Fired on the spot: compensation for corruption inquiry sacking

By David Donaldson

August 21, 2018

A former education official sacked after giving testimony at a corruption inquiry has won compensation, despite sensational evidence. “Many people will think this outcome doesn’t make sense, and we agree,” says secretary Gill Callister. But did the department deny him natural justice?

Former Education Department acting deputy secretary John Allman was sacked in April 2015 by the Department of Education and Training as he walked out of an Independent Broad-based Anti-corruption (IBAC) Inquiry where he had given evidence into so-called “banker schools”.

The inquiry that day had heard Allman tore up documents in his office after IBAC had searched his house and had them disposed of at Bunnings; he was heard in a covert recording telling former Education Department director Nino Napoli, who was at the centre of the investigation, not to mention the school he had worked at; and there were instances of him stating he didn’t recall saying things, recordings of which were subsequently played in court.

Allman told the inquiry he went into a panic after IBAC searched his house and destroyed the documents because “I did have something to hide”.

Allman was in contact with Napoli during the IBAC investigation. A recording was played of him discussing the school where he had worked that had used the “banker school” system, which has been described as a network of slush funds, under investigation by IBAC: “Mate, nothing has come up on Silverton, so don’t fucking mention that.”

Based on its interpretations of these occurrences, the department later that day handed him a termination letter citing three reasons for his summary dismissal: that he had admitted to destroying incriminating evidence, that he had colluded with Napoli, and that he had lied under oath.

It was explosive stuff, and it got plenty of airtime on the news.

But perhaps the story wasn’t as clearcut as the department believed — at least to the standard required to sack Allman on the spot without being given a chance to respond.

Allman later sued the Victorian government for mental injury arising from the sacking, and on August 10 the matter was settled after four days in the County Court, with the state agreeing to weekly payments to Allman for mental injury and incapacity to work backdating to his dismissal, healthcare costs, and paying his legal costs. This followed an initial finding that he was not entitled to compensation, as the department’s actions were reasonable.

The decision to settle may look rather strange on the face of it. Indeed the Department of Education and Training thinks so (the decision to settle the case was in fact made by WorkSafe Victoria, acting as the department’s workers’ compensation insurer).

“Many people will think this outcome doesn’t make sense, and we agree,” secretary Gill Callister told The Mandarin in a statement.

“We encouraged WorkSafe to defend the case in the first place and we did not ask them to resolve it.

“The outcome of this case is in no way a concession by the department that John Allman’s dismissal was unreasonable. As the department’s witness told the court, Mr Allman’s conduct was ‘inexcusable’ and his behaviour ‘strikes at the heart of what it means to be a public sector employee.’

“IBAC examined and exposed patterns of conduct that are completely unacceptable and that have no place in the public sector, particularly in the department responsible for the education and development of our children and young people.

“We stand by our decision to remove Mr Allman from his post — a decision taken in light of the conduct uncovered by IBAC, which in no way met the standards expected of public servants.”

The department also notes that Allman hasn’t taken the opportunities open to him to pursue his reinstatement.

WorkSafe did not respond to a request for comment.

Notwithstanding departmental protestations that the decision to settle does not reflect on the merits of the its decision to sack Allman, the legislation states that there is no entitlement to compensation where mental injury is the result of management action taken “on reasonable grounds and in a reasonable manner”. Indeed, the government’s lawyers indicated in the case they would rely on this as their main defence.

So why settle the case before judgement then?

Natural justice denied?

As the case was settled there’s no judgement to look to, and thus no definitive explanation for the outcome, but the proceedings of the trial may shed some light on WorkSafe’s decision to settle.

On the fourth day — immediately before WorkSafe took the option of settling — Allman’s lawyers put the case to the department’s witness that the department rushed into sacking Allman, not giving him an adequate chance to respond to accusations made at IBAC, nor clarify some of the unflattering evidence he gave.

“If they were not documents that disclosed wrongdoing, it’s difficult to imagine why John would have gone to the effort of tearing them up and taking them to a Bunnings and disposing of them.”

The department’s witness, former DET deputy secretary for people and executive services Monique Dawson, said that the decision to terminate was based entirely on Allman’s evidence at the hearing that day, at which she was present. The decision-making process was kicked off in the morning, progressing through the day while Allman was still answering questions, so the termination letter could be delivered as he walked out of the inquiry.

According to the department’s letter to Allman, during the public examinations he had “admitted to shredding documents”, “urged someone to withhold information” and “lied under oath”. This amounted to serious misconduct and brought the department serious reputational damage, and was thus grounds for summary dismissal as available under his contract, the department argued.

Allman’s conduct was “the most serious that I’ve ever heard from any executive that I’ve had any relationship with in my career,” Dawson told the County Court.

The department wanted to get the job done quickly, Dawson said, because it needed to send the message to any other staff appearing at IBAC that lying would not be tolerated, but also to show the media that it was acting.

Allman’s lawyers, however, argued he was distressed during the hearing and wasn’t aware of the questions that would be put to him before the day (a common practice at IBAC) so gave answers he may not have given if he were more prepared. They argued that Allman was at no subsequent point given the opportunity to respond or give his side of the story, either at IBAC or to his employer, and therefore had been denied natural justice.

Allman’s lawyers suggested that, in its desire to show the media it was addressing the problem, the department could instead have announced Allman was being stood aside while he was given the opportunity to show cause.

Allman’s lawyers also raised questions about the substantive points on which the department based his sacking. Allman told IBAC documents from the Silverton banker school were likely among those destroyed, and that he had “something to hide”. But in the compensation case his lawyers suggested they were not the only copies available, and that much of the material was personal, so this could not amount to destroying evidence. He was angry and acting irrationally when he decided to dump the torn papers at Bunnings, they suggest.

Dawson conceded the department had been unaware of additional testimony Allman had given in a private session at IBAC and could not be certain which exact documents he had torn up, nor that they contained “incriminating evidence”, which had been a basis for his termination. Dawson did say, however: “If they were not documents that disclosed wrongdoing, it’s difficult to imagine why John would have gone to the effort of tearing them up and taking them to a Bunnings and disposing of them.”

Allman’s lawyer Michael Waugh told The Mandarin that the department had misunderstood the evidence Allman gave at IBAC. “They made a big deal about it without understanding what it was,” he said.

“They never went back and checked where the records were kept, namely at the school.”

The department got it “very badly wrong”, he believes. “I’ve got a person who’s been very badly treated.”

Dawson noted that although Allman said copies of any relevant documents remained at Silverton school, there was no way for the department to know whether they were the same ones that he had destroyed, nor which transactions they needed to look for among legitimate transactions.

Allman’s side also made the case that there were possible alternate interpretations of the evidence the department believed showed Allman lied under oath and urged withholding of important information. Addressing the recording where he told Napoli not to mention Silverton, Allman explained he did not want to be dragged into the investigation, and had not meant that there was anything wrong with how he had managed the school’s funds.

It’s not clear exactly why WorkSafe decided to settle the case, but the defence put up by the government “asserted that their decision to dismiss was reasonable”, notes Waugh.

“That must have been based on the instructions they [DET] were giving to WorkSafe. And WorkSafe must have decided, with or without the department, that that defence was going to fail as a result of hearing the evidence.”

The department stands by its interpretation of Allman’s behaviour. It denies it was wrong to sack him and that it asked WorkSafe to settle. Allman’s lawyers argue he’s a man wrongly dismissed and that the decision to settle validates this.

Perhaps these queries could have been resolved sooner and more sustainably if there was a formal process weighing the evidence and offering a right of response before the original decision was made.

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