Education bureaucrat's wife bought contractor shares

By David Donaldson

March 2, 2016

The anti-corruption inquiry into Victoria’s Education Department has heard from another former employee who owned shares in a contractor, as well as a consultant being given the job of preparing a brief based on allegedly false information.

The man charged with rolling out the failed Ultranet software across the Victorian education system held shares in CSG, the company delivering the project, without declaring a conflict of interest, the inquiry heard on Tuesday.

The wife of former regional director Wayne Craig, herself a teacher, purchased around $10,000 from a joint account following a discussion about the company CSG, Craig told the Independent Broad-based Anti-corruption Inquiry hearing. Although his wife believed they had agreed to the purchase, Craig said they had not.

Craig, who reported to former deputy secretary Darrell Fraser, did not declare that he was now the joint owner of shares in the company delivering the project he was working on, stating: “I had looked at the code of conduct and I didn’t believe there was any need to inform anyone.” He did not tell Fraser, as “it was none of his business”.

“Sometime after the purchase” he told friend and regional director Ron Lake, who also owned shares in the company, about it. IBAC heard on Thursday that Fraser told Lake he was a “silly bastard” for buying around $110,000 worth of CSG shares.

Similarly to other department employees who bought shares in CSG, Craig said he was not a regular trader, and held only $10-20,000 worth of stock in other companies. Craig said he believed the $10,000 his wife spent on CSG was “a relatively insignificant amount of shares to purchase”.

Even after his wife’s purchase of the shares was subject to investigation by KPMG, Craig answered “no” on his declaration form to the question of whether any assets could “reasonably raise an expectation of conflict of interest or a material interference with your public duties”. When Fraser rang Craig to inform him of the KPMG investigation, Fraser was “agitated” and said “it was actually a campaign to get at him”, Craig explained.

Craig also described Fraser’s reaction when Craig told him he’d taken a call from a journalist at The Age about goings-on in the department:

“He immediately said, ‘you what?’. And why would I do that. And I said, ‘because I had nothing to — to hide in relation to this’. He then asked me, ‘what sort of things have been spoken about?’. I told him as much as I could remember. He left the room several times. Once at least to ring [deputy secretary Jeff] Rosewarne. He rang [Ultranet board member John] Allman a number of times and after about 50 minutes or so, Mr Allman turned up and left about five minutes later.”

Intriguingly, Fraser’s first comment to Allman was “John, they even know about the artificial turf”, according to Craig. He also mentioned that disgraced former department finance manager Nino Napoli, who last year admitted to stealing thousands of dollars from the school system, had been planning to publish a book on financing in schools.

‘Unusual’ outsourcing

The session also heard about the “unusual” situation of a consultant, former department employee Drew Arthurson, being given the job of preparing an application to exempt a project from the normal tendering process based only on information provided to him by Fraser.

“The department was stretched for staff and there was little time to prepare the brief …”

Arthurson was asked by Fraser to prepare the application to the Accredited Purchases Unit — which was yesterday described in the court as a “rubber stamp” — to exempt a procurement from Alliance Recruitment for $4 short of $1 million from having to go to tender, as anything over $150,000 ordinarily would. That contract, which was approved by the unit without any verification of the information provided, was “a fraud” according to former departmental employee Sonya Velo-Johnstone, who played an administrative role in the payment.

The department was stretched for staff and there was little time to prepare the brief, Fraser told Arthurson, so he needed someone outside the organisation to write it. Although he said he thought it was unusual to outsource such a process, and that it was not normal practice to source all information from one source, Arthurson assumed that as Fraser was a deputy secretary, “there had been some discussions at a senior level inside the department for that to be approved”.

Also described as “unusual” was the manner in which Fraser was originally appointed, said Arthurson, having been promoted from school principal straight into the role of deputy secretary. “There was a lot of commentary around the fact that it was unusual,” Arthurson explained. Normally an employee would have needed to gain experience in a regional role or something similar before going on to deputy secretary, he said.

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