In mid 2014, the State Government handed the council control of a stretch of foreshore, along the eastern edge of the small Kangaroo Island town, American River.

The Kangaroo Island Council then leased the land to a community group which had promised to deliver a tourist attraction to American River by rebuilding the first ship ever built in South Australia, 35 tonne schooner, The Independence, built by American sealers in 1803.

The Rebuild Independence Group (RIG) has since built a large shed on the land – preparing for the ship’s restoration – and a café to help fund it, which has brought a small flash of economic activity to the town.

But the handover of the land was referred to the Office for Public Integrity and the Independent Commissioner Against Corruption Bruce Lander, in turn, referred the matter to SA Ombudsman Wayne Lines for investigation.

Lines found that the deal was unlawful, but did not constitute “maladministration” in a report due to be discussed at a Kangaroo Island Council meeting today.

He found that the council had conducted no formal community consultation process in relation to the handover of the land, and failed to produce a land management plan.

“The council must have a land management plan in relation to community land which is to be occupied under the lease,” Lines’ report says.

“The council acknowledged that there was no management plan drawn up when it assumed care, control and management of the land.

“The council, by failing to have a management plan for its community land when it assumed care, control and management of [the] land … with intention of leasing the land, acted in a manner that was contrary to law.”

Lines said in his report that this “reflected a failure of governance on the part of the council”.

He also found the council’s failure to run a formal consultation on the land had been against the law.

However it did not constitute “maladministration” – defined by the ICAC Act as “an irregular or unauthorised use of public money, or substantial mismanagement of public resources”.

And the council advised that there had been “extensive public awareness” of its negotiations with RIG.

RIG secretary David Churchill told InDaily that his organisation “did everything correctly” and “if council did not do things correctly, that’s not our problem”.

Churchill said RIG had been contacted about sub-leasing half of the land to the owners of a proposed $35 million resort and marina development nearby, however it is unclear whether any future sub-lease may be affected by Lines’ ruling.

Lines ordered the council to provide him with a copy of a land management plan for the area, and inform him when a review of the Community Land Register is formally adopted by the ocuncil.

InDaily contacted the CEO of the council, Andrew Boardman, and KI Commissioner Wendy Campana for comment.