Operation Fitzroy special report

Table of contents

Letter of transmittal

1 Summary of investigation and outcomes

1.1 About Operation Fitzroy

1.2 Corruption and public sector procurement

1.3 Operation Fitzroy outcomes

2 Background

2.1 How the investigation came about

2.2 Why IBAC investigated

2.3 Conduct of the investigation

2.4 The public examinations

2.5 Benefits from the public examinations

2.6 Natural justice

2.7 The Department of Transport and Public Transport Victoria

2.8 Key persons involved

2.9 Entities involved

2.10 Key background entities

3 Legislative and policy framework for procurement, training and practices

3.1 Public sector procurement and corruption

3.2 Procurement rules

3.3 Overarching principles under VGPB

3.4 Public construction under the PDCMA

3.5 DOT policies

3.6 Exemptions and variations

3.7 Probity and conflicts of interest

3.8 VGPB breaches

3.9 PTV policies

3.10 Exemptions and variations

3.11 Conduct of commercial engagements

3.12 Team structures and training

3.13 Procurement practices

4 Earliest controlled entities: Property Services Network and De La Torre Consulting

4.1 Obtaining suitable entities

4.2 Property Services Network

4.3 De La Torre Consulting

5 Global Works Management Pty Ltd

5.1 Control over GWM

5.2 Subcontracting arrangements by GWM

5.3 Use of nominal directors

5.4 Bank account access

5.5 Obtaining work from DOT

5.6 Sale of the GWM assets

5.7 Payments from GWM profits

6 Red Consultancy Group

6.1 Andrew Yi

6.2 RCG’s dealings with DOT

6.3 DOT on notice as to irregularities

7 PWIC Pty Ltd

7.1 Appointment of a nominal director

7.2 Obtaining work from DOT

7.3 Disposal of PWIC

8 Redback Civil Pty Ltd

8.1 Nominal directors

8.2 Obtaining work from DOT

8.3 Benefits from RCPL

9 Associated entities

9.1 Greg Morrissy and his entities

9.2 Darrel Salter and Consalter

9.3 Furphy’s Foundry

9.4 Grand Earthworks

9.5 Global Works Civil

10 Adequacy of systems and controls at PTV and DOT

10.1 Manipulation of procurement processes

10.2 Lack of controls and training at DOT and PTV

10.3 Organisational culture of non-compliance

10.4 Insufficient procedural controls

10.5 Ad hoc audit processes

10.6 Lack of visibility across the department

10.7 Inadequate resources and training

10.8 Lack of management accountability

10.9 Suggested reforms ignored

10.10 Other issues

10.11 Reforms currently underway by PTV

11 Conclusion and recommendations

12 Appendix A: Scope and purpose of public examinations in Operation Fitzroy

13 Appendix B: Natural justice requirements

14 Appendix C: Summary of relevant contracts between DOT, PTV and entities controlled by Barry Wells and Albert Ooi

15 Appendix D: Previous IBAC reports

16 Abbreviations

Letter of transmittal

To

The Honourable President of the Legislative Council

and

The Honourable Speaker of the Legislative Assembly

In accordance with section 162(1) of the Independent Broad-based Anti-corruption Commission Act 2011 (IBAC Act) I present IBAC’s report on its Operation Fitzroy investigation arising from the conduct of former Victorian public servants Barry John Wells and Hoe Ghee (Albert) Ooi, and others.

I presided at the compulsory examinations, both private and public, that were held in aid of this investigation.

IBAC’s findings and recommendations to date are contained in the report.

Yours sincerely

Stephen O’Bryan QC

Commissioner

1 Summary of investigation and outcomes

Except where the context suggests otherwise, references in this report to corruption, or corrupt conduct, mean conduct of a public officer or body that is found to have knowingly or recklessly breached, or contributed to breach of, the public trust or that adversely affects the honest performance of their functions. Such breaches are ordinarily through misuse of power, or position, or information, for private gain or advantage of oneself, or others.1

1.1 About Operation Fitzroy

Operation Fitzroy is an investigation initiated by the Independent Broad-based Anti-corruption Commission (IBAC) in September 2013.

The investigation concerned the circumstances surrounding the establishment and control by or on behalf of two relatively senior former employees of the Department of Transport, Victoria (DOT) and Public Transport Victoria (PTV), Barry John Wells and Hoe Ghee (Albert) Ooi, and their associates of privately owned and operated businesses and companies that secured contracts with DOT and PTV in the period between late-2006 to 2013.

Operation Fitzroy investigated matters which revealed that amongst the awarding of at least $25 million worth of DOT and PTV contracts was serious corruption. A number of related matters were also investigated, including financial and other benefits received by public sector employees, their relatives and associates, as well as other conflicts of interest and serious breaches of internal procurement rules.

Public money was siphoned off by Barry Wells and Albert Ooi for personal gain and for the benefit of co-conspirators.

They corruptly awarded contracts and pocketed public money which was allocated for public infrastructure. As a result, some public projects were not completed or were completed to an unsatisfactory standard. In some cases, invoicing was inflated and the excess cash went to those involved.

The direct result was public funds being diverted for individual gain. An indirect outcome was that honest, hardworking contractors – many of them regionally based – were sometimes shut out of the public quotation and tender process and unable to fairly compete as a result of the reduced business opportunities.

The conduct of Barry Wells and Albert Ooi went undetected for at least seven years at DOT/PTV and continued until overt action was taken by IBAC in late-2013. This occurred largely because of poor controls, an organisational culture of non-compliance, and inadequate supervision in DOT and PTV.

1.2 Corruption and public sector procurement

Corruption is generally defined as the abuse of power for private gain. Power is the ability to influence people, while private gain usually takes the forms of bribes and kickbacks to a corrupt public official, their friends or relatives, a company or other organisation.

In public sector procurement, abuse of power can lead to a secret relationship between one or more bidders and the procurement official that materialises as a conflict of interest, bribery or kickback. There can also be secret relationships between bidders, with the involvement of a corrupt inside official (also known as collusion or bid rigging).

Corruption generally means that a public contract is awarded on a basis other than fair competition and the merit of the successful contractor, so that maximum value for public money is not achieved.2

Whatever the means, ultimately corruption in public procurement generates a public loss. This has immediate monetary consequences for government budgets and the delivery of public services.

Public sector procurement involves large sums of money, often spent in small parcels, in a system of great complexity, and with high levels of decentralisation. Each year the Victorian Government spends over $10 billion on a variety of goods and services from the private sector, with a variety of frameworks guiding the way in which public sector procurement should occur.3

Public sector organisations like PTV are entrusted with a significant responsibility for public expenditure – they spend billions of dollars on construction and other goods and services in order to provide public transport services to the people of Victoria.4 With this comes an obligation to have robust measures in place to ensure integrity in procurement practices.

1.3 Operation Fitzroy outcomes

To date, IBAC’s Operation Fitzroy investigation has shown:

  • between them, Barry Wells and Albert Ooi obtained over $3 million in monetary profits and other benefits during the relevant period through their corrupt conduct, something they admitted in evidence and which has been verified by financial documents. The identified sources of these amounts are shown in diagram 1
  • Barry Wells and Albert Ooi also received other valuable undeclared benefits, largely in the nature of goods, materials and services, from ‘friendly’ third parties who performed work for DOT and PTV as described in this report
  • entities Barry Wells and Albert Ooi controlled received from DOT and PTV at least $11.8 million (diagram 2)
  • entities Barry Wells and Albert Ooi were otherwise associated with in the context of some of their corrupt activities, received from DOT and PTV at least $13.7 million (diagram 3)
  • overall, about $25 million was paid by DOT and PTV during the relevant period to entities that were controlled either by Barry Wells and Albert Ooi, or by their associates
  • considerable conduct which involved serious systemic conflicts of interest and breaches of applicable public sector rules and values
  • conduct that involved false declarations in important internal procurement reports of compliance with internal probity rules
  • Barry Wells and Albert Ooi sat on internal tender assessment panels concerning contracts that entities they controlled were bidding for, with one such entity sometimes submitting tender evaluation reports in favour of other such entities
  • conduct that involved the falsification of documents (in the nature of dummy quotations and tenders, and false signatures), use of false identities, use of misleading contact identities for contractors, use of puppet company directors and rigged contract quotes and tenders
  • a significant level of undisclosed subcontracting occurred in order to secure work from DOT and PTV on a scale that most likely would have attracted unwanted attention had it been disclosed internally
  • important information that came to the attention of DOT and PTV personnel, and which ought to have sounded warning signals at least of possible improper conduct, was largely ignored
  • DOT and PTV’s culture relating to, and methods of dealing with, possible corrupt conduct were plainly inadequate during much, if not all, of the relevant period.

PTV has advised it is now taking steps to address these serious shortcomings. For their part, DOT and PTV indicated acceptance of this report’s findings. PTV otherwise reaffirmed its commitment, given through its CEO Mark Wild, to fully implement a comprehensive program of relevant procurement reform and cultural change to ensure public money entrusted to PTV is spent for proper public purposes, in pursuit of the best public outcomes.

The issues and risks associated with public sector procurement identified through this investigation are not confined to DOT or PTV. There is a clear need for the Victorian public sector more broadly to learn from the findings of IBAC’s Operation Fitzroy and to strengthen measures to ensure integrity in public procurement. IBAC is undertaking further investigations and prevention and education work in this regard, which will be the subject of future public reporting.

Diagram 1: Albert Ooi, Barry Wells & associates: summary of direct and indirect impugned payments 2007–2014

Diagram 1 is a pie chart summary of direct and indirect impugned payments involving Albert Ooi, Barry Wells & associates between 2017 and 2014.
1. Global Works Management ($1,544,108)
2. GWM Management Services ($461,807)
3. Property Services Network ($409,905)
4. Cash and potential cash deposits ($108,170)
5. Consalter ($88,642)
6. PWIC Pty Ltd ($83,075)
7. Redback Civil ($226,992)
8. De La Torre Consulting ($59188)
9. Andrew Hayes ($100,000)
10. Global Works Civil ($15316)
11. Grand Earthworks ($20,720)

Total $3,117,923

  1. Global Works Management
  2. GWM Management Services
  3. Property Services Network
  4. Cash and potential cash deposits
  5. Consalter
  6. PWIC Pty Ltd
  7. Redback Civil
  8. De La Torre Consulting
  9. Andrew Hayes
  10. Global Works Civil
  11. Grand Earthworks

Diagram 2: DOT/PTV payments to controlled entities

Diagram 2 is a pie chart summary of DOT/PTV payments to controlled entities.
1. Global Works Management ($8,538,993)
2. PWIC ($1,153,845)
3. Redback Civil ($665,940)
4. Property Services Network ($1,175,053)
5. Red Consultancy ($203,869)
6. De La Torre Consulting ($97,789)

Total $11,835,489

  1. Global Works Management
  2. PWIC
  3. Redback Civil
  4. Property Services Network
  5. Red Consultancy
  6. De La Torre Consulting

Diagram 3: DOT/PTV payments to other entities

Diagram 3 is a pie chart summary of DOT/PTV payments to other entities.
1. Tactile Australia ($6,192,050)
2. Grand Earthworks ($2,292,977)
3. Country Works Pty Ltd ($1,695,898)
4. Furphy’s Foundry Sales Pty Ltd ($1,692,258)
5. Consalter Pty Ltd ($1,308,845)
6. Global Works Civil Pty Ltd ($565,236)

Total $13,747,264

  1. Tactile Australia
  2. Grand Earthworks
  3. Country Works Pty Ltd
  4. Furphy’s Foundry Sales Pty Ltd
  5. Consalter Pty Ltd
  6. Global Works Civil Pty Ltd

2 Background

This chapter sets out background information concerning IBAC’s investigation.

2.1 How the investigation came about

In September 2013, IBAC commenced an own-motion investigation under subsection 60(1)(c) of the IBAC Act to examine possible serious corrupt conduct by public officers of DOT and PTV, and other persons associated with them, including but not limited to:

  • significant misappropriation of public funds over a period of about seven years
  • obtaining financial benefits by deception
  • obtaining property by deception
  • receiving gifts or secret commissions from third parties corruptly.

The general scope and purpose of the investigation was to determine whether:

  • such conduct had occurred or was occurring
  • relevant systems and practices in the public sector and public sector legislation as they relate to procurement and the approval of tender documents for public works in the State of Victoria are sufficient to safeguard against corrupt conduct.

More specifically, the investigation looked at concerns whether Barry Wells and Albert Ooi and their associates engaged in various forms of serious corrupt conduct between late-2006 and 2013. The alleged conduct raised concerns about significant misappropriations of public funds and other wrongdoing of the kind described above in connection with the procurement of goods and services by DOT, and later by PTV.

Under the Transport Integration Act 2010, the Public Transport Development Authority came into being in late-2011. The Authority has operated as PTV since April 2012, with its main function being to manage Victoria’s train, tram and bus services.

The goods and services in question principally involved contracts for the supply and installation of public bus stop infrastructure, construction of railway car parks and related infrastructure projects, mainly in non-metropolitan locations.

2.2 Why IBAC investigated

The Victorian public has a right to expect that people working for the public sector perform their duties with integrity and honesty.

If corrupt activities are not identified or are left unchecked, this can lead to a waste of public money and resources, can undermine people’s trust and respect in government, and damage the reputation of the public sector as a whole.

IBAC was established to strengthen the integrity of the Victorian public sector, and to enhance community confidence in public sector accountability.

The IBAC Act defines corrupt conduct as conduct of any:

  • person that adversely affects the honest performance by a public officer or public body of their functions
  • public officer or public body that constitutes or involves the dishonest performance of their functions
  • public officer or public body that knowingly or recklessly breaches public trust
  • public officer or public body that involves the misuse of information or material acquired in the course of the performance of their role or function, whether or not for the benefit of the public body or person
  • public officer or public body who conspires or attempts to engage in the above corrupt activity.

The conduct must, if the facts were found proved beyond reasonable doubt at a trial, constitute a prescribed indictable offence.

Victorian public sector bodies include government departments and statutory authorities, Victoria Police, local councils, schools and universities, public hospitals, Members of Parliament, judges and magistrates.

The matters of concern to IBAC were plainly serious, and were considered to constitute possible serious corrupt conduct within the meaning of the IBAC Act.

Given DOT and PTV’s total operating expenses amount to billions of dollars annually to provide transport services for the people of Victoria, IBAC determined it was in the public interest to conduct an investigation to establish whether corrupt conduct had been or was occurring, and whether there were corruption prevention issues that needed to be addressed.5

2.3 Conduct of the investigation

IBAC used a mix of traditional and contemporary techniques during the course of the investigation, fully utilising the broad range of IBAC powers and capabilities under the IBAC Act. This included use of summonses, search warrants, telecommunications interceptions, surveillance devices, physical surveillance, witness interviews, financial analysis, high-tech crime analysis, private and public examinations.

Significantly, Operation Fitzroy was the first time many of these powers were fully exercised, providing a sound base from which to develop and refine IBAC’s internal procedures and test the practical application of IBAC’s legislative powers.

To provide some indication of the size and scale of the investigation, to date IBAC has:

  • conducted substantial physical surveillance
  • obtained 27 search warrants and executed 20 of them6
  • obtained and analysed thousands of pages of financial records and computer generated data from a range of open sources as well as under search warrant
  • obtained statements from 11 witnesses
  • held 43 compulsory examinations of witnesses under section 115 of the IBAC Act, with 25 in private and 18 open to the public
  • obtained two warrants under the Surveillance Devices Act 1999 (Vic) and five warrants under the Telecommunications (Interception and Access) Act 1979 (Cth)7
  • made 64 property seizures with 2,272 separate exhibits
  • identified 559,000 files for review (out of 15 terabytes of data).

Admissions against self-interest had been made by a number of witnesses in private examination about being involved in the creation or use of various false documents, including false signatures, dummy tenders and extensive kickbacks (by way of cash, goods, materials and services). The conduct spanned a considerable number of years and appeared systemic in nature. The private examinations significantly helped in making better sense of key documents and events the subject of the investigation.

2.4 The public examinations

Following a review of material obtained under warrant, evidence from interviews and private examinations, and consideration of the criteria in section 117(1) of the IBAC Act8, the Commissioner determined that it was in the public interest to hold public examinations.

In making the determination, regard was had, in particular, to the following considerations:

  • the substantial financial and other benefits that appeared to have been obtained by Barry Wells and Albert Ooi over many years through allegedly corruptly awarded contracts
  • the substantial value of DOT and PTV contracts allegedly being corruptly awarded to companies seemingly beneficially owned and controlled by them or their associates
  • the clandestine nature of those activities
  • the various kinds of conduct under investigation may be occurring elsewhere in the public sector.

One of IBAC’s principal objects and functions is to expose serious corrupt conduct9. Public examinations encourage persons with relevant information to come forward10, and help ensure public acceptance of the investigation and use by IBAC of its exceptional powers. They also serve as a deterrent to others in the public sector and support IBAC’s prevention and education role.11

The scope and purpose of the public examinations is outlined in Appendix A. Parts one to four were dealt with in phase one of the public examinations. Part five looked at prevention and education, and was the focus of phase two12.

The public examinations took place over a five-week period, commencing on 21 July 2014, with most parties who were involved (including DOT and PTV) legally represented. IBAC Commissioner Stephen O’Bryan QC presided over the examinations. Ted Woodward SC, with Sarah Keating, acted as Counsel Assisting.

IBAC heard oral evidence from 18 witnesses in public. As well as relevant documents, the tendered exhibits included statements made by a number of witnesses.

Following phase one of the hearings, examinations of two new witnesses were held in private as a result of certain previously unknown allegations made by a witness who was called in phase one that required follow-up.

Phase two, outlined in section 10 of this report, involved calling several departmental witnesses, including some former employees.

It was also in the public interest for public examinations to be held to restore public confidence in DOT and the PTV by giving the community insight into the dangers created by improper relationships which, when undeclared and mismanaged, pose significant risks both to the integrity of departmental procurement processes and to its reputation. The examinations also demonstrated to witnesses waiting to be called the futility of giving false evidence.

There was otherwise no evidence or suggestion the safety or wellbeing of anyone would be at risk by holding examinations in public. The risk of reputational damage was, in the circumstances outlined above, considered not unreasonable.

Some represented parties unsuccessfully applied to have their further examinations held in private. The main basis for these applications was said to be the risk of prejudice to any possible future criminal trial. Similar arguments were relied on by some witnesses in seeking non-publication orders relating to the protection of their identities under section 19B(2) of the Evidence (Miscellaneous Provisions) Act 1958. However, in circumstances where no charges had been laid and any putative criminal trial was likely to occur well into the future, the Commissioner ruled that the public interest considerations and due procedural fairness at the examinations, outweighed any potential risk of the kind that was put forward. For these reasons, the applications failed.

Counsel Assisting and represented parties were not required to make closing submissions by the Commissioner because, in the end, there was little or no dispute by key witnesses on the facts relating to the principal areas of enquiry.

2.5 Benefits from the public examinations

One of the reasons for conducting examinations in public was to encourage persons with relevant information to come forward.

Soon after the public examinations began on 21 July 2014, a number of complaints and other information about alleged or possible corrupt conduct in the broader public sector were received from persons who said they came forward because of the publicity surrounding Operation Fitzroy. Some of the fresh information related to matters the subject of the investigation, leading to the calling of a significant witness13 during phase two of the hearings. Other information, whilst not related to Operation Fitzroy, has nevertheless been of interest to IBAC.

The public hearings have also generated interest in the forensic accounting, fraud and financial investigation sectors. IBAC is aware the examination proceedings and transcripts have been referred to in professional development and other seminars, with people encouraged to familiarise themselves with the transcripts on IBAC’s website to educate themselves about fraud and corruption in the public sector.

Apart from seeking to establish the truth about relevant events and encouraging people with pertinent information to come forward, the public examinations, through the published transcripts and media coverage, are also educating both interested professionals and senior public servants about what corrupt behaviour in the public sector can look like.

2.6 Natural justice

IBAC is required to meet certain natural justice requirements in the IBAC Act when publishing special reports. Appendix B outlines this process.

2.7 The Department of Transport and Public Transport Victoria

The Operation Fitzroy investigation covered the period from late-2006 to 2013. During this period, two key organisations are referred to which had responsibility for the functions outlined in this report – the Department of Transport (DOT) and Public Transport Victoria (PTV).

DOT was established in 2008 and assumed the transport portfolio responsibilities of the former Department of Infrastructure (DOI).

DOT oversaw and coordinated the activities of the state agencies responsible for the transport system in Victoria. These agencies were divided into three main types – statutory offices, statutory authorities and independent transport safety agencies.

One of the statutory authorities under DOT was PTV, which has responsibility for providing, coordinating and promoting public transport in Victoria. It was created under legislation passed by the Victorian Parliament in November 2011, and began operating formally on 2 April 2012, taking over many of the responsibilities previously exercised by the Director of Public Transport and DOT.

DOT was abolished in April 2013 and replaced by the Department of Transport, Planning and Local Infrastructure (DTPLI).14

2.8 Key persons involved

Person

Involvement

Barry Wells

Was the Manager, Infrastructure Projects for PTV. Prior to the creation of PTV, was employed in a similar role by DOT, having commenced there in 2006. Previously worked for V/Line, and before that at Melbourne Airport in transport related areas.
In his work for DOT and PTV, was responsible for the tendering, contracting and contract management of civil works and infrastructure projects that related to bus and train civil works projects, mainly the installation of bus stops and railway station car parks, particularly in country Victoria. In his role, he had open access to DOT and PTV civil project financial information and controlled the awarding of various tenders and contracts, as well as authorising payments to the contracted civil companies.
Was suspended on full pay as a full-time PTV employee in early-2014 and is understood to have since resigned15.

Hoe Ghee (Albert) Ooi

Became an employee of DOT in 2002, and commenced working under Barry Wells as a project officer in late-2006. Formally resigned from DOT in January 2012, but was re-engaged as a contractor for 12 months to manage the W-Class Trams restoration project. Ceased working for PTV in early-2013, but continued to assist Barry Wells in managing private businesses and entities that were beneficially owned and controlled by himself and Barry Wells.

Justin Wells

The stepson of Barry Wells and a former director of Global Works Management Pty Ltd (GWM). He worked for wages with Michael de la Torre in GWM on DOT projects that were allocated and closely overseen by Mr Wells.

Grace Holmes

Barry Wells’ mother-in-law, and a former director of GWM.

Michael de la Torre

The stepson of Albert Ooi and a former director of GWM. With Justin Wells, he also worked for wages in GWM on DOT projects.

Andrew Yi Ooi

A son of Albert Ooi. Between 2008–10 he purportedly performed work for DOT (that was allocated by Barry Wells to one or more Wells/Ooi controlled entities) as Andrew Yi in order to disguise his relationship to Albert Ooi.

Gerard O’Neill

Operated a business through Roadside Care & Maintenance Pty Ltd which performed transport, cleaning and other services for DOT and PTV. He later became a director of PWIC Pty Ltd (PWIC), a company controlled by Albert Ooi.

Graham Davis

A director of Grand Earthworks Pty Ltd (GEPL), Global Works Civil Pty Ltd (GWC) and Redback Civil Pty Ltd (RCPL), construction companies which worked on DOT and PTV projects. Worked on numerous DOT and PTV projects for the installation of bus shelters that Barry Wells was responsible for allocating.

Andrew Hayes

Was a director of GWM until November 2013, when he was replaced by Ian Millardship. He was a founding director, with Graham Davis, of GWC and GEPL.

Ian and Deborah Millardship

Ian Millardship runs a printing business and is now the sole director, secretary and shareholder of GWM (despite him having no experience or expertise in the installation of transport infrastructure). His wife, Deborah Millardship, was the bookkeeper for GWM and various other companies connected with Barry Wells and Albert Ooi.

Greg Morrissy

A director of Morrissy Civil Works Pty Ltd (MCW), which owns and operates the registered business name Tactile Australia (Tactile) and performs civil construction work. In particular, Tactile supplies and installs tactile ground surface indicators at transport stops. Since 2008, Mr Morrissy and his staff, including Mr Salter, worked on numerous civil projects for DOT and PTV that were allocated by Barry Wells.

