An IT executive sold a company linked to the botched Ultranet project for $11 million, despite telling a corruption inquiry it had no physical assets and ran out of a virtual office.
It has been alleged that the company only had one asset – its close connections with senior Education Department staff including former deputy secretary Darrell Fraser.
Greg Tolefe, the co-owner of a company called CingleVue, told an Independent Broad-based Anti-corruption Commission's hearing on Thursday that Ultranet developer CSG bought his company for $11 million.
The executive received $5 million upfront and is still negotiating with CSG over a $6 million "earn out", the commission heard.
It was suggested that he dudded his business partners, who were not told of the $11 million sale price and received $800,000 and $200,000.
"I think you might have lied to them about how much you sold the business for," said counsel assisting, Ian Hill, QC.
It emerged that CingleVue did not have a bank account, ran out of a "virtual office" in Western Australia and, according to tendered documents, "ha(d) no physical assets".
But Mr Tolefe said his company had an important software code.
IBAC is examining how contracts were awarded and tendered for Ultranet, a $240 million botched IT project for Victorian state schools that was dumped in 2013 because it was plagued with technical issues.
Education Department officials bought shares in CSG, the company that won the multimillion-dollar contract and top officials took jobs with the company.
Allegations of blackmail also emerged, with Mr Tolefe accusing his former employee, ASG, of pushing him and his co-worker to get secretive information from the Education Department. "ASG were pushing for Frank Aloisio to blackmail folks at the Department of Education," he said.
Mr Tolefe, who joined CSG in mid-2009 after selling his company to them, pleaded guilty to defrauding his former employer, ASG, in the Western Australian Supreme Court in 2011.
He doctored hotel invoices and airline tickets, defrauding the company of more than $8000. But Mr Tolefe pointed out that he did not record a criminal record.
CSG paid more $4.5 million to ASG in 2009 to settle legal action over the Perth company's claim its intellectual property had been wrongly transferred after it bought Mr Tolefe's company.
IBAC is investigating whether Education Department employees received gifts, travel and job opportunities due to their involvement in Ultranet, and whether they bought shares in the company that won the multimillion-dollar IT contract.
Ultranet was meant to deliver an online platform that connected teachers, parents and students, but it was plagued with technical glitches and rarely used after its rollout in 2010.
It was dumped by the former Napthine government in 2013.
It was revealed at the hearings earlier this week that the cost of the project blew out to $240 million – far more than $180 million previously reported.
The hearing continues.
Meanwhile the Caucus is getting restless and so it should
In caucus there are critics of Mr Merlino's performance with some MPs saying Labor is not doing enough on education, despite campaigning heavily on the issue at the 2014 election.
"It is ok having the slogan but you need the substance to back it up, and you need a minister with gravitas and respect to be able to deliver, at the moment all we have got is a slogan," one MP said.
McClelland College ( in Frankston) principal Amadeo Ferra has big plans for his ever-expanding school, and wants to turn it into a state-of-the-art sports academy.
But that will require $12.7 million to fix leaky roofs and upgrade the school's gymnasium, which has no showers or toilets, and a single basketball court for 940 students.
Students have to wear their sports uniforms all day because there is no place to change or shower.
"It's not a level playing field," he said. "All the other schools in the area have great facilities."
While many Frankston schools benefited from extra cash when balance-of-power MP Geoff Shaw held the seat, funding for McClelland College was contingent on the Coalition winning the 2014 state election.( The same situation is occurring at Ballarat High but they have some money for major improvements, not what the Coalition was offering at the last election)
The principal is hopeful that the Andrews government will set aside funding for the school in the 2016 budget.
As reported by The Age earlier this year Victoria is in the grip of a school shortage crisis. The state needs to build up to 220 new schools over the next decade to cope with an explosion in student numbers.
And for the first year in a decade and a half, not a single state school will open in 2016, because of inaction by the previous Coalition government.
It takes between 18 months and two years to build a new school from scratch.
Last year's state budget allocated $325 million to upgrade and renovate more than 60 schools and $111 million for 10 new schools.
A spokesman for Mr Merlino said the last budget delivered the biggest ever injection of funds for education. But more needs to be allocated if Victoraian students get the same amount of education spending as students in every other state.
"It's going to take time to catch up after four years of the Liberals' neglect, they halved infrastructure funding during a period when population growth went through the roof," he said.
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