Wollongong councillors caught up in the corruption scandal may escape paying millions of dollars in legal fees, which could be funded under Wollongong City Council's insurance policy.
The insurance policy offered blanket coverage for Wollongong councillors Kiril Jonovski, Val Zanotto, Frank Gigliotti and Zeki Esen, who were found to be corrupt by the Independent Commission Against Corruption, for their legal expenses now and into the future.
Criminal charges were recommended against the four councillors by ICAC and they are now waiting to see whether the Office of the Director of Public Prosecution will pursue charges.
If the councillors are prosecuted, the matters might take years to play out in court, with each councillor potentially accruing a hefty legal bill.
Those legal expenses may be paid for by the council's ratepayer-funded insurance policy which states: "Councillors are to receive the benefit of insurance coverage effected by council for ... legal services in the event of an inquiry, investigation or hearing by (organisations including) the Independent Commission Against Corruption ... the police ... and the Director of Public Prosecutions."
A council spokeswoman said while councillors were covered by the council's insurance policy for ICAC hearings, she did not know whether they had been reimbursed for their legal costs thus far.
"The relationship between the individuals involved and the insurance company is a private one on which the council is not informed by the insurer," she said.
She did not respond to questions about whether the insurance policy would fund future court proceedings for the corrupt councillors or whether the policy had been amended.
However, the policy flies in the face of advice given in a circular sent to all NSW councils on March 9, 2005 from the Department of Local Government.
In the circular the department said that expenses incurred from a councillor's performance should be distinguished from expenses arising "merely from something that a councillor has done".
"An example of the latter is expenses arising from an investigation as to whether a councillor acted corruptly by using knowledge of a proposed rezoning for private gain. This latter type of expense should not form part of a policy (under legislation)," the circular said.
Greens MLC Sylvia Hale quizzed Department of Local Government Director-General Garry Payne on the matter in a General Purpose standing committee meeting in October.
Ms Hale: Will you get back to the committee about council's obligations to meet those legal costs, how much they have amounted to and how much it is anticipated they will amount to in the future?
Mr Payne: ... It is up to the insurer to decide whose costs will be reimbursed and by how much.
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