A new front has opened in the corruption scandal engulfing the Victorian Education Department, with revelations of a fraud worth up to $1 million involving the botched school computer system, Ultranet.
The suspect payment was uncovered in a secret inquiry by former senior police officers in 2013, which recommended further probes be launched by the fraud squad and corporate watchdog ASIC.
The inquiry found that senior public servants had, without any tender process, paid $1 million in taxpayer funds to a private firm for work worth only about $60,000. It's understood the payment ultimately benefited a Northern Territory company, CSG Limited, which had been contracted to build the failed, $80 million computer system.
Just months after the suspected corrupt payment was made in 2011, the senior education official who authorised it, then deputy department secretary Darrell Fraser, left and took a senior executive job with CSG.
Fairfax Media can reveal that Investigators from the Independent Broad-based Anti-corruption Commission have seized documents relating to the 2013 inquiry into the payment. The department is now bracing for the possibility that IBAC will shift the focus of its continuing public corruption inquiry to Ultranet.
Ultranet was designed to provide parents with fortnightly updates on their child's progress, but it was scrapped in 2013 by the Napthine government after its cost blew out from $60 million to $180 million, and it was barely being used.
The IBAC inquiry starts again this week and has, over the past month, focused on the alleged rorting of education funds by public servants, led by former acting secretary Jeff Rosewarne and his senior colleague, Nino Napoli.
The latest revelations raise further questions about how an apparently systemic failure of governance within the education department enabled allegedly corrupt officials to use money meant for schools to benefit themselves and members of their families.
Mr Rosewarne was acting secretary of the department at the time Mr Fraser sought a certificate of exemption in order to award the $1 million contract without the usual competitive process.
The department only discovered the payment after a Melbourne journalist lodged a freedom of information request for documents relating to entertainment spending in 2011. The journalist later wrote about education funds being spent on a boozy Christmas party.
After the story was published, senior departmental officials ordered their staff to search for any contracts that could be discovered by the media and which might further embarrass the department. It was during this search that a public servant discovered the $1 million payment and reported his concerns to secretary Richard Bolt.
Mr Bolt, who now heads the state's new economic development department, appointed the private investigation firm led by former senior police to conduct an inquiry. Departmental sources said when this inquiry discovered alleged fraud, corruption, conflicts of interest and insider trading, Mr Bolt moved to call in the police and corporate regulator ASIC.
As revealed last November, the involvement of ASIC was in response to the discovery that four senior education department officials, including one on the board overseeing the Ultranet project, had bought shares in CSG and may have had knowledge about the company's future performance.
One of those senior officials with CSG shares, John Allman, was sacked last month by the department after he misled IBAC during a public hearing, and was caught out destroying evidence.
Senior departmental sources said the reason a further and comprehensive internal investigation into the $1 million CSG payment was not completed by the department was because IBAC took over the case.
In a scathing December 2012 report, then auditor-general Des Pearson wrote of "a number of serious procurement and probity lapses" linked to Ultranet.
Mr Pearson found that the department's Ultranet Project Board had in early 2009 suspended CSG as a bidder due to "what DEECD described as untruthfulness in some tender responses".
A spokesman for the Education Department said the IBAC inquiry prevented it from answering specific questions about the Ultranet and the $1 million contract authorised by Mr Fraser,
Mr Fraser, is no longer with CSG.