Leanne Cover outside the ACT Courts on 3 March 2024. Photo: Albert McKnight.
The ACT Integrity Commission has issued findings of serious corrupt conduct and potential criminal conduct by two former public officials involved with the procurement of consultancy services for the Canberra Institute of Technology.
The second Special Report for Operation Luna made findings against then-CEO and Delegate Leanne Cover and then-Executive Director of Education Andrew Whale regarding negotiations concerning the payment schedule agreed upon and the procurement of the sixth contract between CIT and consultant Redrouge Nominees Pty Ltd, worth almost $5 million.
“The contract provided for substantial amounts to be paid in advance of the services to be provided,” an ACTIC statement read.
The ACTIC found a document was created that contained false and dishonest statements as part of the contract’s procurement (and that this was known to Ms Cover and Mr Whale), and ultimately that their conduct amounted to serious corrupt conduct.
“The fictional justification for approving payments in advance to the consultant enabled a contract that gave a substantial commercial gain to the contractor at the cost of the Territory,” the ACTIC stated.
“This was not a case where relevant information was omitted from or false information inserted in a document merely to cover up some unfortunate mistake.”
Redrouge Nominees is associated with Patrick Hollingworth. He is not subject to any adverse findings or comments in this second Special Report.
During contract negotiations, Mr Hollingworth proposed reducing the tender price of $5.68 million to $4,999,990 if the entire amount were paid in advance of the contract’s execution.
It outlined that a third of the money would be paid upon execution of the contract on 28 March 2022, with subsequent payments also payable in advance of the services to be provided.
“The substantial payments in advance requirements under the contract were unusual, particularly in light of the fact that the nature of this services contract did not require upfront investment of significant amounts in order for the contracted services to commence or to be undertaken,” the report stated.
“In negotiating the terms of the contract, Mr Hollingworth, on behalf of the contracting entity, was entitled to consult that entity’s commercial interests without regard to those of the Territory.
“On the other hand, the relevant officials, namely Ms Cover, Mr Whale … were obliged to act solely in the interests of the Territory.”
Proposed contract pricing table for the Redrouge services to CIT. Photo: ACTIC.
ACTIC found it was “never envisaged” that the cost of acquisitions, resourcing, or materials would need to be paid in advance to allow the undertaking of the contract.
It also found that it was understood the contract was for services only, not for any significant acquisition of materials or resources. Equipment, licenses or materials needed would have been covered by a disbursements clause and needed separate approval from CIT.
“Mr Whale’s evidence to the Commission was to the effect that, given the urgency of the work, Mr Hollingworth had … already arranged for staff to undertake preliminary work before the contract actually commenced to enable work to start immediately upon execution and that this was the reason for the payments in advance,” the report stated.
“This explanation is a fiction … the justification given in the brief for the advance payments was knowingly false. That this was the case was known also to Ms Cover.
“Not only did this amount to serious corrupt conduct, but could also amount to criminal offences.”
The report outlined that an FOI request regarding dealings with Mr Hollingworth in 2020, and potential examinations from the Legislative Assembly, led to him being concerned about the contracts and a “perceived risk” that the contracts could be cancelled, “hence his insistence on lump sums to be paid in advance without reference to the services actually performed”.
However, a brief from Mr Whale to Ms Cover on 28 March 2022 explained the advanced payments were to enable Mr Hollingworth’s business “to make the necessary acquisitions, put required resourcing and materials in place, as is the case with this contract.”
“I am satisfied to the requisite degree that Mr Whale drafted the brief on the basis that Ms Cover was aware of and agreed to the fictional character of the narrative as to the reasons for the payment schedule and the extent of third-party assistance,” the report stated.
“Plainly enough, it was to persuade any reader that the contract had been negotiated with appropriate care, and that the most contestable and controversial aspect, namely the schedule of advance payments, was justified in accordance with conventional practice.
“Thus, the brief was directed to deceive, if possible, any interrogator of the legitimacy of the transaction.”
ACTIC found that both Mr Whale and Ms Cover were persons of good character, had no personal relationships with Mr Hollingworth and should be considered as well-regarded public servants with years of experience.
But, despite their denials of any wrongdoing or dishonesty, the evidence established to the required standard that their denials are “untrue”.
ACTIC outlined several sections of the Criminal Code 2002 (ACT) that could allow for criminal charges, either directly or as accessories to a crime.
These include misfeasance in public office, wilful misconduct in public office, conspiracy to defraud, general dishonesty, giving false or misleading information, producing false or misleading documents and abuse of public office.
“A fictional narrative was placed in a crucial authorisation with the intentional effect of enabling a multimillion-dollar procurement to be contracted in a form which gave substantial commercial and financial gain to the contractor at the cost of the Territory and deflecting or misleading scrutiny or inquiry,” the report stated.
“The conduct seriously undermined the probity of the procurement process, enabled a substantively unjustified contract and, additionally, was directed to obstruct or hinder administrative and government oversight.
“It would inevitably threaten public confidence in the integrity of government or public administration.
“Accordingly, the conduct of both Mr Whale and Ms Cover amounted to serious corrupt conduct as defined in [section] 10 of the IC Act.”
Ms Cover argued earlier this year that previous findings against her were covered by parliamentary privilege.
She had also attempted to have the previous adverse findings suppressed.
