An assurance review by Victoria’s auditor general has savaged a failed public-private venture involving the Victorian department of transport to establish remote AI bridge monitoring technology.

The report, tabled on Wednesday, found the project was plagued by poor advice, a lack of due diligence and potential conflicts of interest involving the then rail boss Campbell Rose.

The review was centred around a joint venture between DoT and Xerox, set up in 2021 via a startup named Eloque, which aimed to commercialise a new technology.

The new ‘FiBridge’ technology was designed to monitor bridges in real time, with the state rail infrastructure owner VicTrack providing advice to the government on the joint venture and DoT becoming the first customer.

However, following technical problems and bickering between the partners, Eloque was wound up after just six months of operation in August 2022, and the remote sensors that had been installed on bridges were removed.

The government committed $82.5m to the failed project, VAGO says. The joint venture cost the Victorian Government a total of $20.4 million.

Inaccurate, incomplete advice

The report found VicTrack’s advice was “inaccurate and incomplete”;  that it gave an over-optimistic view of FiBridge as being market ready,  and that it  wasn’t transparent about how the venture would work.

“VicTrack’s submission to the government described the FiBridge technology as proven and ready for commercial rollout,” the review found.

“This was inaccurate, as VicTrack knew the technology required significant further development.”

VicTrack’s advice to the government also overstated projections about the financial benefits of the project.

“The submission’s base case scenario estimated that the venture would generate annual revenue of $422 million after 10 years, at a 41 per cent return on investment.

“These projections were based on a fast-tracked report that VicTrack’s consultant developed and with information that had not been subjected to independent testing or verification,” it said.

VicTrack knew the estimates shouldn’t be used as the basis for investment decisions, but didn’t include a disclaimer, the report says.

VAGO also found DoT failed to do due diligence before investing and that the venture was structured so Mr Rose held multiple roles relating to the project, leading to conflicts of interest.

VicTrack, DoT and HoldCo – a company set up by DoT to oversee the venture – failed to properly oversee it and were late identifying problems with the conduct of Mr Rose, who was Eloque’s interim CEO while he was also VicTrack CEO.

“The public expects government agencies to act with transparency and fairness,” the report says.

“This is especially important when partnering with private sector businesses, which have a primary focus on profit over community benefit.”

VicTrack rejects findings

VicTrack Chair Geraldine Gray said the agency rejected findings that it provided inaccurate and incomplete information to the government about the technology.

“Decisions were made in good faith with the appropriate consultation, expert advice, background documentation and governance arrangements put in place to support those decisions and thier transparent implementation,” she said.

Mr Rose also disputed the findings, describing the report as ‘fundamentally flawed’ and saying a number of its findings were ‘objectively wrong’.

“The findings in this report do not reflect an accurate understanding of what was decided … by whom it was decided, or the risks that were taken into account when making each decision,” he said.

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