Darrel Salter

Operated his own business through Consalter Pty Ltd (Consalter), which provided engineering consulting services on DOT and PTV civil projects awarded by Barry Wells. Before and since then, worked with Mr Morrissy and Tactile.

Graeme Radford

A cousin of Mr Wells and a former director of GWM. Along with Barry Wells and Albert Ooi, was a proprietor of BAG Racing, a greyhound racing business.

2.9 Entities involved

The investigation revealed that around 20 key entities were involved in the corrupt activities of Barry Wells and Albert Ooi.

Diagram 4 has the names of relevant business and corporate entities that feature in this report, including names of registered shareholders and directors in the relevant period.

Diagram 5 shows how, by simply performing public searches of Australian Securities & Investments Commission (ASIC) records, a web of entities having obvious links back to Barry Wells and Albert Ooi could have been uncovered in the relevant period.

2.10 Key background entities

The improper conduct outlined in this report needs to be understood in the context of the background role of a number of entities that were controlled by one or both of Barry Wells and Albert Ooi, and through which significant funds derived from that conduct were channelled.

2.10.1 GWM Management Services and BAG Racing

GWM Management Services Pty Ltd (GWMMS) and BAG Racing were the entities through which a greyhound breeding and racing business was run. Barry Wells had, for a long time, been a passionate greyhound racing enthusiast and a significant portion of funds from the corrupt conduct investigated was applied towards this developing business.

It appears that Mr Wells’ ultimate ambition, which (apart from greed) probably explains much of his impugned behaviour, was to transition from the public sector into successful greyhound breeding and racing through BAG Racing.

By way of relevant background to these entities, in January 2008, a trust deed was entered into by HGO Management Services as trustee for AO Estates Family Trust, Barry Wells as trustee for BJJEN Family Trust and a third party, to establish the GWM Unit Trust. At this time, Global Works Management Pty Ltd (GWM) was the trustee for the GWM Unit Trust. On an unknown date the trustee of the GWM Unit Trust was changed to GWMMS. The purpose of the GWM Unit Trust is unclear; however it shows a clear link between Barry Wells, Albert Ooi and GWM, due to GWM being the initial trustee.

GWMMS was registered as a company in February 2008. The registered address was Mr Ooi’s property at Cottles Bridge, and the directors and shareholders Barry Wells and Albert Ooi.

BAG Racing is a business name which was registered in March 2009. It was originally held by a partnership between Albert Ooi, Barry Wells and Graeme Radford (a cousin of Mr Wells). It was also registered with Greyhound Racing Victoria. In January 2010, GWMMS was registered as the holder of the business name, and trading as BAG Racing.

The GWM Unit Trust only holds one bank account, which was opened in mid-2012. It received one large deposit from GWMMS, which was then transferred back to GWMMS in small amounts between mid-2012 and late-2013.

GWMMS received most of its income through GWM and smaller amounts from Wells/Ooi entities PWIC Pty Ltd and Redback Civil Pty Ltd (RCPL)16. In December 2011, a Division 7A Income Tax Assessment Act 1936 (Cth) loan was entered into between GWM and GWMMS which basically ‘legitimised’ the payments between them. Mr Ooi said in his examination that it was because Mr Wells was taking so much money out of GWM for BAG Racing that their accountant wanted to formalise that as a loan. No repayments were made on the loan, even though Division 7A requires that.

Large distributions totalling over $200,000 to each party were made from GWMMS to the BJJEN Family Trust (Barry Wells) and HGO Management Services (Albert Ooi). Expenditure relating to the greyhounds was paid through GWMMS, and also other more general expenditure such as meals, retail and entertainment. It was basically used by Barry Wells as a ‘slush fund’ for personal and greyhound related expenses. GWMMS paid for site surveys relating to a number of different sites Barry Wells and Albert Ooi were investigating for the location of a new greyhound track. There were large cash withdrawals from the GWMMS bank account over the years.

In addition to payment of greyhound expenses through GWMMS, GWM and RCPL paid large amounts for direct expenses relating to vet expenses, travel, dog food, purchase of dogs, dog runs and other assets. Only a portion of these expenses were put through the Division 7A loan.

As discussed later in this report, a number of ‘friendly’ entities funded work at Barry Wells’ house. Much of this work related to the building of the sheds, housings and runs associated with the greyhound business.

2.10.2 AMA & Associates Pty Ltd

AMA & Associates Pty Ltd (AMA) was registered as a company in January 2012. Albert Ooi is the sole current director of AMA and was appointed in July 2013, whilst Albert’s son Andrew Ooi is the sole current shareholder. Andrew Ooi was the sole director of AMA between January 2012 and July 2013.

‘AMA’ appears to stand for Albert, Mark and Andrew (ie. Albert and his two biological sons). AMA charged a number of these ‘friendly’ entities project management fees. The majority of this income was then paid out as ‘rent’ and other expenses to HGO Management Services, or directly to Albert and his wife, Norma Ooi.

2.10.3 HGO Management Services

HGO Management Services (HGO) was registered as a company in February 2003. Albert Ooi was a director between February 2003 and December 2012. The former shareholders are Albert Ooi and his relative in Malaysia, Hoay Lan Ooi. In December 2012, Andrew Ooi and Mark Ooi (Albert Ooi’s biological children) became directors and are also the current shareholders. HGO is the trustee for the AO Estates Family Trust.

It appears that HGO was established for the ownership and management of some properties in Melbourne. HGO maintained four bank accounts and two loan accounts over the relevant period. HGO appears to have been Albert Ooi’s vehicle for funnelling money out of the various other entities. HGO received income from AMA as well as the various other entities the subject of further parts of this report. While a large amount of the expenditure remains untraced until vouchers can be obtained from relevant financial institutions, it appears much of it went to loan repayments, directly to Albert Ooi (into Australian, Philippines and superannuation bank accounts), and on fees for designing a redevelopment of certain properties in Melbourne.

Diagram 4: Relevant businesses and other entities

Diagram 5 shows formal links between relevant businesses and other entities, including PTV and relevant persons. It also shows relevant persons and businesses associated by business transactions.

Diagram 5: The web of entities involved

Diagram 6 shows the web of relevant persons and businesses involved, including how they are linked by positions and ownership.

3 Legislative and policy framework for procurement, training and practices

This section outlines the Victorian government legislative and policy framework for procurement, as well as the policies, training and practices that applied to DOT and PTV.

3.1 Public sector procurement and corruption

Public procurement is the acquisition by a government department or any government-owned institution of goods or services, ranging from textbooks for schools to the commissioning of large-scale construction works, such as roads and bridges.

Public procurement includes all stages of the contracting process, from the initial needs assessment, budget allocations and market research through to the preparation of the tender, evaluation of applications and award of contracts. It also includes contract implementation and administration, as well as auditing and evaluation. Major procurements such as large-scale construction works can involve numerous contract awards, forming a broader project cycle.

Corruption in all its forms can arise in any phase of the procurement process. It can be initiated by the private sector (the supply side), or by a government official (the demand side).

The most obvious form of corruption associated with public procurement is bribery of government officials to obtain a favourable contract decision where no right or claim to such a decision exists. Bribes can take the form of gifts, money, favours, jobs for family members and donations to political parties or charities.

More subtle forms of corruption occur when there is manipulation of budget allocations, processes and project selection, even before the contracting process begins.17

3.2 Procurement rules

During the period relevant to this investigation, public servants at DOT and PTV were required to comply with complex and on occasion, overlapping sets of policies, guidelines and Ministerial Directions relating to procurement generally and construction works specifically. Some of these obligations changed over time, in particular in April 2012 when PTV commenced.

Since 1995, procurement in the Victorian public sector has been conducted in accordance with a range of policies issued by the Victorian Government Purchasing Board (VGPB)18, the relevant provisions of the Financial Management Act 1994 (FMA) and with the Ministerial Directions issued pursuant to section 30 of the Project Development and Construction Management Act 1994 (PDCMA).

Despite their length, these are worth setting out to demonstrate the complex, indeed almost daunting, regulatory regime for public sector employees to navigate in relation to procurement.

3.3 Overarching principles under VGPB

DOT policies had to be, and PTV policies are, based on the following VGPB principles:

  • value for money
  • open and fair competition
  • accountability
  • risk management
  • probity and transparency.

3.4 Public construction under the PDCMA

Part 4 of the PDCMA provides that the Minister may set standards relating to public construction and issue written directions relating to public construction19. These directions have always applied both to DOT and PTV.

Two Ministerial Directions were made pursuant to section 30 of the PDCMA:

  • Ministerial Direction Number 1 – Tendering Provisions for Public Construction20
  • Ministerial Direction Number 2 – Contractual Provisions for Public Construction21.

Guides to both Ministerial Directions have also been issued as follows:

  • ‘Guide to Ministerial Direction Number 1: Tendering provisions for public construction’22
  • ‘Guide to Contractual Provisions for Public Construction Ministerial Direction Number 2’23.

3.4.1 Ministerial Direction Number 1: Tendering provisions for public construction

This Ministerial Direction provides that where the amount (including GST) to be expended to undertake building and construction works is estimated to:

  • be $25,000 or less, one written quote consistent with current market prices must be obtained
  • be greater than $25,000 but does not exceed $200,000, at least three written quotes must be sought
  • exceed $200,000, either tenders must be sought from at least three qualified contractors, or tenders must be sought by public advertisement.24

Where the amount to be expended for the supply of building and construction related consultancy services (including GST) is estimated to:

  • be $25,000 or less, at least one written quote which is consistent with current market prices must be obtained
  • be greater than $25,000 but does not exceed $150,000, at least three written quotes must be sought
  • exceed $150,000, either tenders must be sought from at least three qualified contractors, or tenders must be sought by public advertisement.25

Further, where the amount to be expended is a tender in an amount exceeding $200,000 for building and construction works, additional criteria are to be applied. Clause 3 lists the special circumstances upon which the Minister or Accountable Officer may certify an alternative procedure to be used. Clause 4 specifies the matters which may be specified in the Guide to Ministerial Direction Number 1. These matters include mechanisms and administrative arrangements to ensure that construction procurement under this direction is conducted in an ethical manner.

Relevantly, the first iteration of Ministerial Direction Number 1 differed in that the value thresholds required for obtaining quotes or utilising pre-qualified consultants or proceeding to public tender were lower. For example, public tenders or tenders from three pre-qualified contactors were to be called for expenditure on building and construction works over $100,000.

3.4.2 Ministerial Direction Number 2: Contractual provisions for public construction

In summary, this Ministerial Direction provides for the requirements to be adhered to when entering into any contract to undertake building and construction works or for the supply of related consultancy services, which include:

  • use of general conditions of contract standard in the industry; where possible, Australian Standards are to be used
  • special conditions of contract are to be kept to a minimum and are not to be onerous
  • general conditions of contract including special conditions must be in a form approved by the Secretary of DOT, or a person authorised by the Secretary.

3.5 DOT policies

For much of the relevant period, DOT employees were required to comply with VGPB procurement policies and with the relevant Ministerial Directions.

Information concerning VGPB policies and Ministerial Directions Numbers 1 and 2 as at May 2009 was held on the ‘Knowledgebase’ section of DOT’s intranet. The documents outlined that for procurements under $100,000, the following steps were to be undertaken:

  • define the scope and estimated value of the procurement
  • determine whether the procurement is:
    • for goods and services; or
    • construction and/or construction related services
  • determine whether a panel of suppliers exists for the planned procurement
  • if there is an appropriate supplier, utilise that supplier, or if there is not an appropriate supplier, select the appropriate procurement method
  • consider and document how:
    • the risk will be managed
    • a high standard of probity will be achieved; and
    • quotes or tenders will be received.

Staff were otherwise referred to a ‘Certificate of Exemption’ procedure when there was a need to seek exemption from the standard procurement process.

As at May 2009, for procurements worth less than $100,000, approval was to be sought to commit funds in accordance with the financial delegations. For contracts worth more than $100,000 there was an additional requirement to obtain approval from DOT’s Accredited Purchasing Unit and further, if over $100,000, approval from the VGPB.

3.6 Exemptions and variations

DOT’s policies set out rules in respect of seeking exemptions to the rules and variations to contracts. As at May 2009, a Certificate of Exemption was required to obtain an exemption from the requirement to invite public tenders and/or to obtain a minimum of three written quotations. Variations could be made to contracts, but this could only be done with the approval of a financial delegate or (for amounts between $100,000 and $10 million) from DOT’s Accredited Purchasing Unit.

3.7 Probity and conflicts of interest

The DOT and VGPB policies as at May 2009 referred extensively to the need for probity in procurement practices and defined the term as the ‘good and fair process’. VGPB principles that promoted probity were set out in DOT policies as follows:

  • fairness and impartiality
  • use of a competitive, consistent and transparent process
  • security and confidentiality
  • identification and resolution of conflicts of interest
  • compliance with legislature and Government policies as they apply to tendering and contracting.

Information and guidance about conflicts of interest was included in applicable DOT policies and the standard internal Contract Approval Recommendation Report (CARR) contained a section for completion that asked the employee to note whether any conflicts of interest arose and how they were dealt with.

3.8 VGPB breaches

As at May 2009, the DOT intranet contained a policy on reporting breaches of the VGPB policies to the relevant Ministers which included, among other things:

  • immediate reporting where the value of the contract exceeded $100,000
  • annual reporting in DOT’s Annual Supply Report (irrespective of the value of the commitment).

3.9 PTV policies

In March 2012 PTV published the ‘Public Transport Procurement Procedures and Approvals’ policy. This document includes the setting out of policies in relation to:

  • procurement thresholds for general goods and services
  • building and construction works and construction services
  • grants and funding arrangements
  • exemptions
  • variations.

The document also attaches a number of other documents, some of which set out the requirements in relation to probity and honest dealings in the procurement process. Relevant attachments include:

  • ‘Act with integrity and impartiality’
  • ‘Promote effective competition’
  • ‘Ensure consistency and transparency of process’
  • ‘Ensure security and confidentiality’
  • ‘Identify and resolve conflicts of interest’
  • ‘Open or selective tendering for purchase in excess of $150,000 policy’
  • ‘Good Practice Guidelines – Conduct of Commercial Engagements’
  • Ministerial Directions Numbers 1, 2, and 3
  • ‘Code of Practice – Building & Construction Industry’.

The table below summarises procurement obligations as they have applied to PTV since its inception.

Policy

Application to PTV

Low

Midrange

High

VGPB Purchasing policy

Guide only (does not apply to construction)

Less than $25,000:

Minimum of one written quote is obtained

$25,000 to $150,000:

Minimum of three written quotes must be sought (with one from a small business if appropriate)

Over $150,000:

Open and selective tender

Ministerial Directions No 1 and 2

Building and construction works

Less than $25,000:

One written tender which is consistent with current market must be obtained

$25,000 to $200,000:

At least three written tenders must be sought

Over $200,000:

Tenders must be sought from at least three qualified contractors; or tenders must be sought by public advertisement

Ministerial Directions No 1 and 2

Supply of building and construction related consultancy services

Less than $25,000:

One written tender which is consistent with current market must be obtained

$25,000 to $150,000:

At least three written tenders must be sought

Over $150,000:

Tenders must be sought from at least three qualified contractors; or tenders must be sought by public advertisement

‘Public Transport Procurement Procedures and Approvals’ policy and procedure dated March 2012

Applies to all PTV Procurement for supply of building and construction works. Adopts Ministerial Directions No 1 and 2

Less than $25,000:

At least one written quote which is consistent with current market prices must be obtained. Approval by CFO required

$25,000 to $200,000:

At least three written quotes must be sought. Approval by CFO required

Over $200,000:

Tenders must be sought from at least three pre-qualified contractors; or tenders must be sought by public advertisement. VGPB Good Practice Guidelines – Conduct of Commercial Engagements should be referred to. Approval by CEO required

‘Public Transport Procurement Procedures and Approvals’ policy and procedure dated March 2012

Applies to all PTV Procurement for building and construction related consultancy services. Adopts Ministerial Directions No 1 and 2

Less than $25,000:

At least one written quote which is consistent with current market prices must be obtained

$25,000 to $150,000:

At least three written quotes must be sought. Approval by CFO required

Over $150,000:

Tenders must be sought from at least three pre-qualified contractors. Approval by CEO required

3.10 Exemptions and variations

VGPB policies do not apply to PTV procurements that relate to building and construction (ie. matters that fall within the definition of public construction as defined in the PDCMA). Those matters are dealt with by Ministerial Directions Numbers 1 and 2 and the associated guidelines.

3.11 Conduct of commercial engagements

The VGPB ‘Conduct of Commercial Engagements Policy’ contains more principles and practices that apply to procurement within PTV and include:

  • abiding by, among other things, the Public Administration Act 2004, the Code of Conduct for Victorian Public Sector Employees, the VGPB policies and other applicable Victorian Government and statutory directions in carrying out procurement
  • public officials are to treat bids and potential bidders in a fair and even-handed way, providing bidders with the same information and avoiding preferential treatment
  • the procurement process is to be conducted in a way to optimise competition to maximise value for money opportunities for government
  • commercial engagements are to be conducted in a transparent and fair manner
  • that any changes to the process for the commercial engagement must be made in a way which is not likely to provide (or be perceived to provide) corrupt or non-meritorious preference to any bidder
  • that processes are adopted to identify, declare and address any actual or perceived conflicts of interest
  • probity practitioners are to be used where the procurement process is considered high risk
  • government and public officers are to demonstrate high levels of integrity in processes while pursuing value-for-money outcomes for the Victorian government and meeting the public interest.

3.12 Team structures and training

3.12.1 Structures

From early-2007, Barry Wells and Albert Ooi were in the Bus and Regional Services team (known internally as BARS) at DOT. Mr Wells’ immediate superior was Julian Perrin for some years, and his ultimate manager was Sergio Lacchiana. During 2011, Mr Wells started to report directly to Mr Lacchiana rather than Mr Perrin. Mr Wells was the team leader of a group known as the Infrastructure Group. Mr Ooi worked in the group as a subordinate of Mr Wells, along with Sheena Clarke in a project support role.

Mr Ooi worked with Mr Wells as a project officer on civil construction projects. He was a full time employee of DOT until the end of 2011, and then a contractor until early-2013.

In June 2011, Winnie Blackwell became the manager of a group which included functions in DOT relating to engineering and technical services. Her title was General Manager, Project Implementation, and she retained this role when PTV commenced operations in April 2012, until May 2013. Mr Ooi was on this team, along with Sheena Clarke. Wayne Garth joined Mr Wells’ team as a project officer in June 2013, replacing Sheena Clarke who left Mr Wells’ team in late-2012.

Mr Wells’ evidence was that this role did not change appreciably from when he commenced with BARS in 2007 until he was suspended from duty at PTV in January 2014. He referred to himself as a Project Officer or Project Manager, managing construction projects for DOT and then PTV in regional Victoria. His role at DOT and PTV was to manage the construction and maintenance of mainly regional bus stops, car parks, bus shelters, bus stations and roundabouts.

3.12.2 Training

This report focuses on training provided to those present or former public servants who were examined by IBAC on the topic.

Albert Ooi gave evidence that whilst he was aware there was a procurement-related policy within DOT, and that updates occasionally were received by email, he received no formal training about the policy. He said that he had never been shown the Code of Conduct for Victorian Public Sector Employees. He nevertheless conceded he knew he was required to act honestly and transparently in his work for DOT, which included avoiding any conflicts of interest and the need to declare to one’s supervisor relevant associations with third parties.

Mr Ooi conceded that when he became involved in reviewing tenders and making recommendations about them, which was whilst he worked under the supervision of Barry Wells, some of these tenders were from companies he had a personal interest in. Having frankly admitted not declaring such personal interests, it seems likely that no amount of actual training would have prevented or even curbed his improper conduct the subject of this investigation. He also conceded being aware of the internal requirement to keep confidential quotes and tenders as between third party contractors – again something he sometimes failed to do.

Barry Well’s evidence was that he did not receive training in relation to procurement policies or guidelines while he was at DOT. In fact he suggested, at least initially, there were no such policies or procedures. Mr Wells was aware of the standard rules pertaining to integrity, although he did not recall a settled policy being communicated to him about conflicts of interest. His evidence was that while at DOT, you simply had to inform your supervisor if you knew a contractor well and that it was of no consequence if the person was a family member. However, evidence referred to in this report of Mr Wells’ complicity in hiding family member involvement in contractor works performed for DOT and PTV compel the rejection of such latter evidence at least.

Mr Wells acknowledged there was significant change to policies and procedures when PTV commenced in April 2012. Whilst he did not elaborate on this, he at least appreciated that the approval process became more complex and the procurement thresholds changed.

Ms Blackwell (Mr Wells’ PTV manager from about April 2012) gave evidence that Mr Wells’ attention was drawn to relevant policies and procedures he was required to follow as a senior member of staff once he had been warned for a breach of same. She also stated that she reminded the broader team of applicable policies and procedures to follow at PTV.

Mr Wells’ supervisor for much of the relevant period, Mr Lacchiana (as Deputy Chief Operating Officer), gave evidence that procurement guidelines and policies were in place and did not change appreciably throughout the period he was at DOT. The relevant guidelines were based on those published by VGPB. He also gave evidence that he instructed his team to seek the approval of DOT procurement staff so as to ensure compliance with procedures.

Graham O’Donnell was a colleague of Mr Wells at the same level, who also approved expenditure on some of his projects. His evidence was that whilst there were procurement procedures at DOT, there were no clear policies in relation to matters like conflict of interest and that he took a common sense approach to such matters. He also said that all staff received training on commencement from the Human Resources team, but he was unsure as to whether specific instruction was included about procurement practices.

3.13 Procurement practices

Barry Wells’ understanding of the procurement rules at DOT was that a construction project worth less than $15,000 required one quote, any project worth between $15,000 and $100,000 required three quotes, and any project over $100,000 went to tender. His evidence was that where one quote was required (ie. for a project under $15,000), his team tended to still obtain two or three quotes from a list of contractors and the contractor who quoted the cheapest price ordinarily won the project.

Contracts were arranged via a series of email communications. Once a quote was accepted a purchase order was raised by Sheena Clarke. The contractor then issued an invoice once the works were completed. Ms Clarke gave evidence that purchase orders were raised by the Finance Team once PTV commenced operations.

CARRs were to be completed both at DOT and PTV. For works worth less than $150,000, the DOT report typically contained a ‘declaration’ section that was to be completed by the relevant project manager, who had to declare (amongst other things) that internal and government-wide procurement and general probity policies had been complied with. The PTV report also contained a section addressing probity.

Mr Wells acknowledged that when PTV commenced operations in April 2012, procurement practices changed. He gave evidence that thresholds increased and one quote was required for a construction project with a maximum value of $20,000 to $25,000, three quotes for a project valued up to $150,000, and the tender process was to be followed for works valued at more than $150,000. He stated that reports had to be prepared when seeking quotes under PTV, specifically with a CARR listing three quotes. Mr Wells included a recommendation as to the preferred contractor, based on that entity providing the cheapest quote. His evidence was that the CARR had to be approved by three or more managers. Once the CARR was approved, a purchase order could be raised.

Ms Blackwell stated that while a manager at PTV, she endorsed CARRs and purchase orders, which were then sent to the Operations Team for approval by a financial delegate. This process of approval also required her to check whether procedural rules had been complied with.

When a project was to be awarded via a tender process, Mr Wells’ evidence was that one of his team would prepare a proposal document. The document would be amended by the procurement team and then once settled, an advertisement was published in a major newspaper and the tender was open for applications for one month. The tender box was accessed by a person from the procurement team, who would prepare a report and provide the applications to Mr Wells’ team to be assessed. The tender applications would then be evaluated by a panel and Mr Wells would prepare the final report. Tender interviews were also conducted, with proposals being awarded a score.

Ms Blackwell stated that her role in respect of tenders was to endorse (or otherwise) the recommendation made by the tender panel.

