CCC investigation uncovers major fraud from WA Health projects

Corruption and Crime Commission

‘Check your moral compass’ – that’s the message for all public officers following the sentencing of a former Department of Health facilities manager to four years jail, for corruptly using his position to obtain almost half a million dollars over a six-year period.

The significant fraud was uncovered by a Corruption and Crime Commission investigation. The manager was charged with 48 counts of corruption under the Criminal Code, but later pleaded guilty to 10 charges with a total benefit of almost $500,000. Prosecutors discontinued the remaining 38 charges.

The manager had been responsible for procurement in a number of different capital works projects including many high profile projects with significant budgets.

Through its investigation the Commission established that the manager had acted corruptly in collusion with an engineering consultant with whom he maintained a covert business relationship. The relationship was concealed by the use of the manager's two family businesses.

At public hearings, the manager said he felt he had been entitled to some remuneration for the architectural and engineering planning work, as well as the supervision and administration of the construction work, he had been doing a for a number of years which he believed was outside the scope of his duties at the hospital.

He said: “In 2004 the consultant suggested to me, and I agreed, for future projects that he was to be involved as project manager and that I would provide to him all my concept designs, architectural, engineering, and building plans and he would pay me a portion of the contract fee that he received.”

The manager attempted to justify this arrangement on the basis that he provided drafting and design services beyond his official duties which would normally be completed by an architect. He argued that it was the same as a doctor working at a public hospital and receiving an income from private patients. His view was that he could do the same because he was saving the hospital the cost of an architect.

Working closely with the consultant, the manager established a reputation for consistently completing works well under budget and within tight timeframes. He became the "go to" person for expediting building projects.

The Commission found several governance weaknesses made it possible for the manager's conduct to go undetected for so long. In fact, it was not identified by anyone at the hospital, the Area Health Service, or the Department of Health – it was revealed by an architect at another organisation which was collaborating on a laboratory refurbishment overseen by the manager.

WA Health’s management of its fraud and corruption risks in this situation was found to be characterised by poor supervision, low accountability and high discretion. The manager had a high degree of executive autonomy and his Director trusted him to carry out his duties with integrity, and to follow correct procurement guidelines with little or no monitoring.

In sentencing, the judge said that the manager had “lost his moral compass”, that his corrupt behaviour would have “continued indefinitely had the CCC not intervened” and that “immediate imprisonment would have a general deterrent effect”.