Recent ICAC inquiries

1. 1 Recent ICAC inquiries Lessons for us

2. 2

3. 3 Wollongong Council 1st report � Council dismissed 2nd report � suspend the DA approval for Quattro 3rd report � Morgan�s assessments of DAs for Vellar, Tabak, Kollaras behaviour Morgan and others including Oxley General Manager; Gilbert and Scimone senior managers; councillors Esen, Jadovski, Gigliotti, Zanotto; others � Younan, Carroll

4. 4 Extent of corruption - without precedent Through 5 layers of management from the General Manager down A litany of problems across the board � management failure; systems failures; misconduct; gifts, benefits, inducements; confidential information, bypassing and manipulating systems, tone at the top, ignoring complaints and indications that inappropriate things were going on; failure to keep records Key problems � centred around Morgan�s personal relationships with 3 developers while working at Council Vellar - Quattro Development $100m & North Beach Bathers� Pavilion Tabak 3 DAs incl Victoria Sq $31m Kollaras 3 DAs

5. 5 Tone at the top Oxley, General Manager Pro development Interfered in processes eg. DA assessment for Quattro. 5 parties had recommended restricting the Quattro DA to the required limits of the LEP, but it got through Met with Vellar outside office hours alone re Quattro Had heard rumours about Morgan�s relationships Gilbert and Scimone senior managers, had complaints, knew about Morgan�s relationships Gilbert let Morgan log on to his computer and generate a document in his name with his electronic signature � a DA approval for Quattro

6. 6 Younan & Carroll Falsely represented that they knew, were or were acting on behalf of ICAC officers; solicited payments from others who believed they could favourably affect the ICAC investigation for them Vellar $120,000 Zanotto $120,000, $500 case of whiskey Morgan $50,000 Scimone $30,000 Tasich $20,000

7. 7 Findings Corrupt conduct Morgan; Tabak; Vellar; Gilbert, Oxley; Scimone; Zanotto; Janovski, Esen, Gigliotti DPP referrals for criminal charges Morgan; Tabak; Zanotto; Janovski, Esen, Gigliotti; Younan; Carroll; Tasich 27 recommendations

8. 8 NSW Fire Brigades Concerned their capital works projects between late 2005 and 2007 False tendering; falsification of documents; soliciting and receiving bribes, TVs, computers; improper provision of confidential information and documents; attempted cover ups from ICAC investigations.

9. 9 Sanhueza & Taylor � building project managers for NSWFB � capital works funding In 2 years manipulated contracts for 39 NSWFB projects Sanhueza�s companies received over $6.075m for work Sanhueza received at least $1.4m from this Taylor $1.01m submitted false tenders and quotes from late 2005 to 2007 on behalf of companies set up and controlled by Sanhueza What happened

10. 10 False qualifications In order to get his job with NSWFB Sanhueza claimed to have qualifications he did not have BComm; MBA Used false qualifications claims to become a member of the Australian Institute of Public Management False documents found at his home: University of Sydney academic record for BEcon; Orange TAFE 1989 and 1990 exam results for certificate for AssocDip (Accounting)

11. 11 The scheme 8 companies controlled by Sanhueza tendered for the work Each had letterhead, phone & fax numbers � sometimes this was a pager service answering in the name of the company Each had false details or details of a friend or associate as directors to distance Sanhueza

12. 12 But these companies never actually did the work � it was subcontracted to others � who were unaware they were actually working for Sanhueza They bargained down the subcontractors� prices to give themselves more money the tenders and quotes were always just below the budget for the project fake tenders were also submitted at much higher prices than those for Sanhueza�s companies � this was to fulfill the requirement for 3 tenders for each project Sanhueza or Taylor then were able to recommend Sanhueza�s company for the job

13. 13 Xuereb Friends through work with Sanhueza and Taylor Was able to listen and observe things from her desk then report relevant information to Sanhueza after he had left NSWFB in March 2007 Xuereb left in October 2007 NSWFB highly confidential original and copied documents found at her home

14. 14 Guirguis Guirguis paid for TVs, laptops, lunches, golf days, wine, whiskey, hampers so Sanhueza & Taylor would continue to provide him with NSWFB work $30,300 for 4 flat screen TVs and 2 laptops $664 lunch $3000-4000 for a client golf day Zrinksi was Sanhueza�s manager and he discovered the scheme checking one contract

