A scathing report into the NSW transport department's purchase of an overpriced, contaminated parcel of land in Sydney's west has found the process was rushed, poorly informed and a corruption risk.
The NSW auditor general's report, released on Tuesday, examined the 2016 purchase of 6.3 hectares of land at Camellia bought as a maintenance depot for the Parramatta Light Rail project.
Transport Minister Andrew Constance requested the audit last November after media reports questioned the probity of the purchase, and says he's "furious and disgusted" at its findings.
Transport for NSW initially bid for the land in 2015, but it sold to a developer for $38.15 million.
Seven months later, Grand 4 Investments - a business established by owners of a property development and investment company - approached the department to resell the land at an inflated price.
The land - contaminated with asbestos, hexavalent chromium and other hazardous substances - was purchased for $53.5 million, but is forecast to cost the department another $106.9 million to clean up.
Auditor General Margaret Crawford found Transport for NSW had made a litany of errors throughout the saga.
The speed of the sale and the high value of the negotiation did not raise red flags, and the department made no effort to seek independent advice on the merits of the sale.
The department had no documented negotiations strategy, no policy on probity management, nor did it keep comprehensive records during the process.
Staff involved didn't have approval to make the offer and no formal valuation was sought prior to purchase, Ms Crawford said.
Further, the valuation commissioned on the day the purchase settled was deliberately limited to exclude the cost of cleaning up the site.
Nonetheless, that valuation found the land, excluding remediation costs, was worth only $15.5 million - less than a third of what the department paid.
Decisions were "rushed and poorly informed", Ms Crawford concluded, and the department could not explain how they'd reached them.
For example, while the department was initially unwilling to accept the costs and risks of contamination, its position later changed to unconditionally do so. It was unable to explain why.
"The lack of analysis and due diligence... constitutes poor governance and ineffective administration," she wrote in the report.
"TfNSW's probity practices were insufficient and exposed TfNSW to a greater risk of corruption, misconduct and maladministration."
Ms Crawford also found she could not rule out the possibility that corruption risk exploited in the sale, which has since been referred to the Independent Commission Against Corruption.
"The records show that only one person completed a conflict of interest declaration."
"TfNSW's insufficient probity practices and gaps in documentation mean that we are unable to exclude the possibility that the transaction was affected by misconduct or corruption."
Ms Crawford also found many of the gaps in policy and procedure guidance noted throughout the report remain.
She made seven recommendations including that the department investigate the staff involved in the decision and that a suite of new policies be introduced to guide future acquisitions.
Mr Constance said the process - or lack of - outlined in the report was "bloody unacceptable".
"I'm furious and disgusted at this," he said.
"This has to be cleaned up."
All of the recommendations made would be implemented to the letter, he said.
NSW Labor says Mr Constance should be sacked over the incident.
It says the then-secretary of TfNSW Tim Reardon, who is now the secretary of the Department of Premier and Cabinet, should also go.
"This report reads like a disaster novel; everything that could go wrong, did go wrong," finance spokesman Daniel Mookhey told reporters.
"What's really worrying is it the same rules that were in place at that time are still in force today.
"Those two decision makers are still in charge of these processes and confidence cannot return to the transport department until we see some serious action to make sure this never happens again."
Australian Associated Press