Updated ,first published
A secret Victorian ombudsman briefing has warned that the Allan government’s agency managing its $100 billion Big Build program is exposed to corruption because it fails to keep adequate records about how it spends taxpayer dollars.
The revelation of the ombudsman’s concerns about the Victorian Infrastructure Delivery Authority, in a briefing sent last month, adds to damning warnings about the waste and rorting of billions of the Big Build separately raised by corruption buster Geoffrey Watson, SC, Fair Work Commission chief Murray Furlong and project supervisors.
It came as Premier Jacinta Allan on Tuesday again rebuffed calls to urgently give the state’s anti-corruption watchdog powers to probe the extent of misspending on the Big Build.
The ombudsman’s criticism of Victorian Infrastructure Delivery Authority (VIDA), which was created to deliver Big Build projects, is contained in a confidential agency document seen by this masthead.
The document deals with the ombudsman’s handling of a Big Build insider’s complaint that certain VIDA executives had acted “improperly” in the way they spent taxpayer funds.
The specifics of the complaint is not being revealed by this masthead as the insider was deemed a whistleblower under Victorian laws that prevent the publication of information that could reveal their identity.
The ombudsman briefing note, dated February 2, said that while an initial assessment by an investigator did not locate the evidence to substantiate the insider’s specific concerns about certain VIDA executives, it still uncovered troubling information.
The ombudsman investigator “reviewed VIDA’s financial records” and concluded that “it was evident VIDA had not adequately recorded its procurement activities in a fair and transparent manner”, the note says.
The ombudsman probe also found that the authority “did not always adhere to its procurement policies and procedure” and was stymied by abysmal record keeping at VIDA.
“Many documents had gaps which created challenges and hindered our ability to fully interrogate the records,” the ombudsman’s note states.
“VIDA’s poor financial record keeping and reporting increases corruption risks, and there is a need to strengthen its governance and reporting mechanisms to allow for effective oversight and accountability.”
The ombudsman said that while it would not launch an investigation into any VIDA executives named in the original insider’s complaint, it would refer its concerns to the Independent Broad-based Anti-corruption Commission (IBAC) as well as the Victorian Auditor-General’s Office (VAGO).
The ombudsman also said it was “aware that VIDA has now taken steps to improve its financial governance and record keeping as a result of our involvement”.
“As a result, we have confidence that the concerns you have raised will be addressed by VIDA, IBAC or VAGO,” the ombudsman said.
The briefing note was written weeks before IBAC went public with its concerns that it lacked the power to “follow the money” to test if the Big Build taxpayer funds had been corrupted.
Under current rules, IBAC cannot pursue taxpayer funds through to subcontractors and labour-hire providers. Commissioner Victoria Elliott has asked the government for these powers, and they were also recommended by parliament’s integrity and oversight committee.
Elliott told a parliamentary inquiry that it would help IBAC probe the Big Build alongside changes that would stop their investigations being limited to those with a link to a public officer.
The opposition, Greens and some crossbenchers supported a push to legislate follow-the-money powers immediately this week by attaching an amendment to a larger omnibus bill, which included anti-vilification changes and tougher penalties on bestiality.
Rather than lose the vote, the Allan government has decided to introduce the anti-vilification laws in a separate bill that will leave the omnibus bill lingering in parliament.
Attorney-General Sonya Kilkenny and Allan have said they will still consider the integrity committee’s response, which they must respond to by June.
On Tuesday, Kilkenny would not say whether the government would adopt the recommendation.
“Those matters will be reviewed by government, and the government will respond in due course,” she said.
Kilkenny said “action is happening right now” to tackle construction industry issues through the police and the cancellation of more than 140 labour hire licences.
Allan said she wouldn’t speculate on any future decisions the government might make.
The Coalition introduced its own private member’s bill on Tuesday that would give IBAC follow-the-dollar powers. However, the government does not support private member’s bills and has a commanding majority in the lower house.
“Victorians deserve a government that wants to stamp out crime, has a plan to clean up the corruption, and fix the problems is our state,” shadow attorney-general James Newbury said.
The Victorian Greens have also pledged to introduce their own integrity legislation in response to the government’s decision to push back debate.
Greens leader Ellen Sandell said Labor was relying on tricks and tactics to avoid giving IBAC the powers its needs.
“This is a cop-out from Labor, and the reality is that there is no excuse for not strengthening IBAC except that Labor doesn’t want to,” she said.
A damning report by integrity expert Geoffrey Watson released last month, commissioned by the administrator of the CFMEU, detailed a litany of misconduct on taxpayer-funded projects including allegations of drug distribution, graft and sexual exploitation.
His initial version of the report estimated that CFMEU-related corruption might have cost $15 billion across $100 billion of Big Build work.
These comments were removed by administrator Mark Irving in a copy of the report produced to a public inquiry in Queensland before being released publicly. He said he deleted the estimate as it was, in his opinion, untested.
Allan has seized on this fact to dispute the figure, even after the Fair Work Commission’s Furlong told Senate estimates he had heard a similar number from Victorian government officials.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.
Nick McKenzie is an Age investigative journalist who has three times been named the Graham Perkin Australian Journalist of the Year. A winner of 20 Walkley Awards, including the Gold Walkley, he investigates politics, business, foreign affairs and criminal justice.Connect via email.