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ICAC reportInvestigation into dealings between Thambiaiah Jeevarajah,
an engineer employed by the Department of Housing, and theconstruction company Australian Colour Enterprises Pty Ltd
ICAC report
Investigation into dealings between Thambiaiah Jeevarajah and Australian Colour Enterprises Pty Ltd
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ISBN 1 920726 72 1 3
© May 2003–Copyright in this work is held by the Independent Commission Against Corruption. Part III, Division
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material other than as permitted by the Copyright Act 1968, please write to the Commission at GPO Box 500,
Sydney NSW 2001.
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Contacting the ICAC
ICAC: Level 21
133 Castlereagh Street
Sydney NSW 2000
Post: GPO Box 500
Sydney NSW 2001
Phone: 02 8281 5999
Toll free: 1800 463 909
Facsimilie: 02 9264 5364
Website: www.icac.nsw.gov.au
Email: icac@icac.nsw.gov.au
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President SpeakerLegislative Council Legislative AssemblyParliament House Parliament HouseSYDNEY NSW 2000 SYDNEY NSW 2000
Dear PresidentDear Speaker
In accordance with s.74 of the Independent Commission Against Corruption Act 1988 (as amended), I am pleased topresent the Commission’s report on its investigation into the conduct of an officer of the Department of Housing.
Assistant Commissioner Pehm presided at the private hearings in this investigation and his findings andrecommendations are contained in the report.
I draw your attention to the recommendation that the report be made public immediately in accordance with s.78(2) ofthe Independent Commission Against Corruption Act.
Yours sincerely,
Irene Moss AOCommissioner
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CONTENTS
EXECUTIVE SUMMARY .................................................................................................................1
Investigation outcomes ................................................................................................................................... 1
CHAPTER 1 — INTRODUCTION ..................................................................................................2
Background .................................................................................................................................................... 2The ICAC investigation ................................................................................................................................... 3Section 78(2) recommendation ....................................................................................................................... 3
CHAPTER 2 - THE RENOVATION OF 265 HOMEBUSH ROAD, STRATHFIELD SOUTH .............4
The contract ................................................................................................................................................... 4The contracting parties .................................................................................................................................... 4Conduct of the renovation .............................................................................................................................. 5Cost to Australian Colour Enterprises Pty Ltd .................................................................................................. 5
CHAPTER 3 — THE BIDWILL PROJECT .........................................................................................8
Select tender process ....................................................................................................................................... 8Tender negotiation and assessment ................................................................................................................. 9Contract variation work ................................................................................................................................ 10Other projects .............................................................................................................................................. 10
CHAPTER 4 — CORRUPT CONDUCT AND S.74A(2) STATEMENT ...........................................11
Criminal offences for the purposes of s.9 of the ICAC Act ............................................................................ 11Disciplinary offences for the purposes of s.9 of the ICAC Act ....................................................................... 12Section 74A(2) statement .............................................................................................................................. 13
CHAPTER 5 — CORRUPTION PREVENTION..............................................................................14
Adequacy of select tendering procedures ....................................................................................................... 14Compliance with procedures for evaluating tenders ....................................................................................... 15Accountability and record keeping ................................................................................................................ 17Conflicts of interest ...................................................................................................................................... 17
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EXECUTIVE SUMMARY
This report deals with an investigation by the
Independent Commission Against Corruption (the
ICAC) into the nature of any association between
Thambiaiah Jeevarajah, an officer of the New South
Wales Department of Housing, and Australian Colour
Enterprises Pty Ltd (ACE), in particular, the
circumstances surrounding the refurbishment of the
residence of Mr Jeevarajah by ACE in 1999 and the
awarding of a Department of Housing estate
redevelopment project in Bidwill, in 1999, to ACE.
The investigation focused on two issues:
1. whether any corrupt arrangement existed between
Mr Jeevarajah and ACE, and
2. in the absence of any such corrupt arrangement,
whether Mr Jeevarajah acted corruptly in that he
failed to appropriately manage an emerging conflict
of interest in accordance with the Department of
Housing’s Code of Conduct.
In relation to the first issue, there was an allegation
that Mr Jeevarajah received a significant financial
benefit in that ACE performed refurbishment work on
his personal premises at a substantially reduced price.
Around the same time as ACE were renovating Mr
Jeevarajah’s home, he was supervising the tendering
process for the performance of construction work in
the Department of Housing’s Bidwill precinct. ACE
won this tender. A concern was raised that Mr
Jeevarajah may have been improperly influenced to
show favour to ACE in the conduct of his official duties
for the Department of Housing.
INVESTIGATION OUTCOMES
This investigation, which included private hearings
involving persons listed in Chapter 2 of this report,
found evidence that indicated that ACE did spend far
in excess of the contract price paid by Mr and Mrs
Jeevarajah in the performance of refurbishment works
on their home. However, there was insufficient evidence
to establish, to the requisite degree, that there was
any corrupt arrangement as between Mr Jeevarajah
and ACE.
The report does find that Mr Jeevarajah did have a
conflict of interest and that he failed to manage this
in accordance with the Department of Housing’s Code
of Conduct.
A recommendation is made in the report that the
Department of Housing consider taking disciplinary
action against Mr Jeevarajah on account of his failure
to adequately comply with the Department of Housing
Code of Conduct with respect to his management of
a relevant conflict of interest.
The final chapter of this report looks at corruption
prevention issues that emerged during the course of
the investigation. This chapter outlines deficiencies in
Resitech’s tendering and contract management
processes that were identified by the ICAC’s
investigation, acknowledges the considerable work
done by Resitech since 1999 to improve the probity
and integrity of these processes and makes a number
of recommendations for further improvements.
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BACKGROUND
At all times relevant to this investigation Mr
Thambiaiah Jeevarajah was an engineer employed by
Resitech, a service agency of the Department of
Housing. The core function of Resitech is to provide
project management and professional services to the
Department of Housing.
In 2000 the Department of Housing conducted
significant upgrading works in its Bidwill precinct to
allow for Torrens Title subdivision of estate property
for residential purposes and possible public sale. This
development will be referred to throughout the
remainder of this report as ‘the Bidwill project’.
In March and April 1999 Mr Jeevarajah assisted the
Department of Housing in its consideration of fee
proposals for the preparation of designs for this work.
In late April 1999 this design work was formally
awarded to the engineering consultants Ove Arup and
Partners. At this stage it became highly likely that the
project would proceed to a construction phase and
that tenders would be called for the conduct of
construction works.
By September 1999 a decision had been made to
proceed with construction in accordance with plans
prepared by Ove Arup and Partners. The Department
of Housing again sought the assistance of Resitech to
facilitate the tendering process for this work. This was
managed by Mr Bounsavad ‘Guy’ Souksay, an engineer
at Resitech under the direct supervision of Mr
Jeevarajah.