4 Earliest controlled entities: Property Services Network and De La Torre Consulting

Albert Ooi commenced working for DOT around 2002. With corporate and financial skills, he was initially involved in the coordination of work already allocated by others, including research projects and systems assessments. Barry Wells controlled the contracting out of much lucrative infrastructure and related project work for DOT, and later PTV.

In about late-2006, Albert Ooi started working in Barry Wells’ team as a project officer, with Mr Wells his immediate superior. Mr Ooi gave evidence that at their very first meeting, whilst travelling in Mr Wells’ car to Horsham to inspect a project site, Mr Wells proposed an arrangement whereby through related third parties, they could obtain and perform work from DOT for profit.

Mr Ooi labelled what was then proposed by Mr Wells as ‘dodgy’, and conduct of a kind he had never engaged in before. He said Mr Wells’ idea required Mr Ooi to arrange an appropriate business entity that could contract for such work. Mr Ooi was given no indication by Mr Wells whether he had engaged in such conduct previously.

The only material difference in Mr Wells’ evidence here, which need not be resolved, was to the effect that he would not have broached the topic until he got to know Mr Ooi better and felt he could trust him in what he effectively conceded were from the outset to be improper activities.

4.1 Obtaining suitable entities

Property Services Network (PSN) and De La Torre Consulting (DLTC) were the first entities to be obtained and used by Barry Wells and Albert Ooi to contract with their employer, DOT. These were disused names of businesses established and previously used for other purposes by Albert Ooi’s stepson Michael de la Torre, who allowed Albert Ooi and Barry Wells to take control of these entities.

The registered address for these entities was the then residential address of Albert Ooi and his stepson, Michael de la Torre. Albert Ooi explained in evidence that Barry Wells had suggested PSN could be engaged on some DOT projects and that they had in mind:

‘doing jobs like...building bus stops, installing bus shelters, doing traffic management. Doing odd things ...(like) maintaining the bus stops and infrastructure works generally’.

Albert Ooi admitted that not long afterwards he began submitting to DOT the many quotes and invoices for work by PSN and, to a lesser extent DLTC, that were found by IBAC.

During the time these entities were used, such documentation tended to state the entities’ contact as either Michael de la Torre, or portions of the full name of one of Albert Ooi’s sons Andrew Khai Yi Ooi (ie. Andrew Yi), in order to disguise any family connection. This idea Albert Ooi attributed to Barry Wells, however Barry Wells’ position was that this was a detail he left to Albert Ooi to arrange. However, both men admitted knowing at the time of the subterfuge.

Andrew Ooi gave evidence that his father told him to use ‘Yi’ as his surname due to what his father described as a ‘conflict of interest’. Documents also suggested that an Andrew Yi had sometimes attended meetings at DOT in relation to some of these purported jobs. This all occurred when Andrew was still living at his father’s residential address.

The upshot was that these men, both full time employees of DOT in responsible positions at the time, agreed in general terms on the nature of their ‘business model’, with Albert Ooi responsible for setting up the necessary mechanisms and handling administration and finances on the ‘private enterprise’ side, and Barry Wells being responsible for allocating profitable DOT work to such entities now under their control.

Appendix C to this report contains a comprehensive list of contracts with DOT and PTV that entities controlled by Albert Ooi and Barry Wells entered into, or were associated with in the relevant periods, together with invoice dates and amounts. As appendix C shows, PSN began receiving DOT work in March 2007 and began invoicing DOT from late April 2007. DLTC received at least one lucrative contract for project management (which is discussed below), and began invoicing DOT in June 2007. All financial profits were agreed to be split evenly between these two men.

Although at times he was somewhat vague in parts of his evidence, Albert Ooi suggested that both his son Andrew Ooi and stepson Michael de la Torre probably had no knowledge of these early quotes and invoices that went to DOT. This was notwithstanding that the latter’s signature appears on some, and that Mr de la Torre admitted to arranging for DLTC business cards to be printed with the name ‘Andrew Yi’.

Despite financial records showing that he received significantly more than Barry Wells, Albert Ooi asserted that after expenses, the bulk of the payments by DOT of PSN and DLTC invoices were normally split equally between himself and Barry Wells. He initially said that sometimes, at Barry Wells’ suggestion, Mr de la Torre was given a share of the profit, although in later evidence he seemed not so sure. Mr de la Torre recalled once receiving about $5,000 for his role in the scheme.

4.2 Property Services Network

Some of the early work purportedly done by PSN was consulting in relation to bus stop infrastructure as well as related procurement work that Albert Ooi conceded could only have been performed by himself (ie. whilst a full time DOT employee). Both he and Barry Wells also conceded it was possible at least some of that work DOT paid for was never done.

Notwithstanding it having no labour force, some projects PSN did for DOT involved not only bus shelter supply, but installation and related work. Albert Ooi said that experienced contractors like Tactile needed to be engaged by PSN to do such physical work.

PSN’s main activity involved the supply of bus shelters to DOT. PSN was simply interposed between DOT and its regular suppliers, thereby enabling it to make a handsome profit – sometimes involving close to a 100 per cent mark up on what it paid to the supplier – on each transaction. For example, in January 2008, documents found show that PSN quoted and was paid by DOT $93,000 for 10 heritage green bus shelters manufactured by Furphy’s Foundry Sales Pty Ltd (Furphy’s), but which cost PSN only about $50,000, being the standard Furphy’s price.

Albert Ooi’s evidence was that Barry Wells always directed him on what level of mark-up to apply, which is unsurprising as Barry Wells would have known what he could justify internally as a reasonable price for DOT to pay for such specialist infrastructure. The most regular supplier in this regard became Furphy’s, a business of longstanding based in Shepparton. Furphy’s eventually marketed a bus shelter – principally designed by Barry Wells to suit DOT’s needs for a fairly robust model – with the product name ‘PSN shelter’, and thereby benefitting PSN.

Documents found so far suggest that in total, PSN invoiced DOT and was paid over $1.175 million, netting a substantial profit to Barry Wells and Albert Ooi. Financial documents confirm both Albert Ooi’s and Barry Wells’ evidence that the former arranged for the latter’s profit share to be paid in various ways, sometimes from PSN directly and sometimes through HGO (the purported majority owner of the PSN business)26. They each confirmed that sometimes Barry Wells’ private expenses were paid directly from PSN or HGO monies, and sometimes he was given cash.

Albert Ooi did not disagree with his stepson Michael de la Torre’s evidence that Barry Wells was given an ATM card for the PSN bank account. Barry Wells confirmed he was given an ATM card, although he was uncertain about what account it related to. Albert Ooi also gave examples of personal expenses of Barry Wells that PSN or HGO sometimes met, namely tax bills, gifts or purchases for his wife or family members and for travel, which evidence Barry Wells agreed with.

Albert Ooi said that whilst he generally handled the finances, Barry Wells kept a close eye on PSN’s affairs to be sure he received his agreed share of the profits. When questioned about what he did with his share of the PSN profits, Albert Ooi claimed to have spent it on general living expenses and not in the purchase of any assets. Nevertheless Albert Ooi conceded having ultimately acquired at least in part from profits of this kind over the relevant period two properties in the Philippines – one akin to a five-star resort according to Barry Wells (who said he once visited there). He also explained how he bought out his stepson Michael de la Torre’s equity in a property in Melbourne at a time when the latter was having difficulty meeting the interest bill.

Michael de la Torre gave evidence that he started the PSN house maintenance business and opened a bank account for it when his employment elsewhere terminated. He said that sometime in 2007 – but more likely it was in late-2006 judging by relevant documentation – his stepfather asked him about the PSN business name and bank account: ‘Look, we need something to start up, can I borrow that company or business? Can we borrow it?’ As PSN was no longer being used by him, Mr de la Torre agreed to the request, and also permitted his stepfather regular access to PSN’s bank account. According to Mr de la Torre, the PSN name was then used by Albert Ooi without reference to him. However, Mr de la Torre’s signature appears on many PSN documents that went to DOT, and at some stage he appears to have authorised an extra ATM card for Barry Wells to use for cash withdrawals from PSN’s bank account. He also signed PSN’s quarterly BAS statements when asked to do so by his stepfather.

At Albert Ooi’s request, Mr de la Torre signed a formal partnership agreement Albert Ooi prepared, stated as commencing 1 October 2006 and probably executed by all parties to it in early-200727. The partnership consisted of HGO, PSN and Mr de la Torre, with HGO said to be a 90 per cent owner of PSN’s business and Mr de la Torre ten per cent. Although this agreement recorded Mr de la Torre being entitled to a ten per cent share of the net profits from PSN’s activities and HGO the balance, apart from possibly once receiving $5,000 as stated above, Mr de la Torre claimed to have no recollection of his entitlement ever being paid. This partnership agreement seems to have been preceded by a service agreement prepared by Albert Ooi and executed in about late-2006, whereby HGO could charge PSN for managerial services in respect of PSN’s work for DOT. Documents found by IBAC showed that such charges were routinely invoiced and paid.

By 2009 the PSN business had stopped contracting with DOT after Barry Wells and Albert Ooi had established a new company, GWM, which initially included their respective stepsons Justin Wells and Michael de la Torre as its purported directors and shareholders. The new company’s target market was DOT contracts of the kind PSN had been taking up, being the subject of section 5 of this report. PSN did however continue to receive income from GWM until mid-2009 before all of its activity ceased.

4.3 De La Torre Consulting

Michael de la Torre gave evidence that in 2006 he registered the DLTC name for the purpose of engaging in event management. Both Barry Wells and Albert Ooi confirmed that the DLTC name was used on at least one occasion in April 2007 as the contracting entity with DOT in respect of the project management of the construction by a third party of bus interchanges at three train stations in the Kilmore region, being a valuable contract of almost $100,000. As mentioned above, the deceptive DLTC contact name of Andrew Yi appeared on the relevant documentation, which Barry Wells knowingly signed off for at DOT.

The value of the DLTC contract with DOT, being slightly under $100,000, was conceded by Barry Wells as probably being so priced to avoid the need for a competitive tender. Albert Ooi said that he prepared DLTC invoices pursuant to this contract that were sent monthly to Barry Wells at DOT in the second half of 2007.

Although his pseudonym Andrew Yi appeared on the contract documents as DLTC’s contact, Andrew Ooi’s evidence was that whilst he recalled attending project sites just a few times with his father, he was a student at the time and considered himself there more as a learning experience. Andrew Ooi recalled having received about $2,000 by way of payment for his involvement.

The consistent evidence of Albert Ooi and Barry Wells was that after invoices were paid, there was meant to be an equal split of the profits between themselves. Moreover, the evidence of Albert and Andrew Ooi established that apart from what Albert would have done anyway in his capacity as a DOT employee at the time (in terms of checking up on the work being done at the project sites), no project management work was in fact performed under this contract. Whilst he was not prepared to confirm in evidence that this was the position, Barry Wells did not dispute it. He did however agree that at the time, Andrew Ooi was in no position to manage such a project.

5 Global Works Management Pty Ltd

Global Works Management Pty Ltd (GWM) was registered as a company in early-2008. It was Barry Wells’ and Albert Ooi’s principal entity in their overall scheme to allocate profitable DOT work to companies they controlled in order to secure profit. Relevant evidence, both documentary and oral, established that GWM was established for two purposes:

  • to create another entity that they could allocate DOT work to in order to enjoy the profits
  • to provide work to their respective stepsons, Justin Wells and Michael de la Torre.

Throughout its period of operation, GWM secured work from DOT valued at over $8.5 million. As discussed earlier, bank account records and other documentary evidence found and analysed by IBAC investigators show substantial sums being transferred from GWM into accounts in the name of Barry Wells and Albert Ooi, as well as being used to pay for what appear to be personal and lifestyle related expenses (relating more to Barry Wells)28.

5.1 Control over GWM

It is uncontroversial that between them, Barry Wells and Albert Ooi approached Michael de la Torre and Justin Wells in about early-2008 to become directors of GWM. Throughout their time working at GWM, each received a salary and, possibly for their role as its nominal directors and to keep them onside, some traceable benefits in the form of monies, holidays and sporting equipment.

On a practical level, Barry Wells and to a lesser extent Albert Ooi, had oversight and control of the day-to-day operational activities of GWM. Barry Wells allocated many contracts from DOT to GWM, whilst Albert Ooi would generally put together the necessary quotes on behalf of GWM. Barry Wells required all email correspondence to any clients of GWM to first pass through him for approval, he dictated when any employee could take leave, he had Michael de la Torre make arrangements at his behest for the GWM Christmas party and he demanded that schedules and reports be submitted to him for work to be done and works completed, on a daily basis. Mr de la Torre verified in evidence many emails involving Mr Wells to this effect.

The following emails from Barry Wells to Michael de la Torre and Justin Wells are examples of his tight control of the day-to-day operations of GWM:

Gentlemen,

After looking over our records I have to say that sick leave for a small company

Our sick leave records are pathetic, not from the workers may I ad but from the

Two people who are supposed to run the company.

Drinking all weekend and then feeling shitty when you get back to work on a

Monday is not an excuse for a sick day.

A sick day is an entitlement not a right. Sick days are for when people are sick.

Not taking wives to hospitals etc., That’s what we take time off for, leave early

Not a whole day.

Have a good hard look at yourselves an make the call am I being fair dinkum

Do I actually want to be here...

I am getting to the stage where I am ready to whined it all up as it seems Albert

And I are just talking to our selves about what needs to be done and when

It needs to be done. [sic]29

No overtime unless authorized by me.

All hours are to be emailed to Albert and CC me every week.

From now on if there is an issue with pays it is to be put in writing exactly what the problem is and then albert and I will assess it.

No phone calls writing/email.

Need to look at Dougs Pay – He claims him and Geoff are owed

1 overnight allowance for the Monday that you went up to Myrtleford

To finish the job...

Geoff will be the same if that is the case. [sic]30

Barry Wells also drafted emails and directed Mr de la Torre to forward these on behalf of GWM, ensuring that none of Barry Wells’ or Albert Ooi’s personal details were forwarded with it. Mr de la Torre did this, including in relation to email communications with DOT employees involved in projects that were awarded to GWM. He said he did so on the understanding that it was to protect Albert Ooi and Barry Wells from exposure to a conflict of interest.

Giving evidence of a further example of Barry Wells ensuring against any exposure over clear conflict of interest, Mr de la Torre described how Barry Wells would attend GWM’s office to instruct himself and Justin about what was required on site for the day (ie. on a DOT project being performed by GWM). However, when Barry Wells visited the site, he did so in his capacity as a representative of DOT and would not interact with them in any way in order to conceal his connection with them.

In short, Barry Wells closely managed both Justin Wells and Michael de la Torre in relation to the operation of GWM. The tenor of his many email communications with them amply shows his ‘firm hand’ style of rule, with the following email to Justin Wells and Mr de la Torre assertively conveying his belief about who controlled GWM:

Justin and Michael,

It is very important for this business to work and be successful that you 2

Are able to talk, be honest and communicate with each other.

Let me stress neither of you are the Boss:

Michael your name may be on the Paper work but

Justin is a silent partner, the bosses of the Business are Albert and I.

No one should be yelling at anyone, no one should be making decisions

Without the others opinion.

Justin you organize the operational side of the business with Michaels

Assistance when required.

Michael you organize the paper work side of the business with Justin’s

Assistance when required.

The thing that generates paperwork is operational and when we have

An operational matter that requires the input from all our staff then

We are there, get along when we are there and speak to each other

Civilly when we are in front of the public.

Albert and I do not need to hold the hands of two grown men, you need

To fix your communication between you and be able to talk about everything

In a manner that is acceptable.

As for Lisa, she is an employee that at times has too much to say and you

Both need to understand she is a woman. Women can be hard to work with

And generally like to take sides and at times add fuel to a fire when

Things are a little unsettled.

I am happy with how things are progressing but we all have our faults

And let he who is perfect have the first crack at the other.

Both grow up, get over Friday, communicate better and if you have a Problem talk first, talk again and then if it cannot be resolved call me.

Thanks Barry [sic]31

At his public examination, Barry Wells had no difficulty accepting the proposition put to him by Counsel Assisting that he was effectively in charge of GWM’s operations for its entire period of operation. For his part, Justin Wells’ statement corroborated much of what is described above concerning the operations of GWM.

5.2 Subcontracting arrangements by GWM

The evidence established that Barry Wells and Albert Ooi consolidated the profitability of GWM by setting up subcontracting arrangements with other companies with whom they had a relationship. Grand Earthworks Pty Ltd (GEPL) was one of these. For this purpose, Albert Ooi created a memorandum of understanding (MOU) in collaboration with Barry Wells. It specified a reciprocal subcontracting arrangement between GWM and foreshadowed GEPL’s creation in relation to contracts awarded by DOT, and was signed by Andrew Hayes and Graham Davis. These men were also required to sign broad-reaching confidentiality agreements prepared by Albert Ooi, presumably in order to lessen the risk of DOT or PTV learning of their arrangements.

Mr Hayes gave evidence that this MOU was executed around the time GEPL was registered as a company, being in March 2011, however it was dated 16 August 2010. Further, he was aware the success of the agreement relied upon Barry Wells’ ability to allocate work to GWM from DOT, and that Albert Ooi had a role to play in that process. The evidence suggested that Michael de la Torre and Justin Wells had no part in organising this. It is further indicia of the overall control Barry Wells and Albert Ooi exercised over GWM, as well as their motivation behind establishing GWM.

Over time, the working relationship between Barry Wells, Justin Wells and Michael de la Torre deteriorated. Justin Wells left GWM briefly in the latter part of 2009, during which time Darrel Salter appears to have stepped in to perform the operational role in Justin’s stead. In January 2010, Justin returned on a higher salary. Mr de la Torre left shortly after that, by then unable to get on with either of them it seems. From early-2008, Mr de la Torre had been a shareholder of GWM, something he denied in evidence ever having any knowledge of.

5.3 Use of nominal directors

GWM had a string of nominal company directors throughout its operation from 2008 to 2012, beginning with the appointment of Michael de la Torre and Justin Wells. Justin Wells ceased as a director after about six months, apparently because of concern that his sharing Barry Wells’ surname might expose their connection. Mr de la Torre continued as sole director until his departure in January 2010.

Thereafter, Barry Wells’ cousin and fellow BAG Racing owner, Graeme Radford, was appointed, followed by his mother-in-law, Grace Holmes. Next, Andrew Hayes was appointed, followed in 2010 by Ian Millardship (the latter a friend of Barry Wells and whose wife Debbie Millardship did the book-keeping for most of the Wells/Ooi controlled entities). Mr Millardship said he agreed to become a director of GWM in order to assist Justin Wells in the business.

Over the relevant period, none of these registered directors (with the arguable exception of Mr de la Torre who might have sometimes signed some documents in that capacity at his father’s request) performed any directorship role whatsoever in relation to GWM. Furthermore, and underlining their ‘puppet’ status, the evidence establishes that at various times when the necessity arose, Albert Ooi signed GWM documents sometimes in the name of Grace Holmes, and sometimes as Andrew Hayes, and without their authority.

The burden of Barry Wells’ and Albert Ooi’s evidence was that both agreed on the appointment of these people as mere nominal directors of GWM. The context reflects that the appointment of nominal directors was important to enable them to have continued control of GWM without themselves being identifiable as directors and thus risking exposure to an undeclared and unmanaged serious conflict of interest at their workplace.

5.4 Bank account access

Albert Ooi had constant access to the bank account of GWM by way of ATM card. He was the bank account holder and, apart from electronic access, had further ATM cards for GWM’s account issued for others’ use. Between them, Albert Ooi and Ms Millardship were responsible for management of the books and accounts of GWM and therefore were familiar with them. For his part, Barry Wells was well aware that the source of funds he regularly received from Albert Ooi, or quite likely sometimes withdrew himself from GWM’s account, was profit from work paid for by DOT.

Whilst Justin Wells and Michael de la Torre also had access by ATM card to the GWM account, they normally had to seek permission from Mr Wells before making any purchases or withdrawals on the account.

5.5 Obtaining work from DOT

Apart from undisclosed subcontract work, GWM otherwise obtained all of its work directly from DOT or PTV. The email material found during the investigation showed how Barry Wells would ensure work was allocated to GWM by arranging for provision of quotes on behalf of GWM through Albert Ooi. Barry Wells would provide the necessary information and price points to Albert Ooi or Darrel Salter to ensure GWM’s quotes or tenders appeared on file as the most competitive.

Albert Ooi greatly assisted Justin Wells at GWM in relation to tendering for work from DOT, whilst Barry Wells was in a prime position to manipulate the tender process to ensure that any project was awarded to a company of his choosing. In that regard, Barry Wells candidly gave this evidence during his public examination:

Mr Woodward:

And no doubt (you) were aware at the time of the tender and the interview that if it were successful, that that would be a big win for Global?

Mr Wells:

Correct.

Mr Woodward:

And for you?

Mr Wells:

Correct.

Mr Woodward:

You would have, I imagine, Mr Wells, been concerned within the limits of the tender system to do everything you could to ensure that Global won it?

Mr Wells:

That would be the case.

Barry Wells’ ability and preparedness to manipulate and exploit DOT tender processes was demonstrated during his public examination in relation to a project known as the Bass Coast project. Albert Ooi gave evidence that both he and Barry Wells attended an evaluation meeting in relation to the project and that both of his sons were present at the meeting – Michael de la Torre on behalf of GWM, and Andrew Ooi as a purported consultant for DOT. Barry Wells himself signed off on the necessary CARR that recommended the project go to GWM.

In so doing, and as so often happened, Barry Wells positively, but in circumstances where he and Mr Ooi jointly owned the beneficial interest in and controlled it, falsely declared to the effect that he did not have a conflict of interest in relation to the tendering parties.

Relevant to systemic manipulation of a significant number of internal tender processes under his control, Barry Wells gave this evidence during his public examination:

Mr Woodward:

Were there any times to your knowledge where Tactile won a job, in particular through a tender, and were told by you after the tender had been awarded to Tactile that, ‘Of course Global will be doing the installs,’ or - - -?

Mr Wells:

As with tenders and everything that we did, it was always prearranged, anything between Albert and myself. If Mr Salter was there - we used to go to site together in the same car. We used to play golf with them. We used to have lunches with these guys, so the arrangement would have been pre-done.

According to Michael de la Torre, there was an occasion when he questioned his step-father about how GWM won tenders and suggested to him that it was ‘a bit dodgy’, to which Albert Ooi agreed and said that ‘Barry’s taking care of it.’ In this regard, Barry Wells’ evidence was that he and Albert Ooi ‘operated as a team’.

Barry Wells confirmed in evidence that he would email documents from his DOT address to his personal address so that he could prepare quotes for DOT work on behalf of GWM. It was uncontroversial that Albert Ooi otherwise prepared the bulk of the quotations on behalf of GWM for DOT contracts.

GWM also subcontracted work out to GEPL, GWC, Tactile and Furphy’s. As well, those companies sometimes received the work directly from DOT on condition they use certain subcontractors, including in particular GWM. These things were ordinarily done without disclosure to DOT and PTV.

5.6 Sale of the GWM assets

In late-2013, Barry Wells and Albert Ooi caused GWM to sell its equipment and accreditation relating to occupational health and safety to their associates Andrew Hayes and Graham Davis for the sum of $107,000. Telephone intercept material established that for this sale, $100,000 was paid by way of bank cheque by Mr Hayes to Albert Ooi following earlier payment of a deposit. Albert Ooi then banked the cheque and withdrew an amount of $30,000, which he paid by cash in an envelope to Barry Wells on a public roadway near PTV’s offices. That exchange was caught on covert video surveillance by IBAC operatives. The video was shown during the public examinations and no doubt encouraged candid admissions by both Barry Wells and Albert Ooi about the exchange in their examinations.