15. 15 Findings Corrupt conduct Sanhueza; Taylor; Guirguis; Hanna; Xuereb DPP referrals for criminal charges Sanhueza; Taylor and his wife; Guirguis; Xuereb Receipt of corrupt proceeds � restraining orders Sanhueza for $950,000; Taylor assets forfeiture order � farm at Merriwa, 2 flatscreen TVs and laptop 14 Recommendations

16. 16 Dept of Housing � Miller Office DoH manages 144,000 properties Miller office allocates and manages 400 bedsits and 800 1&2 bedroom units Bedsits not popular � damage, social problems, debts in rent High vacancy = quick occupancy 1 & 2 bedroom units more popular especially ground floor Often vacancies in upper floors

17. 17 Bedsit project Not well understood by officers responsible for allocations Local needs meant variation to normal processes Few clients realised that there was a high vacancy in the bedsits Bedsits hard to let Short listing and other allocation strategies open to manipulation

18. 18 Norris DoH employee since 1999 From at least 2003 sought bribes from DoH clients to fast track applications $500-700 for bedsit $1500-$1700 for 2-3 bedroom unit Passed confidential information about police activities to two tenants Knowingly allowed premises to be used for drug deals

19. 19 Norris - �red flags� at DoH

20. 20 Findings Corrupt Conduct � Norris and 7 others DPP referral � Norris and 4 others for a variety of things including several persons making false statements to the ICAC 18 recommendations

21. 21 RailCorp 1 - Welding work Conduct of Blackstock � 16 years with RailCorp; project manager � allocating and supervising welding work metro South Region; gambling problem Madrajat � Director, Precision Wirefeed Welding Pty Ltd set up with Blackstock Ward � RailCorp employee 6 years

22. 22 Precision received over $4m from RailCorp between Jan 2004 and Sep 2007 Blackstock got $1.3 Madrajat $1.1m False time sheets submitted by Blackstock and Shane Ward

23. 23 The scheme Funnelled welding work to Precision Helped Precision with tenders Precision had major safety issues that Blackstock was worried about but didn�t report major �near miss� incident on the tracks � lied to RailCorp Test and Tag Precision falsely tagging equipment as having been tested � major OHS problem with Precision False time sheets �job and knock� � common practice in South Region - filling out time sheets for days or hours not worked

24. 24 Findings Corrupt conduct Blackstock Madrajat Ward DPP referral Blackstock Madrajat Ward And 2 others

25. 25 RailCorp 2 - Plant & equipment Background � Plant Service Management System 1996 RailCorp has contracts with 2 companies to organising plant & equipment for rail construction and maintenance 2 companies are known as Plant Service Managers (PSMs) Kingston Industries PL Total Plant Services PL PSMs mostly subcontract the work to others RailCorp�s relationship is with the PSM not the subcontractor who is doing the work

26. 26 PHIPS software Plant Hire Internet Procurement System Used by hundreds of RailCorp staff to source all commercially provided plant and equipment Requesting officer � request to PSM PSM responds - ok Approving officer � approves spending Certifying officer � checks service is provided and signs work docket to ok payment to PSM Payments done through Ellipse software At first, PHIPS and Ellipse were not compatible

27. 27 Renae Hughes Serious gambling problem Corrupt conduct resulted in her receiving $115,137 overpayment of wages $366,000 from dishonest payment to Kuipers Excavations $28,313 paid by RailCorp for hire car Other dishonest payments secured by Hughes to others Corrupt activity was Very complex Well planned Well managed Has been convicted of offenses of theft since leaving RailCorp

28. 28 Hughes � employment agency contract to RailCorp 2001 � paid by the agency PHIPS administrator Assist users of the system Train potential users Provide advice PHIPS & Ellipse initially incompatible so Hughes manually uploaded PHIPS orders into Ellipse. Given higher than normal access to do this

29. 29 15/9/2003 Hughes directly contracted to RailCorp Now submitted invoices for work directly to RailCorp 22/9/2003 promoted to Contracts Relationship Manager (CRM) Managed relationship with the PSMs. Kept her high level systems access 20/6/2005 temporary employee to RailCorp Still the CRM 5/5/2006 left RailCorp

30. 30 False/misleading invoices to RailCorp re plant hire from Kuipers Excavations PL = $506,633 in 18 months Manipulated the Ellipse the payment system False records created Between December 2004 and June 2006 Kuipers paid Hughes $366,000 The scheme

31. 31 False/misleading invoices to RailCorp Hughes�s wages = $115,137 Facilitated through Ellipse knowledge and access wages in excess of allowable limits double paying of wages wages that had not been �approved� work not yet done Scanned supervisor�s signature and used that No questions asked by management or accounts

