A damning report into the risk of corruption within local government in Victoria highlights the need for greater scrutiny of regional councils, a ratepayers advocacy group says.

Key points: Victoria's corruption watchdog has found most, if not all, of the state's councils likely face the risk of procurement-related corruption

Victoria's corruption watchdog has found most, if not all, of the state's councils likely face the risk of procurement-related corruption The sometimes close proximity of council employees to local suppliers has been identified as a potential risk

The sometimes close proximity of council employees to local suppliers has been identified as a potential risk A code of conduct has been recommended for suppliers and contractors that deal with councils

A report into the City of Ballarat and Darebin City Council by the state's corruption watchdog has found that the risk of procurement-related corruption is "likely to be faced by most, if not all, councils in Victoria".

President of Ratepayers Victoria Inc Dean Hurlston said the report from the Independent Broad-Based Anti-Corruption Commission (IBAC) highlighted the need for greater scrutiny of council affairs.

"This is rife across regional Victoria," he said.

"Many long-term councillors know the system, many staff know the system and there is a culture of getting away with it and nobody holding them to account," Mr Hurlston told ABC Statewide Drive.

Corruption vulnerabilities 'not unique' to Ballarat, Darebin

The investigation into the Ballarat and Darebin councils found corruption risks in how they procure services or allocate contracts, oversights around that process and how conflicts of interest are managed.

IBAC found that between 2013-2015, the City of Ballarat's sports and recreation manager, Lukas Carey, defrauded the council of $184,123 and obtained $103,630 in either secret commissions or by way of other pecuniary interests.

Carey allocated council contracts to a business owned and operated by his wife, while also receiving secret commissions from two other contractors, according to the report.

He received a three-year jail sentence and was ordered to repay $31,200, while his wife was ordered to repay $20,500.

The report stated that the City of Ballarat "did not provide adequate oversight of senior employees" and that council's subsequent internal investigation into Carey "was poorly conducted".

IBAC also found that a project manager at Darebin council helped an associate obtain road maintenance contracts worth more than $16 million in return for "cash, gifts and other benefits" more than four years ago.

The report stated that "IBAC does not believe these vulnerabilities are unique to those two councils" as "local government may be at heightened risk of corruption because of the sometimes close proximity of council employees to local suppliers".

Ballarat is 'the tip of the iceberg' says Ratepayers Victoria

IBAC recommended the State Government develop a code of conduct for suppliers and contractors who deal with councils, which the relevant department, Local Government Victoria, said it would consider.

But Mr Hurlston said ratepayers needed formal representation beyond the mix of local associations which functioned at varying degrees.

"This entire sector does not have a consumer advocacy group," he said.

"There is very little honest information provided to the public. Councils are really good at spin.

"We're calling on the minister to advocate, step in, put in some very serious controls and start investigating every regional council."

Mr Hurlston said with smaller budgets, many regional councils ran "on the smell of an oily rag", and corruption therefore had serious consequences.

"The majority of issues that we're seeing come out across the state are coming out of regional councils because they often have poor practices, poor training and less oversight than a big smoke municipal council," he said.

"So $200,000 or a million dollars here and there is substantial and significant and has a massive impact on the service delivery."

Councils accept recommendations

The City of Darebin provided a four-page response to IBAC stating that "significant reforms have been subsequently implemented to council systems" to reduce the risk of procurement-related corruption.

The City of Ballarat provided a one-sentence statement that noted the report and accepted its recommendations.

CEO Justine Linley said Ballarat council would provide an outline of how it aimed to reduce the risk of corruption, as the commission recommended, within 12 months.

"We need to be open and transparent in our dealings with each other and internally not be afraid to question an action that might be taken by either a colleague, a peer or a supervisor or manager," she said.



"One of the critical things to come out of this entire investigation, and in particular this special report, is the importance of calling out poor behaviour and being prepared to step up and say that you're concerned with an action or an inaction."

Ballarat Mayor Samantha McIntosh declined to comment.



In a statement, the Minister for Local Government Adem Somyurek said he had "faith in IBAC's ability and role as an independent body to properly investigate any allegations of misconduct or corruption".