Ex-councillors formally cautioned over role in Warrnambool council CEO sacking

Details of a two-year Local Government Inspectorate investigation have finally been revealed almost three years after the sacking of then Warrnambool City Council chief executive officer Peter Schneider.

Former councillors Michael Neoh and Kylie Gaston received formal cautions from the Victorian Government Solicitor's Office for their roles that led to the ousting of Mr Schneider in a controversial 4-3 vote in July 2020.

Three ex-councillors who voted against sacking Mr Schneider, then mayor Tony Herbert, Peter Sycopoulis and Robert Anderson, have welcomed the issuing of the formal cautions.

Mr Sycopoulis said it was vindication for the trio who had made a complaint to the inspectorate that sparked the investigation.

The complaint centred on how Mr Neoh and Ms Gaston sought legal advice in the lead up to the vote and later actions regarding the payment of a bill for that information.

The inspectorate found the advice received from Melbourne-based law firm Maddocks was not authorised.

"Cr Neoh therefore committed an offence in contravention of section 76D (1) of the 1989 Act," the inspectorate found.

"Cr Gaston aided and abetted or was knowingly concerned in the alleged misuse of position by Cr Neoh to gain or attempt to gain, directly or indirectly, an advantage for himself and/or others or to cause detriment to others in contravention of section 76D (1) of the 1989 Act."

In essence, the report found the legal advice was obtained without a resolution of council - something they were unaware they were required to do and something the legal advice had not pointed out.

The investigation also looked at Ms Gaston's draft notice of motion to the council in July 2020 about paying for legal advice which she withdraw after confirming it would represent a conflict of interest.

The actions of Mr Neoh in seeking and receiving the legal advice, requesting the law firm address the invoice to the council and then having that invoice placed on the council's gift register, were also a focus of the investigation.

Penalties for breaching the Local Government Act are rarely given but are hefty, and the penalties could have been as high as $99,132 or five years' imprisonment.

However, despite the findings, the inspectorate decided not to prosecute because it wasn't in the public interest.

"You were only able to commit the offences because you and your fellow councillors acted on professional legal advice from Maddocks that your actions were authorised," the inspectorate found.

The inspectorate also found a majority of councillors would likely have been able to pass a resolution to authorise the obtaining of the advice from Maddocks.

Other factors in the decision not to prosecute was that Maddocks provided a copy of their advice to all councillors, the legal firm also reversed its invoice and did not charge a fee and no public funds were used.

The fact the pair are also no longer councillors was another factor in the decision not to prosecute.

In response to the finding, Ms Gaston told The Standard she had thought it was prudent to get legal advice. "I'm pleased this has all now come to a close," she said.

Mr Neoh, who earlier in June told The Standard he was pleased he would not face charges, said he would make no further comment.

Mr Herbert, Mr Sycopoulis and Mr Anderson issued a statement to The Standard.

"The turmoil at the time cost the council and Warrnambool reputationally and financially, impacted the entire city to the tune of about $750,000 as the council was ordered to pay Peter Schneider's court costs as well as their own," they said.

"This all occurred at a time when the financial capacity of the council had already been significantly impacted by COVID."

The Standard has previously reported the cost to ratepayers was as high as $300,000 after insurance covered part of the legal bill and savings associated with a director juggling her role and that of the CEO were taken into account.

Mr Schneider received a $364,000 payout when he was sacked but 12 months later he returned to the job after a successful court challenge. Late last year the current council decided not to extend his contract.

With no charges arising from the investigation, the pair are now eligible to run for council in 2024 should they wish to after they failed to be re-elected just months later in October 2020.

Mr Sycopoulis said "at the very least" he expected Mr Neoh and Ms Gaston would have been ineligible to become "a councillor or take up public office or have a responsible public position for at least the next eight years".

If Mr Neoh and Ms Gaston chose to run again, the pair had been advised to properly familiarise themselves with the Local Government Act, and utilise resources available for councillors on the inspectorate's website or contact the Municipal Association of Victoria.

But it was Ms Gaston's actions in contacting the MAV about obtaining legal advice about the termination of Mr Schneider that resulted in her "facilitating and assisting Cr Neoh to obtain that legal advice".

The city's current councillors, who were all elected after the saga, will now have to undergo training.

The council received a letter relating to the investigation outcome with the inspectorate's recommendations to be presented to its audit and risk committee.

Chief executive officer Andrew Mason said the inspectorate had asked training for councillors about the role and functions of both the CEO and councillors, and on the employment cycle of the CEO, be facilitated.

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