SA Health under fire on multiple fronts as CEO’s accidental conflict of interest revealed

By Stephen Easton

Monday November 18, 2019

The South Australian Health Department is under fire on several fronts following revelations that chief executive Dr Chris McGowan mishandled his move into the public service from his old job leading healthcare provider Silver Chain, which does a lot of work for the department.

On Thursday McGowan self-referred the issue — that he was still the director of one obscure Silver Chain subsidiary for his first two months as department head — to the Commissioner for Public Sector Employment, but only after it was revealed by InDaily with help from the opposition.

It appears Health Minister Stephen Wade and the rest of the government were unaware of this until the news report appeared. It seems the CEO and his former employer realised he was still director of the subsidiary, due to an administrative oversight, way back in July 2018.

Dr Chris McGowan

In reaction to InDaily’s questions, the CEO said he would refer the matter to commissioner Erma Ranieri to aid transparency “and in an abundance of caution” while the Silver Chain group said McGowan had been left on the books as director of a “non-operational, dormant subsidiary company” by accident, and his separation was quickly completed when the error was realised.

Ranieri soon promised to use an independent investigator after the Labor opposition suggested it would be inappropriate for her to lead the probe as she played a central role in the formal process of recruiting the CEO.

Documents show the company moved to fix the error by asking McGowan to sign a form completing his resignation in July that back-dated his resignation to May. The Australian Securities and Investments Commission records his resignation from the subsidiary as happening in May.

The InDaily report also highlighted some interesting statements made by the SA Health CEO about his involvement in contracts between the department and Silver Chain.

Early in his tenure, McGowan told a radio host it was his job as department head to sign off on a recommendation to the minister that SA Health contract the organisation he previously led, and the fact that the company had bid for the work when he was its CEO only meant he could not “influence” the advice. “That’s the way it works, so I saw it coming through, knew that I couldn’t really have a play on that and just signed it straight through the way it was presented to me, so I didn’t influence it.”

The government has paid about $13 million to Silver Chain to date under one deal that was inked during that two-month period when McGowan technically still had a role with the external provider. The auditor-general has also reported concerns about how that contract was awarded and managed.

In a more recent parliamentary committee hearing, the opposition asked McGowan if he had ever “signed a document that recommends or notes the procurement of services from Silver Chain” and he took the question on notice. He agreed there would be a perceived conflict of interest if he had.

While it looks like an honest mistake, the fact that it was kept quiet for over a year means it has blind-sided the government and given more ammunition to the opposition at a time when SA Health is fast becoming a magnet for criticism.

The corruption watchdog, Bruce Lander, believes the department is plagued by maladministration, poorly managed conflicts of interest and other issues, and has received over 1000 corruption complaints about the department since 2013, but a request for additional funds to investigate was rebuffed. Now a former director of public prosecutions, Stephen Pallaras, has told the Adelaide Advertiser he can’t see why the government hasn’t begun a special inquiry into SA Health. Lander is expected to report more about his concerns before the end of the year.

Meanwhile, separate claims emerged on Thursday that a potential supplier of CCTV cameras abruptly pulled the plug on a deal with SA Health, in part because it had serious concerns about probity within the department and believed two public servants had conflicts of interest due to their “very material and significant commercial interests” in companies that could end up competing with the potential supplier.

The department reportedly dismissed the company’s allegations, which were aired in parliament by SA Best MP Frank Pangallo.

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