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IBAC investigation finds public sector manager misused position to benefit private recruitment company

An investigation by Victoria's anti-corruption Commission has found a former Department of Education and Training project manager misused their position when he sourced IT contractors from a company he owned for his personal benefit.

IBAC’s Operation Betka special report, tabled to Parliament today, reveals a project manager failed to manage a conflict of interest when his company provided almost $14 million in contracted staffing resources to the Department between 2003 and 2016.

The Honourable Robert Redlich QC said "IBAC's Operation Betka investigation found the failure of Department of Education and Training supervisors to properly manage the conflict of interest enabled this project manager to misuse departmental information to improperly influence processes for procuring contracted staffing services.

"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.

“The Victorian community rightly expects public sector employees to always perform their duties with integrity and impartiality.

"When conflicts of interest are not appropriately managed there is a strong risk that important decisions about the delivery of community services, infrastructure and other vital public projects and services are compromised and are not made in the public's interest.

"Operation Betka exposed significant organisational failings in how conflicts of interest were managed by the Department, and provides a timely alert to every Victorian public sector agency of the corruption risks posed by the mismanagement of conflicts of interest.

"Operation Betka found the failures of those supervising this project manager were striking. 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.

"The project manager was able to improperly influence the Department's procurement processes for his own benefit over an extended period. This could have been avoided had his supervisors implemented and enforced a plan to manage his conflict of interest, as they should have done.

"Those in positions of management and supervision are obligated to ensure compliance with all public sector processes and standards. They must always be vigilant in addressing circumstances where conflicts of interest are likely to arise," Commissioner Redlich said.

The Department has since taken steps to strengthen how conflicts of interest are identified, recorded and managed.

"The vulnerabilities highlighted in this investigation are not unique to the Department of Education and Training, so I encourage all public sector agencies to read this report and review their internal systems, processes and controls around managing conflicts of interest, and particularly around appointing contractors," Commissioner Redlich said.

IBAC has made recommendations to the Department to address issues including how it detects and manages conflicts of interest and strengthen controls around procurement and recruitment processes, and oversight of contractors. IBAC has asked the Department to report on the implementation of these recommendations by 30 November 2020.

Media contact: 0427 480 840 or media@ibac.vic.gov.au

  • IBAC is Victoria's anti-corruption body responsible for preventing and exposing public sector corruption and police misconduct.

    The following is a summary of an IBAC investigation called Operation Betka.

    In August 2016, IBAC commenced an investigation into corruption allegations against a contracted project manager at the Department of Education and Training.

    IBAC investigated allegations the project manager was using their position within the IT division to source IT contractors from a company they owned for personal benefit.

    This company provided almost 40 million dollars in contracted staffing resources to the Department of Education and Training between 2003 and 2016.

    IBAC found the project manager failed to formally declare and manage a conflict of interest posed by the project manager's role as director of the IT company and the services that company provided to the Department of Education and Training.

    Because this conflict was not managed the project manager was able to misuse departmental information to influence processes for procuring contracted staff and obtain an unfair advantage over other IT contractor suppliers.

    IBAC found those responsible for supervising the project manager failed to manage the conflict of interest by not documenting reporting or monitoring the conflict. The supervisors also failed to understand and apply public sector processes around the engagement of contractors.

    IBAC found the actions of the project manager undermined the integrity of the Department's procurement processes. Such processes help ensure fairness for suppliers and value for money; as well as ensuring that decisions about public services and projects are made in the best interests of the public.

    The Department of Education and Training ceased the project manager's engagement in July 2016 and the project manager's companies submitted an application to deregister in October 2016.

    IBAC has made two recommendations to the Department of Education and Training to address issues identified in Operation Betka.

    The first recommendation is for the department to strengthen controls around engaging and overseeing contractors.

    The second is to ensure employees and contractors understand and comply with the department's conflict of interest framework.

    Operation Betka highlights the importance of declaring and managing conflicts of interests and having strong systems practices and controls around procurement processes, including around engaging contractors.

    Operation Betka demonstrates how important it is that government employees understand public sector processes such as those associated with the staffing services state purchase contract.

    Operation Betka also shows that government institutions must ensure contractors, public sector employees and supervisors fulfill their obligations to act in the public interest.

    All public sector agencies face corruption risks related to poorly managed conflicts of interest and procurement processes. Agencies should consider whether their existing systems processes and controls are sufficient to identify and help prevent such risks.

    There may be opportunities to strengthen controls such as audits and improve staff understanding of policies and systems through training or better access to relevant information.

    To download a copy of the report, visit www.ibac.vic.gov.au.

Related resources

Summary of Operation Bekta
Summary of Operation Bekta
Operation Betka was an investigation by the Independent Broad-based Anti-corruption Commission (IBAC) into allegations a contracted Senior Project Manager in the Information Technology Division of the Department of Education and Training was involved in serious corrupt conduct.