ICAC report - Parliament of NSW...ICAC report v ICAC © Investigation into dealings between Thambiaiah Jeevarajah and Australian Colour Enterprises Pty Ltd CONTENTS EXECUTIVE

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

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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: [email protected]

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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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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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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.


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.


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’.


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

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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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