The NSW auditor-general has refused to rule out “misconduct or corruption” in a state government and deal. 

In 2016, government agency Transport for NSW (TfNSW) bought a highly contaminated parcel of land near Parramatta for $53.5 million - triple the NSW valuer-general's previous valuation of $15.5 million, excluding remediation costs.

The land was purchased from developer Billbergia, which had bought the land the previous year for $38 million.

The controversial sale was first reported on the ABC, leading to a review by official auditors. 

Auditor-general Margaret Crawford has since found that the department's decisions were “rushed and poorly-informed”. 

The lack of documentation on the deal means “we are unable to exclude the possibility that the transaction was affected by misconduct or corruption”.

The audit found that TfNSW commissioned an independent valuation on the same day as the settlement, knowing the site was contaminated.

Also, the final valuation report was received late; a breach of the department's own policies that exposed TfNSW to the risk of the price exceeding market value, the report says.

The land will be used for a stabling and maintenance facility for the Parramatta light rail project, and was purchased a fortnight before the state government announced the rail project in December 2015.

“The lack of analysis and due diligence to support the level of financial offer and the approach to environmental contamination risk constitutes poor governance and ineffective administration,” Ms Crawford wrote.

The department was unable to explain or justify why the risk and costs of contamination were accepted unconditionally.

The department failed to commission advice on remediation costs until after the acquisition. It has now entered into contracts worth $106.9 million for environmental remediation.

The report also found that TfNSW staff lacked approval for the $53.5 million offer, which was approved by an acting deputy secretary who did not have delegation to do so.

The audit report calls on Transport Minister Andrew Constance to ensure that the “deficiencies” it identified are not “systematically diminishing Transport for NSW's effective and ethical stewardship of public resources”.

TfNSW secretary Rob Sharp acknowledged the deficiencies and “continuing risks”, but says the department will make the necessary changes to meet community expectations.