Project manager’s company pocketed $14m

A company owned by a Victorian education department project manager benefitted from almost $14 million worth of government contracts, an investigation has revealed.

IBAC Commissioner Robert Redlich

The state’s corruption watchdog found the officer misused his position by sourcing IT contractors for his personal benefit between 2003 and 2016.

IBAC Commissioner Robert Redlich QC slammed the ‘striking failures’ of supervisors at the Department of Education and Training, who allowed the manager to improperly influence staff procurement processes for such a long time.

“The manager was able to bypass proper processes in order to obtain an unfair advantage for his company, which disadvantaged competing IT suppliers but benefited him,” he said.

“Managers were aware of the project manager’s conflict of interest yet they failed to take meaningful steps to remove that conflict or to effectively manage his conduct.”

A report tabled in parliament by IBAC this week says ‘Company A’  provided IT services to the department’s IT division including the development of the DET’s information and communication strategy.

Staff from the company were also contracted for management roles within the division.

Over 13 years, it amounted to almost $14 million in contracted staffing resources for company A.

The project manager was the sole director of Company A at the time he was contracted to DET. His managers described him as an “exceptional project manager” and a “go-to-guy”, IBAC investigators were told.

The report found he had failed to identify, manage or declare his conflict of interest and that the people responsible for his supervision abrogated their responsibility to address this.

“This meant the project manager was able to improperly influence departmental decisions over several years for his personal benefit. These striking failures in supervision undermined the integrity of the department’s processes,” the report concludes.

However there was not enough evidence to support criminal charges against the project manager, who has since been let go by the department and had his company deregistered, IBAC said.

Consultant culture

It also found a culture of relying on IT consultants within DET, saying that at one stage there were 70 active projects in the IT division.

Budget cuts had resulted in increased expenditure on IT contractors, and “within this environment, managers did not always take the time to follow the proper process,” IBAC said.

It also said there was generally a less stringent process for ensuring contractors were aware of public sector codes of conduct, which presented risks to the  integrity of a public sector agencies.

Mr Redlich warned that the corruption risked highlighted in Operation Betka were likely to apply across the Victorian public sector.

“Therefore, there is value in other public sector agencies considering the issues highlighted in this report regarding the engagement and operation of contractors, and taking action to strengthen their systems, processes and controls,” he said.

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2 thoughts on “Project manager’s company pocketed $14m

  1. White collar crime!! And so many people turned a blind eye for 13 years – beggars belief. A salient lesson for organisations, large and small.

  2. The newspapers have been consistently full of stories of IT project disasters where government agencies have lost many millions, and yet even after news got out this man was still described by his managers as an “exceptional project manager” and a “go-to-guy”.

    Not only that but there’s the rather disingenuous line in this article: ‘there was not enough evidence to support criminal charges’ which in law should read ‘there was no evidence to support criminal charges’. There either is or there isn’t when it comes to evidence!
    And $1 million a year for IT costs is what you’d expect for a business with 20-25 staff building automations. Just two FTE contractors. Not much at all!

    Quite often very clever people believe the end justifies the means, especially when they are surrounded by incompetence. Has anyone in Melbourne therefore considered the inverse paradigm – however painful – that maybe, just maybe, he actually saved the community a lot of money by making stuff work?

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