The $30,000, together with other cash of about $6,000 received by Barry Wells around that time from Mr Salter, was later found by investigators in a freezer (wrapped in aluminium foil) at Barry Wells’ residence when executing a search warrant. Although at the time the cash was found he falsely explained it as greyhound winnings, and in private examination he told an elaborate but false story about its various origins, Barry Wells admitted in public examination the real sources of the cash and said it was kept hidden in his freezer due to him going through a divorce and matrimonial property dispute.

5.7 Payments from GWM profits

Barry Wells and Albert Ooi agreed to split the GWM profits evenly. However, whether that in fact occurred is more problematic. Albert Ooi had overall responsibility for the books of GWM and claimed to have regularly reported verbally to Barry Wells about profit sharing from the business. Nevertheless, not only are there large untraced withdrawals from relevant bank accounts, financial evidence shows Albert Ooi receiving significantly more money than Barry Wells over the relevant period.

At Barry Wells’ direction, Albert Ooi would sometimes pay Mr Wells’ bills with profit from GWM. This included at least one tax bill, expenses related to contractors working at his residential address, other ‘lifestyle’ purchases as referred to earlier, and expenses related to BAG Racing. Barry Wells would sometimes make cash withdrawals from GWM for expenditure that was unrelated to the operations of GWM. This was entered on a quarterly basis through Albert Ooi as a Division 7A loan to GWMMS, which after a period of time had accrued to well over $750,000 as described earlier.

Albert Ooi would often allocate payments to Barry Wells in lump sums of tens of thousands of dollars towards his share of the profits. Apart from the expenditures referred to earlier in this respect, it is unclear at present where the balance of his share of GWM profits was spent by Albert Ooi. He suggested on living expenses, however apart from his various known property interests, he appears to maintain a fairly modest lifestyle in Victoria.

6 Red Consultancy Group

In March 2008, Andrew Ooi was involved in the registration of a business called Red Consultancy Group (RCG). This occurred shortly after GWM was established and followed Andrew Ooi completing a traffic management course with a view towards him working for GWM. At the time, Andrew Ooi was studying for a graduate degree in automotive engineering.

The evidence was that the original plan for RCG was for it to undertake consultancy work for DOT, with both Andrew Ooi and Barry Wells seeing it as an opportunity, fostered by Albert Ooi, for Andrew Ooi to gain work experience and possibly income whilst a student. To this end Andrew Ooi set up an email address which he said his father had access to. He initially suggested in evidence that he used to do the invoicing for RGC’s work and admitted receiving many payments by DOT for RCG into his personal bank account.

RCG had a surface mail address of PO Box 5078, South Melbourne, which Andrew Ooi in effect said he had no knowledge of or involvement in procuring. It became obvious his father must have done so. Andrew Ooi later distanced himself from prior evidence of having invoiced DOT after being taken to some invoices that he conceded appeared false. It seems likely his father prepared these, along with many other documents and correspondence sent from Wells/Ooi controlled entities to DOT.

Barry Wells recalled at the public hearings being told at the time there was a group of people behind RCG made up of some of Andrew Ooi’s fellow students. Neither Andrew nor Albert Ooi referred to this in their evidence, which was completed before Barry Wells gave his evidence. However, no documentation was found which supported Barry Wells’ recollection in this regard.

RCG only ever worked for DOT, with all work coming through Barry Wells or Albert Ooi. It received payments from DOT over a period of nearly two years of over $200,000.

6.1 Andrew Yi

As referred to earlier in this report, Andrew Ooi, under the pseudonym Andrew Yi, recalled attending more than one tender interview at DOT. He recalled at least one such meeting that included his half-brother Michael de la Torre attending in the capacity as GWM’s representative, with Andrew Ooi there as RCG’s representative. Barry Wells conceded in his evidence that Andrew Ooi attended DOT interviews under that pseudonym. Whilst Barry Wells claimed uncertainty at the time as to Andrew’s Yi’s real surname, he accepted at least that the relationship between father and son went undeclared within DOT.

Andrew Ooi, in his guise as Andrew Yi, recalled limited dealings with Sheena Clarke (the junior member of Mr Wells’ team at DOT) and having attended one meeting at least with Julian Perrin (an infrastructure project operations manager).

6.2 RCG’s dealings with DOT

Within a day of its registration as a business in March 2008, RCG received a DOT purchase order for tender reviews for projects known as ‘KFC’ and ‘Lonsdale Street’ totalling $6,600. Andrew Ooi had no recollection of these supposed reviews and believed he was not involved. Indeed his evidence at his public examination, which differed from his private examination, was an initially firm recollection of only ever doing one RCG tender review. Later on, his evidence seemed to shift to the possibility of having more involvement to the extent of him possibly preparing some draft tender evaluation reports which he then sent to Barry Wells, or his father, for completion.

The precise level of Andrew Ooi’s involvement with RCG remains unclear, his evidence being somewhat fluid at times (as indicated above). However, in view of his lack of relevant qualifications and experience, and with his father seemingly active behind the scenes, Andrew Ooi’s involvement appears to have delivered minimal, if any, value to DOT.

In June 2008, RCG won a DOT contract for the preparation of a business plan for the South Gippsland Tourist Railway (SGTR) valued at over $30,000. Andrew Ooi said that as with all amounts quoted by RCG, his father decided upon this amount, which was eventually paid into his bank account by DOT in two instalments. As both his father and Barry Wells conceded, Andrew Ooi had no prior experience or training in drafting business plans.

Andrew Ooi recalled attending (as Andrew Yi) a few site meetings relevant to this contract, with his father also attending as DOT’s representative. A daughter of Albert Ooi (Andrew Ooi’s half-sister), was also engaged to take some site photographs, for which she received payment. Whilst Andrew Ooi said in evidence that he felt he added value to the SGTR project, it is not apparent how.

Such tender assessment reports as RCG was responsible for usually involved situations where one or more entities Barry Wells and Andrew Ooi owned and controlled, such as GWM and PWIC, were involved as tenderers. Moreover, Barry Wells and Albert Ooi were also members of the internal DOT assessment panel on each occasion RCG was involved in so reporting.

Andrew Ooi readily accepted that he added no value to the tender reviews RCG purportedly did in circumstances where there was plainly no reason why his father and Barry Wells could not have done each of the evaluations for DOT. Indeed, it would appear they were paid their salary by DOT to do so as part of their ordinary duties.

The evidence was that Albert Ooi, and not Andrew Ooi, was ultimately responsible for most if not all the documents emailed from RCG to Barry Wells at DOT. For example, Andrew Ooi was shown and distanced himself from numerous such emails, often attaching quotes, invoices or reports, where no punctuation was used. His evidence was that he always punctuated his emails and he confirmed such documents were unfamiliar to him. He also identified documents which bore indications of having been prepared on Albert Ooi’s computer. That Albert Ooi had ready access to RCG’s email account was not in dispute.

In late-2008, RCG branched out into purported design work and bus stop construction work. This became a far more lucrative area for RCG than the tender review work. Andrew Ooi conceded he had no skills to attempt such work, disowned any involvement in it, and admitted that the various invoices for same he was shown, and which were paid by DOT into his bank account, appeared to be false.

As for the monies DOT paid into his bank account, Andrew Ooi said that his father used to sit down with him from time to time at his computer and direct him as to where to electronically transfer them. He also said that this father prepared all tax related documents for RCG. Reinforcing that it was his father who ran the RCG business, Andrew Ooi professed to have no recollection about certain large lump sum transactions (of around $44,000 and $90,000 respectively) that went through his bank account.

Barry Wells gave evidence that whilst he thought those behind RCG were qualified to at least perform the tender evaluation work, he accepted they were not qualified to perform either design or construction work. Although he suggested that Albert Ooi must have been behind the latter kinds of work32, he never denied having knowledge of that occurring. Andrew Ooi’s evidence was to the effect that because RCG never, at least to his knowledge, performed construction work, its invoices to DOT for same must have been false.

6.3 DOT on notice as to irregularities

In about June 2010, someone in DOT’s finance area raised internally the apparent connection between Andrew Ooi and his father. It seems the person noticed the name Andrew Ooi in the nominated bank account details and drew it to the attention of DOT’s Rema Rockwood, a manager in procurement advisory services. Ms Rockwood said in evidence that she initially raised the matter separately with both Albert Ooi and Barry Wells, who each led her to believe that Andrew Ooi was not related to Albert Ooi. She did not recall knowing at the time of Andrew Ooi using the pseudonym surname ‘Yi’, which suggests that the false surname he used remained hidden up to that time.

Soon afterwards Barry Wells contacted Albert Ooi in order, it seems, to get their ‘cover’ stories straight as seen in the following email between their private addresses in late June:

Albert,

I will prepare a list of works provided to us by Red Consulting.

I will get all the quotes given for the works.

I will go to the meeting and see what he has to say.

My view is,

I was approached via email in regards to being able to do some work If work become available. I meet with Andrew at his office an spoke to Him in relation to what services he provided and his credentials and the People he had around him.

His work was second to none, provided a very good Business Plan for SGTR, supplied a all Data in relation to the corridor on the Bass Coast For SGTR - All Drawings Plans etc,,, All works have been completed and on time.

Just need to get it all together.

If the question comes did I know it was your son/relation I will

Say I did not know until Rema made me aware of the Surname.

I then asked you and you advised me that it was, but at no stage had

You been in charge of quoting or seeking financial approvals for Work.

If then asks you follow the same line.

Speak to you tomorrow.

But get a list of all works done, and we will go through it all.

See you tomorrow.\ [sic]

This email can be contrasted with private emails dating back to 2008 from Barry Wells to recipients that included Andrew Ooi and which involved an invitation to a family function. This made it impossible for Barry Wells to deny in evidence that he was at all material times aware of ‘Andrew Yi’s’ true identity.

In early July 2010 and probably expecting the false Yi surname had been or was about to be uncovered, Barry Wells sent the following email to his immediate superior, Sergio Lacchiana:

Sergio,

2 weeks ago 1 was upstairs and Remma asked me to look at something on her computer. It was a surname that a client of ours had. I knew the client as Andrew Yi - Red Consulting. The actual surname was Yi - Ooi.

I have used Red Consulting as a back up consultants to the consultant’s we have used largely over past 2 - 3 years. Prior to you appointment.

" Lonsdale St - 2007"

• Planright,

• Diadem,

• Monsal,

• Coffey’s,

• De la Torre Consulting Group,

• GTA,

• APR,

• AG Projects Consultant,

• Beck and Associates,

• Uwe Paffrath Traffic Consultant,

• GMR Engineering, and

• Land Management Services

I first meet Andrew after he applied for 2/3 EOl and was unsuccessful after an invite to meet him at his office at North Melbourne. A opportunity arose and I engaged him to do a review and Report.

I have reviewed all our dealing with Red Consulting we have used them on 8 occasions with me being the primary manager who engaged them. The value of works is around $73,000.00 with the larger being for a Business Plan that was written for SGTR (32,000.00 inc GST)

Once being alerted to this I questioned Albert and he advised that Andrew was a family member and that he is not involved in Andrews business in any way. He has not promoted the business nor has he been party to appointing/engaging Red Consulting to perform work.

look forward to our discussion. I will bring the documents to our 1/1 Friday 16th 2010.

Barry [sic]33

Upon receipt of this email, Mr Lacchiana ought to have appreciated the false use of the Yi surname by RCG. It will also be observed not only that RCG was said by Barry Wells to have evaluated one or more tenders by the closely related DLTC, but that he made no disclosure to Mr Lacchiana of the improper business association he was aware of between DLTC, RCG, Albert Ooi and himself.

Notwithstanding the admitted prior deceptive use of the name Andrew Yi, Albert Ooi’s obvious knowledge of that conduct, the undeclared and therefore unmanaged conflict of interest that pertained, not to mention Ms Rockwood’s evidence of both Albert Ooi and Barry Wells having initially misled her about Andrew Ooi’s connection with Albert, somehow Barry Wells managed to talk his way out of the situation with Mr Lacchiana (and it would seem that of both Albert and Andrew Ooi). Moreover, RCG continued to be engaged by DOT in the same role for another six or so months, and in 2012 Barry Wells and Albert Ooi audaciously attempted to have AMA, again using the false contact name of Andrew Yi, tender (unsuccessfully on this occasion) for certain DOT work.

Not only did Andrew Ooi give evidence that he never became aware his pseudonym had become compromised within DOT, he said that in the six or so month period after that had occurred, namely in the second half of 2010, he continued to use the name Andrew Yi in connection with RCG’s ongoing work for DOT. This suggests that Mr Lacchiana took the matter no further after receiving Barry Wells’ said email and discussing the matter with him. Indeed the 2012 incident referred to in the foregoing paragraph suggests that Barry Wells and Albert Ooi felt reasonably confident there was little or no adverse risk to them in once more using the ‘Yi’ surname.

Graham O’Donnell, who previously worked at DOT in a senior role and is now general manager of bus operations at PTV34, when informed at his private examination of the fact of RCG being allowed to continue in the same role after this deception was uncovered internally, expressed considerable concern both of that, and that no internal disciplinary action followed. Ms Rockwood stated in her evidence that at the time she first approached Barry Wells and Albert Ooi about the matter, she was surprised someone external had been engaged to perform work of this nature, a concern Mr O’Donnell also shared. She went on to say that when she then raised such views with Mr Lacchiana, he said he would look into the matter, but appears never to have done so.

Whilst Sergio Lacchiana, who no longer works for DOT or PTV, accepted in evidence that he would have discussed the matter with Mr Wells, his recollection of this episode was vague. The upshot however was that at the time, Mr Lacchiana appears never to have challenged Barry Wells over his knowledge of the deceptive use of the name Andrew Yi, never saw fit to discuss the matter with either of the Oois (according to their recollections) let alone commence any internal disciplinary action against at least Albert Ooi, and never sought to prevent or at least monitor any ongoing engagement of RCG by DOT. Indeed, Mr Lacchiana gave evidence that he had no real idea before or after this episode precisely what RCG was being engaged and paid by DOT to do, all of which suggests he took a most sanguine approach to what should have been seen by him as a matter of great concern from an internal integrity perspective.

7 PWIC Pty Ltd

PWIC Pty Ltd35 was registered as a company in early-2009. PWIC formed part of the suite of companies established and controlled by Barry Wells and Albert Ooi for the purpose of contracting with DOT in order to profit from contracts awarded to it. PWIC had two shareholders, Roadside Care & Maintenance Pty Ltd (RSCM) and GWM, but no employees.

Albert Ooi gave an account in his evidence about PWIC to the effect that it was agreed between himself and Mr Wells he would manage and control it. The motivation behind PWIC was to have an arrangement whereby DOT work would be allocated to it in the same way it was allocated to PSN. The total value of DOT work undertaken by PWIC was around $1.15 million.

7.1 Appointment of a nominal director

Barry Wells and Albert Ooi’s practice of appointing nominal directors to their companies continued in respect of PWIC. The evidence established it was a mutual decision between them that a ‘friendly’ third party be registered as director of PWIC. Gerard O’Neill was a friend of Barry Wells and owned RSCM, which had received a substantial amount of work from DOT. According to the evidence, Albert Ooi simply asked Mr O’Neill to become a director of PWIC and he agreed.

Mr O’Neill had no role whatsoever in the affairs of PWIC. More particularly, he was not informed of the shareholding for PWIC (in particular that his company RSCM was a registered shareholder), it is unlikely he was present at a meeting with Mr Ooi and an accountant when the shareholders for the company and like matters were determined, he was not told how or whether Albert Ooi proposed to split profits made by PWIC, he had no control over PWIC’s bank account, and he had no idea how much work PWIC won from DOT.

7.2 Obtaining work from DOT

Albert Ooi undertook the contract tendering on behalf of PWIC, with Mr O’Neill having no involvement with preparation of any tender documents. Any work PWIC won through tendering or via quotes was recommended to it by Barry Wells and would be subcontracted by PWIC to other companies. The rate for the subcontractor was a reduced amount compared with the tender price to enable PWIC to pocket the margin, which by agreement was meant to pass to Barry Wells and Albert Ooi equally.

Whilst PWIC was tendering for work from DOT, so was RSCM. Needless to say, neither Barry Wells nor Albert Ooi declared any conflict of interest to DOT in that regard, with Mr Wells deceptively completing contractor evaluation reports within DOT on the basis that he had no conflict in relation to PWIC.

Both Barry Wells and Albert Ooi derived substantial financial and other benefits from the work allocated to PWIC. For example, PWIC paid for works done at Barry Wells’ residential address including a shed that cost $30,000, and over $6,000 was spent on water tanks for each of their properties. There were also significant payments made to a domestic builder for work at Barry Wells’ house. Whilst each of them derived profits from PWIC, financial records show significantly more profit going to Albert Ooi than Barry Wells.

7.3 Disposal of PWIC

During 2012, Albert Ooi indicated to Mr O’Neill that PWIC was to be wound up and asked if he wanted to take over control of the company instead. According to Mr O’Neill, Albert Ooi arranged to hand PWIC over to him for free. Mr O’Neill expressed surprise when it was shown during his examination that the company is still legally owned by RSCM and GWM as equal shareholders, presumably due to inaction on the part of one or both of these persons.

The evidence of Albert Ooi was that when the arrangement between DOT and PWIC came to an end, Mr Ooi simply asked Mr O’Neill what he needed. Mr O’Neill requested a caravan for use on occasions when works were carried out by RSCM in the country, and Barry Wells and Albert Ooi agreed to the request. A caravan valued at over $66,000 was then purchased and paid for by PWIC as a possible reward for Mr O’Neill’s role in assuming the position of its nominal director in the first place. Albert Ooi confirmed during public examination that this was the case:

Commissioner:

He was a nominal director?

Mr Ooi:

Yeah, yeah.

Commissioner:

So was he being basically given a caravan for being good enough to allow his name to be used?

Mr Ooi:

The intention of him getting the PWIC and setting it up, yes.

Bearing in mind this level of ‘reward’ seems excessive in terms of what little Mr O’Neill had done to earn it, Barry Wells (whilst not recalling any details) suggested it was payment in kind for a PWIC contract that RSCM had subcontracted on. The matter does not, for present purposes, need resolving.

8 Redback Civil Pty Ltd

Redback Civil Pty Ltd (RCPL) was registered as a company in October 2011. There was no dispute in the evidence that consistently with their previous modus operandi, Albert Ooi established the company in consultation with Barry Wells to take on further profitable work from DOT.

Albert Ooi conceded that he was in control of the day-to-day running and affairs of RCPL during its early years of operation. For reasons he no longer recalled, Albert Ooi was himself registered as a director of the company for a single day on 20 February 2012, replacing Graham Davis who had been appointed sole director upon registration of RCPL. Mr Davis was then re-appointed as director, however, as was the pattern with the Wells/Ooi controlled entities, this was only in a nominal capacity (at least until Mr Davis took on a more central role in RCPL in early-2014).

8.1 Nominal directors

Mr Davis, who readily agreed he was merely a ‘dummy’ director of RCPL, said that he had no involvement with the company in its early years of operation. Unsurprisingly, he was not aware how RCPL was set up, had no knowledge of what projects it was contracting with DOT for, and had no understanding of why he signed an ASIC resignation form as a director on 20 February 2010 and was re-appointed that same day. According to Mr Davis, Albert Ooi made clear to him that he would not receive any financial reward for his name being used in this way.

It would appear that Mr Davis asked very little about the arrangement when it was proposed to him by Albert Ooi. Mr Davis’ willingness to take on the role as nominal director and his appreciation of the purpose of his role can be understood in the context of his having been party to the aforementioned MOU recording a subcontracting agreement between Mr Davis and his then business partner Andrew Hayes (and the foreshadowed GEPL) and GWM, which was entered into in 2010 or 2011. At that time, Mr Davis understood that Albert Ooi and especially Barry Wells had the capacity to influence where work was allocated from DOT, being motivation enough for him to agree to be involved. A year on, GEPL had received a substantial amount of DOT work through that subcontracting arrangement.

One example of how Albert Ooi utilised Mr Davis’ name involved a document Albert Ooi created purporting to record minutes of a meeting where almost $80,000 was distributed to the shareholder of RCPL, Norma Ooi. The document had a signature on it, representing to be that of Mr Davis. Mr Davis did not recognise the document or signature as his, nor did he recall any such meeting or the provision of money to the shareholder. He said that he never authorised Albert Ooi to sign on his behalf, let alone in his name. This was but one of a number of documents investigators found and where Albert Ooi admitted having signed in the name of nominal directors of Wells/Ooi controlled entities.

8.2 Obtaining work from DOT

Telephone intercept material in late-2013 demonstrates that RCPL received work in the same manner that GWM did. That is, Barry Wells would provide information to Albert Ooi about the projects that RCPL should submit quotes or tender applications for and provide a price point in that regard. For example:

Mr Ooi:

I - I look at the email. It’s 39 bus stops at Point Cook

Mr Wells:

Yeah, yeah.

Mr Ooi:

You mean Craigieburn? I’m just wondering whether it’s ---

Mr Wells:

Oh, yeah, Point Cook I meant. Yea.

Mr Ooi:

Yeah, all right. Okay So what do you want us to do? To provide a quote today or what?

Mr Wells:

Yeah, yeah. If you can beat it. Let Darrel have a quick look at it. I think he’s looked at it. If he can beat that figure.

Mr Ooi:

by 115, I think, he’s sent through something like that, yeah.

Mr Wells:

135 including GST. So ---

Mr Ooi:

Okay. I’ll – yeah, all right. I will – I will get that all going. I’ll – I will speak to Darrel, okay. [sic]36

The telecommunications interception material confirms admissions by Barry Wells and Albert Ooi that the decision as to what work would be provided from DOT to RCPL at any given time was at the discretion of Barry Wells. Furthermore, Albert Ooi conceded during private examination that there was a period of months where he was assisting RCPL to submit tender applications whilst he was still employed full time at DOT.

Typical of a number of Wells/Ooi controlled entities that contracted with DOT, RCPL had no employees capable of performing any such work it won. Therefore any such contracts it won had to be subcontracted to other entities that were either controlled by Barry Wells and Albert Ooi, or were at least friendly to them.

8.3 Benefits from RCPL

With Albert Ooi controlling the books of account for RCPL, as well as its finances, the total value of DOT contracts awarded to RCPL in the relevant period was over $665,000.

Funds were distributed from RCPL’s account variously to AMA, HGO and GWMMS, a portion of which was for administrative work Albert Ooi did for RCPL. Whilst telecommunications interception material reflects that Albert Ooi also transferred or otherwise paid to Barry Wells some of the profits of the company, sometimes after he had verbally accounted to Barry Wells anticipated profit from it, the financial records have Albert Ooi (or entities whose finances were essentially controlled by him) receiving significantly more than Barry Wells.

9 Associated entities

Complicit third parties, both individuals and entities they managed or controlled, played a significant role in supporting and prolonging the improper activities of Barry Wells and Albert Ooi. That support involved:

  • agreeing to act as nominal directors or shareholders of controlled entities (as detailed in earlier parts of this report)
  • agreeing to quote or tender to, or accept work from, DOT or PTV on the basis of a private and undisclosed arrangement with Barry Wells or Albert Ooi that all or part of the work would be subcontracted to a controlled entity (primarily GWM)
  • providing or arranging to provide bogus or inflated quotes to DOT or PTV, or otherwise participating with Barry Wells or Albert Ooi in a process of quote, or tender price, manipulation
  • providing cash or other benefits to Barry Wells and Albert Ooi in return for ongoing favourable treatment from them in the allocation of DOT and PTV contracts.

The individuals and entities that have been the subject of investigation in this context are:

  • Morrissy Civil Works Pty Ltd (MCW), trading as Tactile Australia (Tactile) and Country Works Pty Ltd (CWPL), both companies owned and controlled by Greg Morrissy
  • Darrel Salter and his company Consalter Pty Ltd
  • Furphy’s Foundry Sales Pty Ltd (Furphy’s), its manager Todd Huggard and his superior, Sam Furphy
  • GEPL and GWC, companies owned and controlled by Mr Hayes and Mr Davis.