Ultimately, in December 1999, the tender was awarded
to the firm Australian Colour Enterprises Pty Ltd
(ACE). The tender price was $753,000.
ACE had commenced operations in the early 1990s
as a purely painting operation. Over the decade it
expanded its capacity to encompass property
maintenance and property repairs. It had done some
remedial work of this nature previously, however, this
project was easily the largest of this type ever undertaken
by the firm up until that point in time.
On 1 June 1999, after the contract for the design work
for the Bidwill project had been awarded, but prior to
any decision to progress to construction and the
tendering for this work, Ranjana Jeevarajah, the wife
of Mr Jeevarajah, entered into a contract with Chetran
Pty Ltd (Chetran), for the conduct of home renovations
at premises owned by Mr and Mrs Jeevarajah at 265
Homebush Road, Strathfield South. These premises
had been purchased in April 1998 and had been rented
out since purchase. The renovations were taking place
so that Mr and Mrs Jeevarajah and their family could
take up residence in the premises. Chetran was a
parent company to ACE in circumstances where they
were essentially the same organisation. The renovations
proceeded and were completed towards the end of
the year. A payment, in accordance with the terms of
the contract, of $24,000 was made by Mrs Jeevarajah
to ‘Chetran/ACE’ on or about 29 December 1999.
In an article printed in the Sydney Morning Herald on
Monday 27 May 2002, concerns were raised about
this renovation and Mr Jeevarajah’s subsequent
involvement in the tendering process for the
construction phase of the Bidwill project. The article
indicated that ‘sources involved with the project’ had
suggested that the renovation at 265 Homebush Road
involved a major renovation costing ACE ‘about
$100,000’, well in excess of the contract price paid.
The article went on to canvass Mr Jeevarajah’s role,
subsequent to this contract for renovation, in the
granting of the contract to ACE with respect to the
Bidwill project which eventually cost the Department
of Housing in excess of $1,000,000.
On 22 May 2002, in preparing for the article, Mr Neil
Mercer, the journalist responsible for the article, spoke
by telephone with Mr Jeevarajah who, in turn, advised
the management of the Department of Housing about
the circumstances of his conversation with Mr Mercer.
In a letter dated 23 May 2002 addressed to the
Commissioner of the ICAC, the Director General of
the Department of Housing informed the Commissioner
of the circumstances of this conversation and the issues
it raised and asked that the Commissioner consider
investigating the matter.
CHAPTER 1 — INTRODUCTION
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THE ICAC INVESTIGATION
To facilitate the investigation, the ICAC obtained
relevant documents from ACE, the Department of
Housing, and others.
The ICAC interviewed a number of persons with respect
to the conduct of the Jeevarajah renovation. Of these,
a significant witness was Mr Marek Lupinski.
To test the validity of the most serious allegations in
this matter the ICAC held private hearings. The ICAC
heard evidence from five witnesses:
• Christine Xia;
• Piotr ‘Peter’ Lewandowski;
• Bounsavad ‘Guy’ Souksay;
• Chester Soltysik;
• Thambiaiah Jeevarajah.
SECTION 78(2)
RECOMMENDATION
Pursuant to s.78(2) of the ICAC Act the ICAC
recommends that this report be made public
immediately.
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THE CONTRACT
Mr and Mrs Jeevarajah purchased the premises at 265
Homebush Road, Strathfield South, in April 1998.
Initially they rented the premises out, but by 1999
they were planning to take up residence. Mr Jeevarajah
told the ICAC that he commenced making inquiries
in relation to building contractors who could perform
refurbishments that needed to be completed prior to
the family taking up residence. He said he was under
pressure to do this quickly as his family was living in
considerable discomfort in short term living
arrangements in a flat. He also said that he had
difficulties obtaining a builder due to demands created
by the Olympics. He said that he asked colleagues at
work for suggestions. At one stage he called Mr
Soltysik, the General Manager of ACE. Mr Jeevarajah
said that he had previously met Mr Soltysik through
his work for Resitech and had retained his business
card. According to Mr Jeevarajah, Mr Soltysik agreed
to send an estimator out to the premises to arrange
for a quote for the refurbishments. Mr Jeevarajah said
that he was ultimately provided with a verbal quote
either by Mr Soltysik or the estimator for the
performance of the renovations at a cost of $30,000.
He prepared a contract and made arrangements for
its execution.
The ICAC was supplied with a copy of this contract,
which was dated 1 June 1999. It set the contract price
for the renovations at $30,000, subject to a ‘prime
cost items’ sub-clause. This sub-clause later operated
to reduce the price to $24,000.
Evidence from a series of witnesses associated with
ACE did not clarify how the organisation came to
commit to this arrangement. There was a letter of
offer, dated 28 May 1999, signed by Mr Lupinski, who
ultimately managed the renovation project, offering
to perform the work for $28,500. Mr Lupinski told the
ICAC that he had no recollection of signing this letter.
Mr Jeevarajah said he never received such a letter. Mr
Piotr Lewandowski was the Chief Estimator at ACE
and was primarily responsible for ensuring that ACE
took on profitable projects. He said that he was not
involved in settling the quotation price. There was a
faxed letter addressed to Mr Lewandowski from ‘Jeeva’
enclosing a ‘scope of works’ with respect to the
renovation. Mr Lewandowski wrote on this document
outlining arrangements for a meeting at the premises
involving himself. Mr Lewandowski in his evidence said
that he had no recollection of receiving this document
and he never attended at the Jeevarajah premises. Mr
Soltysik agreed that it was his signature on the contract
but he had no recollection of actually signing the
document.
THE CONTRACTING PARTIES
The contract was signed by Mrs Ranjana Jeevarajah,
Mr Jeevarajah’s wife, for the owner. Mr Jeevarajah
said that this was not unusual as anything individually
signed by his wife or himself was essentially signed on
behalf of both of them.
The contract was signed by Mr Soltysik on behalf of
the contractor, in his capacity as the General Manager
of Chetran. According to witnesses associated with
ACE, Chetran was not a trading company. They
described it as a ‘parent company’ or an ‘overheads
company’ to the trading company which was ACE.
Mr Soltysik, Mr Lewandowski and ACE’s financial
controller, Ms Christine Xia, all expressed surprise at
the fact that the contract was in the name of Chetran.
Mr Soltysik said that he would have queried this if he
had noticed. Mr Jeevarajah said that he knew that Mr
Soltysik was the General Manager of ACE and he
had dealt with him in that capacity prior to this
contract. He claimed, however, that he recorded
Chetran on the contract as the card that he used to
access Mr Soltysik was a Chetran card and this caused
him to believe that he was dealing with Chetran as
distinct from ACE. He told the ICAC that he continued
to believe he was dealing with Chetran even after he
received correspondence in relation to the project on
ACE letterhead.
