The opening day of a historic parliamentary committee examining whether the now-Planning Minister had a conflict of interest and potentially misled parliament over the decision to reject the port proposal in August heard from John Sergeant, managing director of the company pushing for the plan.

Sergeant said that Kangaroo Island Plantation Timbers had received ongoing assurances from senior Planning bureaucrats over several years that “the development was on course for approval”.

Addressing the hearing via a video link from Sydney, Sergeant said KIPT accepted that the former Labor Government had “imposed stringent conditions and we were willing to accept those”.

He said the company was told that successive ministers, Labor’s John Rau and Liberal Stephan Knoll, supported the proposal, along with the state planning commission which set the terms of reference for an Environmental Impact Statement.

“The setting of the terms of reference is really the creation of the cookbook for a development to be approved,” he told the committee.

He said the granting of major project status was a strong indication the development would ultimately be approved, saying the development industry understands it as “an assessment pathway designed to approve projects that have a major impact and require assessment by central government”.

“I don’t think it would be fair to Minister Knoll to say he thought it would be straightforward, but it was certainly clear to my mind that he was minded to approve it provided certain conditions were met,” Sergeant said.

Things changed after Knoll resigned in mid-2020, to be replaced by Chapman, he said.

“We found it difficult to get phone calls returned and the process, which had already been subjected to inordinate delays, was now subjected to delays without explanation,” he said.

“Our contacts in the department were either unwilling or unable to provide updates about the project assessment.”

He said KIPT was already aware that both Chapman and KI mayor Michael Pengilly, a former Liberal MP with close factional ties to Chapman, were opposed to the project.

He cited a 2017 meeting at parliament house with Pengilly, when he was still an MP known to be an “extreme opponent” of the port plan.

“We did not want this development to become a political football, so we felt it proper to keep him fully briefed on the development,” Sergeant said.

He and two other representatives of KIPT attended, including director Shauna Black, a former journalist who had edited the local newspaper.

“Mr Pengilly looked horrified to see Shauna Black there – he refused to shake her hand and said ‘I’m not meeting with you while this woman is here’ [which] I thought that was rather shabby treatment,” Sergeant told parliament.

Asked later why Pengilly objected to Black’s presence at the meeting, Sergeant recalled a 2012 occasion when Pengilly had drawn public fire for referring to then-Prime Minister Julia Gillard as a “real dog” in a social media post.

“Ms Black was editor of the local newspaper at the time and wrote an editorial saying this was unacceptable… I think that’s the roots of that dislike,” he said.

Sergeant said Black opted to “fall on her sword” and leave the meeting, but “no sooner had it begun than Vickie Chapman turned up”.

“She was, at that stage, deputy leader of the opposition,” he said.

“That was a surprise to us, as we’d been asked to advise who was attending on our part.”

He said Chapman “ran the meeting”, telling the executives “she thought we’d picked the wrong location” for the port at Smith Bay.

“She found it hard to believe we could have selected a site like Smith Bay and she’d like to see a full consideration of all possible sites in the EIS,” he said.

Sergeant said he believed “it wasn’t her place to make that request but the company found it prudent to honour it” and “indeed invested a fair bit of money in investigating Cape Dutton” at her suggestion.

“I’m not sure it’s even lawful to assess a development by requiring the developer to consider other sites [but] despite receiving advice that it may not even be lawful we went on to comply with that request,” he said.

He said the Smith Bay location, however, remained the most appropriate site.

“We didn’t just buy a piece of real estate and say ‘let’s just build a port here because we own it’ – we owned it because it was the best place to build a port,” he said.

He said the company had already considered “all possible sites some years earlier” but “the degree of rigour was certainly influenced by that meeting”.

Sergeant said it was understood that “Ms Chapman’s family owns property on western Kangaroo Island… so she knows those roads very well” and proposed “various potential haulage routes”.

“This was of interest to Mr Pengilly because the haulage route to Smith Bay would have in all probability passed his house,” he said.

“I can recall Ms Chapman saying certain roads on western KI were considerably more direct to Smith Bay and could be upgraded to haulage routes.”

He told the hearing Chapman suggested Cape Dutton “could be excised from being a marine national park”.

“I didn’t believe that was possible but it was interesting to hear her say it,” he said.

Sergeant said the legislation entitles the Planning Minister to decide the fate of major projects, so “I don’t know if she acted improperly [by vetoing the plan] and I’m certainly not accusing her of it”.

The highest standards should apply – and I don’t think they did in this case

However, he said, “I don’t think Ms Chapman was appropriate to act as sole arbiter of the decision, and in her position I wouldn’t have acted as sole arbiter myself”.

“It surprised me because the Marshall Government has been very much a cabinet government, so it struck me as particularly odd that a decision like this would not be made by cabinet,” he said.

“When an act does give a minister that power over assets worth many hundreds of millions of dollars, owned by other people, the highest standards should apply – and I don’t think they did in this case.”

He said Chapman “may well have been within her rights” to rule against the project – which had provisional approval from a range of government agencies.

“There’s an assumption in the legislation that if you meet the requirements of all the departments there’s no reason the development can’t be approved – but the fact remains the legislation gives the decision to the minister as an individual,” Sergeant said.

Asked whether Chapman had suggested that as the state’s prospective deputy premier she may hold some sway over the project’s fate, Sergeant said: “She didn’t need to say that – we’re not idiots.”

Sergeant said he believed Pengilly and Chapman were close, telling parliament “there is a sense in which Vickie’s father [former MP Ted Chapman] encouraged Michael to enter politics and acted as his patron”.

He said Pengilly often told KIPT representatives words to the effect of “you don’t know how things work around here”.

“That’s an example of the sort of thing Michael would say – ‘you don’t know how things work around here, you should be looking at Ballast Head’ [instead of Smith Bay],” he said.

“It’s a bit like a fiefdom, Kangaroo Island, in some ways,” he said, suggesting local represenatives felt “things happen the way they want, not by some outside company making a proposition that catches them unawares”.

Chapman, who will give evidence to the inquiry tomorrow, has already branded it a “witch-hunt”.

Pengilly is expected to front the committee by video link on Friday.

He told InDaily today: “I think it’s a joke.”

“Regardless of the fact Josh Teague as [former] Speaker found Chapman never had a conflict of interest, I don’t believe she had at all, quite frankly – and neither had I,” he said.

Pengilly said there was “only ever one road” officially designated for haulage, which did not pass by his property.