergency situations can increase the risk of corruption and misconduct, particularly in relation to grants or emergency relief and response.


    • Increased risk of information misuse due to work from home arrangements. The opportunities to disclose information without detection are greater than before, and there is an increased risk of cyber security threats due to remote working.
    • Increased risk of improper influence in land/planning decisions within regional/rural councils experiencing population growth due to COVID-19.
    • Misuse of funding for personal gain or manipulation of reporting against funded services or programs.
    • Procurement – for councils whose procurement frameworks lack structure, guidance and mechanisms to detect anomalies and red flags.
    • Land planning, rezoning and urban growth decisions.
    • Challenges with implementing and maintaining a culture of integrity due to high turnover of CEO and council staff.
    • Licensing, permits, approvals and other delegated functions.
  • Operation Sandon

    • IBAC found a property developer, and others who worked with him, sought to improperly influence numerous councillors and staff at an interface council. For two councillors, the property developer arranged to move money to them, and in return, the councillors progressed the property developer’s interests before Council relating to rezoning and planning matters.
    • IBAC’s investigation exposed how decisions at the local and State levels of government were improperly influenced or were at risk of undue influence through manipulation of council governance processes, donations and lobbying.
    • These risks were particularly driven by a lack of transparency in decision making, political donations and lobbying, as well as a lack of requirement for expertise or rigour by councillors in matters they are deciding.
    • IBAC found councillors often failed to declare conflicts of interest, and when they did, they continued to attempt to influence how other councillors would vote in relation to those matters.
    • Operation Sandon also indicated that CEOs lack the authority to act in relation to identified integrity issues involving councillors and that the mechanisms to address poor councillor conduct were slow and lacked transparency.

    Operation Dorset

    • IBAC found a project manager at a metropolitan council subverted the council’s procurement processes over many years by awarding contracts to friends and associates. The project manager received cash, gifts and benefits from a company which was awarded council work.
    • The project manager did not appear to understand what constitutes a conflict of interest and the council’s processes for declaring them.

    Operation Royston

    • IBAC found a manager at a regional city council unlawfully authorised payments totalling over $184,000 and obtained over $103,000 in benefits by way of direct pecuniary interest or secret commissions. Three of the manager’s associates were also charged—one with obtaining a financial advantage by deception and attempting to commit an indictable offence, and the other two with paying secret commissions.
    • IBAC found that the manager was instrumental in setting up a company (which was solely owned and operated by his wife) and engaging the company on behalf of council. In doing so, the manager played a critical role in his family obtaining a financial advantage.
    • The manager was also actively involved in engaging three associates on behalf of council. Again, he played a critical role in those companies obtaining a financial advantage ($128,238 in contracts between 2013 and 2015) in exchange for which he solicited and received secret commissions totalling $47,745.
  • IBAC reviews police and public sector investigations into allegations of internal misconduct or corruption to ensure they are appropriately managed in accordance with public expectations.

    Review of an investigation by a metropolitan council into gifts, bribes and preferential treatment

    • IBAC referred an anonymous complaint to a metropolitan council for investigation. The two allegations referred were that, during an unspecified timeframe two employees of a local council-owned market accepted gifts and large sums of money from stall holders in exchange for preferential treatment.
    • The investigation was conducted internally by council employees who interviewed both the subjects of the allegations and stall holders at the market. The investigation found the allegations to be unsubstantiated. The Council also undertook a review of relevant policies to identify any fraud and corruption risks.
    • The review found the referred complaint was appropriately addressed by the council.
    • However, the council was advised in the outcome letter that the investigation process was not procedurally correct in that one subject of investigation was later an interviewer in the second subject’s investigation interview. This is an example of the limitation of expertise of internal investigations in local government rather than deliberate obscuring behaviour.
    • It was also noted that at interview stall holders expressed that they were unaware of procedures for making complaints to the council and it was recommended that this gap be addressed.

    Review of an investigation by a metropolitan council into misuse of library resources

    • A metropolitan council notified IBAC that a council library officer misused library resources to borrow more than 2000 items and accrued fines over $30,000. The same employee created multiple library memberships in breach of council policies and overrode library systems to waive fees. The conduct was revealed when the council’s debt recovery team made enquiries about the overdue fees.
    • An internal investigation was conducted by a senior council employee. The subject of the investigation was interviewed and admitted to the conduct. Further lines of enquiry included obtaining CCTV footage and forensic analysis of library management systems. The subject employee resigned from their position and a repayment plan was established for the outstanding fees of more than $15,000.
    • The investigation undertaken internally by council was thorough, appropriate and proportionate.
    • The investigator actively engaged the subject and given their subsequent resignation, although the council’s action at the outcome of the investigation may appear lenient, the review considered ongoing risk had been mitigated. The council further took reasonable steps to update policies in relation to library systems to prevent repeat conduct.

    Review of an investigation by a metropolitan council into falsifying timesheets

    • A metropolitan council notified IBAC that an employee employed as a health instructor at the council’s leisure centres was also working privately as a personal trainer and falsifying timesheets to be paid by the council for the two roles.
    • The council interviewed the employee. The outcome of the investigation was termination of the employee’s employment.
    • The investigation file was inadequate in that copies of evidence collected, and relied upon for decision-making purposes, was not provided to IBAC.
    • Without access to the evidence, an IBAC review cannot determine whether the findings were evidence-based and the outcome fair and reasonable. The following data could have been included: original documentation (i.e. timesheets, invoices), interview notes/transcript with subject, any relevant witness accounts.
    • The council did not state whether any organisational and/or systemic issues had been identified and any resulting changes to policy, process or systems. This was pertinent given the subject claimed such conduct was common among the personal training staff.
    • The council was further advised that in circumstances where notification is made to IBAC of allegations of corrupt conduct, all internal investigations and enquiries should cease pending IBAC’s assessment of the matter. Further investigation by council may impede IBAC if investigations are initiated.

    Review of an investigation by a metropolitan council into undue influence of a planning decision

    • A metropolitan council notified IBAC that an employee from its planning team had influenced a planning application for a personal contact.
    • The council conducted an internal investigation led by three members of senior management. The full investigation file was provided to IBAC and included:
      • evidence of emails and systems accessed by the subject
      • an investigation chronology including telephone contacts documented relevant to the case
      • meeting notes and policy documents.
    • All allegations were substantiated amounting to misconduct and the subject’s employment was terminated.
    • In response to the referral from IBAC, the council reviewed their existing conflict of interest declaration requirements and reviewed the current case management systems. The council stated that consideration was given to amending their policies with respect to planning officers disclosing any indirect involvement in planning applications and increasing training about conflict of interests.
    • IBAC found the investigation was adequate with no deficiencies. The information provided with the investigation file demonstrated a thorough, adequately resourced, and procedurally fair process. The investigation was conducted in a timely manner. Policy, governance and systems reviews had been undertaken demonstrating a pro-active approach to strengthening council’s management of conflict of interest. One minor issue was identified, being the subject was not assigned a welfare coordinator whilst under investigation.