THE HILLS are alive with Liberal infighting.
On the eve of preselection for September's local government elections, allegations have emerged that the Liberal mayor of the Hills Shire, Greg Burnett, embezzled $280,000 by forging signatures on cheques - and the controversy is set to embroil both the state and federal members for the area.
What started as a vicious preselection battle has now escalated to the state headquarters of the Liberal Party.
Several Liberal Party members in the Hills district are angry that Councillor Burnett's close friends and backers, the federal MP Alex Hawke and state member Ray Williams, have allegedly been aware of the embezzlement allegations for some time but took no action. Both men deny this, saying they only became aware of the allegations in recent days and they do not believe them to be true.
Cr Burnett has denied any wrongdoing.
Cr Burnett was working as the financial controller at Guardian real estate agency in Dural in March 2008 when the bank raised concerns that the signature on a $45,000 cheque had been forged. The cheque had been made out to Cr Burnett's private company Steelglow.
Sources in the real estate agency have confirmed that a subsequent investigation by an independent auditor reported that on nine occasions dating back to 2004, cheques totalling $274,205.34 had been fraudulently paid over to Cr Burnett's company.
The money was allegedly taken from a joint venture account run by the agency's former owner Charles McKinnon and his friend Ray Long, who runs a door and window furniture manufacturing company. When confronted with the allegations, Cr Burnett threatened self-harm if the matter was reported to police, some colleagues at the real estate agency said.
The week before being elected to council in 2008, Cr Burnett's then accountant Bob McCullough organised a confidential settlement, with Cr Burnett agreeing to repay the money he had stolen.
''I refer to our discussion and advise that Greg has misappropriated approximately $285,000,'' Mr McCullough wrote in a letter obtained by the Herald. Cr Burnett would repay the money by selling his house, cashing in his superannuation and selling shares, the letter stated.
Mr McCullough declined to comment yesterday, saying the matter had been settled confidentially. Mr Long and Mr McKinnon also declined to comment.
Cr Burnett angrily denied any wrongdoing and suggested Mr McCullough's letter had been fabricated. He said that the amount in question was a loan which he had repaid. He could not recall whether he had disclosed the loan on his pecuniary interest form.
He said a ''dirt file'' was being spread by his enemies to discredit him on the eve of the preselections for the council, which are due on July 28.
Mr Hawke, the member for Mitchell, is backing Cr Burnett's ticket, which will have Ray Williams's 27-year-old son, Ryan, as the No.2.
''I am absolutely flabbergasted this muck is being circulated and I refute it,'' Cr Burnett said. ''Those allegations were baseless then, they are baseless now.'' He had instructed his lawyers to pursue those responsible for spreading the material against him.
Mr Williams said he would have gone to the police if there was any truth in the matter.
The Liberal state director, Mark Neeham, confirmed that the allegations had been referred to head office and that the party's general counsel was investigating the matter.