32. 32 Hire car = $28,313 At first entitled to a hire car Kept it when not entitled to it Manipulated system to pay for it Resigned 5 May 2006 Kept the car till 28 June 2006

33. 33 Findings Corrupt conduct Hughes William Kuipers � owner Kuipers Kim Kuipers � wife DPP referral Hughes William and Kim Kuipers

34. 34 RailCorp 3 Other contract work Stanic � RailCorp since 1976 1996 - Project Supervisor, metro South Region Included procurement of contract services and authorising invoices Contractors Szoboszlay - Wire & Steel Industries PL Kouraos � Anev Painting & Decorating Pl Palombo � Delux Quality Cleaning & Property Maintenance

35. 35 Between 2001 to mid 2006 Stanic awarded the 3 contractors RailCorp business worth more than $2.9m Stanic authorised payment of inflated invoices Inflated invoice amounts used by contractors to pay Stanic Stanic told Szloboszky how much to quote for jobs Contractors paid Stanic $121,000 - $140,000

36. 36 �Most Travelled Diver� award Stanic interested in scuba diving travelled overseas 2002 � 2007 2003, 2004, 2005, 2006 � 3 overseas trips each year Awarded �Most Travelled Diver� by a diving business for each year 2003-2005

37. 37 The scheme Szoboszlay Wire & Steel Industries Did fencing work for RailCorp 2001-2005 worth just under $1m Started paying Stanic in 2001 ��to keep us on the list� at least $17,000 Inflated invoices covered corrupt payments to Stanic Stanic sometimes told Szoboszlay how much to quote for jobs RailCorp work and payments to Stanic stopped end 2005 - RailCorp introduced list of preferred contractors � Wire & Steel not on the list

38. 38 Kouraos � Anev Painting & Decorating Knew Stanic since early 1990s � was RailCorp employee Anev established 2003 � RailCorp work till July 2006 $1.75m total Total estimate paid to Stanic $82,000-$100,000 Inflated invoices to RailCorp covered payments to Stanic Stanic continued to award RailCorp work and receive corrupt payments from Anev despite Anev not being on RailCorp�s preferred contractor list Work from Railcorp and payments to Stanic stopped late 2006

39. 39 Palombo - Delux Quality Cleaning Knew Stanic since 1970s � had worked together RailCorp work Apr 2005-July 2006 $292,000 Inflated invoices to RailCorp � included amounts for payments to Stanic total $22,979 Awarded RailCorp work after RailCorp�s preferred contractor list established - even though not on it; and corrupt payments to Stanic

40. 40 Findings Corrupt conduct Stanic Szoboszlay Kouraos Palombo DPP referral Stanic Szoboszlay Kouraos Palombo

41. 41 RailCorp 4 � Plant & equipment Walker � RailCorp employee since 1992 � metro South Requesting officer under PHIPS system Created work order requests Could contract a preferred contractor re availability Could then nominate that contractor on the request Forwarded the request to Total Plant Services one of the 2 PSMs (Plant Service Managers) used by RailCorp Walker corruptly received at least $0.5m in 4 years from various contractors Gambling problem

42. 42 Contractors received millions of dollars worth of work through Walker Kuipers � was also involved in RailCorp 2 Michael Napier [father] [2005 - $3.6m-$4.8m] Matthew Napier [son], Azzopardi [2006 - $1.8m-$2.7m] Krecichwost � bought Michael Napier�s business in 2006 for $13m Sventek 1996 & Dulhunty 1978 � RailCorp employees assisted Walker

43. 43 RailCorp 5 � Plant & Equipment Hetman � RailCorp Civil Engineer since 2000 metro South Could award contracts for maintenance work Supervised and certified work allocated to contractors Used the PHIPS system to nominate Sage Civil Engineering as a preferred supplier to TPS, one of the 2 Plant Service Managers for RailCorp Sage owned by Murdocca Hetman also used the purchase order system to allocate to Sage Used his certifying role to certify Sage�s work

44. 44 2005 Hetman set up GRT Consulting Group Sage paid GRT for work that GRT never performed Hetman admitted all $ to GRT were rewards for him directing work to Sage Received corrupt payments $110,000> Between June 2006 � Oct 2006 Hetman corruptly arranged for RailCorp work to go to Sage 2002-2003 - $136,000 Jan 2005-Aug 2006 - almost $1m Sage falsified hours worked, when and by whom, extent of work Hetman and Murdocca close personal friends