CHAPTER 2 — THE RENOVATION OF 265
HOMEBUSH ROAD, STRATHFIELD SOUTH
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Call charge records obtained by the ICAC relating to
Mr Jeevarajah’s mobile phone indicate that, from
March 1999 until the end of the year, Mr Jeevarajah
was in regular contact with a number of different ACE
representatives including its Chief Estimator Mr
Lewandowski and its Production Manager Peter
Falkowski. These were persons who were involved, at
a senior level, in the operations of ACE, but who had
minimal or no involvement in the refurbishment of Mr
Jeevarajah’s home.
CONDUCT OF THE
RENOVATION
Mr Lupinski was the ACE employee who had
responsibility for the Jeevarajah renovation. He told
the ICAC that he obtained quotes from sub-contractors
to perform the entire renovation, but these were too
expensive, so he elected to project manage the
renovation himself, bringing in contract tradesmen as
they were required. He said that after a delay of a few
weeks the project proceeded in accordance with the
scope of works provided by Mr Jeevarajah and the
plan attached to the contract.
Mr Lupinski outlined some construction areas where
he had experienced some difficulty. The main area of
difficulty involved problems that arose with replacing
existing windows. On account of the age of the
premises there were structural weaknesses around the
windows. This meant replacing the windows was far
more time-consuming than expected and this added
expense to the project through additional labour costs.
He outlined some further, less significant, areas where
extra unexpected work was needed at some additional
cost to ACE.
Mr Jeevarajah said that the project took about four
weeks to get started. It proceeded for three to three
and a half months according to plan. He said the
only problem was occasional delay. Mr Jeevarajah
indicated to the builders that they should contact him
if they had any problems. He said that they only
contacted him in relation to some minor issues, the
nature of which he could not recall. When he was
asked whether there were any substantial construction
problems he responded, ‘No, not really’.
In his evidence Mr Soltysik said that after he returned
from overseas on 2 September 1999, Christine Xia
drew his attention to the costs blow-out on this project.
He said he then took the matter to Mr Falkowski, his
Production Manager, ‘to give me explanation and to
resolve’. Mr Soltysik said that Mr Falkowski later
advised him, ‘When I rang the client, the client was
furious, that there had been a lot of unauthorised work
done’. Mr Falkowski was spoken to by ICAC officers
and he indicated that he had no recollection of this
particular project.
COST TO AUSTRALIAN COLOUR
ENTERPRISES PTY LTD
According to Mr Lupinski and accounting records
provided to the ICAC by ACE, the renovation at 265
Homebush Road cost ACE substantially in excess of
the contract price paid by Mr and Mrs Jeevarajah.
ACE provided a Job Details Report with respect to the
Jeevarajah renovation. It recorded that ACE’s ‘accrued
costs to date’ with respect to the renovation were
$107,384, as at the date when the document was
printed on 11 September 2002. This involved an
adjustment up from the ‘paid to date’ amount, recorded
on the document, of $105,283.
ACE also provided a Creditor’s Invoice Report (CIR)
with respect to the Jeevarajah renovation. This listed
all the invoices that were received by the ACE Finance
Section (ACE Finance) in relation to this project. The
total cost of the paid invoices recorded in this document
was $105,283, which accords with the ‘paid to date’
amount recorded in the Job Details Report.
ACE provided copies of some but not all of the invoices
that are referred to in the CIR. The invoices that were
provided as copies are for amounts totalling $54,407.
This means that there are invoices totalling $50,876
that were apparently received by ACE Finance but
which are not accounted for.
With two exceptions, all of the invoices that were
provided clearly relate, on their face, to the renovation
of the Jeevarajah premises. Two of the invoices
provided, both from Seymour Building Supplies and
totalling $754.50, clearly relate to a separate project.
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Accordingly, the total costs attributed to the renovation
of the Jeevarajah premises in the CIR and the Job
Details Report are inaccurate at least to this extent. It
is possible that amongst the invoices that were not
provided there are further such errors, that is costs
attributed to this project that were in fact incurred on
other projects.
In his evidence, Mr Soltysik indicated that some errant
ACE employees had intentionally manipulated ACE’s
accounts by placing invoices relating to particular
projects against the accounting details of other projects.
This was used as a means of accessing incentive
arrangements for staying within budget on these
particular projects. Mr Lupinski told the ICAC that he
was not aware of any occasion of intentional
manipulation of these accounts, but he did observe
unintentional errors on occasions when he reviewed
the CIRs relating to his projects.
Accordingly, the $50,876 of invoices that were not
provided to the ICAC may be subject to some
accidental or intentional errors. It is also possible that
some of the invoices that were provided which, on
their face, relate to the Jeevarajah project, have resulted
from intentional manipulation of the type described
by Mr Soltysik. Having said this, there is no evidence
currently available to the ICAC that indicates that any
intentional manipulation took place with respect to
this project beyond Mr Soltysik’s general assertion that
some manipulation did occur with some projects. Mr
Soltysik said that he never suspected Mr Lupinski of
being involved in such practices.
ACE provided the ICAC with seven handwritten Job
Cost Progress Reports. On their face, each clearly
outlines expenditure on the Jeevarajah project over a
two week period. The seven reports cover the period
from 4 August 1999 to 9 November 1999. In relation
to each handwritten report there is a corresponding
typed Job Cost Progress Report which draws
information from the handwritten document. There is
an additional typed report dated 23 November 1999
for which there is no corresponding handwritten report.
Mr Lupinski told the ICAC that he filled out each of
the handwritten Job Cost Progress Reports and that
the amounts included involved actual expenditure on
the Jeevarajah project. The total expenditure recorded
on these documents is $76,630. His account is
corroborated by the fact that ACE Finance in its CIR
has recorded receiving invoices with respect to
accounts reported in his Job Cost Progress Reports to
the amount of $70,866. His account is further
corroborated by actual invoices provided to the ICAC
that confirm expenditure of $39,517 and that match
expenses outlined in the CIR and Mr Lupinski’s reports.
The Job Cost Progress Reports prepared by Mr Lupinski
relate solely to the period between 4 August 1999 and
9 November 1999. There are indications that there
were expenses incurred before and after this period
that are not recorded in any of Mr Lupinski’s reports:
• There are actual invoices, provided to the ICAC,
for work done prior to this period that, on their
face, clearly relate to the Jeevarajah project. All
these invoices are recorded in the CIR as having
been received by ACE Finance and having been
paid. These account for $13,755.71.
