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 Meroo.
In 2018, IBAC commenced an investigation into allegations of corruption against the former CEO of a Victorian regional health service. The health service operates a number of campuses that provide acute care, residential aged care, disability services and community services.
IBAC investigated allegations that the former CEO:
- used their position to award a contract to a company with which they had personal associations
- failed to comply with the health service's procurement policies when sourcing goods and services, including awarding work to their relative's electrical company
- used their position to circumvent proper recruitment procedures
- used the agency's purchasing cards for travel and hospitality expenses that were not within the guidelines of their employment
- provided false information to the Department and the Commonwealth Department of Health to receive government funding for capital works projects
- received a financial benefit from two car dealerships, the suppliers of the health service's fleet vehicles.
IBAC found the former CEO:
- awarded a poorly defined contract worth nearly one million dollars between 2010 and 2017 to accompany without following a competitive process
- was in personal relationships with one of the company's directors and a subordinate of the former CEO but did not declare conflicts of interest
- provided that company director with benefits which were inconsistent with the health services policies
- authorized the payment of invoices without verification to a relative's company between 2012 and 2015 totaling around $74,000 for work purportedly undertaken in 2004
- did not comply with the health service's policies in relation to recruitment and promotions
- expended the health services funds inappropriately on travel meals and alcohol
- was involved in funding applications for building works to the Department and the Commonwealth Department of Health which contained false information, but there was not enough evidence to determine the impact of the false information on the applications.
IBAC did not substantiate the allegation that the former CEO received any personal benefit when purchasing fleet cars for the health service.
IBAC found that agency's board failed to govern effectively and did not adequately oversee the former CEO. For example, by failing to scrutinize the former CEO's expenditure. The inadequate oversight by the board effectively facilitated the former CEO's conduct. Board members did not have the skills and capabilities to fulfill their responsibilities.
In addition, IBAC identified issues with the oversight of the health service by the then Department of Health and Human Services, despite red flags regarding the conduct of the former CEO. Oversight of health services now rests with the Department of Health following machinery of government changes.
IBAC also found that the health service had a culture which discouraged employees from speaking up and contributed to the board of the health service failing to properly scrutinize the former CEO's conduct.
The former CEO was responsible for the day-to-day management of the health service for the public good. The former CEO's failure to uphold the Code of Conduct for Victorian Public Sector Employees and the failure of the board and the Department to hold the former CEO to account resulted in significant cost to the health service.
In 2017, the former CEO was placed on leave during an independent review of the organisational culture at the health service. The former CEO did not return to work and later formally resigned from the health service.
IBAC has made three recommendations to address the issues identified in Operation Meroo.
The first recommendation is that the health service review its policies systems and practices to address corruption vulnerabilities, including by:
- strengthening controls applying to procurement, including ensuring suppliers are engaged in a way that is consistent with competition requirements
- ensuring a strong conflict of interest framework is in place, including requiring declarations of consensual personal relationships between employees; and
- regularly communicating with employees and board members regarding their responsibility to report suspected corrupt conduct.
The second recommendation is for the Department of Health to work with the board's Ministerial Advisory Committee to ensure the Committee:
- considers public health service and public hospital board evaluations prior to the annual appointment process, and takes action to address issues and risks identified in those evaluations
- that they introduce a more formal process for conducting board director exit interviews; that they address the vulnerabilities of public health service and public hospital boards in regional and rural areas, including maintaining required levels of capability; and
- for the committee to review the support provided to public health services and public hospital board members, including training and resources.
The third recommendation is for the Department of Health to:
- ensure its systems for monitoring the performance of public health services and public hospitals centrally record concerns or issues raised, to collate information on each health services risks in a systematic way
- review and strengthen controls around appointment and performance management of public health service and public hospital CEOs.
The misuse of any public funds causes harm to communities as it can impact on the delivery of vital service and reduce public confidence in public institutions, services and government. This is particularly acute in health care.
Victoria's public health services and public hospitals and other agencies, particularly in regional or rural areas and those governed by boards, should consider the corruption risks outlined in this report; the identified vulnerabilities and recommendations made; and determine how they can mitigate these risks in their own agencies.