NSW Government mining titles processes remain exposed to bribery, fraud, theft and corruption risks that include the acceptance of cash for mining title applications, a review has found after Hunter Department of Planning whistleblower Rebecca Connor was sacked in 2018 after raising corruption concerns.
"I want an apology," said Ms Connor after an Ernst & Young review to Department of Planning Secretary Jim Betts on November 29 provided a damning assessment of the state's management of mining, despite previous high-profile corruption inquiries involving coal exploration licences.
It includes a recommendation that the Resources Regulator lose its approval functions to focus on regulating mines less than two years after taking on the approval roles, because of a "perceived lack of independence" leading to "reduced public confidence".
Ernst & Young found there was a ''lack of awareness of the full extent of fraud risks" within the Department of Planning, in a review initiated after Newcastle Herald articles in 2018 about Ms Connor's sacking because "I wouldn't play ball".
The articles prompted calls for a judicial inquiry after three other sacked senior department governance and information systems staff raised concerns about corruption risks in the mine titles area and a "be silent or be sacked" culture within the department.
"The E & Y review validates issues I've been raising since 2016. My treatment shows a culture of behaviour in which whistleblowing is not supported. The department has failed to show any genuine remorse," said Ms Connor, a former senior department titles operations manager based at Maitland.
The NSW Ombudsman's office is investigating her complaint she was suspended a day after allegedly warning a senior manager she was making a protected disclosure alleging serious misconduct by a former titles staff member, leading to an unlawful mining lease approval.
"The report doesn't address my treatment as a whistleblower and as far as I'm concerned the department is merely paying lip service to the issues I raised to appease bad media attention," Ms Connor said.
The Ernst & Young review found mining applications were approved without evidence that fees and levies were paid, title conditions were not effectively monitored for compliance and title holders were able to submit "factually inconsistent" reports without detection.
It recommended the department's Division of Resources and Geoscience, which oversees mining applications, should prohibit payment of application fees by cash or cheque "to reduce the risk of fraud, bribery or theft".
The existing payment process is "manual and performed outside of any system", with "no system-generated transaction listing" and a "lack of appreciation" of the risk such payments represented, the review found.
The division said the recommendation would be considered in a 2020 review, but there were no "legislative requirements that allow DRG to refuse cash/cheque payments".
Not being able to accept more than $1 million a year of majority cash applications for small-scale opal titles at Lightning Ridge "would significantly affect the opal industry", the division said in response to the review's concerns.
The division said it had only received one mining title cash payment at its Maitland office in 2019.
The division received 395 new and renewal applications between April, 2018 and March, 2019, with the majority exploration licence applications. Coal applications represented 12 per cent of the total figure, with the bulk relating to gold, silver, copper, zinc and lead.
While sample testing by Ernst & Young, which did not include an investigation, did not identify fraud or corruption, there was an "inherent risk of fraud, corruption and conflicts of interest" in the mining titles area, the review found.
Despite the inherent risks there had been "reduced management attention" in the past so that "key controls" had "historically" not been put in place.
The review found the Division of Resources and Geoscience had to strengthen how it managed staff conflicts of interest in an area where staff had not "historically" been required to declare conflicts while assessing individual mining title applications, despite dealing directly with mining companies and their agents.
In 2018 the Herald broke more than a year of government silence byrevealing a Hunter Department of Planning employee married to a coal miner played a key role in mining company Ridgelands' attempt to cut a Muswellbrook community fund from $5 million to $500,000, despite the fund being an exploration licence condition of consent.
In 2017 former Muswellbrook Shire councillor Christine Phelps described the secrecy around the 2013 condition of consent as another case of "the NSW Government and the mining industry in cahoots again to shaft the community". Her comment came after Muswellbrook Shire Council became aware of the fund and initiated NSW Supreme Court action to recover the $5 million.
In July, 2018 the NSW Resources Regulator said it would not prosecute mining company Ridgelands Resources over the community fund after an investigation revealed significant NSW Government agency failures in managing how the company complied with the condition.
The Ernst & Young review noted the Division of Resources and Geoscience ran training for staff about dealing with "difficult people and conversations", but senior management had "failed to endorse a fit-for purpose anti-fraud and corruption training program".
The division's recruitment processes also left the mining titles area exposed to fraud and corruption by failing to consistently perform criminal history checks and checks on qualifications.
The review raised serious concerns about the division's documents management for mining titles, leaving the NSW Government exposed to legal challenges and breaches of the Mining Act, and where serious issues raised by the Resources Regulator about a mining applicant's history or financial capabilities were missing from final decisions.
Ernst & Young could find no evidence application fees were paid in seven applications tested, no evidence of levies and fees paid in another two before a title was issued, and no evidence six applications were published in the Government Gazette as required to comply with the Mining Act.
The "inconsistent records management practices" left the mining titles area exposed to "the leakage of sensitive information" but there was a "lack of emphasis on the importance of records management", the review found.
A high staff turnover in senior management and "ongoing resource constraints" hindered internal reporting of "unusual, unique or unprecedented applications" to senior management level, the review found. Existing processes also hindered other "noteworthy incidents, such as undue pressure from applicants and/or mining agents" from being progressed to senior level.
Ms Connor called on the Department of Planning to say how much it had spent on new IT systems to manage mining documents and processes and improve transparency, after the review confirmed whistleblower complaints that weaknesses in the system were risks.
"The department is responsible for administration of billions of dollars in our economy and yet still can't get the fundamentals right. Conditions of title and consents are being tracked through a system that is not much more than a glorified spreadsheet that cannot provide rudimentary reporting and oversight. The review found that new checklists still fail," Ms Connor said.
In April this year the Department of Planning conceded a "world first scandium mine" approval at Nyngan was invalid nearly a year after Ms Connor was sacked after allegedly making a protected disclosure that the 2017 scandium mine approval was unlawful and should be revoked.
The Division of Resources and Geoscience said it lost an elderly farmer's objection to the mine in 2016, only for it to surface a matter of days after the mining lease approval in October, 2017.
The department did not advise the farmer his objection had been found until September, 2018 after Ms Connor complained to the NSW Ombudsman. In a letter to the farmer in April, at the direction of the NSW Land and Environment Court, the department conceded it had been required to consider his objection to the scandium mine on his property and had not done so before approving the mining lease.
The department subsequently amended the title so it is not over the farmer's land.
In response to a question about whether the review was damning of the state's mining title systems and management, Division of Resources and Geoscience deputy secretary Michael Wright said "No-one's perfect. We are on, and have been on, a pathway to improvement".
Independent Commission Against Corruption inquiries in 2013 into Hunter mining exploration licence approvals "still hang over the division", Mr Wright said.
"I would agree we need to rebuild public trust."
The division accepted the review's recommendations and "many of the recommendations mirror steps we're already taking to improve our systems and decision-making processes", he said.
A new online titles management system will "improve control, efficiency and transparency of the mining titles administration process".
"We are also delivering a set of new, tailored training workshops around risk management and prevention of fraud, a conflict-of-interest register, specific to the Division of Resources and Geoscience and improved IT and record-keeping systems to lift standards of accountability and transparency," Mr Wright said.
He said accepting cash for titles applications from a "particular demographic" at Lightning Ridge that "continues to pay by cash" was a risk that was being addressed as part of a review of payments processes in 2020.