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The Victorian government’s body in charge of delivering upon major urban renewal projects has been chided by the state’s anti-corruption watchdog, which says lax procedures allowed a senior staffer to flout governance rules and dishonestly award contracts to companies at which his family members were directors.

Tabling its latest report into Parliament, the Independent Broad-Based Anti-Corruption Commission found that Carmine Petrone, a senior manager at Places Victoria who headed the organisation’s Fibre to the Home project over a five-year period ending February 2014, was involved in serious corrupt conduct for his actions in awarding more than $8 million worth of contracts to two companies at which family members of his were directors and over which Petrone himself had substantial influence without him having declared conflicts of interest.

Furthermore, it chided the adequacy of processes and procedures relating to core governance and accountability at Places Victoria.

In particular, the watchdog found that:

  • Petrone had failed to attend mandatory induction training at which rules and procedures associated with procurement and conflicts of interest were explained and that he did not attend subsequent training sessions on corporate governance.
  • Policies and procedures were ‘systematically circumvented’ and red flags failed to prompt an effective response from Places Victoria for four years. These included the creation of purchase orders after work had been performed and invoiced; the manipulation of invoices to less than $50,000 so as not to exceed Petrone’s financial delegation; and invoicing irregulatories such as consecutive invoice numbers and identical invoice dates with similar amounts.
  • Duties were not segregated, enabling Petrone to exercise excessive control over multiple stages of the procurement process.
  • There was insufficient control over subcontracting arrangements. Contractors and subcontractors commenced work without any induction to relevant policies, procures or codes of conduct. One of the companies whom IBAC alleges was under Petrone’s control had no experience in installing fibre network infrastructure and was established solely to work on the individual project in question.
  • The project team used private email accounts and Gmail and Google Docs for communication rather than official Places Victoria systems.
  • During his time with Places Victoria, Petrone was able to work without effective oversight or supervision and was rewarded for ‘getting things done’ with bonuses in excess of $88,000.
  • During its recruitment process, Places Victoria had failed to identify that Petrone had been dismissed from a previous employer because of serious misconduct.

Places Victoria is the public sector agency owned by the Victorian government which is charged with delivering major urban renewal projects in that state.

The fibre to the home project involved the installing of fibre-optic network infrastructure across a number of the agency’s developments including the Aurora and Aspect residential estates in Epping in Melbourne’s outer north and Officer in Melbourne’s outer east.

In its report, IBAC recommended that Places Victoria beef up governance process and procedures.

This included through appropriate due diligence to ensure that new and existing contractors are aware of their obligations and through ensuring that a clear conflict of interest framework is in place.

IBAC Commissioner Stephen O’Bryan QC said he hoped that the Places Victoria case could provide lessons for other government agencies.

“By sharing the findings of this investigation, IBAC draws the attention of all public sector agencies to the real risks and vulnerabilities that exist for corruption to occur, and we have made clear recommendations to help agencies prevent corruption,” he said.

 
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