The undisclosed subcontracting enabled GWM to secure work on DOT and PTV projects on a scale that most likely would have attracted an uncomfortable level of attention had it been disclosed internally, or had the projects been awarded directly to GWM. With the exception of some remarks made by Mr Morrissy to DOT staff discussed below, none of these third parties did anything to expose the aforesaid activities of Barry Wells and Albert Ooi, despite all appearing to understand at the time that those activities were at the very least inappropriate, if not improper and corrupt. Thus, the support of ‘friendly’ third parties contributed materially both to the scale and longevity of Barry Wells’ and Albert Ooi’s conduct the subject of this investigation.

9.1 Greg Morrissy and his entities

Greg Morrissy gave evidence that he first met Barry Wells and Albert Ooi at a railway station in regional Victoria where Tactile was working on a job for V/Line in late-2006 or early-2007. In the course of a conversation with Mr Morrissy during that first meeting, Barry Wells or Albert Ooi explained some of the difficulties they had in finding suitable contractors for work in regional areas, and suggested Mr Morrissy come to Melbourne to meet with them and discuss opportunities for Tactile to quote for that work. That meeting occurred a short time later and Tactile ‘started doing a lot of work with them very quickly’ according to Mr Morrissy (and as DOT records confirm). Over the course of the ensuing 12 months or so, contract work allocated to Tactile by Barry Wells came to make up much of Tactile’s total business. Although this has dropped off significantly in more recent years, DOT and PTV records show total payments to Tactile and CWPL during the relevant period of nearly $8 million.

Initially, Tactile’s work for DOT involved the installation of bus shelters along country bus routes in areas such as Wallan, Lara, Seymour and Wangaratta. On all of these installations, Mr Morrissy or his staff were instructed by Barry Wells or Albert Ooi where to source the shelters. From an early stage that instruction was to the effect of ‘you’ll get your shelters from PSN’. Mr Morrissy’s evidence was also that Tactile had difficulty contacting PSN and he was told by Albert Ooi ‘Don’t phone them, just deal with them by email only’, which Mr Morrissy agreed under questioning seemed strange. Mr Morrissy also thought at the time that the prices for the shelters demanded by PSN were inflated. Apart from one early delivery, all of the PSN shelters used by Tactile were delivered by or collected from Furphy’s in Shepparton. Darrel Salter started working for Tactile during 2007 and soon became Barry Wells’ and Albert Ooi’s main point of contact at Tactile.

As discussed earlier, GWM was established in early-2008. According to Mr Morrissy, later that year Barry Wells told him that his stepson was starting up a construction business and he asked Mr Morrissy if he could provide his stepson with some training on line marking, installation of tactiles and related work. Mr Morrissy agreed and Justin Wells and Michael de la Torre were then taught how to install tactiles.

Mr Morrissy said he was not told at the time that Michael de la Torre was related to Albert Ooi, but that he ‘put two and two together’. In August 2008, Barry Wells drafted an email for Michael de la Torre to send on behalf of GWM thanking Mr Morrissy for the training.

9.1.1 Non-disclosed subcontracts

At about the same time, Mr Morrissy and/or Mr Salter started receiving instructions from Mr Wells that when Tactile quoted or tendered for a particular job for DOT, GWM would be doing a substantial part of that work. According to Mr Morrissy, such instructions – mostly from Barry Wells, but sometimes from Albert Ooi – commonly took the form of ‘Can you send us a quote for this job and Global will be doing the shelter install’ (or the tactiles, fencing or some other component of the works). In some cases the instruction came after Tactile had been awarded the contract. Importantly, whatever part of the works Mr Wells told Mr Morrissy or Mr Salter that GWM would do, it was something Mr Morrissy considered Tactile was both better equipped and more capable of doing. Mr Morrissy said he believed that Barry Wells was the person in charge of GWM and that Albert Ooi ‘was the one going around mopping up behind the scenes’.

Apart from a period of six to nine months around the second half of 2008 until early-2009 (when Barry Wells and Mr Morrissy had a temporary falling out over, according to Mr Morrissy, the extent to which Mr Wells was demanding he submit false quotes for work), this pattern of subcontracting between Tactile and GWM continued for several years. It involved both GWM undertaking work on contracts awarded to Tactile, and Tactile doing the work on GWM contracts that GWM had neither the skill nor the capacity to do.

Neither the oral evidence nor the documents found disclose any instances where either entity disclosed the subcontracting arrangements to DOT, something that relevant internal rules required disclosure of. An example here is the contract for the construction of the school bus interchange at Traralgon Secondary College. The CARR dated 10 June 2010 discloses that MCW (trading as Tactile) tendered for the contract at a price of nearly $1 million and was awarded the tender by a selection panel comprising Barry Wells, Albert Ooi and Sheena Clarke.

None of the project documents disclosed any involvement of GWM but, in fact, Barry Wells had told Mr Morrissy before Tactile submitted its tender that GWM would be installing the shelters, and GWM had already sent an invoice to Tactile for the supply and installation of the shelters for a total price of $450,000. GWM had in turn contracted with Furphy’s for the manufacture of the shelters. This sum was incorporated into Tactile’s tender price to DOT, but the involvement of GWM was not disclosed.

Mr Morrissy gave evidence not only that had Tactile been left to choose the shelter manufacturer and do the installation itself, its price would have been significantly cheaper, but also that GWM’s workmanship on this and some other shelter installations was poor and had to be rectified by Tactile at its own cost.

9.1.2 Other benefits to Barry Wells

In addition to channelling work to GWM on instructions from Barry Wells, at some point in their dealings an arrangement was struck under which a pre-determined sum earmarked for Barry Wells was built into a number of contracts awarded by DOT to Tactile and CWPL. The evidence clearly establishes that the deal was struck primarily between Mr Salter on behalf of Tactile and CWPL, and Barry Wells, and that it involved different amounts on different contracts over a period at least until October 2010.

On 4 October 2010, Mr Salter emailed Barry Wells a spreadsheet that he labelled ‘Barry Reconciliation’, which contained a column listing each of the amounts for Mr Wells totalling $180,610 and a second column identifying, for the most part, private work done by Tactile for or at the request of Mr Wells, largely at Mr Wells’ house and ascribing a value to that work of $95,723. Mr Salter’s evidence was that this was a working document which he updated from time to time and forwarded to Barry Wells, and that he believed the ‘remainder’ amount showing in the spreadsheet as still owing to Barry Wells of $85,366 as at 4 October 2010 was later paid or applied for Mr Well’s benefit.

As to how much Mr Morrissy knew about the arrangement, Mr Salter initially gave evidence that he discussed the arrangement and these figures with Mr Morrissy, as he needed Mr Morrissy’s approval. However, when Mr Morrissy’s evidence that he had no advance knowledge of the arrangement was put to him, Mr Salter appeared to resile from this position. It should be noted here that Mr Salter was until recently back working for Mr Morrissy and the two are friends. Barry Wells asserted that Mr Morrissy, Mr Salter and Albert Ooi often travelled to sites together, socialised from time to time together, and that this arrangement was regularly discussed between them. For his part, Albert Ooi denied knowledge of the suggested arrangement. While Mr Morrissy accepted that Tactile did work of a substantial value at Barry Wells’ home for no charge (he referred to it being worth about $90,000 to $100,000), he denied that he knew at the time the work was agreed that Tactile would not be paid at least at cost for it. For present purposes, it is sufficient to record that Mr Morrissy accepted he did find out about the arrangement once the work for Barry Wells had been done, and conceded that if Mr Salter had given him more information about the arrangement he ‘would have put his head in the sand. I didn’t want to know about it’.

Mr Morrissy also gave evidence of his involvement in a direct cash payment to Barry Wells around October or November 2013. Again, Mr Morrissy’s evidence of the circumstances leading up to this payment was somewhat muddled, but he was at least clear that Mr Salter told him Barry Wells expected money to be paid to him from a particular job for the PTV and that Mr Morrissy did not think Mr Salter should have to pay it. Mr Morrissy then arranged for his wife to obtain $5,000 in cash, which was placed by her into an envelope and then later given by Mr Morrissy to Mr Salter to give to Barry Wells. Mr Salter confirmed that he was given the envelope containing $5,000 by Mr Morrissy and that he added a further $1,000 of his own money before delivering the cash to Barry Wells at the Melton Bar & Grill restaurant.

9.1.3 DOT told of irregularities

Mr Morrissy’s willingness to turn a blind eye to the activities of GWM and such private arrangements with Barry Wells is not entirely unexpected. Based on his evidence, on at least one and possibly two occasions in around 2009, he disclosed to personnel at DOT that Barry Wells’ and Albert Ooi’s sons worked for GWM, but that information was essentially ignored.

Mr Morrissy’s evidence was that he told both Sheena Clarke and Julian Perrin about the relationship – the former when she came on site to press them about getting work finished and the latter when Tactile was assisting Mr Perrin with a job in Werribee. Ms Clarke denied being told this (and Mr Morrissy accepted that the site was noisy and she may not have appreciated what he had said). However Victor Scarcebrook, an experienced in-house lawyer with DOT, gave evidence of a conversation he had with Mr Perrin that corroborated Mr Morrissy’s account. Mr Perrin could not himself recall either the conversation with Mr Morrissy or with Mr Scarcebrook, but agreed they could have occurred.

9.2 Darrel Salter and Consalter

Darrel Salter has diplomas in civil engineering and a background in preparing technical drawings and designs for smaller-scale civil engineering projects. He began his association with Barry Wells and Albert Ooi (primarily the former) when he joined Tactile in 2007. He soon became Mr Wells’ ‘go-to man’ on matters relating to the design and construction of DDA37 compliant bus stops and inter-changes. He was frequently retained by Mr Wells on behalf of DOT to prepare specifications for infrastructure projects and was often involved in assisting Tactile and others in quoting on the projects he had designed. By around mid-2009, Mr Salter and Mr Morrissy agreed that it was no longer appropriate for Mr Salter to be carrying on his design work at Tactile (among other things, Tactile did not carry appropriate professional indemnity insurance), so Mr Salter set up Consalter in September 2009 to be his design consulting company. However, there was a transition period of several months when Mr Salter continued to be employed by Tactile.

Through Consalter, Mr Salter provided consulting services to DOT and later PTV. Payments by DOT and PTV to Consalter during the relevant period totalled over $1.3 million. Consalter also provided consulting services to GWM, RCPL, Tactile, GEPL and GWC. Indeed, Mr Salter was often retained by more than one of these entities on the same job and became the middle-man in sorting out with Mr Wells which entities would quote, and which of the entities quoting would win the work. He also facilitated cash ‘kickbacks’ from projects in favour of Mr Wells.

These practices seem to have started at least by early-2010 and are exemplified in a number of telecommunications interceptions between Mr Wells and Mr Salter in late-2013. For example:

Mr Salter:

Hello.

Mr Wells:

How ya goin’?

Mr Salter:

Good.

Mr Wells:

Global come in at about 134 including GST.

Mr Salter:

Okay. So they’re the cheapest that Wayne’s got?

Mr Wells:

Yeah, yeah.

Mr Salter:

All right. So I’ll – I’ll just come in 132?

Mr Wells:

Oh, about 130. Under ’em.

Mr Salter:

I could do one-ninety – one-ninety – sorry, 129,800, then it looks a lot cheaper.

Mr Wells:

Oh, yep, yep.

Mr Salter:

Yeah. Uh, yeah, and you got – you did get Greg’s Swan Hill quote, didn’t you?

Mr Wells:

I dunno. I’ll have to have a look.

Mr Salter:

Okay. Do you wanna find out?

Mr Wells:

Well, I’ll have a look. He’s fucking hopeless.

Mr Salter:

I do all this fucking work to price these fucking things for him - - -

Mr Wells:

Yeah.

Mr Salter:

- - - and he doesn’t send ’em in. (laughing)

Mr Wells:

Yeah.38

Mr Salter:

Sorry, Baz, I just realised you were on the other phone.

Mr Wells:

Yeah, yeah, that’s why.

Mr Salter:

That’s – that’s our paranoia beating us to death.

Mr Wells:

Oh, I know. I just don’t - you know.

Mr Salter:

No, yeah, that’s what I mean. It’s you and me both. It’s – it’s just total paranoia.

Mr Wells:

Yeah, but it’s better to be that way than not.

Mr Salter:

Yeah.

Mr Wells:

So - - -

Mr Salter:

Yeah, that’s right. No, I agree, it’s very - - -

Mr Wells:

Yeah, so. Yes. But, er, other than that there’s no dramas, so.

Mr Salter:

Yeah, oh good.

Mr Wells:

Well, Greg owes me five from Boronia, The Avenue one.

Mr Salter:

Yeah, he said there was a – it was only six grand above his quote.

Mr Wells:

Oh well, whatever, give me three then. I don’t give a fuck.

Mr Salter:

Yeah, okay. I said, ‘Oh well, you owe him three,’ and he goes, ‘Yeah, no worries’.

Mr Wells:

Yeah.

Mr Salter:

But what I’ll do is I’ll - I’ll put out, er, five or six and throw that with it so at least you’re getting decent chunks.

Mr Wells:

Oh, that’s all right. We’ll sort it out.

Mr Salter:

Instead of – instead of dribs and drabs, ‘cause - - -

Mr Wells:

Yeah.

Mr Salter:

Just don’t - - -

Mr Wells:

Yeah.

Mr Salter:

It all becomes pointless.39

The tone and content of these exchanges between Mr Wells and Mr Salter confirms that they shared a close working relationship and high level of co-operation around these improper dealings.

9.2.1 Further benefits to Barry Wells

As alluded to above, the other key part of Darrel Salter’s involvement with Barry Wells concerns a number of payments made by Mr Salter directly to Mr Wells or on his behalf. Mr Salter had first thought these payments commenced in early-2012. However, banking records found and analysed by IBAC forensic accountants show the first such payment may have occurred in May 2011, in the sum of $43,450. Mr Salter could not recall the circumstances of this first payment, but agreed that the name ‘Romsey Earthmoving’ that he wrote on the Consalter cheque butt for the payment was fictitious, and accepted the accuracy of the bank records that show the funds were in fact deposited by Mr Wells into his personal bank account. Banking records show a total of five payments by Mr Salter to Mr Wells for sums totalling over $74,000. Some payments were from the Consalter account and others were from Mr Salter’s wife’s cheque account.

Mr Salter was able to recall three of these five payments (and in fact produced the cheque butts for the payments at his first private examination) and also gave evidence of two further cash payments – one of $2,000 which Mr Wells arranged for one of his greyhound business workers to collect from Mr Salter, and the one for $6,000 that comprised the $5,000 from Mr Morrissy and $1,000 from Mr Salter as described above. Mr Wells agreed that the smaller bundle of $6,000 in cash found in his freezer at the time of the execution of a search warrant at his residence in January 2014 included the cash delivered by Mr Salter to him at the Melton Bar & Grill restaurant in late-2013.

Notably, Mr Salter’s evidence was that the source for all the payments was the same. In substance, there would generally be a phone call by Mr Wells to Mr Salter where Mr Wells typically said ‘I’ve sent you some documents, some plans. Can you have a look at how much you would charge to design those and then get back to me’.

The work involved would generally be low-value design work usually priced well under DOT’s ‘one quote’ threshold of $25,000. According to Mr Salter, he then looked at the documents and called Mr Wells and the following exchange typically occurred:

Mr Salter:

I think it it’d be X amount of dollars.

Mr Wells:

Well, can you make it X plus an amount, and that amount is for me.

The amount added by Mr Wells varied, but it was generally between $2,000 and $4,000. Mr Salter then put in a quote for the inflated sum which Mr Wells accepted, the work was done and the account for the quote submitted and paid to Mr Salter by DOT. These sums would build up over time and at some point Mr Wells asked Mr Salter to arrange to pay it, either directly to him in cash or by cheque, or by paying a bill for Mr Wells, usually from his wife’s account. Mr Salter volunteered that on one occasion he paid a bill of $6,000 from a fencing contractor undertaking work at Mr Wells’ residence in Romsey. By way of further examples, there was a record also volunteered of a transfer of almost $14,000 from Mr Salter’s wife’s account in favour of Mr Wells in mid-2012, which followed earlier payments that year from the same source in favour of Mr Wells’ family trust (BJJEN) of $8,000 and around $5,600 respectively.

There does not seem to have been any hesitance or reticence on the part of Mr Salter in facilitating such payments. Indeed, as recently as late-2013, Mr Salter confirmed he would soon be making a further such payment:

Mr Salter:

Yeah, I’ve got a – I’ve got a big invoice coming in soon.

Mr Wells:

Yeah.

Mr Salter:

I’ll pass some more coin your way. But I’ll do it - - -

Mr Wells:

All right. I’ll ring ya.40

9.2.2 Mr Salter’s response

Mr Salter’s response to this section, insofar as it relates to comment or opinion that might be considered adverse to himself, was to the effect that at all relevant times, he only acted as servant and agent of Mr Morrissy whilst an employee of Tactile, and never for CWPL. Further, that Mr Salter regularly reported back to Mr Morrissy on such matters and therefore always had approval from him for such payments and work done. Whilst he asserts the payments spreadsheet was also emailed by him to Mr Morrissy’s wife’s email address (intended for Mr Morrissy’s attention), IBAC has found no record of that.

Mr Salter also responded that the example given in the first telephone intercept material was in fact the only occasion when Mr Wells sought his assistance in deciding where to place a contract. Further, that he was never aware when he was pricing projects for the various companies which other companies would be bidding, and that he never prepared quotes on behalf of other companies. He also contends he did not ‘facilitate’ cash kickbacks in favour of Barry Wells, and that the conclusion he acted without hesitancy or reticence is unfair, as at all times he acted at the behest and under the instructions of Mr Wells.

It is otherwise acknowledged that along with volunteering a number of records, Mr Salter made significant admissions against self-interest from an early stage of his private examinations, which assisted in the expedition and effectiveness of the investigation.

9.3 Furphy’s Foundry

The relationship between Barry Wells, Albert Ooi and Furphy’s began in early-2007, with the development of the ‘PSN Shelter’ and the purchase of bus stop shelters by PSN from Furphy’s and on-sale to DOT for a substantial mark-up as described above. However, once GWM was established in January 2008, the relationship with Furphy’s provided Mr Wells and Mr Ooi with the ideal opportunity to secure work for GWM, without the need to source that work directly from DOT. It simply involved arranging for Furphy’s to quote for the supply and installation of shelters and instructing Furphy’s that the installation and any associated fencing and traffic management would be done by GWM. In the second half of 2012, that role was taken over by RCPL. Payments by DOT and PTV to Furphy’s during the relevant period totalled almost $1.7 million.

Most of Mr Wells’ and Mr Ooi’s dealings with Furphy’s throughout this period were with the General Manager at the foundry in Shepparton, Todd Huggard. There is no evidence that Mr Huggard or anyone else at Furphy’s knew there was any connection between Mr Wells and Mr Ooi, on the one hand, and GWM and RCPL, on the other. Mr Huggard said he did have dealings from time to time with someone he referred to as Justin at GWM, and that he learnt in due course that Justin’s last name was Wells. He was never told of any relationship between Justin and Barry Wells, but assumed Justin was Barry’s son or brother. He thought Mr Wells must have arranged for Justin to get a job with GWM.

Furphy’s also secured work from DOT and PTV by being nominated by Mr Wells or Mr Ooi as the supplier of the shelters under contracts awarded to Tactile, GEPL, GWM, GWC and RCPL. With one important exception, there is no evidence that Furphy’s gave any payments or other benefits to Mr Wells or Mr Ooi in exchange for the work it received from DOT and PTV, except for the benefit Furphy’s unwittingly conferred on Mr Wells and Mr Ooi by accepting Mr Wells’ and Mr Ooi’s instructions to use first GWM, and then RCPL, on shelter installations.

9.3.1 Domestic furniture received

The aforesaid exception occurred in around February 2011 and involved Furphy’s supplying domestic garden furniture with a total value of over $13,000 to Barry Wells and Albert Ooi. According to Mr Huggard, this occurred after both Mr Wells and Mr Ooi attended the foundry in Shepparton and were together with Mr Huggard in his office leafing through Furphy’s brochures. They (primarily Mr Wells) identified certain items of furniture and asked Mr Huggard to put the furniture through on an order for 20 bus shelters for Wodonga City Council, which had just been finalised between Furphy’s and Wells on behalf of DOT. Mr Huggard understood from the conversation that the cost of the furniture was to be included in the price already determined for the 20 shelters, with the result that Furphy’s was not to be paid for the furniture. Mr Huggard was later provided with addresses for the delivery of the furniture, which he strongly suspected were the residential addresses for Mr Wells and Mr Ooi.

Mr Wells and Mr Ooi did not dispute receiving this furniture free of charge for use at their respective residences. However, Mr Ooi suggested he was not present in the Furphy’s office at the time it was selected and that he simply went along with the idea when Mr Wells raised it over the telephone. There is no reason not to accept Mr Huggard’s version of events, although for present purposes nothing really turns on whose version is to be preferred in this regard.

Mr Huggard said that the accounts department at Furphy’s was ‘tight’ and that he knew its personnel would query him about the furniture, so he sought approval for the arrangement from his boss Sam Furphy. Sam Furphy, who controls Furphy’s and is based in Melbourne where he has other business interests, spoke regularly by phone with Mr Huggard and attended the foundry in Shepparton once a month for a regular board meeting. Mr Huggard’s evidence was that when he spoke to Mr Furphy about this matter, he (Mr Huggard) knew that Furphy’s would not be paid for the furniture and that Mr Furphy’s response was that given the business Mr Wells and Mr Ooi brought Furphy’s, ‘he was happy to go along with it, yes’.

Mr Furphy denied he knew the furniture would not be paid for, but conceded that he believed the department would be paying for it. This was notwithstanding it was not suited to public bus shelter use and therefore must have given rise to a concern that DOT was being improperly made to fund an inappropriate purchase.

It seems likely that Mr Huggard would have sought approval from Mr Furphy for supplying the furniture to Mr Wells and Mr Ooi effectively free of charge, given the risk of workplace sanctions against him if he did not, and there being no need to seek approval for something Furphy’s was to be paid in full for. There is also evidence Mr Huggard’s relationship with Mr Furphy was sufficiently close that he would feel able to talk to Mr Furphy about the issue. However, it is sufficient for present purposes to note that at least as general manager of Furphy’s, Mr Huggard was prepared to condone the improper arrangement in the interests of maintaining Furphy’s business relationship with DOT.

9.3.2 Quote irregularities

The other activity Furphy’s was prepared to engage in to secure ongoing work from PTV was to submit what the preponderance of the evidence shows were dummy invoices, ensuring that Furphy’s invoice was the lowest of three and thus would most likely win the work from PTV. This first occurred in May 2012, soon after PTV had been established. Furphy’s, through Mr Huggard, had earlier quoted for the supply installation of a bus shelter at Eaglehawk near Bendigo for a total price of almost $87,000. Barry Wells and Albert Ooi had arranged that RCPL would do the installation and associated fencing and traffic management for just under $36,500, which was included in the Furphy’s price. However, before the order could be completed, Mr Wells contacted Mr Huggard and asked him if he could provide another two quotes against the original Furphy’s quote because ‘he needed to get through some red tape’. Mr Huggard’s evidence was that he then rang Mr Furphy to see if he could get two quotes drawn up from a couple of his other companies and that Mr Furphy told him to provide the information needed for the quotes and the pricing, and that he would get them organised.

Mr Huggard then prepared two drafts of the quotes including pricing (each changed by Mr Huggard to look different to the other and to the original Furphy’s quote), and emailed these to Mr Furphy who later sent back two quotes with the information provided by Mr Huggard cut and pasted into the quotes; one on the letterhead of his company Urban Maintenance Systems (UMS) for $91,350, and another on the letterhead of a ‘Morgan Property Services’ for $92,980. These quotes were sent by Mr Huggard to Mr Wells to add to Furphy’s quote, and lowest-priced Furphy’s duly won the job. Neither of the two additional quotes was signed, and each found their way onto the relevant DOT file as if they were validly (ie. separately and from bona fide quoting entities) obtained.

