Compliance Stream C & D (C000369) – Defence Activity 6 – Probity and Ethics

PART 1 – CASE STUDY

Read the following article and answer the questions at the end.

Vic Police IT unit is ‘shambolic’

Milanda Rout

From: The Australian

November 12, 2009 2:22PM

VICTORIA Police’s IT department has been exposed by the state’s chief watchdog as a dysfunctional, shambolic unit where taxpayer funds are wasted, government tender guidelines flouted and questionable million-dollar tender deals done.

In a scathing report tabled in parliament, Ombudsman George Brouwer said the Business Information and Technology Services Department had grossly inadequate record-keeping, “apparent disregard” for contract processes and should be investigated for the misuse of taxpayer funds.

He identified the two senior managers of the $191 million unit — including one handpicked by former police commissioner Christine Nixon — as key problems but also criticised Ms Nixon for failing to address issues in the unit first identified several years ago.

The report detailed some of the examples of oversight, including paying $81,000 for a lease for a communications tower that had held nothing but an empty cupboard since 1995, tenders blowing out by $39m more than they were given government approval for and the only record of a $27m IT deal being a scribbled handwritten note.

Senior staff at the unit also accepted free tickets to the Melbourne Cup, AFL grand finals and Australian Open tennis from potential IT contractors.

Mr Brouwer found there had been “no fewer” than three external reviews and five internal audits, and two criminal investigations of the unit since August 2006 but police had only recently taken “remedial action”.

One of the earlier police investigations found “correct practices and policy for procurement of contractors within BTIS were blatantly disregarded by senior managers and employees, who were involved in unethical, dishonest and deceptive practices”.

Chief Commissioner Simon Overland was quick to admit that he was embarrassed by the activities of the unit and had accepted all the recommendations.

The state government said it had become aware of the “terrible” breaches only last Christmas and hoped the revelations did not undermine the public’s confidence in the police force.

Mr Brouwer’s report, which contained more than 30 recommendations, found that the head of the unit, Valda Berzins, who was Victoria Police’s chief information officer at the time and has since resigned, admitted she did not “closely monitor” the day-to-day functions and left it to her offsider, John Brown.

“The extent of Mr Brown’s control over knowledge of BITS finances and the general lack of proper records is best illustrated by the fact that Victoria Police’s figures relating to the funding of a contract worth in excess of $27m are largely based on a handwritten note he provided to a BITS manager in a meeting several months after his resignation,” Mr Brouwer wrote.

“In another example, in February 2007, BITS obtained the relevant approvals to redirect security services valued at more than $11m from IBM to Fujitsu,” Mr Brouwer wrote. “In March 2007 the former CIO entered into a contract with Fujitsu to the value of $27.2m, some $15m above the approved expenditure.”

He said there had been 56 breaches of financial regulations by unit staff when processing government IT contracts.

Mr Brouwer said Ms Nixon had not done enough to fix the problems at the unit. “I consider that Victoria Police management permitted an environment to develop where two senior BITS staff committed Victoria Police to unfunded multi-million-dollar IT projects,” he wrote.

Mr Overland, who accepted the report’s findings, said corruption was not the issue, rather, it was a case of “trusting people too much”.

“I think essentially we probably trusted some people a little too much and we didn’t have appropriate oversight arrangements in place that picked up the sorts of breaches and the sorts of behaviours that have been identified (in the report),” Mr Overland said.

“There are very clear guidelines, very clear rules about how we actually expend public money and essentially they haven’t followed proper process so it’s not money that we didn’t have to spend but they’ve gone about it in a way that didn’t follow proper process.

“The criticisms that were made are fair criticisms and we absolutely need to accept and learn from them,” he said.

“It is embarrassing, yes. Obviously, no one likes to receive criticism of this nature but I have to say I think the ombudsman has been very thorough and very fair in the way that he’s gone about his task.”

Mr Overland said the behaviour of accepting gifts and benefits was “clearly unacceptable”.

He said a new policy had been drafted but he would wait for a broader government review being conducted by the State Services Authority before making any announcements.

“I want to actually wait and see what comes out of that to make sure my policy is consistent with that position.

“But I don’t believe my senior managers are under any misapprehension around what are appropriate gifts, benefits and hospitality.”

Mr Overland said two criminal investigations had been completed but no charges would be laid.

“They are now complete and finalised so there’s no criminal conduct here.”

He denied that trust in his staff was diminishing.

“Two of the people that most of the criticisms have been levelled against are no longer with the organisation. … I’ve had an opportunity to bring in a new senior executive team.

“I have the utmost confidence in my team and the people working for them. I’m not going to single people out. I think in the end all of us have to accept responsibility for what’s happened, I have to accept responsibility for what’s happened, and make sure that the recommendations that the ombudsman has made are implemented and that this issue is fixed,” Mr Overland said.

On-line comment posted in response to the above article:

The true culprit is the extremely onerous Procurement policies and process used by the Victorian Govt. The most basic of things have to use a process that is both time consuming and eventually ends up costing more than a normal purchase would cost. If people knew how much of the waste is down to following ‘processes’ it would stagger them.
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