• The CIR records that invoices for a further
$9,982.77 were received and were paid (or had
money withheld for tax purposes) during this period
in circumstances where the actual invoices have
not been made available to the ICAC. This makes
a total of $23,738 of expenses recorded against
the Jeevarajah project that predate the period of
Mr Lupinski’s reports.
• The CIR records that invoices were received in
relation to expenditure after the period of Mr
Lupinski’s reports in the amount of $3304. There
were no invoices in the material provided to the
ICAC with respect to these expenses.
Mr Jeevarajah, a person apparently experienced in the
costs of such renovations, was dismissive of the
suggestion that an amount well in excess of the contract
price was expended on his home, claiming that
‘$75,000 would give me a brand new home’.
Mr Lupinski’s account as to his process of completing
Job Cost Progress Reports and the resultant expenditure
recorded in these is substantially corroborated by the
CIR and to some significant extent by actual invoices.
This indicates that, irrespective of the precise extent
of the expenditure by ACE, the corporation endured
expenditure well in excess of the funds paid under the
contract of $24,000, and at least in the order of
$70,000.
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With respect to the expenditure that apparently took
place before and after the period of the Lupinski
handwritten reports, or expenditure that for some other
reason was not incorporated into those reports, there
is nothing specific to indicate that these amounts are
erroneous. However, without Mr Lupinski’s supporting
evidence, there is greater room for error as a result of
the possibility of innocent error, as with the Seymour
Building Supplies’ invoices, or the possibility of
fraudulent manipulation, as was alluded to by Mr
Soltysik. Accordingly, evidence of this further
expenditure is less reliable.
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In early 1999 the Sydney suburb of Bidwill was an
established public housing area. At some stage in early
1999 a decision was made by the Department of
Housing to conduct significant upgrading works in its
Gracilis Road/Oreades Road precinct, involving
upgrading road works and drainage works and making
changes to existing services such as electricity and
telephone. This was to facilitate Torrens Title
subdivision of estate land, creating residential blocks
that had the potential to be sold publicly at some
stage.
The Professional Resource Division of Resitech was
called on to provide technical support for the project.
This was to be provided by Mr Jeevarajah’s section,
Engineering and Surveying. Mr Jeevarajah allocated
responsibility for this support to Mr Bounsavad ‘Guy’
Souksay, an engineer under his authority. The technical
support that was sought involved arranging for the
design for the project, calling for tenders for the
construction work and administering the conduct of
this construction.
In April 1999 Mr Souksay facilitated a selection process
that saw the engineering consultancy firm Ove Arup
and Partners selected to carry out the design and
documentation work relevant to this project. This was
approximately two months prior to the Jeevarajah/
Chetran contract for the renovation of Mr Jeevarajah’s
premises. At this stage it was apparent that substantial
construction work would take place and that there
would be a tendering process relevant to this.
This design and documentation work appears to have
been completed by September 1999, at which time
arrangements were being made for a select tender
process to identify building contractors for the
performance of the construction work. By this time
the renovations to Mr Jeevarajah’s premises had
commenced but were not complete.
SELECT TENDER PROCESS
Select tendering involves approaching a group of
selected organisations and seeking tenders from these.
This is distinct from a public tender process where
any person or organisation is able to tender for work.
The rationale for using a select tender process, rather
than a public tender process, according to Resitech
policy as it was in 1999 was ‘to reduce the risk of
unsuitable contractors being selected for HPD [Housing
Production Division; prior name for Resitech]
construction work. [In addition] using a select tender
list instead of calling for open tenders reduces the
amount of time and effort required to evaluate
tenders.’
Existing Resitech procedures were quite prescriptive
about how a select tender should be conducted. These
required that a select tender list be established from
‘pre-qualified and registered contractors’. Mr Souksay,
who was responsible for the conduct of this process,
told the ICAC that he did not draw from a register of
pre-qualified tenderers, as there was no such register
available for this type of construction work. He said
he drew from his own experience and discussions with
colleagues to devise a list of six firms. He incorporated
this list into a submission, dated 8 October 1999,
recommending that the matter proceed to tender.
When he discussed this submission with Mr Jeevarajah,
as his supervisor, one of the listed firms, Arben
Constructions Pty Ltd, was crossed off. Mr Souksay,
when giving his evidence, could not recall why this
firm was removed. He suggested that the firm may
have been involved in other projects in a way that
would have inhibited its involvement in this project.
Mr Jeevarajah said that Arben Constructions Pty Ltd
was known to be a small firm. It was already involved
in Department of Housing work at Campbelltown. In
his discussion with Mr Souksay it was agreed that it
would be risky to include the firm in the list, so they
removed it.
At the same time, ‘ACE Refurbishment’ was
handwritten into the list. Mr Souksay and Mr
Jeevarajah both confirmed that it was Mr Jeevarajah
who wrote this into the document. Mr Souksay said
that this was at Mr Jeevarajah’s suggestion. He said
Mr Jeevarajah told him, ‘ACE is interested in doing
road works and so give him a go at tendering for this
job’. Mr Souksay said that prior to this conversation
he had not been aware of the existence of ACE. In his
evidence, Mr Jeevarajah gave a different account. He
said that Mr Souksay suggested the inclusion of ACE
on the list. He claimed this must have been the case
as it was Mr Souksay who retained the section’s list of
CHAPTER 3 — THE BIDWILL PROJECT
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civil contractors. Mr Souksay in his evidence also spoke
about how he had established and retained an informal
list of civil works contractors, however, he was unsure
whether this had been established at the time of the
Bidwill project.
The ICAC was supplied with a copy of a facsimile
dated 8 October 1999, the same date as Mr Souksay’s
submission, on ACE letterhead, signed by Mr
Lewandowski, addressed to the Department of
Housing and marked to the attention of ‘Jeeva’. The
document outlines projects ‘where ACE has been
significantly involved in carrying out road works and
services’. The existence of this document indicates that
there had been discussions between Mr Jeevarajah and
persons associated with ACE in relation to this project.
Mr Lewandowski in his evidence confirmed that the
signature on the document was his, but he claimed
that he had no recollection of the letter. Mr Jeevarajah
said in his evidence that he probably did contact ACE
at this time to ensure that they had done work of this
nature previously.
The Resitech procedures in place at that time were
very strict about the manner in which discussions and
negotiations with tenderers took place. In particular,
these procedures specified that records (file notes, etc.)
should be kept of all such interaction and retained on
the Tender File. It appears that no records were made
with respect to early interaction between Mr Jeevarajah
and ACE.