This same process happened on at least two further occasions, but with two important differences. First, the quotes from UMS purported to be signed by one David Lock of UMS. Secondly, the second quote was provided not by Morgan Property Services but by another company with which Mr Furphy was and remains associated, Landmark Products Ltd. On both occasions, each of the quotes from Landmark was signed by Mr Furphy above the typed name ‘Sam Murphy’ (emphasis added). Sam Furphy’s evidence about these matters was to the following effect:

  • He agreed that he was asked by Mr Huggard to arrange the additional quotes, but at least at the time of the first and second quotes, he did not know and did not assume that Furphy’s was also quoting on the same job.
  • In relation to the single Morgan Property Services quote, he spoke to his long-term friend Will Morgan, who has a residential building business and was never previously engaged in this line of work, and asked if he was interested in providing a quote for the supply and installation of some bus shelters and Mr Morgan agreed. However, Mr Morgan gave no input into the pricing – nor was he in a position to – and asked Mr Furphy to make up a letterhead for the purposes of the quote, which Mr Furphy did.
  • Mr Morgan accepted in his evidence that the purported Morgan Property Services quote was misleading in at least two material respects. First, there was no such entity. Secondly, contrary to what it expressly represented, namely that ‘We would be very happy to proceed at your earliest notice upon acceptance of these quotes’, Morgan himself was not in a position to do so unless and until he had both scoped what the job entailed and decided whether it was worthwhile from a profitability point of view41.
  • In relation to the UMS quote, Mr Furphy’s evidence was that he ‘spoke to our contract manager at the time’ (Mr Lock) and briefed him on it, explaining that ‘We’ve got a quote we’re putting together for Furphy’s. It’s for some shelters, supply and install. Would you be happy to, you know, carry this job out if we were successful’.
  • He did not take Mr Lock or Mr Morgan through any of the figures and neither of them ever saw the quotes.
  • Mr Furphy signed the second and third UMS quotes using Mr Lock’s name. He said in evidence ‘...when I spoke to David, he said, ‘Look, can you just sign off on my part, because of the scanning complications of it’.
  • In relation to the use of the name ‘Sam Murphy’, Mr Furphy said he did type in ‘Sam Murphy’: ‘Look, embarrassingly so, that is the common mistake that sometimes get (sic) made and I’m embarrassed about that’.
  • Mr Furphy was pressed on this final issue, but persisted in his claim that it was a typographical error made by him in typing his own name, despite the disparate location of ‘F’ and ‘M’ on a computer keyboard, not to mention his twice signing above the wrongly typed Murphy surname.

There are a number of significant difficulties with Mr Furphy’s evidence:

  • On the question of whether he knew or assumed Furphy’s was also putting in a quote, his evidence contradicts that of Mr Huggard, which was to the effect that he told Mr Furphy he needed two ‘additional quotes’, clearly referring to two in addition to the Furphy’s quote.
  • Although Mr Morgan’s evidence in private examination largely accorded with Mr Furphy’s, there were two important differences, one being that he was clear in his evidence that when Mr Furphy contacted him about the quote, he said to Mr Morgan that ‘he needed a third quote’ (emphasis added). If this is correct, and treating the UMS quote as one quote and the quote from Mr Morgan as ‘the third quote’, the only other quote Mr Furphy can have been referring to in speaking to Mr Morgan is a quote from Furphy’s.
  • The other important difference between their evidence was Mr Furphy’s evidence of having twice prepared quotations to DOT in the name of Morgan Property Services, with Mr Morgan saying it was a one-off occurrence and only one such quotation being found amongst relevant DOT files.
  • Mr Lock was never ‘the contract manager of UMS’ (emphasis added). According to Mr Lock’s evidence in private examination, he was at the time one of a number of contract managers employed by UMS, and was managing first the Hobson’s Bay Council contract and later the Melbourne Airport and Securency contracts, none of which had any connection to a possible job installing a bus shelter near Bendigo, nor Kilmore.
  • More importantly, Mr Lock said that he only ever spoke to Mr Furphy in person once or twice during management briefings and may have spoken to him on the phone about a compactus fire at Melbourne Airport. However, he could not recall any phone calls about bus shelter installations and he was clear that this was something he would recall if it had happened. He emphatically rejected ever asking or authorising Mr Furphy to sign a quote using his name.
  • Mr Lock left UMS in October 2013 and had not had any dealings with Mr Furphy for some time since then. However, and most curiously, on Friday 25 July 2014, Mr Furphy called Mr Lock ‘out of the blue’ with a suggestion they get together for a coffee, which they did the following Monday (28 July 2014), just a week after the public examinations began.
  • According to Mr Lock, Mr Furphy said nothing during that meeting about the UMS quotes or the IBAC investigation, but did ask him if he was interested in assisting in a project with Landmark where he would go on a retainer of $1,000 a month to be available to quote on installing Landmark products in public areas. Mr Furphy then said he would get back to him, but was yet to do so.
  • It is notable that Mr Furphy gave evidence that he ‘went back to his records once this hearing had commenced’. It therefore seems that this otherwise unexpected contact with Mr Lock and the inducement not only of future work but of a significant ongoing financial windfall to someone in Mr Lock’s position coincided with Mr Furphy’s review of his records in preparation for his examination. These circumstances naturally give rise to a concern regarding the motivation of Mr Furphy behind such contact with Mr Lock42.
  • Mr Furphy ultimately conceded in giving evidence concerning the third occasion he arranged quotes, that it was ‘likely’ he would have assumed by this time that Furphy’s was also putting in a quote. This concession was well made and appropriate as any contrary suggestion warrants incredulity, particularly having regard to the evidence of Mr Huggard and Mr Morgan referred to above.
  • If it is accepted that Mr Furphy knew, or assumed, that Furphy’s would be putting in a quote on each occasion, it makes perfect sense that he would not use his own (very distinctive) last name in signing off a purportedly competitive quote from Landmark, and his explanation that unwittingly he twice mistyped his own name and then went on to sign above it in the way that he did cannot be accepted.

However, it is not necessary for the purposes of this report to reach a final conclusion on these issues. On any view, Mr Furphy was himself responsible for arranging several purportedly competitive quotes to DOT from entities with which he was associated on three separate occasions, as well as producing false signatures (ie. purporting to be Mr Lock’s). Mr Furphy accepted that it was ‘not appropriate’ for someone dealing with a government department or, indeed, any customer, to send multiple quotes that purport to be competing where the same person has effectively determined what price to put in those quotes.

9.3.3 Mr Furphy’s response

Mr Furphy’s response to this report, insofar as it relates to comment or opinion that might be considered adverse to himself or Furphy’s, principally related to the introduction to section 9 as well as section 9.3 and, in particular, general comments about the complicity of associated entities, which he contends on the evidence ought not include himself or Furphy’s.

It was also sought to have acknowledged that there is nothing to suggest Mr Furphy, or Furphy’s, had any knowledge of practices that had been adopted by Barry Wells and Albert Ooi, notably the use of substantial ‘mark-ups’ on items supplied by Furphy’s, to allow them to gain financial benefits for themselves. Also, that there is no suggestion that at all times the items quoted on, and supplied by, Furphy’s were not genuine commercial quotes at competitive prices. See also footnote 42.

9.4 Grand Earthworks

Before a more recent falling out, Andrew Hayes and Graham Davis were long-term friends. In about mid-2010, they decided to set up a landscaping and earthworks partnership, Grand Earthworks Pty Ltd (GEPL). GEPL was registered as a company in June 2011.

Mr Hayes had a background in operating large earthmoving machinery, whilst Mr Davis had worked primarily driving trucks.

The evidence was that GEPL was established to obtain DOT work following earlier discussions between Barry Wells and Andrew Hayes at a social encounter at a mutual friend’s farm.

GEPL started doing a considerable amount of bus infrastructure and other civil works very quickly after it was established, both directly for DOT and under (undisclosed) sub-contract from GWM. So much so that payments by DOT and PTV to GEPL during the relevant period totalled nearly $2.3 million.

9.4.1 Benefits to Barry Wells

In late-2010 and early-2011, the GEPL partnership undertook landscaping, concrete slab installation and other earthworks at Barry Wells’ home. They also arranged and paid for the erection of two pergolas in Mr Wells’ garden and tiling around his new swimming pool. Whilst some part of these various expenses was claimed to have been reimbursed to GEPL by GWM, the evidence was clear that at the very least, Mr Hayes’ and Mr Davis’ time, and the use of GEPL equipment, was provided to Mr Wells’ benefit without charge.

Both Mr Hayes and Mr Davis initially claimed in private examination that this work was in return for Mr Wells training greyhounds that they owned, but each soon abandoned this story when it became clear that most if not all of the work was done before the greyhounds were purchased43. They ultimately both conceded such work was done in return for Mr Wells arranging for GEPL to win DOT contracts.

9.5 Global Works Civil

Mr Hayes and Mr Davis set up Global Works Civil Pty Ltd (GWC) at the time GWM was winding down its operations once Justin Wells had left. The idea was for GWC to take over GWM’s accreditations and carry on with the work that GWM and GEPL had been doing, with GEPL becoming owner of the equipment. This is generally what occurred, although only for a relatively short time period due to IBAC’s intervention.

Although much of the work of GEPL and GWC was done under direct contract from DOT and PTV, they also each did work under undisclosed subcontracts, initially from GWM and then later from RCPL. Generally, that subcontract work was done at a discount to the contract price, with the difference forming part of the profits taken by Barry Wells and Albert Ooi out of those controlled entities. GWC’s payments from DOT and PTV totalled around $565,000.

Mr Hayes suffered serious health issues during 2013, and spent several months recuperating. He re-joined the businesses later in 2013. The relationship between Mr Davis and Mr Hayes broke down in around November 2013 over GWC’s financial management. At the time IBAC search warrants were executed in early January 2014, Mr Hayes had found new employment with a transport business and Mr Davis was working on taking over control of RCPL and continuing in civil construction.

10 Adequacy of systems and controls at PTV and DOT

Besides examining the corrupt conduct of individuals, the public examinations also focused on the procurement systems and controls in place at DOT and PTV – specifically the integrity of the procurement process to detect instances of officers of DOT and PTV providing benefits to themselves, their family, friends or associates and conflicts of interest.44

IBAC heard evidence in relation to procurement processes from four witnesses who had worked in various roles within DOT and PTV:

  • Witness D45
  • Julian Perrin, Project Manager
  • Rema Rockwood, Manager of Procurement and Advisory Services
  • Winnie Blackwell, General Manager of Project Implementation.

The Commission also heard from the current Chief Executive Officer (CEO) of PTV, Mark Wild.

This section summarises DOT and PTV procurement policies and processes during 2008 and 2012. The examinations also investigated flaws in the procurement processes as well as the culture at DOT and PTV that allowed the type of conduct described above to thrive. The evidence explains in large part how Barry Wells and Albert Ooi were in a position to manipulate procurement processes in order to obtain the benefits exposed during phase one of the hearings.

10.1 Manipulation of procurement processes

Relevant undisputed evidence from the public examinations suggests that Barry Wells and Albert Ooi were able to manipulate procurement processes in several ways:

  • projects that required three quotes could be submitted for approval by a financial delegate without production of a CARR, supporting documentation or involvement of the procurement team
  • benefits were built into quotes by agreement with contractors, and those amounts were then included in the purchase order price and returned to Barry Wells and Albert Ooi by some contractors as kickbacks
  • at least one tender threshold of $150,000 was avoided by ‘contract splitting’
  • contractors like Andrew Ooi could be engaged under a false identity for work such as evaluation reports on low value contracts that ought to have been undertaken internally. The same applies to at least some of the work performed by Mr Salter
  • funds left over from previous projects could be applied to later projects, using the same internal Contract Management System (CMS) number.

10.2 Lack of controls and training at DOT and PTV

Poor procurement controls and training existed at DOT and PTV, with evidence provided during the course of Operation Fitzroy revealing the following deficiencies:

  • DOT and PTV favoured timely outcomes above compliance with procurement process
  • the procurement team was inadequately resourced
  • procurement policy was generally not supported by management
  • management lacked accountability and deficiencies in procurement processes were highlighted to senior management as at 30 April 2012
  • staff members were not properly, or at all, trained for risk identification associated with fraud and corruption
  • the structure within the divisions at DOT and PTV precluded visibility of non-compliance with procurement processes across Mr Wells’ division (and others) so that corrupt conduct could be contained and covered up
  • the application of CMS was not mandatory.

PTV has indicated that confusing and overlapping procurement policies have since been streamlined.

10.3 Organisational culture of non-compliance

Whilst a senior employee within DOT, Witness D prepared a memorandum dated 30 April 2012 that identified deficiencies in the procurement processes at DOT generally, and highlights an organisational culture where delivery output was preferred over robust compliance with proper process.

The document was the product of a substantial amount of internal collaboration. Indeed in its exhibited form, the memorandum was the ninth iteration. It was produced in the context of ‘budgets [being] tight [and] how we can do things smarter, how we can do things better, how can we save some money for the organisation?’ The final version of the memorandum says:

‘The current focus for much of the procurement activity in DOT can be described as ensuring compliance with the relevant government policies and department rules and achieving the desired result as expediently as possible.’

According to Witness D, this in effect meant that the driving ethos at DOT was to ‘make sure we didn’t bend – break any of the rules too much, and if we did, don’t worry about it and just achieve the result, make it happen’.

This type of attitude was manifest in the evidence given by Ms Blackwell about her contact with Mr Wells in relation to breaches of policy and procurement protocols.

Mark Wild joined PTV in September 2012 and took up responsibilities as the CEO in February 2014. Within three months, Mr Wild stated that it was apparent to him the combination and variety of predecessor organisations had produced a department that did not have strict-enough controls. Mr Wild attributes the culture identified by him, and set out earlier in this section, to a reluctance to follow proper procedures on the basis that ‘this is how we have always done business around here’. According to Mr Wild, it was a case of ‘the process was getting in the way and the large volume of work had to be done, so it was almost bypassing the process to expedite the works’.

Mr Wild characterised the environment in 2012 in these terms:

‘When PTV commenced operations in 2012, it inherited serious cultural problems. The most significant of these can be summarised very simply. First, an officer like Wells was seen by some of his peers as being a ‘man of action’ who got the job done and cut a few corners. Second, a work environment that some saw as robust and knockabout might more accurately be perceived as a ‘clubby environment’ with its own unwritten rules and values. Third, a reluctance to follow proper procedures was explained away, by some, on the basis that ‘this is how we have always done business around here.’46

Separately Ms Rockwood described the attitude toward procurement during 2008 to 2012 in these terms:

‘There wasn’t support for procurement in that culture. It wasn’t a priority. It was just an advisory role and it was a management culture that didn’t support procurement, especially procurement rules or activities that I was trying to enforce.’

Mr Wild also advised that PTV is working to establish an environment that welcomes complaints being made, in accordance with the line of reporting to internal management, but more broadly, to any employee at PTV.

10.4 Insufficient procedural controls

Witness D gave evidence, in the context of concerns detailed in the memorandum, of an example where insufficient controls rendered the role of the procurement team ineffective.

Procurement had the role of reviewing CARRs, but performed this task without actually sighting supporting documentation. Evidence during phase one indicates that on a number of occasions Albert Ooi created fictional quotes in support of certain contracts. At other times, Barry Wells did not seek three quotes in relation to a contract despite the requirement to do so. Purchase orders were raised in respect of those projects nevertheless. The effect of Witness D’s evidence was that there was simply no delving into any aspects of the review of the CARR to ensure proper process was adhered to.

Ms Rockwood’s evidence further demonstrates how this type of conduct was facilitated rather than identified within DOT and PTV. Ms Rockwood was taken to several examples where financial delegate Mr Lacchiana had approved a CARR without the project having first been approved by the procurement team to check, at least based on the CARR, that all supporting documentation had been provided. In these instances Ms Rockwood explained that she had approved the CARR retrospectively and that this type of procedural irregularity was a matter for that financial delegate. Ms Rockwood did not have the authority to enforce proper process.

In the same way, the procurement team had no real role in scrutinizing the validity of any tender process. Its role, according to Witness D, was to close the tender at 2pm on a Thursday and provide the applications to the relevant project manager, Barry Wells being one of them.

Ms Rockwood gave evidence of trying to enforce controls via the CMS. She encouraged project teams to create a CMS record in relation to every transaction so that it was recorded. A CMS entry was not, however, always compulsory; there was no requirement for a CMS record for a contract under $25,000. A CMS record was not therefore prerequisite to allowing an invoice to be paid. Procurement checks in that regard could therefore be by-passed.

CMS operated so that anyone in a management role was able to raise a CMS record. Anyone in a management position, including Barry Wells, thereby had oversight of all projects undertaken in the division and could identify if any funds had not yet allocated under a particular project. Barry Wells then had the capacity to apply those funds to a later project using the same CMS number. There were examples of this type of practice during phase one of the public hearings.

10.5 Ad hoc audit processes

Audit processes within procurement did not appear from the evidence during phase two to be systematic. Perhaps indicative of the culture at the department during this time, Ms Blackwell was not aware of the frequency of internal audits or the provenance of information that came to procurement as a result of those audits.

An audit was conducted by KPMG into bus infrastructure procurement, reporting in February 2013. Mr Wild gave evidence that the then Chairman and Chief Executive (Ian Dobbs), and the Director of Network Operations (Norman Gray), had identified following an internal audit in 2012 that the bus infrastructure area should be looked at more closely. So when in January 2013 a finance reporting officer told Mr Wild that a small pool of contractors were getting a lot of work in this area, Mr Wild knew it was already being looked into by KPMG.

Mr Wild described the audit as a ‘deep dive’ and that the issue being addressed required close scrutiny as a result of being identified by internal management. According to Mr Wild, he also decided then that Barry Wells had to be separated from this work because, while he was not aware of any fraud, it became clear to Mr Wild that ‘Wells was a particularly disorganised individual’. The position Barry Wells later took up (after a three- or four-month process) was with Smart Bus.

At the public examinations, Mr Wild was asked to comment on the adequacy of KPMG analysing only three contracts in what Mr Wild termed was a ‘deep dive’ investigation. Mr Wild conceded that ‘knowing what we know now, clearly that should have been a lot more thorough and maybe the sample size wasn’t particularly large but I do know from that report, major reform was instituted’.

While not fully explored in the investigation or public examinations, the ad hoc auditing process and the response to the KPMG audit also raises concerns about the effectiveness of PTV’s audit and risk management functions.

10.6 Lack of visibility across the department

Ms Rockwood gave evidence of how the lack of transparency across divisions allowed for corrupt conduct to go undetected. Ms Rockwood elaborated on an example revealed during phase one, whereby another team informed her that a consultant working with the Bus and Infrastructure team had the same surname as Albert Ooi. As discussed earlier in this report in connection with the controlled entity RCG, she investigated this issue by speaking with Albert Ooi, who denied that it was a family member or anyone that he knew. As part of good practice, Ms Rockwood went on to speak with Mr Ooi’s manager, Barry Wells, who she said responded with words to the effect of ‘there is no issue. That’s not anyone we know of. It’s just a person with the same name.’ Procurement was also made aware of what Ms Rockwood had been told.

However, not only were these false assurances apparently accepted at face value, no one seems to have informed Ms Rockwood (nor, it seems, others in procurement) that this consultant was actually using the false surname Yi. And yet a contrary version of the relationship between Andrew Ooi and Albert Ooi, including discussion of the use of the ‘Yi’ surname, was provided in writing to Mr Lacchiana by Barry Wells, as also discussed earlier. Perhaps unsurprisingly given those circumstances but nevertheless concernedly, no disciplinary action was taken and there was no further investigation of what was a significant breach of procurement rules.

As a separate issue and as identified earlier, Ms Rockwood had also queried why an external party, RCG, had been providing consulting services at low value for tender evaluation, being work that could easily be done in-house. Ms Rockwood gave evidence that she raised this with Mr Lacchiana at the time and that he said in effect ‘I’ll see that it doesn’t happen again’. Ms Rockwood accepted that the matter would be handled from there and had no further involvement. The evidence from phase one makes clear that RCG/Andrew Yi continued to consult on projects at the department. Again, no action appears to have been taken.

As Witness D’s memorandum suggests, a more coordinated whole-of-contract approach, and one where managerial procurement officers had management support to escalate this type of problem, may well have resulted in this matter being dealt with more effectively. Ms Rockwood gave evidence that had she been provided with more information about these instances and with the resources by which to obtain it, she would have ‘escalated [the issue] right up to the top’.

10.7 Inadequate resources and training

Ms Rockwood and Mr Wild both gave evidence that there was a lack of resources for the purpose of collecting information about procurement practices. In relation to resources, Ms Rockwood had to split her time physically moving between two buildings in order to report at each division. This, in relation to a multi-billion-dollar organisation, is demonstrative of the resourcing issue. In a culture characterised by a reluctance to investigate or discipline instances of irregular conduct, conduct of the kind engaged in by Barry Wells and Albert Ooi was able to continue unimpeded by early, appropriate enquiry and intervention.

Consistent with resourcing issues indicated by Witness D, Mr Wild acknowledged that procurement was significantly under resourced at PTV. Mr Wild opined that this was not a funding issue, but instead it was the result of the amalgamation of three entities, each without adequate procurement staff to join the new organisation.

Mr Wild stated that it was clearly not enough for a multi-billion-dollar enterprise to have but two people in procurement. PTV now has 10 or 11 people on the procurement team, and one or two positions yet to fill. There is a new position which reports directly to the Chief Procurement Officer and has oversight of all small to medium projects and a mandate to be suspicious in their approach, to look at patterns of behaviour, perform ASIC searches, and police audit activity.

For the period 2008 to 2012, evidence could not be found that employees of DOT and PTV were trained in relation to fraud and corruption. In particular, Ms Blackwell in her capacity as manager, explained that she was not trained to identify ‘red flags’ and that looking back, she should have gone further into the explanations provided by Barry Wells in relation to significant irregularities she asked him about.

10.8 Lack of management accountability

Phase two of the public examinations focused on a number of instances where irregular conduct was brought to the attention of management and not acted on or investigated. According to Mr Wild (and generally supported by evidence), a significant factor contributing to non-compliance with procurement processes was a lack of accountability at management level.

One such example involved Ms Rockwood raising the results of an internal audit in late-2011 with Ms Blackwell, which revealed that Barry Wells’ team had failed to provide necessary documentation in relation to 11 projects. Ms Blackwell admitted that this was a surprising number of irregularities. It was a level of non-compliance not affecting the other two teams she was managing and highlighted that Mr Wells’ team was exceptionally poor in relation to compliance. This conduct was not the subject of any proper investigation or disciplinary action.

Ms Blackwell followed up with Mr Wells in relation to the 11 instances and was assured in an email by him that the documentation had been provided for all but one project. Ms Rockwood informed Ms Blackwell that this misrepresented the true position and that documentation in respect of four projects remained outstanding. Ms Blackwell said that she forwarded Ms Rockwood’s response to Mr Wells via email, who then responded that he would follow up with Ms Rockwood and that she preferred to speak about it rather than email about it. Ms Blackwell said that she then forwarded Mr Wells’ response to Ms Rockwood and assumed from the lack of further contact that Ms Rockwood ultimately obtained all necessary information from Mr Wells. There is no evidence to suggest that Mr Wells did in fact follow up with Ms Rockwood.

When asked about the adequacy of her response in the circumstances and the absence of investigation behind the non-compliance issue identified, Ms Blackwell said that:

‘it was about finding the evidence that for – that is required for those contract documents. So from my perspective it could be – it very well happen like you said, but it’s also – it’s because the document could be misplaced. So it’s not – wasn’t there before, and those documents we need to be provided, but it could very well happen as you said.’ [sic]

Ms Blackwell also stated ‘I probably gave him the benefit of the doubt’.

It is troubling to note that a further instance of non-compliance was brought to Ms Blackwell’s attention by procurement in 2012. This time the breach was in relation to contract splitting – where a contract for 20 bus shelters for Wodonga from Furphy’s had been split between delivery ($18,900 – originally quoted on 22 February 2012) and supply and install ($149,600 – originally quoted on 23 February 2012). Had the two contracts been combined, the supply would have exceeded the tender threshold.

