Friday, 27 January 2017

Operation Dunham

They thought they were the smartest guys in the room!
The official announcement about Operation Dunham, released today:

IBAC has found evidence of process corruption, improper diversion of funds, conflict of interest and mismanagement at senior levels, in its Operation Dunham investigation into the failed Ultranet online platform, at the Department of Education and Training. 

The report, tabled in Parliament today, details a number of improper actions and behaviours by senior departmental staff that effectively corrupted the Ultranet’s tender process, and ultimately led to the waste of millions of dollars of taxpayers’ money.

IBAC Commissioner Stephen O’Bryan QC said: “The Victorian community invests considerable trust in public sector employees ensuring limited resources are used in a proper manner for the benefit of all Victorians.  Taken singly, many of the actions and behaviours by these public servants would be of concern. Taken together, they show a disturbing pattern of improper behaviour.” 

Behaviours identified by IBAC include the inappropriate receipt of hospitality and travel; improper communications intended to influence the tender process; and a likely attempt to influence the tender outcome by ‘stacking’ an evaluation panel.  IBAC found decisions contrary to proper procurement process, in particular singular preference for a particular bidder, despite serious concerns about its credentials. 

The IBAC investigation also revealed almost one million dollars was improperly paid to an external company in an attempt to prop up the Ultranet project. There was also evidence some senior departmental officers used confidential information about the project to purchase shares, and misled the Department about those purchases. 

The Ultranet was designed to be an online teaching and learning platform for all Victorian government schools.  It was cancelled in 2014 following an audit by the Victorian Auditor-General’s Office. The eventual cost of the Ultranet is unknown, with estimates ranging from $127 million to $240 million.

IBAC has recommended DET review current arrangements governing how schools and other work areas pursue and respond to commercial opportunities; and strengthen internal procurement and governance arrangements for major projects. The Department has advised it supports these recommendations. 

IBAC has recommended the Victorian Public Sector Commission consider banning public sector employees receiving any gift, benefit or hospitality from a current or prospective supplier.  IBAC has also recommended the Department of Treasury and Finance consider improvements to reviews of high value and/or high risk projects. 

IBAC is compiling a brief of evidence for advice by the Office of Public Prosecutions. - See more at:


They sold it well , although most principals saw through the smoke and mirrors. I was there at that 'Big Day Out' and it was very embarrassing! the reality was very disappointing and it would have been obselite today even if it had worked. It was clunky and counter-intuitive. ( by the way, how are people going with the new Insight Aseasment platform??? ) I saw these people up close at regional briefings with their pin head hangers on from St Andrews Place and the regional staff fauning over them and it was sickening. They thought they were the smartest guys in the room and they had a lot of people fooled. This rot started at the top. Not in schools! That was where the corruption started and for the most part ended and that is where the reform is needed. Not in our schools!

From the Age

The Ultranet project promised to deliver an online platform that connected teachers, parents and students, but was plagued by technical issues and rarely used after its rollout by the former state Labor government in 2010.

In a long-awaited report tabled in state parliament on Friday, IBAC found that department officials purchased shares in CSG – the company awarded the Ultranet project – influenced the tender process and accepted inappropriate gifts from suppliers including flights and lavish dinners.

"The willingness of some senior leaders in the department to deceive has resulted in the waste of millions of dollars of public money," the report said.

It follows revelations by Fairfax Media in 2014 that four senior senior education department officials bought shares or took jobs with CSG.

His colleague, former regional director Ron Lake, bought $100,000 in CSG shares while on the Ultranet board. Former regional director Wayne Craig and his wife purchased 6000 CSG shares after the company won the contract.

"The behaviour suggests that at least some used confidential information to which they were exposed in the course of their work for private gain," the report said.

The man who spearheaded the Ultranet project, former deputy secretary Darrell Fraser, used $1 million of department money to "corruptly inject funds into CSG to ensure it had sufficient cash flow to properly deliver the Ultranet project", IBAC found. 

It said Mr Fraser – a former principal at Glen Waverley Secondary College – was "instrumental in manipulating procurement processes to ensure the Ultranet contract was awarded to the CSG/Oracle consortium – companies with whom he had a longstanding relationship".

He also tried to influence the tender evaluation by 'stacking' an assessment team with like-minded colleagues. Mr Fraser also spent thousands of dollars of department funds on expensive dinners and alcohol.

In 2011, Mr Fraser resigned as deputy secretary and took up a senior job with CSG.

The watchdog heard that despite repeated warnings from consultants and probity officers that the CSG bid was high risk, the contract went ahead.

"IBAC found decisions were made that were contrary to proper procurement process – in particular, the unreasoned and inexplicable decision to give singular preference to CSG, despite serious concerns about its commercial credentials in the relevant area.

Ultranet was launched in August, 2010 at an event which became known as "The Big Day Out" and cost a staggering $1.4 million.

A video of the event shows singers and dancers performing to a remixed version of Madonna's Material Girl: "We are living in a virtual world and I am an Ultranet girl".

The scandal is a major embarrassment for the Labor government, which pledged to deliver Ultranet at the 2006 state election and considered it a legacy project. It was dumped by the former state Coalition government in 2013.

During the public hearings, former Education Minister Bronwyn Pike was snared in phone taps agreeing to secretly "chew the fat" over drinks with two ex department officials accused of corruption.

But the report cleared her of any wrongdoing, saying her enthusiasm for the project "never gave tacit approval to any person to do anything outside of those proper processes or to act with anything other than complete integrity".

Opposition education spokesman Nick Wakeling said the government needed to reassure parents that education funding would be spent on improving literacy and numeracy. 

Education Minister James Merlino said that Victorian families had a right to feel angy and let down by the department. 

He said the department had introduced reforms which would stamp out corruption by improving procurement processes, auditing and financial training for schools. 

Education Department secretary Gill Callister said that the behaviour exposed by IBAC was "completely unacceptable".

"I hope that this signals the closure of a dark chapter in this department's history," she said. 

"Many people within the department and our school communities will feel greatly let down by the people they were entitled to trust."

Senior executives implicated in the scandal have been either sacked or resigned, she said.

IBAC is seeking advice from the Office of Public Prosecutions about whether criminal charges can be pursued. It has recommended the Victorian Public Sector Commission look at banning public servants from receiving gifts or benefits from prospective suppliers.

This is IBAC's second major investigation into corruption in the Education Department. It recently charged former education department official Nino Napoli for his involvement in an alleged scam that swindled $6 million from state schools. 

Bernie Fraser.

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