TENDER NEGOTIATION AND
ASSESSMENT
Mr Souksay’s recommendation, including ACE as a
prospective tenderer, was supported by Mr Jeevarajah
and approved by the Director, Resources, on 8 October
1999. Letters seeking tenders were forwarded to six
prospective tenderers. The closing date for tenders was
1 November 1999. Ultimately, three tenders were
received as follows:
ACE - $513,206
Kevin Bailey Holdings Pty Ltd (KBH) - $923,706
Combined Civil - $1,075,782
Each tender was completed on a Tender Form provided
by the Department of Housing. This included a ‘Bill
of Quantities’ document prepared by Mr Souksay. This
outlined a series of ‘items’ which involved incremental
parts of the overall construction project. Some items
were broken up into sub-items. The tendering parties
were required to record the amount that they would
charge for the completion of each item and sub-item,
which in total formed their overall price for the
completion of the project. Items 25 and 26 related to
changes to existing electrical and telephone services.
Mr Souksay told the ICAC that while ACE’s tender
was the lowest, Resitech formed the view that the firm
had misunderstood what was required with respect to
Items 25 and 26, as their costings for this were
particularly low. In addition, they had placed
qualifications on the tender that were unacceptable.
Resitech procedures in place at the time provided that
where a particular tender price was significantly lower
than that of other tender prices, Resitech officers should
‘seek clarification as to why the price is significantly
lower. Give the tenderer ample opportunity to review
the price and ensure the cost of any item has not been
omitted … where a tender has omitted the cost of an
item they should be given an opportunity to withdraw
the offer’. There was no provision for the tenderer to
adjust their tender price up.
According to Mr Souksay and Mr Jeevarajah,
permission was obtained from the Director, Resources,
to negotiate with ACE as the lowest bidder in
circumstances where ACE would be given an
opportunity to revise their tender price up. Mr
Jeevarajah outlined a substantial amount of activity,
involving a number of meetings and discussions with
the Director of Resources, the Manager for Contract
Policy and others, that led to this approval for a course
that involved a significant departure from Resitech
procedures. Despite the amount of activity and the
significance of the departure from formal procedures,
it appears that no part of the process was documented.
Negotiations took place that saw ACE increase their
tender price by $293,794, to make a final tender price
of $753,000, and withdraw all the qualifications they
had had to their original tender. Again, there was no
documentation of this process, although
documentation of all negotiations was specifically
required by existing Resitech procedures.
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Mr Souksay said that once he was given authority to
negotiate with ACE as the lowest tenderer, he
concentrated solely on the ACE bid, to the exclusion
of all others.
There was some further negotiation with KBH and
this firm submitted a revised bid. Mr Souksay said
that, although he was aware of KBH’s ongoing
involvement, he effectively ignored this. He said Mr
Jeevarajah may have used this to assist him in
assessing appropriate costs for the electrical and
telephone work canvassed in Items 25 and 26. Mr
Jeevarajah agreed that the focus of negotiations was
solely on ACE. He said he could not recall further
negotiations with KBH and this firm was never asked
for a revised pricing. The revised tender price from
KBH was still in excess of the final tender price
submitted by ACE.
Mr Souksay prepared a submission, dated 9 December
1999, summarising the evaluation process and
recommending the acceptance of the revised ACE bid.
This was endorsed by Mr Jeevarajah and approved by
the Director, Resources on the same day. The
Department of Housing entered into a contract with
ACE for the performance of the construction work on
7 January 2000.
CONTRACT VARIATION WORK
Mr Souksay in his evidence described how a
subsequent extension of the contract price from
$753,000 to over $1million through variation work
arose out of deficiencies in the initial design. He said
he had numerous disputes with ACE over the cost of
this variation work.
Mr Souksay said that on a couple of occasions Mr
Jeevarajah intervened in disputes over variation work.
At one stage, ACE was seeking $5000 per trench for
trench work facilitating service crossings over
roadways. Mr Souksay was of the view that this was
grossly overpriced and should have only involved costs
in the order of $1000 to $1500 per trench. He said Mr
Jeevarajah intervened and agreed to the payment of
an amount of about $4000 per trench. Mr Jeevarajah
gave an alternative account. He claimed that he only
facilitated the discussion and was not personally
responsible for the settlement price.
OTHER PROJECTS
Following the contract for renovations at Mr and Mrs
Jeevarajah’s premises, ACE were successful in gaining
the tender for a number of Department of Housing
projects, in addition to the Bidwill project:
• Rectification works at Wollongong (contract price:
$249,600, awarded 1 November 1999).
• External painting work at Redfern (contract price:
$224,329, awarded on 17 April 2000).
• Rectification and painting at Chippendale (contract
price: $153,650, awarded on 22 November 2000).
Mr Jeevarajah was involved in the tendering process
of each project. Each project appears to have been
managed by someone under his supervision. All
recommendations made as to select tender lists and
most acceptable tender were reviewed by Mr
Jeevarajah before being submitted to the Director,
Resources. Department of Housing documentation in
relation to each of these projects has been examined
by the ICAC. There is nothing in this documentation
that indicates that Mr Jeevarajah acted improperly to
promote the interests of ACE through his involvement
in these matters.
Mr Lewandowski told the ICAC that, as far as he was
aware, ACE did not receive any favourable treatment
from Mr Jeevarajah in return for the benefit he received
on the home renovation. Mr Soltysik also told the ICAC
that he was not aware of ACE receiving any favourable
treatment. When it was suggested to Mr Jeevarajah
that he may have shown favouritism to ACE in return
for a benefit that he received through the renovation
of his house he responded ‘I totally deny that’.
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Investigation into dealings between Thambiaiah Jeevarajah and Australian Colour Enterprises Pty Ltd
To constitute ‘corrupt conduct’ under the ICAC Act,
conduct must satisfy the requirements ss.8 and 9 of
the Act.
S.8(1)(a) provides:
Corrupt conduct is any conduct of any person
(whether or not a public official) that adversely
affects, or could adversely affect, either directly
or indirectly, the honest or impartial exercise
of official functions by any public official, any
group or body or public officials or any public
authority...
I am satisfied that by engaging Chetran/ACE in a
contract for the refurbishment of his personal residence
and then participating, in the way he did, in select
tender processes where ACE was a key tendering party,
without taking any measures to appropriately manage
this conflict, Mr Jeevarajah did engage in conduct that
either did or could have adversely affected his impartial
exercise of his official functions.
S.9(1) of the ICAC Act provides:
Despite section 8, conduct does not amount to
corrupt conduct unless it could constitute or
involve:
(a) a criminal offence, or
(b) a disciplinary offence, or
(c) reasonable grounds for dismissing,
dispensing with the services of or otherwise
terminating the services of a public official,
or
(d) in the case of conduct of a Minister of the
Crown or a member of a House of
Parliament a substantial breach of an
applicable Code of Conduct.
CRIMINAL OFFENCES FOR THE
PURPOSES OF S.9 OF THE ICAC
ACT
Criminal offences with respect to Mr Jeevarajah, that
warrant consideration include:
(i) S.249B(1)(a): Receiving a benefit as an
inducement for showing favour to ACE.