Ms Blackwell admitted that when she spoke with Mr Wells about this incident, she had in her mind what had earlier occurred in late-2011 and that her concerns in relation to Mr Wells were building. Whilst she did put Mr Wells on written notice that formal action would be taken if a similar incident occurred in the future, she again accepted at face value his explanation for the split quotes and orders, including his glib assertion that he was unsure why the dates on the original quotations were only a day apart but he ‘believed it could be due to Furphy’s error’.

Ms Rockwood gave further evidence that she spoke with Mr Wells about a number of non-compliance issues over the period. In that time, she did not suspect ‘anything was going wrong but they were given requirements to build at that time – government was trying to do all of the bus stops and it was sort of a constant turnover of work and their reasoning was, ‘we need to get the work done’, so processes were just something that take second place’.

It would seem that there was no internal analysis of the problem to understand the reason for repetitive instances of non-compliance, apparently because neither DOT nor PTV had the resources to allow for monitoring and capturing of information to support any investigation.

Mr Lacchiana also gave evidence during phase one that there simply were no checks and balances to ensure that people like Barry Wells and Albert Ooi, intent on manipulating systems to their advantage, could be discovered. In that context Mr Wild, having reviewed the evidence, sought to assure IBAC that:

‘I make a clear and unambiguous commitment to pursue and deliver that cultural change and, above all, signs of irregular conduct cannot simply be ignored, nor can they be dealt with by senior officers doing no more than asking questions of the persons responsible and then seeking no independent verification.’

Furthermore, in admitting that irregular conduct must be looked for and highlighted and that this will require a proactive approach, Mr Wild said:

‘DOT staff previously did not see it as their job to pursue patterns of irregular conduct. They were not encouraged to do so, they were not resourced to do so. That must now change.’

10.9 Suggested reforms ignored

Witness D’s 2012 internal memorandum suggested solutions in relation to many of the issues identified. The memorandum was expressly endorsed by senior management and escalated to the Leadership Group. Nothing was done to implement the reforms despite frequent follow-ups with Witness D’s immediate superiors.

Indeed, it seems that positive steps were taken to dilute DOT’s ability to identify corrupt practices. In the third quarter of 2012, the procurement team secured the support of the risk management group to add to the DOT risk register that fraud and corruption was a strategic risk to the organisation. Witness D’s evidence was that whilst they were not at the meeting where this was discussed, it was reported back to Witness D by someone who was, that the Departmental Leadership Group removed fraud and corruption from the risk register because ‘procurement fraud and corruption does not happen in this department; never has, never will’.

Overall, it appears that the attitude of management to enforcement of procurement rules and policies was complacent at best.

In relation to Witness D’s internal memorandum of suggested changes to procurement procedure, Mr Wild stated he had never seen the document. Notwithstanding, Mr Wild accepted that many of the recommendations in that document are those now to be implemented at PTV through a package of reforms identified in Mr Wild’s statement to the public examinations. Mr Wild could not explain why those matters were not acted upon in 2012 or why the memorandum had not been brought to his attention.

10.10 Other issues

It is of concern that there is evidence of non-compliance with state-wide policies and procedures which have left PTV and DOT significantly exposed to corruption.

Other issues identified but not explored in the public examinations include concerns about PTV/DOT’s polices, processes and procedures around:

  • managing conflicts of interest and gifts and benefits
  • managing declarations of private interests
  • undertaking due diligence on contracted entities
  • screening prospective employees in potentially high risk positions related to finance and procurement
  • the use of sub-contractors and transparency and due diligence around their use
  • risk management planning, review and reporting
  • the role of PTV/DOT’s internal audit and risk management activity in identifying and reviewing fraud and corruption risks.

10.11 Reforms currently underway by PTV

10.11.1 Fraud and corruption control plans

In 2013, prompted (in part) by PTV’s internal detection of an unrelated fraud, Mr Wild engaged Ernst & Young to create a new PTV Fraud and Corruption Control Plan (Policy and Procedure) (the PTV Fraud Control Plan).

According to Mr Wild, the present draft of the PTV Fraud Control Plan dated 30 May 2014 will give consideration to findings made consequent upon IBAC’s investigation. The stated purpose of the plan is to minimise, detect and respond to any fraud and/or corruption that may occur at PTV. The objectives of the plan are to:

  • confirm senior management’s responsibility and accountability for:
    • putting measures in place to identify exposure to any risk of fraudulent and corrupt activities
    • establishing, maintaining or enhancing PTV’s system of internal controls and procedures for preventing and detecting such activities
  • reinforce that employees, contractors, and consultants are not to participate in fraudulent and corrupt activities or improper conduct by:
    • mandating the reporting for any such activities
    • ensuring that all employees, contractors and consultants are aware of their responsibilities regarding their own ethical conduct
    • putting in place regular fraud and corruption risk assessments and implementing prompt and appropriate responses to any suspected fraudulent or corrupt activity, or such risk assessments.

Importantly, the PTV Fraud Control Plan sets out the new organisational roles and accountabilities for fraud and corruption control at PTV from the position of CEO down to employees, contractors and consultants. Key aspects of this include:

  • the use of risk assessments to minimise and detect fraud and corruption at a strategic and planning level
  • establishing an integrated approach across PTV to minimise, detect and respond to fraud and corruption
  • establishing a Fraud and Corruption Response Team consisting of senior officers to investigate and respond to alleged instances of fraud and corruption
  • creating the role of Fraud and Corruption Control Officer who will receive and handle allegations of fraud and corruption as well as have a role in assessing the ongoing effectiveness of the PTV Fraud Control Plan on an annual basis
  • establishing and reviewing a system of internal controls to minimise, detect and respond to any fraud and corruption based on risk
  • maintaining good engagement with, and reporting to, external auditors (VAGO), law enforcement agencies and IBAC
  • building an awareness and understanding of how fraud and corruption may occur and ensuring staff are trained and aware of the consequences for engaging in such conduct
  • creating an environment to encourage the appropriate reporting of allegations of corruption and fraud
  • emphasising and utilising audit procedures in order to deter fraud and corruption
  • investigating and responding appropriately to instances of corruption and fraud
  • maintaining a Fraud and Corruption Incident Register.

The PTV Fraud Control Plan includes an agenda for cultural change, setting out expectations of the CEO, Board members and management staff for inculcating a compliance mindset.

It will be important that this plan is not simply seen as a document produced by Ernst & Young. It will need to be ‘owned’ by management, regularly reviewed and integrated into organisational decision-making.

10.11.2 Training

As part of the Fraud and Corruption Control Plan, PTV has advised that Ernst & Young have designed a package of fraud and corruption control awareness training, which will be mandatory for all PTV employees. It was anticipated most staff will have completed this training by August 2014 or shortly thereafter.

Broadly, the training includes:

  • definitions of fraud and corruption and an overview of the various species of such conduct (including, relevantly, conflicts of interest)
  • examples of specific fraudulent, corrupt and improper conduct risks for PTV
  • case studies designed to demonstrate how corrupt conduct can manifest in the public sector (including one in a procurement context)
  • the regulatory and policy frameworks governing detection and reporting of fraud and corruption
  • the organisational consequences of fraudulent and corrupt conduct
  • avenues for reporting of fraudulent and corrupt conduct (including an overview of IBAC’s functions with respect to protected disclosures)
  • an interactive session at the end, during which employees are encouraged to ask questions and engage with their colleagues in relation to the matters covered in training.

PTV advises that this training is intended to provide staff with real examples of corrupt conduct and methods for its detection, including an overview of behavioural red flags often displayed by perpetrators of corrupt conduct (such as living beyond their means, having an unusually close relationship with a customer/vendor, having a ‘wheeler-dealer’ attitude and being generally very controlling).

If effective, this training should provide all staff with a common understanding of fraud and corruption risks in PTV, but also empower them to report suspicious activities or behaviour to either management, or via other avenues such as IBAC. It will also be important that this training is undertaken on a regular and ongoing basis, rather than just as a one-off activity.

11 Conclusion and recommendations

Operation Fitzroy has revealed that Barry Wells and Albert Ooi, often aided by their network of associates, corrupted public sector expenditures of at least $25 million. They did this by establishing companies and then allocating contracts to their own entities – or ones they were improperly associated with – for financial gain, as well as colluding with suppliers providing invoices for goods and services that were never delivered or which charged inflated costs.

Barry Wells usually signed off on those invoices at DOT/PTV in return for a share of the payment, taking advantage of his colleagues’ trust and ignorance, and deliberately manipulating procurement systems and controls for his own (and others’) benefit.

Confidential price or specification information was provided to suppliers to provide an unfair competitive advantage and assist in contracts being awarded to certain suppliers. During the course of the investigation, one supplier commented that they made sure their quote was handed in at the last minute to avoid the risk that information from the quote was passed on to competitors by Barry Wells.

In relation to DOT and PTV, Operation Fitzroy has exposed serious systemic gaps in procurement processes and procedures, as well as failure to provide adequate training and address an organisational culture of non-compliance which enabled Barry Wells and Albert Ooi’s activities to flourish. The practices in this report were not isolated instances – they continued unchecked for at least seven years until overt action was taken by IBAC in late-2013.

Key organisational factors which assisted Barry Wells and Albert Ooi in being able to corruptly award contracts included:

  • Poor contract management
    Evidence provided shows DOT and PTV paid little attention to projects once a tender process was finished and a contract awarded. In this case, poor contract management, including inadequate performance monitoring, clearly contributed to corruption going undetected.
  • Lack of due diligence
    Due diligence was not conducted on suppliers being awarded contracts. Had this been undertaken, it is likely Barry Wells and Albert Ooi’s connection to companies being awarded contracts would have been exposed.
  • Limited training and expertise
    It is clear many employees with procurement responsibilities at DOT and PTV did not have relevant training, experience or adequate technical knowledge about the goods or services being procured.
  • Poor management of conflicts of interest
    Conflicts of interest by Barry Wells and Albert Ooi were not declared or were poorly managed.
  • Inadequate management of procurement staff
    Poorly trained managers contributed to corruption risks in DOT and PTV. In this case, lack of managerial expertise resulted in inadequate supervision and checks on staff activities and in failing to recognise ‘red flags’. In turn, these resulted in improper, non-compliant and corrupt behaviour going undetected.
  • Tight timeframes
    The imposition of tight timeframes and a culture of expediency created corruption risks related to procurement planning, compliance and scrutiny of decisions. The end result was systemic non-compliance with procurement policies and procedures.

It is apparent from Operation Fitzroy that, at least at some stage, procurement policies were regarded by staff at PTV as subservient to achieving the delivery of significant programs of work as quickly as possible. This expedience was suggested in evidence by some of those involved to be one factor that allowed corrupt practices to occur or to be overlooked.

In part, corruption occurs due to there being an opportunity. Corrupt acts have to be detected and exposed. At the same time, opportunities for corrupt practices need to be reduced through accountable and transparent systems, structures and processes. Management must actively look to reduce or eliminate these opportunities in order to prevent corruption from occurring.

It will be imperative that PTV, and its portfolio department, DTPLI, follows through and delivers on the commitment made by PTV CEO Mark Wild when he gave evidence to fully implement a comprehensive program of procurement reform and cultural change to address the serious issues identified.

IBAC notes, in particular, that as part of this program PTV will need to consider the establishment of appropriate:

  • processes for employees and contractors to raise concerns (potential and actual) about procurement misconduct and corruption, and that these processes are effectively promulgated (in an ongoing manner and not as just one-off activities)
  • controls over sub-contracting arrangements, and that integrity and other risks associated with subcontracting are effectively identified and managed
  • controls to ensure suppliers have the requisite skills, qualifications, financial viability and experience to deliver the required goods and services
  • mechanisms to engage with suppliers regarding procurement policies and procedures, probity obligations, standards and requirements
  • processes for screening prospective employees in potentially high-risk positions related to finance and procurement, and that validation of screening occurs on a regular basis for appointed employees
  • ongoing training for all relevant employees regarding procurement policies and procedures, and associated corruption risks.

It is clear from Operation Fitzroy that ongoing education and training will be particularly important in supporting the cultural change required at PTV to ensure that staff, in future, are empowered to report any concerns of wrongdoing up the line, and managers are fully accountable for actively managing risks and responding appropriately when any issues or concerns are raised.

IBAC notes that PTV’s commitment to cultural change will need to consider ways to manage tensions that can occur between meeting project delivery requirements and ensuring robust compliance with procurement policies and procedures.

Pursuant to section 159(1) of the IBAC Act, it is recommended that:

  1. the CEO of PTV provides a detailed progress report to IBAC by 30 June 2015 on the implementation of its program of procurement reforms and cultural change to address the issues identified throughout Operation Fitzroy, followed by a further report demonstrating effectiveness of these reforms by 30 December 2015. These reports will be published on IBAC’s website.
  2. DTPLI and PTV take appropriate steps towards excluding third persons and entities whose behaviour has been found to be improper or corrupt from obtaining contract work in the future.
  3. the Victorian Auditor-General’s Office consider undertaking a performance audit of PTV, to assess the effectiveness of PTV’s revised procurement and risk management framework in identifying and addressing corruption risks in procurement, as well as delivering value for money.

To support broader learning and practice improvement across the public sector, the issues raised by Operation Fitzroy will also be referred by IBAC to:

  • the Department of Treasury and Finance and the VGPB, as the lead agencies responsible for ensuring best practice in public sector procurement, and providing associated advice and training to government employees
  • the Victorian Public Sector Commission for consideration in the context of its stewardship of policy frameworks and supporting tools for the appropriate management of conflicts of interest, gifts and benefits, and secondary employment arrangements.

IBAC will now finalise its work in Operation Fitzroy, including whether prosecutions are warranted47, and development of prevention and education initiatives to help strengthen public sector capacity to prevent corruption. This work will include a survey of suppliers regarding their perceptions of corruption within public sector procurement.

Finally, IBAC is undertaking other significant investigations into alleged serious corrupt conduct in procurement practices in other Victorian public sector entities, which indicate the issues exposed through Operation Fitzroy are not an isolated case.

12 Appendix A: Scope and purpose of public examinations in Operation Fitzroy

The scope and purpose of the public examinations in Operation Fitzroy concerned investigation of:

  1. The circumstances surrounding the establishment and control by or on behalf of one or more current or former employees of Department of Transport (DOT) or Public Transport Victoria (PTV) of businesses and companies that later secured contracts with DOT or PTV in the period late-2006 to 2013 inclusive (relevant period), for the supply of goods and services, including the supply and installation of bus infrastructure, the construction of railway car parks and related infrastructure projects (DOT/PTV contracts).
  2. The circumstances under which DOT/PTV contracts were quoted, tendered for and awarded in the relevant period, including the role of any such employees in selecting companies and businesses (including, but not limited to, the companies and businesses referred to in paragraph 1) to be offered the opportunity to quote or tender for DOT/PTV contracts and then determining which companies or businesses would be awarded the contracts.
  3. The involvement of any such employees in carrying out DOT/PTV contracts in the relevant period, including in connection with the selection of suppliers and sub-contractors.
  4. The circumstances surrounding any actual and potential financial benefits obtained by any such employees and members of their respective families and their associates, resulting from, or otherwise in connection with, DOT/PTV contracts (or purported DOT/PTV contracts), including the actual or purported awarding, carrying out and payment under, those contracts in the relevant period.
  5. The systems and controls in place at DOT and PTV concerning procurement, with particular focus on the existence and adequacy of systems and controls for ensuring the integrity of the procurement process, including by detecting instances of officers of DOT and PTV providing benefits to themselves, their family, friends or associates and other conflicts of interest.

13 Appendix B: Natural justice requirements

Natural justice requirements in section 162 of the IBAC Act

Some parts of this special report were considered to be covered by section 162(4) of the IBAC Act (which requires that non-adverse comment or opinion about any person be shown to them in advance). Therefore, such persons were extended the opportunity to inspect relevant parts.

To the extent that persons are identified in the report and are not the subject of adverse comment or opinion, IBAC is satisfied in accordance with section 162(7) that:

  • it is desirable to do so in the public interest
  • it will not cause unreasonable damage to any such person’s reputation, safety or wellbeing
  • each such person is not the subject, nor for that matter intended to be the subject, of any adverse comment or opinion.

To the extent that public bodies and persons are identified in the report and are the subject of adverse findings48, comment or opinion49, they have been given a reasonable opportunity to respond to same by being shown in draft material parts relating to them. In accordance with sections 162(2) and (3) respectively of the IBAC Act, responses to the extent they are of the kind provided for in the IBAC Act are fairly set out in the body of this report.

14 Appendix C: Summary of relevant contracts between DOT, PTV and entities controlled by Barry Wells and Albert Ooi

Information in the following tables have been transferred verbatim from DOT/PTV systems and contain typographical, spelling and grammatical errors.

Payments from Department of Infrastructure to Property Services Network

Description

Invoice date

Invoice amount

Fowler St Tallygarroopna New Bus Stop

27 April 2007

$19,415.00

10 Bus Shelters - Mooney Valley Style (Yarrawonga)

27 April 2007

$87,945.00

Ballan Heritage Bus Shelter

27 April 2007

$19,921.00

Wonthaggi Hospital Bus Interchange

22 April 2007

$7,590.00

Details Plans and design - Wonthagi Hospital Bus Interchange

14 May 2007

$8,250.00

Yarroweyah - Bus interchange

14 May 2007

$62,150.00

Seymour Bus and Rail Interchange Project - Local Bus Shelter

14 May 2007

$10,890.00

10 Standard Bus Shelters

27 May 2007

$87,945.00

Wonthaggi Bus Interchange Safeway - Ancillary Works - Retaining Wall

27 May 2007

$3,850.00

Bus Shelter - Lara

13 June 2007

$27,500.00

Bus Shelter - Wonthaggi

13 June 2007

$27,500.00

Yarroweyah Bus Turn Lanes -extra depth and additional crushed rock required - additional rolling and compacting - VicRoads requirement after inspection

21 June 2007

$16,494.50

Delivery off shelter, Install Bus shelter, Tactiles Line marking and Flags

25 June 2007

$9,894.50

New Bus Stop - Wallan - Whittlesea Rd

28 June 2007

$13,695.00

New Bus Stop - William St Wallan

28 June 2007

$13,695.00

Seymour Bus and Rail Interchange Project - removal of and install new power pol

11 July 2007

$19,965.00

Koo wee rup (Bass Coast Improvements) and Seymour (Bus and Rail Interchange)

11 July 2007

$29,150.00

Koo wee rup (Bass Coast Improvements) and Seymour (Bus and Rail Interchange)

31 July 2007

$58,300.00

Seymour Bus and Rail Interchange - GV Water Stand

31 July 2007

$19,789.00

Koo wee rup - Bollards and safety chain

17 September 2007

$15,180.00

Koo wee rup - safety fencing, signage, tactiles and line marking

17 September 2007

$16,885.00

Benalla Bus Interchange

17 September 2007

$19,855.00

Kilmore East - Connection of power (Supply and Install Controlled Lighting switchboard - cabling and connection to 4 light poles - 800 metres of cabling)

21 December 2007

$16,494.50

V/Line Staff and Public Car Park - Seymour Rail and Bus Interchange

14 January 2008

$98,945.00

P28-H18 Supply 10 new bus shelters (Heritage Green) for use in the Hume Region

14 January 2008

$93,000.00

Provide footing and erect 2 Shelters - Larra and Wallan

27 February 2008

$27,500.00

Provide footing and erect 3 Coach Shelters - Gisborne, Bacchus Marsh & Ballan

26 February 2008

$55,000.00

Mitcham Railway Station

6 March 2008

$89,925.00

10 Bus Shelters Tatura

26 March 2008

$1,760.00

Concrete/Asphalt Works Mitcham RS

7 April 2008

$89,925.00

P28-M08-04 Supply and install a replacement shelter on Beaconsfield/Emerald Rd

23 June 2008

$16,445.00

P28-L26 Level Gisborne station car park

23 June 2008

$63,250.00

P28-S25-03 Lay concrete slab for the coach shelter at Colac

23 June 2008

$26,950.00

Total payments made

$1,175,053.50

Payments from Department of Transport to PWIC Pty Ltd

Description

Invoice date

Invoice amount

Koo wee rup - Toilet Block

17 June 2009

$106,700.00

Koo wee rup - Toilet Block

17 June 2009

$52,800.00

Koo wee rup - Toilet Block

23 June 2009

$49,500.00

Anderson - Toilet Block (2)

23 June 2009

$66,000.00

Anderson - Toilet Block (2)

28 June 2009

$84,687.00

Supply of two toilets

17 August 2009

$180,000.00

P29L-H05C Major works at Marian College

9 September 2009

$38,500.00

Myrtleford Bus Bays Marian College

10 September 2009

$226,715.50

P29L-H05C Major works at Marian College

6 October 2009

$66,000.00

P29L-H08A3 Major works at Beechworth SC

7 October 2009

$29,000.00

P29L-H08A3 Major works at Beechworth SC

7 October 2009

$10,945.00

P29L-H08A3 Major works at Beechworth SC

2 November 2009

$135,184.50

Variation 1 - Dig 6 holes and extra 2 meters x 600 mm and concrette as well - Foundation increase due to soil report - Fence around Septic

26 October 2009

$107,813.20

Total payments made

$1,153,845.20

Payments from Department of Infrastructure to De La Torre Consultancy Group

Description

Invoice date

Invoice amount

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

12 June 2007

$7,950.00

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

12 July 2007

$13,500.00

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

2 August 2007

$19,800.00

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

6 September 2007

$18,846.00

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

26 November 2007

$18,846.00

Project Management and works supervision - Koo Wee Rup, Kilmore and Seymour

26 November 2007

$18,846.90

Total payments made

$97,788.90

Payments from Public Transport Victoria to Global Works Management Pty Ltd

Description

Invoice date

Invoice amount

Construction of bus stop at Point Cook Salt Water Prom Site 7

5 August 2013

$28,270.00

Total payments made

$28,270.00

Payments from Department of Infrastructure to Red Consultancy Group

Description

Invoice date

Invoice amount

P28-L18-02 Tender review for KFC

17 April 2008

$3,300.00

P28-M06-02 Tender review for Lonsdale St

13 May 2008

$3,300.00

Avenal Springhurst Violet Town (N/E Corridor Coach Replacement - Design Work)

6 October 2008

$19,800.00

SGTR Business Plan

3 November 2008

$15,400.00

Wells Road Braeside Bus Stops

16 April 2009

$43,994.50

SGTR Business Plan

5 May 2009

$16,379.00

P29L-H13 Review and assess three tenders for works

22 June 2009

$5,500.00

EOI Report preparation and delivery

26 October 2009

$3,300.00

P41-H10 Review assessment of EOI for Mytleford

28 May 2010

$1,650.00

P41-G01A Review assessment of EOI for Traralgon

12 July 2010

$3,300.00

P41-M31 and P41-M24 Construct bus stops at Hallam and Aspendale

5 September 2010

$87,945.00

Total payments made

$203,868.50

Payments from Department of Transport to Redback Civil Pty Ltd

Description

Invoice date

Invoice amount

11/12 $5m - Pakenham Primary School Bus Interchange Repair

23 November 2011

$13,860.00

Construction of x 9 Bus Stops in Point Cook, Werribee and Berwick

20 January 2012

$147,290.00

Southbank Boulevard

30 January 2012

$1,265.00

$5m 11/12 - Fence Maintenance to 195 Burwood Hwy Bus Stop

9 February 2012

$1,375.00

$5m 11/12 - Coordination of works and services for Koo Wee Rup Rail Trail, Wallan Traffic Signals and Mooroolbark Car Park

21 February 2012

$12,870.00

$5m 11/12 - Tender preparation and associated services for Echuca Car Park, Wandong Car Park and DDA Bus Stop upgrades

21 February 2012

$7,920.00

Metro Bus - Construction of DDA Bus Stop at Heathcote (paid twice - DoT and PTV)

