Procurement corruption in Vic councils prompts special report

By Shannon Jenkins

September 30, 2019

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Local councils should strengthen their procurement policies and a code of conduct should be developed for suppliers to reduce corruption risks, according to Victoria’s anti-corruption commission.

The Independent Broad-based Anti-corruption Commission has tabled a special report to Parliament that warns of corruption risks and vulnerabilities in local government procurement practices.

IBAC Commissioner Robert Redlich said the report has brought a range of corruption risks that would likely affect most of the state’s councils into the spotlight.

“Allegations of corruption associated with council procurement practices and processes are a recurring theme in the complaints received and investigated by IBAC,” he said on Monday.

“There is an opportunity now for all Victorian councils to consider these findings and assess how robust their own processes and controls are.”

The report looked at two IBAC investigations that alleged council employees had manipulated procurement processes to benefit themselves.

In one case, the watchdog found a former project manager at the Darebin City Council had helped an associate’s company win more than $16 million in contracts through “deception”. The project manager had accepted cash, gifts and other benefits from the company.

The City of Ballarat Council was the focus of another case, where the former Sports and Recreation manager Lukas Carey had enabled associates and family to win contracts. Carey had engaged his wife’s company on behalf of the council, obtaining $55,885 in contracts. He had used parts of his own university thesis as examples of work performed by the company. Carey was also involved in engaging three associates for the council, in exchange for secret commissions totalling $47,745. In 2017, Carey was sentenced to three years’ jail, while three others, including his wife, pleaded guilty to other charges.

Redlich reminded councils of the harm corruption can do to the public service.

“Public sector corruption it is not a victimless crime. It wastes taxes and rates that should be used to operate and maintain Victoria’s schools, hospitals, roads and other vital public services and projects. And it damages the reputation of organisations and undermines community’s confidence in the public sector,” he said.

IBAC recommended that the two councils review and strengthen their procurement policies, systems and practices to address the identified vulnerabilities, and called on their CEOS to report their progress within a year.

It also recommended Local Government Victoria develop a code of conduct for local government suppliers to outline the standards expected of suppliers, declaring conflicts of interest, and reporting suspected misconduct or corruption.

While Ballarat accepted the recommendations, Darebin asserted that it had been “deeply committed” to eliminating corruption by outlining the changes that have already been made.

CEO of Darebin City Council, Sue Wilkinson, requested that the recommendation requiring a report on strengthened procurement practices be adjusted or removed, “in recognition of the proactive improvements” that have occurred since the initial investigation.

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