The core elements of an offence under this
section would be:
(a) Mr Jeevarajah received a benefit;
(b) this benefit was intended as an inducement
to show favour and Mr Jeevarajah knew
this.
Such an offence could not be established unless
it could be shown that there was an actual
improper agreement between Mr Jeevarajah and
ACE.
(ii)S.249B(1)(b): Receiving a benefit in
circumstances where receipt would tend to
influence Mr Jeevarajah with respect to
Resitech’s affairs.
The core elements of an offence under this
section would be:
(a) Mr Jeevarajah received a benefit;
(b) the receipt of this benefit would inevitably
tend to influence him to show favour to ACE
in relation to Resitech’s affairs;
(c) Mr Jeevarajah knew he was receiving a
benefit and that it had a tendency to
influence him to show favour to ACE in
relation to Resitech’s affairs.
This could be established in circumstances where
there was no actual agreement but it was clear
to Mr Jeevarajah that he was receiving
favourable treatment that tended to encourage
return favour.
CHAPTER 4 — CORRUPT CONDUCT
AND S.74A(2) STATEMENT
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A prosecution would need to establish a direct
link between the receipt of the benefit by Mr
Jeevarajah and his appreciation that he was
receiving a benefit that had a tendency to
engender return favour. The time he effectively
received the benefit was when he entered into
the contract with Chetran/ ACE. It would be
insufficient if he only became aware of the
benefit and its significance subsequent to it
being given, and he then elected to acquiesce
in this.
There is insufficient evidence to establish that Mr
Jeevarajah’s conduct could constitute or involve a
criminal offence. Important considerations in this
respect are:
(i) There is no direct evidence of a corrupt agreement
between Mr Jeevarajah and ACE.
(ii) There is evidence that ACE spent substantially in
excess of the contract price to meet its obligations
under the renovation contract. The precise extent
of this expenditure is unclear, but it does appear
that it was at least in excess of $70,000.
(iii) There is no evidence of the circumstances in which
ACE decided to commit itself to this contract.
Accordingly, I am unable to negate the possibility
that ACE was negligent in its assessment of the
implications of the contract.
(iv) It is apparent from the evidence of Mr Lupinski
that difficulties did emerge during the renovation
process, that were not anticipated at the time of
contract, and which did extend the cost outlaid by
ACE.
(v) The select tender process, that Mr Jeevarajah was
closely involved in, involved numerous departures
from normal Resitech procedure and a paucity of
records with respect to critical negotiation and
assessment processes.
Criminal offences with respect to ACE that warrant
consideration are s.249B(2)(a) and ss.249B(2)(b). The
considerations with respect to these offences are similar
to those relating to Mr Jeevarajah. There is insufficient
evidence that the conduct of the firm ACE, or any of
its representatives, could constitute a criminal offence.
DISCIPLINARY OFFENCES FOR
THE PURPOSES OF S.9 OF THE
ICAC ACT
Section 9(3) of the ICAC Act defines ‘disciplinary
offence’ as including ‘any conduct, irregularity, neglect
of duty, breach of discipline or any other matter that
constitutes or may constitute grounds for disciplinary
action under any law’.
‘Disciplinary action’ is defined in s.42(1) of the Public
Sector Employment and Management Act 2002 as
involving one or more of a series of actions including:
(a) dismissal from the Public Service,
(b) directing the officer to resign, or to be allowed to
resign, from the Public Service within a specified
time,
(c) if the officer is on probation - annulment of the
officer’s appointment,
(d) except in the case of a senior executive officer -
reduction of the officer’s salary or demotion to a
lower position in the Public Service,
(e) the imposition of a fine,
(f) a caution or reprimand.
In 1999 the Department of Housing had a Code of
Conduct that provided as follows:
Conflict of Interest
Conflict of interest situations arise when we have
a personal interest in a matter which could
improperly influence or appear to improperly
influence us in the performance of our duties.
In many cases only the individual will be aware
of the potential conflict. It is the individual’s
duty to avoid these situations or disclose them
to a supervisor.
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At the time of the Bidwill tender process and other
relevant tender processes, ACE was renovating or had
only just finished renovating Mr Jeevarajah’s home.
These were clearly personal circumstances that
threatened the integrity, or at least the appearance of
integrity, of his official role in these sensitive tender
processes. Mr Jeevarajah should have been aware that
there was potential, real or perceived, for him to benefit
personally through support for or cooperation with ACE
regarding Resitech business.
Mr Jeevarajah said that his private dealings were with
Chetran as distinct from ACE and that this meant
there was no conflict of interest for him. In fact,
Chetran and ACE were essentially the same
organisation and this was readily apparent to Mr
Jeevarajah. Mr Jeevarajah originally contracted with
Chetran knowing Mr Soltysik through work ACE had
done for Resitech. He clearly knew and was in regular
contact with various representatives from ACE. He
received correspondence in relation to the refurbishment
work on ACE letterhead. Further, the covering letter
enclosing Mrs Jeevarajah’s payment under the contract
was addressed to ACE/Chetran.
Mr Jeevarajah also said that Mr Souksay, and other
Resitech staff members were responsible for the
management of the relevant tender processes, so that
he personally did not have a conflict of interest. This
is difficult to accept. Mr Jeevarajah was clearly in a
position of considerable influence with respect to these
tender processes and, at least with respect to the Bidwill
tender process, he exercised this influence on a number
of occasions.
Mr Jeevarajah’s personal dealings with Chetran/ACE
with respect to the renovation of his home clearly
presented him with a conflict of interest in relation to
his involvement in the select tender processes where
ACE was a tendering party. In accordance with the
requirements of the Department’s Code of Conduct,
this conflict should have been avoided by Mr Jeevarajah
or reported to his supervisor within Resitech. His failure
to do this constitutes a neglect of duty and conduct
that comes within the terms of s.9(1)(b) and
consequently amounts to corrupt conduct within the
meaning of the ICAC Act.
SECTION 74A(2) STATEMENT
Section 74A(2) of the ICAC Act provides that, in
respect of each ‘affected person’, a report must include
a statement as to whether or not in all the
circumstances the ICAC is of the opinion that
consideration should be given to the following:
(a) the prosecution of the person for a specified criminal
offence,
(b) the taking of action against the person for a specified
disciplinary offence,
(c) the taking of action against the person as a public
official on specified grounds with a view to
dismissing, dispensing with the services of or
otherwise terminating the services of the public
official.
The term ‘affected person’ is defined as including a
person against whom, in the ICAC’s opinion,
substantial allegations have been made in the course
of or in connection with the investigation. In this
context, the term ‘person’ includes corporations. For
the present purposes Mr Jeevarajah and ACE should
be regarded as ‘affected persons’.
