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The New South Wales government paid more than $1m in 2016 to compensate for environmental damage from the construction of the WestConnex motorway by buying offsets on a property 400km outside Sydney that is part-owned by a consultant who worked on the environmental assessment for the project.
A second consultant who holds shares in the offset site was employed as a conservation officer in the NSW environment department at the time the land, near Kempsey on the state’s north coast, was purchased in 2014.
The offset purchase was made in October 2016 and there is no suggestion either consultant was aware of the offset requirements for WestConnex when they bought the land. The consultants told Guardian Australia it was their understanding the offset requirements had not been developed at the time the property was purchased.
The transactions are revealed in emails tabled in the NSW parliament, where hearings in the state’s inquiry into biodiversity offset schemes resume on Thursday and Friday.
Offsets exist to allow developers to compensate for environmental damage in one area by delivering an equivalent environmental benefit in another.
Guardian Australia revealed earlier this year that consultants from a company that advised governments on major developments in western Sydney had made windfall gains of tens of millions of dollars selling offsets to the state and federal governments for those same developments.
The revelations triggered a string of reviews, including a parliamentary inquiry, internal investigations by Transport for NSW and the planning department, and an investigation by the state integrity body.
Now, $1.2m in transactions involving Sydney’s partially completed WestConnex motorway and a company called Angophora Holdings have come to light through documents tabled in the NSW parliament.
Offsets area method of compensating for habitat destruction caused by developments such as roads, new suburbs, mines and airports.
They are often set as a condition of a project's environmental approval by state and federal governments.
When threatened habitats are bulldozed, developers are required to compensate for that damage by providing an equivalent environmental benefit elsewhere.
Examples of biodiversity offsets include permanently protecting another parcel of land with the same ecosystems and species as the site being cleared, or doing regeneration and restoration work - over and above standard environmental management - to improve a site with the same type of habitat.
The WestConnex project faced strong opposition from community groups because of the environmental damage it would cause to certain ecosystems in Sydney and to habitat for the threatened green and golden bell frog.
Under its approval conditions, the former NSW Roads and Maritime Service – now Transport for NSW – was required to compensate by buying credits under the state’s offset scheme.
The credits it was required to purchase were for the frog and for two types of woodland – critically endangered Cooks River/Castlereagh ironbark forest found in Sydney, and paperbark swamp forest, an ecological community found in Sydney and on the NSW north coast that is listed under NSW laws as endangered.
The environmental impact statement (EIS) for WestConnex was produced by the multinational engineering firm Aecom and was published in November 2015. The firm also worked on earlier contracts for the project, including a November 2014 report for the project’s application as state significant infrastructure.
Transaction records show that in October 2016, the NSW government – via the WestConnex company – purchased 203 green and golden bell frog offset credits for $1,116,500 and 27 paperbark swamp credits for $87,750, excluding GST, from Angophora Holdings.
Land records show the company bought a property at Kundabung, near Kempsey, for $125,000 in July 2014 and “banked” it for conservation under an agreement registered in June 2016.
According to the EIS, requests for the relevant credits were advertised on the government’s public biobanking register in December 2014, August 2015 and October 2015.
The listed directors of Angophora Holdings are Anthony Davis and Darren James, who are also listed as shareholders, with their respective partners.
At the time of the property purchase, Davis was an associate director at Aecom and is named as the reviewer for some of the chapters of the WestConnex EIS, specifically sections relating to contamination and waste.
James was employed as a conservation officer in the then NSW office of environment and heritage.
Angophora Holdings said the company was unable to answer specific questions in the timeframe given by Guardian Australia but stressed that the land was purchased before the offset requirements for Westconnex were developed and that any inference that they had known about the offset requirements before buying the land would be “wrong and baseless”.
“Angophora Holdings is committed to the protection and management of biodiversity within the biobank site, and biodiversity conservation more generally,” the company said.
“Angophora Holdings will be happy to assist with any official enquiries or reviews undertaken of the offsetting scheme.”
Aecom told Guardian Australia it is committed to acting with the highest level of ethics and integrity and “we do not tolerate any behaviour that does not align with our Code of Conduct”.
Asked if James had declared any potential conflicts of interest associated with the property, a spokesperson for the NSW planning department said he had made a “private or secondary employment declaration that was approved by the director, metro branch of the former Office of Environment and Heritage in January 2014”.
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Geoffrey Watson, a director of the Centre for Public Integrity and a former counsel assisting the Independent Commission Against Corruption, told Guardian Australia that on their face the transactions raised questions about potential conflicts of interest.
“The department needs to investigate this matter to make sure its controls were appropriate,” he said. Guardian Australia does not suggest any impropriety by James, Davis or Angophora Holdings.
In response to earlier reporting by Guardian Australia about the state’s offset scheme, the department commissioned two external reviews of how it had managed potential conflicts associated with staff holding financial interests in offset sites.
One review, by the legal firm Maddocks, found “no issues arising”, the department’s spokesperson said. In response to the second, by the consulting firm Centium, the department had adopted a number of recommendations, including developing a conflict of interest protocol.
Transport for NSW did not respond to a list of questions. Tara McCarthy, the agency’s deputy secretary for safety, environment and regulation, speaking generally, said: “Matters concerning biodiversity offsets, such as those relating to the Western Sydney Infrastructure Plan, are with the Independent Commission Against Corruption.”
Labor’s environment spokesperson, Penny Sharpe, demanded an urgent response from the environment minister, Matt Kean.
“Minister Kean has failed to provide even the most basic oversight and monitoring of the biodiversity offset scheme that instead of protecting biodiversity is leading to windfall gains for individuals and a licence to clear endangered habitat,” she said.
“The minister has admitted that the scheme is under investigation – that is not enough. This failure needs an urgent and thorough response.”
The Greens MP Cate Faehrmann, who is chairing the parliamentary inquiry, questioned why the government had offset a motorway in Sydney with land more than 400km away.
Under the state’s offset policy, credits for species can be purchased from any part of the state but ecosystem credits are expected to be purchased from sites closer to where land is cleared.
Faehrmann said the outcome was an environmental loss for Sydney.
“Paying money to a landholder on the mid-north coast for green and golden bell frog habitat wouldn’t give much comfort to the frogs in western Sydney whose homes were bulldozed,” she said.
“Species are listed as threatened for a reason and offsetting the destruction of habitat makes them more so, not less.
Kean told Guardian Australia the public had a right to know that any development was offset and consistent with the rules.
“Public trust in the scheme and its outcomes is vital,” he said.
“There are a number of issues relating to the scheme that are currently under review or investigation by integrity bodies, as well as by my department.
“I look forward to receiving the outcomes of that work and working closely with stakeholders to further improve the scheme.”
The NSW environment department’s spokesperson said under current offset rules, the purchase of the paperbark swamp credits near Kempsey – which occurred under old laws – would not be considered a like-for-like offset.
The spokesperson said the department was consulted by the WestConnex company before the purchase and had confirmed it was acceptable.