IBAC flags "significant corruption risks" in council procurement

Tables special report to Parliament after investigating two councils



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Victoria's anti-corruption commission IBAC has tabled a special report to Parliament flagging "significant corruption risks" in council procurement.

The report highlighted a range of procurement-related corruption risks and vulnerabilities that were found in two councils.

IBAC Commissioner Robert Redlich said that they are likely to be faced by most, if not all councils, in Victoria.

"Allegations of corruption associated with council procurement practices and processes are a recurring theme in the complaints received and investigated by IBAC," Redlich said.

"There is an opportunity now for all Victorian councils to consider these findings and assess how robust their own processes and controls are."

This special report focused on two IBAC investigations, Operations Dorset and Royston, which concerned allegations that council employees subverted procurement processes for their own benefit and the benefit of associates.

In Operation Dorset, IBAC concluded a former project manager at the Darebin City Council had assisted an associate’s company to win more than $16 million in contracts. These contracts were awarded in circumstances where the project manager was receiving cash, gifts and other benefits from the company.

In a private examination before IBAC, the project manager admitted receiving cash payments from one of the two companies involved, stating ‘Well, I was receiving … if you call it kickbacks for ongoing works for the City of Darebin, yes’, read the report.

It was also alleged the project manager used his position to access information to help a former colleague who was the director of the other company involved win contracts with the council by submitting bids that were often around $1,000 under the next lowest tender bid. In private examinations, both the project manager and the director denied accessing or using information to benefit the business.

In Operation Royston, IBAC concluded a former manager at the City of Ballarat Council had enabled associates and family to win contracts, in exchange for financial 'kickbacks'. In 2017, the manager was convicted of a range of offences and sentenced to three years’ jail and ordered to repay $31,200. Three other people, including his wife, pleaded guilty to other charges.

"Public sector corruption is not a victimless crime. It wastes taxes and rates that should be used to operate and maintain Victoria's schools, hospitals, roads and other vital public services and projects. And it damages the reputation of organisations and undermines community's confidence in the public sector," Redlich said.

IBAC has specifically recommended that Darebin City Council and City of Ballarat Council review and strengthen their procurement policies, systems and practices to address the identified vulnerabilities.

IBAC has also recommended local Government consider developing a code of conduct for local government suppliers, which would outline the standards expected of suppliers including in relation to reporting suspected misconduct or corrupt conduct on the part of council employees and other suppliers.

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