Mr Jeevarajah gave evidence with the benefit of a
declaration under s.38 of the ICAC Act. The result of
this is that his evidence is not admissible against him
in criminal or disciplinary proceedings other than in
proceedings for an offence against the ICAC Act.
For reasons canvassed earlier in this report, I am not
of the opinion that the Director of Public Prosecutions
should give consideration to prosecuting either ‘affected
person’.
In all of the circumstances I am of the opinion that
the Department of Housing should give consideration
to taking disciplinary action against Mr Jeevarajah on
account of his failure to adequately comply with the
Department of Housing Code of Conduct with respect
to his management of a relevant conflict of interest.
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Investigation into dealings between Thambiaiah Jeevarajah and Australian Colour Enterprises Pty Ltd
When managing projects for clients, Resitech contracts
out much of the direct design and construction work.
Thus a large part of the business of Resitech is focussed
on tendering and contracting for services. Because of
this focus it is important that these tendering processes
are conducted with integrity to reduce the risk of
corruption, maximise value for money, reduce the
potential for wasting public funds and maintain
Resitech’s reputation.
There are a number of factors that contribute to
maximising probity in tendering and contracting. These
include obtaining best value for money, ensuring the
process is transparent, dealing with conflicts of interest,
maintaining accountability and monitoring and
evaluating performance. This investigation identified
a number of deficiencies in Resitech’s operations in
these areas. Particular problems were found regarding
compliance with existing policies and procedures,
management of conflicts of interest, and record keeping
and accountability. These problems had a number of
consequences. The process for selecting the contractors
to be included in the select tender list for the Bidwill
project was not transparent. Mr Jeevarajah did not
declare the conflict of interest he had on this project
regarding ACE. The records kept of the process of
evaluating the tenders and negotiating with ACE were
poor. All this contributed to a perception that there
may have been corrupt conduct.
Each of these corruption prevention issues is discussed
in more detail in the following sections. Because this
matter occurred in 1999, each section briefly
summarises the problems that occurred at the time,
the changes that have been implemented by Resitech
since then, and whether there is anything further that
could be done by Resitech to strengthen it’s corruption
resistance. Resitech has provided information to inform
the following sections.
ADEQUACY OF SELECT
TENDERING PROCEDURES
Problems in 1999
The investigation revealed two main problems with
the policies and procedures in use in 1999 for
conducting select tenders. The first concerned the use
of a register of pre-qualified contractors. The creation
of a select tender list required the selection of pre-
qualified contractors from an established register of
contractors. However, at that time such registers only
existed for contractors in areas that were commonly
tendered by Resitech, such as building works. The
tender for the project at Bidwill was not solely a building
job. It involved civil engineering works such as road
construction, landscaping and drainage. Evidence given
during the investigation revealed that there was no
register of contractors for this type of contract. The
project officer was therefore not able to follow this
policy. He chose the tenderers for the select tender
based on his own personal experience and ad hoc
discussion with colleagues. The lack of an appropriate
register meant that this process could be manipulated
because contractors could be included in the select
tender list without being pre-qualified or included on
a register.
The second problem concerned record keeping and
accountability. When establishing a select tender list
from a register of pre-qualified contractors, a series of
primary selection criteria were used as a filter to select
potential contractors who might be suitable to tender
for a specific project. These criteria, which included
geographical area, relevant experience, financial
capacity, occupational health and safety requirements
and special work required, were used as the initial basis
for selecting contractors. Resitech’s policies included
no requirement to record these details on the tender
file, which allowed the selection of tenderers to be
conducted in a way that may not be open and
transparent.
CHAPTER 5 — CORRUPTION PREVENTION
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Changes made by Resitech
Since this incident occurred in 1999, Resitech have
reviewed their tender policies and introduced a new
set of procedures for select tenders. The new procedures
also require selection of contractors from a register of
pre-qualified contractors. According to evidence
provided during the investigation, in 2002 there was
still no register of pre-qualified contractors for civil
works of the type involved in the Bidwill project. This
has been confirmed by Resitech. However, Resitech
has developed a list of contractors who have done
civil works and for whom performance reports have
been completed. According to Resitech, a formal
register may not be needed, given the small number
of projects it manages that involve civil works.
The new procedures still do not require any
documentation of the application of the primary
selection criteria. This means that the risk remains that
process of selecting contractors may not be open and
transparent.
Recommendations
This investigation indicated that some of the procedures
for select tenders cannot be implemented properly
because there are not always the proper administrative
structures, such as a register of contractors, in place
to support them. Establishment of a select tender list
from an informal list of contractors (even where there
are performance reports) would not seem to be a
sufficiently robust method of selecting contractors.
Select tenders should not be conducted where there is
no register of pre-qualified contractors for the type of
project being tendered. In these situations Resitech
should either establish a formal register or choose
another appropriate method of tendering.
The select tender procedures should be modified to
ensure that the application of the primary selection
criteria is recorded on the tender file. These records
should include a justification of the reasons why each
contractor was chosen from the register for the select
tender list, and also why possible contractors who met
the criteria were not chosen.
Recommendations:
1. Resitech should restrict the use of theselect tender process to thosesituations where a list of pre-qualifiedcontractors exists. If a list does notexist, another tender process shouldbe adopted.
2. Resitech should modify its selecttender policies and procedures toinclude a requirement that the resultsof the application of the primaryselection criteria should be includedon the tender file.
COMPLIANCE WITH
PROCEDURES FOR EVALUATING
TENDERS
Problems in 1999
The procedures for the evaluation of tenders which
Resitech had in place in 1999 were developed within
the framework of the NSW Government Code of
Tendering for the Construction Industry. These
procedures are generally comprehensive and provide
a good basis for evaluating all types of tenders.
However, the evidence of this investigation suggests
that the compliance with these evaluation procedures
was not uniform.
The investigation revealed a number of instances in
the process of negotiating the Bidwill tender that did
not follow the procedures included in the Resitech
policies. These included the following examples:
• Negotiations were conducted with ACE when their
original tender did not comply with the tender
specifications. ACE may have been selected as the
preferred tenderer because the other tenders were
also non-conforming, however this is not clear in
the tender file. Evidence was given that approval
was granted for negotiation with ACE. If this
negotiation was approved because of exceptional
circumstances, there is no record of this on the
tender file, and no explicit provisions for this
possibility in Resitech’s policies and procedures.
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• Negotiations occurred only with ACE, although
Resitech’s policies suggest shortlisting two tenders
in case one subsequently becomes unacceptable.
In this case ACE was able to renegotiate their price
without competition.
• The summary of the evaluation did not meet the
requirements for the tender evaluation summary
specified in the procedures. Evidence was given that
in 1999 tender evaluation summaries were never
prepared for these types of engineering projects.
