In 2011, the Independent Commission against Corruption (ICAC) found Willoughby Council building inspector Edward Karkowski had been accepting free sexual services at the Chatswood-based Oriana Bath House in return for his ongoing silence about the true nature of the business.

The Land & Environment Court ordered the parlour be shut but an illegal vice den is again thriving at the same address under the guise of a "ladies only" Korean sauna, which also offers private health insurance rebates on "remedial massages".

Willoughby Council's acting general manager Greg Woodhams confirmed a compliance investigation had begun, adding there was "no immediate evidence" of any links to the same "rogue tenants" who had formerly nurtured corrupt ties within council.

"As was the case previously, an approval is in place for a massage centre but I understand it's different management to before," Mr Woodhams said.

"Until we do the investigation ... check the various names and business names ... we won't know."

For several years Willoughby Council tried and failed to shut the underground parlour in a commercial complex at 7 Help Street, Chatswood. Karkowski was instrumental in approving the construction of the Oriana Bath House in 2007-08, which in keeping with the planning consent stipulated it was offering massage services for women only and there was to be no sex.

Karkowski turned a blind eye in return for regular sexual favours. The ICAC inquiry was told that during a phone tap in 2010 Karkowski was heard boasting to a friend about a visit to his "usual" girl "Tina", describing the session as "just a bit of pressure relief off the valve".

Karkowski was also found to have received cash, gifts, free meals and VIP hospitality through a series of dodgy deals with developers.

In 2012 he was found guilty of five counts of corruptly receiving a benefit and sentenced to six months' jail, though he was deemed "suitable" to serve the term in home detention. Willoughby Council was hit with recommendations, including improved supervision and monitoring of staff within its Environmental Services Division.

While there is no suggestion of council wrongdoing, history appears to have repeated itself.

Drummoyne-based real estate agents Warwick Williams confirmed a new tenant, Xiufen Sun, began a three-year lease on September 10. The business occupying the site is called Queen's Sauna which, in keeping with its development consent, advertises itself as a women-only traditional Korean body scrub and remedial massage centre. New shop front signage states that its owners are the same people behind a former, popular Kings Cross sauna and adds: "Health fund rebates available."

The business also appears under the alternative name of  Chatswood 7 on a notorious brothel website called Parlour Pages, which claims to be the "keepers of Sydney's best kept secrets".

On September 18 a subscriber to Parlour Pages, Andrew, posted a review of his visit to Queen's Sauna, which included a "happy ending". He wrote: "Massage was really awful. Clearly, she had no experience as [a] masseuse but I was not there for massage anyway." And last Monday, a private investigator visited the address on behalf of Brothel Busters, a private consultancy which investigates illegal brothels. In his reportthe undercover agent confirms sexual services were offered and received, with the girl having stated: "I can give you a happy ending and take my top off for another $70 or take off all my clothes for $90."

Last week it was reported that because of ineffective laws governing the sex industry, councils are forced to hire private investigators and spend up to $30,000 of ratepayers' money each time they try to shut an illegal brothel.

Brothel Busters owner Chris Seage said he had delivered a "plethora" of evidence to council, confirming sexual services at Queen's Sauna. "There is only one option here and that is the Land and Environment Court to obtain a court order to shut the place down," Mr Seage said.

Over the past 18 months the government-owned Medibank Private has cancelled at least 30 service provider registrations nationally, finding some of its affiliated therapists were prostitutes providing sex under the guise of "remedial massage".

A Medibank spokeswoman said no provider had been registered at the location since May and the fund would investigate any claims of "impropriety".

The brothel owners did not return calls from The Sun-Herald.

Timeline

January 7, 2008: Lease agreement confirms the Oriana Bath House is not to use site for "sex-related uses".

October 21, 2009:  Willoughby Council issues Brothel Closure Order. Ignored.

March 18, 2010: ICAC receives information that Willoughby Council development officer Edward Karkowski is favouring various businesses across Chatswood and protecting the Oriana in exchange for free sex.

July 6 2010: ICAC finds Karkowski received free sex at Oriana and in return, failed to inform council it was operating illegally. Claimed overtime for the visit.

November 16, 2010: Oriana lease holder issued with another Brothel Closure Order.

June 16, 2011: Land & Environment Court orders the brothel to shut.

June 22, 2011: ICAC holds public inquiry and finds Karkowski guilty of corruption, recommending he be prosecuted by the DPP

July 26, 2012: Karkowski found guilty of five counts of corruptly receiving benefit and sentenced to six months' jail.

September 2014: An investigation by The Sun-Herald finds a brothel is again operating from the same premises under the guise of a woman's health retreat.