$19,800.00

Total payments made

$204,380.00

Payments from Department of Infrastructure and the Department of Transport to Global Works Management Pty Ltd

Description

Invoice date

Invoice amount

P28-M28-04 Concreting at Hampton Station bus interchange

18 April 2008

$56,760.00

P28-L18-07 Construct carpark and bus interchange at the Kangaroo Flat railway station

28 April 2008

$136,988.00

P28-M08-02 Provide traffic management during bus stop construction

5 May 2008

$10,808.00

P28-M28-03 Works at Hampton Station

5 May 2008

$28,595.01

P28-M28-06 Remove bus stops from Hampton Station

14 May 2008

$2,530.00

P28-M08 Improve bus passenger safety and amenities by relocating the bus stop on Beaconsfield - Emerald Rd to a new safer location

2 June 2008

$10,808.00

P28-M28-07 Provide traffic coordinators for the Hampton Station works by request from Connex

22 May 2008

$9,537.00

P28-M28-05 Signage, fencing and cable relocation at Hampton Station bus interchange

25 May 2008

$114,950.00

P28-L18-08 Removal of trees and repair subgrade in the KFC

6 June 2008

$32,475.00

P28-M06-09 Construction of a bus terminus in Lonsdale St

6 June 2008

$153,978.00

P28-M42 Improve bus passenger safety by relocating the bus stop on High St out of Left turn lane

11 June 2008

$53,900.00

P28-M06-09 Construction of a bus terminus in Lonsdale St

19 June 2008

$220,000.00

P28-L20 Provide linemarking and access improvements to the Castlemaine carpark via subway

21 June 2008

$21,945.00

P28-L18-09 Repair subgade works at KFC

19 June 2008

$32,450.00

P28-G20 Install totems in Gippsland Region

19 June 2008

$7,260.00

P28-S29 Install totems in Barwon Region

19 June 2008

$9,680.00

P28-L18-07 Construct carpark and bus interchange at the Kangaroo Flat railway station

21 June 2008

$132,000.00

P28-L18-09 Repair subgade works at KFC

17 August 2008

$30,800.00

Construction Kangaroo Flat carpark

18 August 2008

$132,000.00

Construction Bus Terminal Lonsdale Street

23 September 2008

$165,000.00

Construction Kangaroo Flat carpark

23 September 2008

$31,900.00

Kangaroo Flat carpark

30 September 2008

$62,302.70

Bus terminus at Lonsdale Street

6 October 2008

$165,000.00

Install signage for NE rail replacement at coach stops and stations

29 October 2008

$11,275.00

Construction of bus terminus at Lonsdale Street

17 November 2008

$65,912.00

P29L-M17A Upgrade the Sunbury coach terminal

16 December 2008

$82,500.00

P29L -M18A&B + P29L-M17B Upgrade Melton and Sunbury bus interchanges

16 December 2008

$88,000.00

P29L-M01 Upgrade Benton Road bus interchange in Mt Martha

19 February 2009

$45,100.00

P29L-M17A Upgrade the Sunbury coach terminal

3 March 2009

$47,711.40

P29L-M01 Upgrade Benton Road bus interchange in Mt Martha

3 March 2009

$42,350.00

P29L-S06 Replace broken seats and repair lights in the bus shelter at Lara Station

12 March 2009

$6,710.00

Install Tactile to Melton Bus Terminal

3 March 2009

$73,443.48

P29L-M01A Install safety fencing at the Bentons Rd bus stop

31 March 2009

$2,145.00

P29L-M01A Install safety fencing at the Bentons Rd bus stop

31 March 2009

$2,145.00

P29L-M43 Design and scope a safer bus stop for the retirement village on the Hastings Tyabb Rd

6 April 2009

$22,000.00

P29L-M46 Repair bus stop tactiles

6 April 2009

$1,303.50

Improve Bus Safety Access and Safety Mitcham Station

9 April 2009

$1,303.50

P29L-M43 Design and scope a safer bus stop for the retirement village on the Hastings Tyabb Rd

8 May 2009

$37,345.00

29L-H05A & H08A1 Safety works at Beechworth and Myrtleford

15 June 2009

$38,500.00

P29L-H05B Install 32 metres of shelter at the Marian College

15 June 2009

$34,650.00

P29L-H08A2 Install 32 metres of shelter at the Beechworth SC

15 June 2009

$34,650.00

P04-H18A Install 32 meters of shelter at the Wallan SC RSBSP

17 June 2009

$38,500.00

Bus Stop Audits

4 June 2009

$7,837.50

P04-H18B Install 163 meters of safety fencing at the Wallan SC RSBSP

23 June 2009

$22,000.00

Bus Stop Audits

12 June 2009

$7,837.50

Bus Stop Audits

12 June 2009

$7,837.50

29L-H05A & H08A1 Safety works at Beechworth and Myrtleford

1 July 2009

$22,000.00

P29L-H08A2 Install 32 metres of shelter at the Beechworth SC

1 July 2009

$16,500.00

P29L-H05B Install 32 metres of shelter at the Marian College

1 July 2009

$16,500.00

Shelter at Wallan SC Bus Bays

1 July 2009

$16,500.00

Safety Fencing at Wallan SC Bus Bays

1 July 2009

$22,000.00

Bus Stops Audit

29 June 2009

$7,837.50

10 x Bus Shelters - Purchase/Transport/Installation - Bass Coast

14 September 2009

$53,900.00

Works completed - Shelter at Marian College

14 September 2009

$17,561.50

Final payments “works completed” shelter at Beechworth SC

14 September 2009

$17,561.50

Final payments "works completed: safety works - Beechworth

14 September 2009

$23,904.56

Bus stop - Carrum Downs Shopping Centre

17 September 2009

$26,345.00

10 Street Light/solar powered - Purchace/Transport/Install

28 September 2009

$66,000.00

Bass Coast Bus Stop Improvements - EOI

5 October 2009

$93,500.00

10 x Bus Shelters - Purchase/Transport/Installation - Bass Coast

26 October 2009

$52,800.00

P04-H18A Install 32 meters of shelter at the Wallan SC. RSBSP

10 November 2009

$13,711.50

10 Street Light/solar powered - Purchace/Transport/Install

10 November 2009

$63,800.00

Safety Fencing Wallan SC Bus Bays

11 December 2009

$13,598.25

DDA shelters - various as per tax invoice

15 December 2009

$98,788.80

DDA shelters - various as per tax invoice

30 November 2009

$105,666.00

Concrete pad construction - Werribee train station bus interchange

15 January 2010

$8,745.00

Bass Coast Bus Stop Improvements - EOI

1 February 2010

$92,009.06

Bass Coast Civil Works

23 December 2009

$37,229.19

Bass Coast Civil Works DDA Stops

5 March 2010

$72,635.33

DDA shelters - various as per tax invoice

15 February 2010

-$6,666.00

Bass Coast Bus Stop Improvements EOI

-10 Solar Lights & 250 Upgrade DDA Bus stops metropolitan Melbourne

8 April 2010

$117,440.40

Bass Coast Bus Stop Improvements EOI - 10 Solar Lights & 250 Upgrade DDA Bus stops metropolitan Melbourne

26 February 2010

$108,372.00

Bass Coast DDA Stops

1 April 2010

$120,832.75

Bass Coast Bus Stop Improvements - EOI

13 April 2010

$78,820.31

Werribee Bus Stops Project

12 April 2010

$21,905.73

Wyndham Vale Bus Stops

12 April 2010

$18,354.27

P4-M8C Somerville Secondary College - Improve student safety and amenity by installing bus shelters at the school. Shelter supply and installation

14 April 2010

$32,945.00

Bass Coast Bus Stop Improvements EOI

- 10 Solar Lights & 250 Upgrade DDA Bus stops metropolitan Melbourne

12 April 2010

$126,566.00

Bass Coast Bus Stop Improvements - EOI

3 May 2010

$161,227.35

P41-M26 Linemarking and tactiles for new bus stop on Westall Road

1 June 2010

$3,300.00

Bass Coast Bus Stop Improvements EOI

- 10 Solar Lights & 250 Upgrade DDA Bus stops metropolitan Melbourne

17 May 2010

$125,794.90

Bass Coast Bus Stop Improvements - EOI

1 July 2010

$175,553.91

Werribee/Wyndham Bus Stops - 9 stops

1 July 2010

$33,561.00

Werribee/Wyndham Bus Stops

1 July 2010

$35,200.00

Werribee/Wyndham Bus Stops - 7 stops

1 July 2010

$24,640.00

Upwey High School Bus Interchange

1 July 2010

$67,000.00

P41-G07 Install a shelter at San Remo

21 July 2010

$5,500.00

Werribee/Wyndham Bus Stops - 75 stops

21 July 2010

$38,500.00

Werribee/Wyndham Bus Stops - 75 stops

30 July 2010

$107,800.00

P7-G9 Relocate fences at Koonung Sec College

15 July 2010

$3,190.00

Werribee/Wyndham Bus Stops - 75 stops

1 September 2010

$117,287.50

Upwey High School Bus Interchange

6 September 2010

$66,745.70

P41-M16 Install 24 DDA compliant bus stops for new service in Craigeburn

6 September 2010

$49,500.00

P41-H12A Install 110 metres of safety fencing at Kilmore.

6 September 2010

$19,745.00

P41-M33 Repair 2 bus stops in Watsonia.

6 September 2010

$3,850.00

P41-M16 Install 24 DDA compliant bus stops for new service in Craigeburn

6 October 2010

$42,900.00

P42-M07 Repair light at Kilcunda and install bus stop in Dandenong

7 October 2010

$6,820.00

Loch Bus Stop

7 October 2010

$23,595.00

DDA Bus Pads - Wells Road

11 October 2010

$49,500.00

Supply and install 2 x 3 m bench seat at Reservoir Railway Station

11 October 2010

$3,850.00

Railway Pedestrian Crossing

26 October 2010

$35,669.04

Railway Station Pedestrian Crossing

26 October 2010

$60,673.14

DDA Bus Pads - Wells Road

6 November 2010

$42,835.21

1/12 East Boundary Road Bentleigh East

12 November 2010

$8,690.00

Installation of DDA compliant bus stops

29 December 2010

$135,009.97

Installation of DDA compliant bus stops - Sunbury

24 January 2011

$46,209.63

Installation of DDA compliant bus stops - Sunbury

24 January 2011

$35,690.00

Broadford Railway Station Pedestrian Crossing

31 January 2011

$71,836.38

Installation of DDA compliant bus stops - Sunbury

10 February 2011

$35,720.92

2.4MBI Installation of DDA compliant bus stops - Folder 7

14 February 2011

$35,034.67

P41-G07 Install a shelter at San Remo

14 February 2011

$8,195.00

Avenal Railway Station Pedestrian Crossing

28 February 2011

$75,234.06

2.4MBI Installation of DDA compliant bus stops - folder 8

28 February 2011

$41,284.87

5MBI Broadford Rail Crossing

22 February 2011

$8,770.30

2.4MBI Installation of DDA compliant bus stops - folder 9

7 March 2011

$74,428.48

5MBI Avonsleigh bus stop

7 March 2011

$2,750.00

2.4MBI Installation of DDA compliant bus stops - folder 11

24 March 2011

$30,240.65

2.4MBI Installation of DDA compliant bus stops - folder 12

24 March 2011

$38,810.64

2.4MBI Installation of DDA compliant bus stops - folder 13

24 March 2011

$38,962.44

2.4MBI Installation of DDA compliant bus stops - folder 14

24 March 2011

$30,636.10

Violet Town Railway Pedestrian Crossing

6 April 2011

$70,305.84

2.4MBI - OTH - Installation of DDA compliant bus stops - folder 15

6 April 2011

$31,647.99

2.4MBI - OTH - Installation of DDA compliant bus stops - folder 16

6 April 2011

$53,743.43

Chiltern Railway Station

4 May 2011

$34,948.98

Springhurst Railway Pedestrian Crossing

4 May 2011

$36,701.28

2.4MBI - MWE - Installation of 30 DDA Compliant Bus Stops specified as stage 1

4 May 2011

$157,740.00

Avenel & Violet Town Ped Crossing

1 July 2011

$14,080.00

North East Corridor Railway Stations - Install signs at 7 railway stations

1 July 2011

$17,132.50

2.4MBI - OTH - Installation of DDA Compliant Bus Stops - Stage 2

1 July 2011

$310,998.60

2.4MBI - OTH - Installation of DDA compliant bus stops

1 July 2011

$161,799.00

Huntingdale bus stop - North Road

14 July 2011

$29,700.00

2.4MBI - OTH - Installation of DDA compliant bus stops - Stage 6

14 July 2011

$152,724.00

2.4MBI - OTH - Installation of DDA compliant bus stops - Stage 5

14 July 2011

$157,674.00

Bus Stop Opp Sunbury College at Mitchell Lane Sunbury

30 August 2011

$1,045.00

SCS1-12 Change parking signage in the Southern Cross Laneway

30 August 2011

$14,982.00

Manna Gum Drv / Burwood Highway Ferntree Gully

16 September 2011

$38,500.00

2.4MBI - Installation of DDA compliant bus stops - Stage 7

16 September 2011

$313,269.00

2.4MBI - Installation of DDA compliant bus stops - Stage 8

29 September 2011

$159,126.00

2.4MBI - Installation of DDA compliant bus stops

15 November 2011

$160,754.00

11/12 $5m - V/Line Project Costs Warragul Station Precinct Upgrade

18 November 2011

$10,835.00

2.4MBI - Installation of DDA compliant bus stops - Stage 11

29 November 2011

$317,064.00

2.4MBI - Installation of DDA compliant bus stops - Stage 13

20 January 2012

$160,440.50

Huntingdale Bus Interchange Repair Nth Road

27 January 2012

$65,945.00

Total payments made

$8,510,723.22

Payments from Public Transport Victoria to Redback Civil Pty Ltd

Description

Invoice date

Invoice amount

Metro Bus - Construction of DDA Bus Stop at Heathcote

26 April 2012

$19,800.00

Metro Bus - Supply & Instal signage and other services

$1,045.00

Metro Bus - Supply & Instal signage and other services

$5,445.00

Kyabram bus shelters installation

29 May 2012

$6,840.20

Supply and install solar light at Heathcote Bus Stop

7 May 2012

$14,850.00

Quote 1031 Bus stop Flaxen Hills Rd Doreen

$24,420.00

Leongatha Secondary College Quote 1018

1 June 2012

$5,445.00

Bus shelter Riddells Creek

$13,304.50

DDA bus shelter construction Kyneton

$10,945.00

Bus stop upgrade Templestowe

18 June 2012

$16,054.50

Construction of 3 bus stops at Avondale Heights

5 October 2012

$12,914.98

Repair to bus stop Caroline Springs and Wantirna South

28 August 2012

$3,294.50

Construction of new and decomssion of bus stops in Benalla

4 September 2012

$52,745.00

Construction of bus stop in Langwarrin

20 September 2012

$19,196.98

Supply and installation of solar powered street light - bus stop at Nyah

21 September 2012

$15,972.00

Whitelaw Ave Ballarat

22 April 2013

$23,320.00

Wheeler St Berwick

$8,437.55

Dorset Rd Boronia

$7,070.36

Victoria St Doncaster

18 March 2013

$18,299.49

Cresthaven Blvd Berwick

$9,496.19

Station St Calder Highway - Kangaroo Flat

8 May 2013

$24,680.92

Construction of bus stop Point Cook Seabrook Bvd Site 4

24 July 2013

$51,678.00

Site 8 Saltwater Prom Pt Cook

11 July 2013

$10,120.00

New Bus Stop Point Cook Road Tristania Sth Bound

$13,090.00

Temp bus stop Palmers Rd and Lancaster Dr Nth Bound Site 12 Point Cook

5 August 2013

$14,850.00

Construction of town bus stop at Sturt St Ballarat

9 September 2013

$31,625.00

Construction of bus interchange Kyabram

19 August 2013

$26,620.00

Total payments made

$461,560.17

15 Appendix D: Previous IBAC reports

Report

Publication date

Annual Report 2012–13

September 2013

Special report concerning certain operations in 2013

November 2013

Special report concerning allegations about the conduct of Sir Ken Jones QPM in relation to his dealings with certain confidential Victoria Police information

February 2014

Special report following IBAC’s first year of being fully operational

April 2014

Annual Report 2013-14

October 2014

These reports are available on IBAC’s website at www.ibac.vic.gov.au

16 Abbreviations

AMA

AMA & Associates Pty Ltd

ASIC

Australian Securities and Investments Commission

ATM

Automatic Teller Machine

BAS

Business Activity Statement

BARS

Bus and Regional Services team

CARR

Contract Approval Recommendation Report

CEO

Chief Executive Officer

CMS

Contract Management System

CWPL

Country Works Pty Ltd

DDA

Disability Discrimination Act 1992

DLTC

De La Torre Consulting

DOI

Department of Infrastructure

DOT

Department of Transport

DTPLI

Department of Transport Planning and Local Infrastructure

Furphy’s

Furphy’s Foundry Sales Pty Ltd

FMA

Financial Management Act 1994

GEPL

Grand Earthworks Pty Ltd

GST

Goods and Services Tax

GWC

Global Works Civil Pty Ltd

GWM

Global Works Management Pty Ltd

HGO

HGO Management Services

IBAC

Independent Broad-based Anti-corruption Commission

IBAC Act

Independent Broad-based Anti-corruption Commission Act 2011

MCW

Morrissy Civil Works Pty Ltd

MOU

Memorandum of Understanding

PDCMA

Project Development and Construction Management Act 1994

PSN

Property Services Network

PTV

Public Transport Victoria

PWIC

PWIC Pty Ltd

RCG

Red Consultancy Group

RCPL

Redback Civil Pty Ltd

RSCM

Roadside Care & Maintenance Pty Ltd

SD Act

Surveillance Devices Act 1999

SGTR

South Gippsland Tourist Railway

Tactile

Tactile Australia

TIA Act

Telecommunications (Interception and Access) Act 1979

UMS

Urban Maintenance Systems

VAGO

Victorian Auditor-General’s Office

VGPB

Victorian Government Purchasing Board

VPSC

Victoria Public Sector Commission

 

1 Subsection 162(6)(a) of the IBAC Act provides that IBAC may not include in a report such as this any finding or statement that a specified person is guilty of or has committed any criminal offence.

2 Definitions sourced from ‘Identifying and Reducing Corruption in Public Procurement in the EU’ European Commission, June 2013.

3 In Victoria, the Victorian Government Purchasing Board (VGPB) sets the policies that govern procurement of non-construction goods and services across all Victorian Government departments and some public bodies. The Department of Treasury and Finance are responsible for public construction policies, which cover the planning, building and maintenance of constructed assets such as schools, hospitals, public housing, police stations, courthouses, water, road, rail and transport infrastructure. Health Purchasing Victoria is responsible for procurement in hospital and health services. Partnerships Victoria policy governs the establishment of partnerships for provision of public infrastructure services.

4 In 2013–14, PTV’s total operating expenses were $4.2 billion. The majority of PTV’s expenditure was for payments to transport service providers including $1.2 billion for metropolitan and regional train services, $0.2 billion for metropolitan tram services, $1.5 billion for the Government’s capital assets charge for rail infrastructure, and $0.9 billion for bus services. Source: 2013-14 Annual Report, Public Transport Victoria, 2014.

5 Section 60(2) of the IBAC Act provides that IBAC must not commence an investigation in its corrupt conduct jurisdiction unless it is reasonably satisfied the conduct in question is serious corrupt conduct. Corrupt conduct is defined in section 4 of the Act and requires identification of one or more prescribed indictable offences that might have been committed.

6 Pursuant to authority from the Supreme Court of Victoria.

7 Pursuant to authority from the Supreme Court of Victoria and Administrative Appeals Tribunal (Cth) respectively.

8 The criteria to be met before IBAC may permit any of its examinations to be open to the public is more prescriptive than exists in legislation governing several of its interstate counterparts. In particular, IBAC must consider on reasonable grounds there are exceptional circumstances, it is in the public interest, and that a public examination can be held without unreasonable damage to a person’s reputation, safety or wellbeing.

9 See subsections 8(a) and 15(2)(a) respectively of the IBAC Act.

10 Shortly after commencement of the public examinations, a considerable number of complaints were received by IBAC of possible corrupt conduct in the public sector from complainants who generally indicated they were encouraged to come forward as a result of media coverage of Operation Fitzroy and apparent effectiveness of IBAC as an independent investigative body.

11 See subsections 8(b) and 15(5)–(6) respectively of the IBAC Act.

12 Phase one occurred 21 July–15 August 2014 and phase two 25–27 August 2014.

13 Known as Witness D following the making of a non-publication order regarding their identity.

14 For convenience, DOI and DTPLI are respectively intended to be referred to when references are made to DOT in this report for the period before its establishment, and after its abolition.

15 The suspension of Barry Wells followed the execution by IBAC officers of a search warrant at his PTV workplace in early-2014. According to evidence given in phase two of the public hearings by the current Chief Executive Officer of PTV, Mark Wild, Mr Wells resigned from PTV shortly after he gave evidence at his public examination in early-August 2014.

16 The last three entities are discussed in more detail later in this report.

17 Curbing corruption in public procurement: a practical guide, Transparency International, 2014.

18 VGPB was established on 1 February 1995 to provide a policy framework for government for procuring goods and services. It is established by section 54A(1) of the FMA. The VGPB policies apply to all government departments including DOT.

19 See sections 29 and 30 respectively.

20 Effective as at 1 February 2002 and replaced with a revised version on 1 July 2008, being the current version.

21 Effective as at 1 December 1996, being the current version.

22 Effective from around 2002 and a revised version effective from 1 May 2009, which remains the current version.

23 Effective from 1 June 2000, which remains the current version.

24 Unless the relevant Minister or the Accountable Officer certifies in writing that special circumstances in clause 3 apply, in which case the relevant Minister or Accountable Officer shall determine the procedure to be used.

25 See previous footnote.

26 As explained earlier, significant monies passed through HGO during the relevant period, an entity that was always controlled by Mr Ooi.

27 This estimated time of execution is based on one of the recitals about PSN being restructured in January 2007 to provide services to the transport infrastructure construction works area.

28 Including a new baby grand piano, two new jet skis, travel, paying out loans for motor vehicles, and expenses for the greyhound business trading as BAG Racing.

29 Sent 26 May 2009.

30 Sent 22 September 2009.

31 Sent 5 September 2008.

32 Andrew Ooi said in evidence that his father assisted him with any work he performed for RCG.

33 Sent 5 July 2010.

34 Replacing Mr Wells’ manager at the time, Mr Lacchiana.

35 PWIC stands for Public Works Infrastructure Consortium.

36 Recorded on 28 October 2013.

37 Disability Discrimination Act 1992 (Cth).

38 Recorded on 28 October 2013.

39 Recorded on 19 November 2013.

40 Recorded on 19 November 2013.

41 In particular, the job was near Ballarat, something Mr Morgan was previously unaware of.

42 Mr Lock’s evidence on these events was not put to Mr Furphy by Counsel Assisting as his examination had occurred previously. In his response to this, Mr Furphy contended that the fact that he did not raise at the meeting the UMS quotes or IBAC investigation, demonstrates there is no basis for any such concern.

43 It seems that this cover story was arrived at during a meeting they attended with Mr Wells and Mr Ooi at Broadmeadows Shopping Centre in January 2014, a few days after IBAC search warrants were executed. The explanation was quickly backed away from when in private examination, they were shown covertly taken photographs of themselves, Mr Wells and Mr Ooi arriving at and participating in this meeting.

44 Appendix A, paragraph 5.

45 A witness whose name, for operational reasons, cannot be published pursuant to an order made by the Commissioner under section 19B(2) of the Evidence (Miscellaneous Provisions) Act 1958 (recently repealed).

46 Wild statement, paragraph 7.

47 A matter the Office of Public Prosecutions may need to consider.

48 In relation to public bodies.

49 In relation to persons.