Vic public servants hid suspected $285m fraud from ministers
The Victorian corruption watchdog has found that public servants hid the size of a suspected $285 million fraud relating to COVID-19 support payments from the ministers responsible.
Independent Broad-based Anti-Corruption Commission boss Victoria Elliott on Thursday accused senior public servants of “serious failures” after they concealed the full extent of the losses in official communications with relevant ministers in 2021.
Victorian Premier Ben Carroll became minister for industry support and recovery in 2022. Joe Armao
“While officers within the department spoke up, their leaders failed to act, meaning the government was left uninformed and unable to move quickly to address this suspected significant loss of public funds,” said Elliott.
With just over six weeks until the November state election, the findings put the government in a difficult position as it fights to re-establish its credibility on integrity following the CFMEU corruption scandal.
Premier Ben Carroll, who as the relevant minister in 2022 was also misled, said he was surprised by the findings when he learnt about them in a briefing on Wednesday.
“I’ve always acted, I think, very professionally, and always tried to bring out the best in our public service,” said Carroll.
“I’ve been a public servant myself, and I value our public service, and I want them always to feel, with me or any of my ministers, that their job is to provide frank and fearless advice.
“I’ve been very clear to the head of my department, that we act on these reports, and we act on them immediately.”
But Liberal leader Jess Wilson slammed the government over the revelations, linking the conduct of the public service to the government itself.
“It’s just more evidence of a government that has mismanaged taxpayer money, and more evidence that corruption is rife. Corruption is in Labor’s DNA,” Wilson said on Thursday.
The programs involved in the fraud were in addition to the federal government’s $89 billion JobKeeper scheme and were created by the Victorian government to support businesses affected by the state’s extended COVID-19 lockdowns.
The department paid out $11 billion in grants over two years from July 2020 to affected businesses.
In 2021, officials in the Department of Jobs, Precincts and Regions identified payments had been made to ineligible recipients under programs set up to support businesses during the pandemic.
But IBAC found that the department’s deputy secretary directed officials to remove the suspected magnitude of the $285 million loss from a draft report to the then minister for industry support and recovery, Martin Pakula.
IBAC also found that the associate secretary withheld information about the amount of the suspected loss from the department’s secretary, Simon Phemister.
This ultimately led to incomplete and misleading information being provided to Phemister, then-minister Pakula, the Victorian Ombudsman and the Victorian Auditor-General’s Office.
VAGO investigated the department’s inconsistent approach to verifying eligibility for the COVID programs in 2023, which confirmed the payments were made in error and likely involved fraud that had gone undetected.
IBAC’s report, released on Thursday, focused on the conduct of departmental officials.
$108 million was paid to businesses with zero turnover in the six months leading up to the pandemic.
“Multiple failures to provide clear and accurate information occurred over a 10-month period from November 2021. This was not a one-off event, nor was it due to an oversight,” the report said.
“It is impossible to avoid the conclusion that the advice provided to ministers was not frank and fearless.
“Indeed, the convoluted rationalisation of the department’s decision to withhold information – proffered in response to IBAC’s enquiries – suggests that ethics and integrity were secondary considerations in the face of scrutiny.”
When Carroll took on the ministry in 2022, he received departmental briefs about the administration of the business support programs that said no payments had been made in error and that Pakula had been fully appraised of the department’s implementation approach.
The first estimate of the potential loss was $9 million, but this grew to $285 million after more detailed analysis.
But IBAC analysis found that about $257 million had been paid to more than 9000 businesses that had backdated their goods and services tax registrations, including $108 million paid to businesses with zero turnover in the six months leading up to the pandemic.
The department had recovered $8 million by April this year, with a further $5 million to be collected through ongoing repayment plans.
