Controversial price rises at Rookwood Cemetery that critics claimed discriminated against some faiths have been put on hold after the release on Friday of a review that identified three breaches of legislation.
The report, by Elton Consultants, also revealed that Rookwood's chief executive had been suspended and its board placed under administration for a year.
The review identified serious problems with the governance of the general trust, which oversees all burials other than Catholic burials. It also found evidence of secret meetings to oust unpopular board members, bullying, serious disharmony, breaches of confidentiality and lack of records.
Responding to the report, NSW Minister for Lands and Water Niall Blair said the government would review the governance of all three trusts – Catholic, general and necropolis trusts – that manage burials at Rookwood in Lidcombe, the largest necropolis in the southern hemisphere.
"Today draws a clear line in the sand; I have taken decisive action to address community concerns and ensure that Rookwood General Cemeteries Reserve Trust is placed on a sustainable footing into the future," he said.
It is the second major shake-up for Rookwood in three years. In 2013 the government reduced the number of trusts at the cemetery as part of reforms to cemeteries across NSW.
The report said the board had been "highly polarised around the status and role of two board members" representing the Jewish Board of Deputies and the Lebanese Muslim Association.
Longstanding tension among the board had been exacerbated by the board's decision to increase the cost of burials, which the Jewish and Muslim faiths claimed affected them unfairly.
To add to confusion, Fairfax was told that other board members had claimed that Jews and Muslims benefited while their faiths were disadvantaged.
Rookwood general trust represented 90 different faith groups, and the board was responsible for mediating tensions around equity of treatment across numerous groups with vastly differing practices, observances and needs, the report found.
Yet it seem ill equipped to do so, and suffered "turbulence and churn".
This included the resignations of three board members, the departure of a chief executive and two chief financial officers, the suspension of the chief executive during the course of this investigation, and unresolved allegations against the chief and a board member, according to the report.
The cancellation of a board meeting in December 2015 because of concerns about bullying allegations, raised significant concerns about individual board member behaviour and board management, the report found.
The board also showed a lack of respect for the needs of the different religious faiths, which was a key aspect of the new legislation. The report said in August 2015, Rookwood's business director sought to override a longstanding protocol called "Shomer Shabbat", where a part of the Jewish burial area was only available to strict observers of the faith.
The report noted that board members had held a secret meeting to get rid of the head of the audit committee.
Mr Blair said Jason Masters had been appointed as administrator for a year to manage the affairs of the Rookwood General Cemeteries Reserve Trust, ensure ongoing operations continue, and implement the NSW government's response to the independent investigation.
"The NSW government supports all of the evidence-based recommendations of this thorough and independent investigation," Mr Blair said.
This report has been updated after incorrect information was provided by the NSW government.