They were considered to be too detailed and more
oriented to building works rather than civil
engineering projects. Resitech’s policies and
procedures do not differentiate between different
types of projects.
• There is no evidence of any record of the
methodology to be used in evaluating the tenders,
nor of any selection criteria that had been specified
prior to the tender being called.
Changes made by Resitech
Since 1999 Resitech have reviewed their policies for
evaluating tenders. The policies are now clearer and
easier to follow. This should assist in achieving
compliance. The new policies have an increased
emphasis on price as the main evaluation criteria for
‘construct only’ tenders (the type of tender for the
Bidwill project). The new policies do not require
completion of a tender evaluation summary for these
types of tenders. This is appropriate if the evaluation
of ‘construct only’ tenders is straightforward. Where
tenders are more complex the policies and procedures
require referral to Resitech’s Board of Review. The
Board of Review submission requires detailed
information about the tender, including the reasons
for selecting the contractors to be on the select tender
list, the reason for selecting the preferred tenderer and
the reason for passing over any lower tenderers.
Resitech has introduced a comprehensive quality
management system (QMS). This system covers all of
their policies and procedures, including the policies
for evaluating tenders. The QMS provides a framework
for continually improving Resitech’s policies and
procedures. It includes a number of features that
should increase compliance with tenders:
• the QMS and the policies and procedures are now
on line, making it easier for staff to access them;
• training about the QMS system and the tendering
procedures was provided when the system was
introduced;
• procedures are regularly amended as part of the
process of continual improvement and notices of
amendment are issued to all Resitech personnel to
inform them of the changes;
• training about the QMS system is provided to new
staff at induction.
Resitech has an ongoing internal audit program that
audits a random selection of projects annually. These
audits occur as part of an overall quality assurance
process. Resitech has said that where non-compliance
with procedures is identified training can be provided
to individuals, or changes can be made to policies
and procedures.
Resitech uses the results of these audits and the Board
of Review submissions to provide feedback to staff.
Resitech has outlined a range of strategies that are
used to do this. These include small workshops to
inform staff about changes in policies, and
dissemination of summaries of lessons learnt from
submissions to the Board of Review. Resitech also
reports that it is planning a forum in 2003 with staff
involved in tendering to describe the experiences of
the Board of Review, discuss problems that occur and
share good ideas and submissions.
Recommendation
Given the nature of Resitech’s business, it is likely that
there are some circumstances where it is appropriate
for senior executives to vary the application of existing
policy or procedure. However, the circumstances in
which this occurs ought to be controlled and subject
to a documented procedure that requires the reasons
for such variation to be documented and formalised.
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Recommendation:
3. If Resitech believes that it is necessaryand appropriate to give discretion toa suitable officer to authorise avariation to established procedures,Resitech should consider amending itsprocedures to provide guidance toappropriately delegated officers onthe limited circumstances in whichestablished procedures can be varied.Such an amendment should ensurethat the reasons for variation aredocumented.
ACCOUNTABILITY AND
RECORD KEEPING
Problems in 1999
This investigation found poor record keeping within
Resitech. There were few records kept of negotiations
with contractors, or decisions made regarding awarding
the tender. One of the key issues in this investigation
was the reason for the negotiations with ACE. Evidence
given during the investigation stated that the decision
to negotiate solely with ACE was the result of a number
of meetings between Resitech staff. However, based
on the information in the tender files it was impossible
to say for certain that such a decision had been formally
made, what the basis of the decision was, and who
made it. This meant that it was difficult to determine
whether or not the process for awarding the tender for
the Bidwill project had been manipulated.
Changes made by Resitech
Resitech have introduced Project Control Files for
recording specific information throughout the lifetime
of each project. This information includes minutes of
Project Control Group meetings and meetings with
clients.
Recommendation
Both the previous and the current tender policies require
documentation of all communications with tenderers.
Despite the introduction of Project Control Files, and
the policy that communications are documented, the
requirements for record keeping could be further
strengthened. Not all sections of the policies and
procedures (including the section on evaluating tenders)
explicitly state that records must be kept of all
negotiations and decisions. Such statements should
be included in all sections of the tendering policies
and procedures to reinforce the need for adequate
records of meetings, decisions and negotiations to be
kept.
Recommendation:
4. Resitech should amend its tenderingpolicies and procedures to ensurethat all sections clearly state thatrecords must be kept of allnegotiations, meetings and decisions.
CONFLICTS OF INTEREST
Situation in 1999
Resitech employees are required to abide by the
Department of Housing Code of Conduct. The Code
of Conduct in place in 1999 included provisions about
conflicts of interest. It stated that ‘a conflict of interest
arises when we have a personal interest in a matter,
which could improperly influence or appear to
influence us in the performance of our duties’.
Changes made by Resitech
The Department of Housing introduced a new Code
of Conduct in 2000-2001. This code was reviewed in
2002, and a revised version has been drafted. This
new draft Code of Conduct has been simplified and
the section on conflicts of interest is comprehensive.
In January 2002 Resitech introduced its own Code of
Conduct for tendering, property acquisition and
disposal and engaging consultants and suppliers.
Resitech’s code complements the existing Department
ICAC report
18
ICAC©
Investigation into dealings between Thambiaiah Jeevarajah and Australian Colour Enterprises Pty Ltd
of Housing code. It requires all personnel involved to
sign a declaration that they agree with and understand
the provisions about conflict of interest and use of
confidential information. This must be done for each
project the staff member is involved in.
In 2001-2002, staff from Resitech participated in
training in the Department Code of Conduct as part
of a Department-wide training exercise. In addition,
all new staff receive training in the Department’s Code
of Conduct and ethical business practices at induction.
Recommendation
As a service agency to the Department of Housing
Resitech faces a range of corruption risks that do not
usually occur in the Department’s primary role of
providing housing to people with low incomes or
special needs. Most of these additional risks are
associated with Resitech’s tendering and procurement
activities. The Department reviewed its Code of
Conduct in 2002 and has produced a new draft. That
the Department has so recently reviewed its code
suggests that it may be timely for Resitech to conduct
its own review to ensure that its code is adequate for
the specific circumstances and corruption risks that
Resitech faces, particularly in the light of the issues
raised in this report. If Resitech chooses to review its
code it should consider adding some examples of
conflicts of interest that are particularly relevant to
Resitech.
The requirement that all staff involved in tendering
need to complete a declaration regarding the Code of
Conduct for tendering is a sound measure. The
introduction of a Code of Conduct specific to Resitech
is also a sound measure.
Recommendation:
5. Resitech should consider whether, inthe light of the recent review by theDepartment of Housing of their Codeof Conduct, it also needs to review itsown code for tendering.
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