45. 45 RailCorp 6 � Cleaning services Akkawi � RailCorp project accountant Owned TJ & Associates PL Did work for RailCorp Received payments between $0.1-$0.5m from RailCorp Akkawi misled RailCorp about his involvement with TJ & Associates in order to benefit financially from RailCorp work awarded to TJ Between 2000-2007 paid $1m by RailCorp for cleaning and maintenance Circumvented process to authorise invoices for TJ Sought confidential information to further TJ

46. 46 RailCorp 7 Commercial Renewals Division Long involved report � 9 chapters Scams Laidlaw�s team � Laidlaw, Kotevski, Hansen,Toma 1 False accommodation claims total $44,037 but likely far greater � book and pay for bed but travel and eat at home. Use RailCorp vehicle for this purpose. Submit claim for bed, breakfast, lunch, dinner - $140.40 pd tax free Laidlaw June 2006-Dec 2007 146 nights claimed $20,498 (2005 � Mar 2008 $68,976 total � likely mostly false claims) Kotevski June 2006-Jan 2008 177 nights $24,851 Hansen August 2007-Dec 2007 69 nights $9,688 Breached RailCorp�s Fatigue Management Policy

47. 47 Stealing and selling RailCorp assets copper 1397 kg + 222 kg other copper in 6 months netted $10,000 electric motors, transformers 439 kg netted nearly $6000 Sold by Tomsett, truck driver working at RailCorp track sites, scrap metal trader/dealer �Job & Knock� Kotevski claim 7am � 5.30pm Gosford 21 January Surveillance tracked him to Sydney RailCorp functions; Menai shopping centre; Claimed travel and accommodation Likely not the only claim

48. 48 Arrangements with favourite contractors Laidlaw controlled which contractors were engaged to assist his team Oversaw work Signed work dockets and thus payments to the contractors Favoured Araldi who was banned because of a positive drug test, and Hili � Hili Excavations Directed between $0.5 - $1m work per year for them Submitted false dockets to RIPS and PHIPS to overcome problems such as: double and triple shifts � expressly forbidden to falsely pay for 2 drivers when only 1 worked long term hire of a truck from Araldi � truck cost $45,530; through Laidlaw, RailCorp paid Araldi $223,080 over 4 years to hire it. The truck hire problem raised several times by project clerk with management � nothing done Tip truck hire

49. 49 Sandown track relocation project Schliebs hired through MCR, a contractor he was working for because he was known to the project engineer Argueta and his supervisor Whitehouse Schliebs was Sandown internal site supervisor Was friends with Hili of Hili Excavations Argueta unaware Schliebs had resigned from RailCorp prior to being dismissed because of disciplinary inquiry into Schliebs�s activities ie false time sheets Schlieb on Sandown site from 9/7/2007 � 30/9/2007 � submitted false time sheets � claims for RailCorp work when he was not � eg., assessing RailCorp work for MCR; at a lingerie restaurant in Woolloomooloo; visiting his accountant � Madrajat

50. 50 25 out of 28 time sheets contained false claims, including 70 hours when he was not present on site Had corrupt arrangement with Hili to falsify work dockets Told another contractor Severino of Nat�s Earthmoving to claim for 10 hours for 2 � hrs actual work. Schliebs ok�d Severino to take some sleepers Schliebs referred to the Sandown job as his �holiday camp�

51. 51 Employees & their own companies Petrovski � T/L Commercial Renewals, Railcorp Undeclared interest � wife sole director, secretary and shareholder At one point Araldi hired a Mac Water Truck to do work for RailCorp through TPS Used by TPS for RailCorp work Laidlaw favoured Mac Water Trucks July 2005 � May 2007 $438,000 from RailCorp � all of Mac�s revenue During this time $211,000 deposited to personal account for Mr Mrs Petrovski Number of people falsified documents and records to hide wrongdoing Hansen � Hansen Transport (NSW) PL Penny � Penny Hire PL Had advice from Schliebs to take invoices to Madrajat � director of Precision Wirefeed Welding PL Had $62,000> in falsely claimed overpayments

52. 52 Contractors fund RailCorp entertainment Some RailCorp employees expected contactors to contribute to major social functions, eg golf days, staff farewells Laidlaw and Whitehouse involved in the commitee Widespread acceptance of this Blacktown RailCorp Golf Day Schlieb�s farewell

53. 53 RailCorp 8 Final summary report 40 recommendations RailCorp employees found to have improperly allocated almost $19m to companies owned by themselves, friends, or families in return for corrupt payments over $2.5m 96 corrupt conduct findings against 31 people DPP referrals for 33 people 663 criminal charges