The former head of a public health service in regional Victoria “circumvented” the agency’s procurement policies and “exploited” vulnerabilities in systems and controls, the Independent Broad-based Anti-corruption Commission (IBAC) has found.
In a report tabled to Parliament on Friday, IBAC revealed the longstanding ex CEO had misused their position for their own financial benefit and the benefit of some close associates.
The executive had awarded a “poorly defined” contract worth about $960,000 to a consultancy between 2010 and 2017 without following competitive procurement procedures, the corruption watchdog found.
The CEO was in a personal relationship with one of the company’s directors and a subordinate, and gave the director benefits, but didn’t declare a conflict of interest.
According to IBAC, the CEO also authorised the payment of $74,000 in invoices to their relative’s electrical company between 2012 and 2015, for work that was allegedly undertaken in 2004. The CEO did this without verification.
Through its investigation, Operation Meroo, IBAC found the executive had failed to comply with policies related to recruitment and promotions, and inappropriately spent agency funds on travel, meals and alcohol.
The corruption watchdog found the CEO was “involved in providing false information” to the state and commonwealth Health departments to obtain government funding, “but there was insufficient evidence to determine the impact of the false information provided on the applications”.
IBAC commissioner Robert Redlich noted that public sector employees are expected to maintain strict separation between work-related and personal financial matters, and must only use public financial resources for work-related purposes.
“The failure of the former CEO to do this resulted in significant costs to the health service,” he said in a statement.
“Any misuse of public funds impacts communities and damages trust in public institutions, services and government. The public harm is particularly acute in health care where the misuse of funds comes at the expense of delivering vital services affecting people’s quality of life.”
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IBAC found that the health service had a culture which discouraged employees from speaking up, and its board failed to govern effectively. Redlich said the inadequate oversight of the board helped facilitate the former CEO’s conduct.
“The health service’s board did not act in the best interests of the agency as it failed to scrutinise the former CEO’s expenditure and did not hold the longstanding former CEO to account,” he said.
The vulnerabilities highlighted by IBAC are not unique to this particular health service, Redlich said.
“There are 81 public health services and public hospitals in Victoria,” he said.
“I urge public health services and other public sector agencies, particularly in regional or rural areas and those governed by boards, to consider the corruption issues outlined in the Operation Meroo special report and consider how they can mitigate these risks in their own agencies.”
IBAC also highlighted issues with the oversight of the then Department of Health and Human Services, noting that it did not hold the CEO to account.
“Despite red flags, the department did not adequately act on concerns regarding the former CEO,” the report said.
IBAC has made recommendations to the health service and the Department of Health related to strengthening board capability and oversight, procurement practices, and conflict of interest management.