Delimiter is reliably informed that CenITex chief executive Michael Vanderheide sent the following email to the IT shared services agency’s staff this week, following the publication of a damning report by the Victorian Ombudsman into procurement practices and the engagement of contractors at CenITex. The report found examples of “nepotism and favouritism” in the company, as well as more serious improper conduct and poor procedures for handling CenITex’s large contractor workforce.
Today the Ombudsman tabled a report in Parliament titled “Investigation into allegations of improper conduct by CenITex officers”. It identifies examples of breaches of procurement and recruitment processes, examples of failure to manage and document conflicts of interest, weaknesses in our controls environment and, in one case, fraudulent activity.
Following our discovery mid last year of fraudulent behaviour by a company employing contractors in the Efficient Technology Services (ETS) program, we began a review of controls associated with procurement and recruitment. As a result, we initiated a number of investigations and began work on improving processes.
Subsequently, an Ombudsman investigation commenced following allegations by an anonymous whistleblower. Given the Ombudsman’s Office has greater powers and more resources to conduct investigations, I welcomed their engagement with us and over the subsequent months, we participated actively in their work.
As you would be aware, we had also set about changing things. In my response to a draft of the report, I advised the Ombudsman of a range of initiatives that were underway to strengthen our control environment and to make necessary change at a cultural level. These included:
- significant enhancement of the control and monitoring environment associated with procurement processes and decision making;
- the building of a culture of “plain speaking” within the organisation whereby staff are encouraged to feel safe to raise concerns and to challenge poor process;
- the launch of a CenITex specific conflict of interest policy based on the policy developed by the State Services Authority;
- the addition of probity matters as a standing item on the fortnightly Executive Leadership Team agenda;
- the introduction of centralised management for conflict of interest declarations and a monitoring process for compliance with related management plans;
- a quarterly external review of a broad sample of procurement activities to test for compliance with process and probity principles;
- formal conflict of interest related training for more than 250 staff involved in procurement and recruitment decisions;
- centralisation of the recruitment approval process for both contract and public service staff within the division with responsibility for human resources management; and,
- the establishment of a contractor procurement board with specific responsibility for oversight of contractor engagement and contract extension.
This report reflects weaknesses of our past and importantly, while it illustrates its findings through a large number of case studies, it centres around a small number of individuals and a small number of companies. I know the overwhelming majority of CenITex staff and contractors, as well as the hundreds of companies we deal with, operate to high standards of integrity, professionalism and a commitment to serving the best interests of the Victorian community.
I have accepted all of the recommendations in the report – in fact, we have already implemented some and are making good progress on others. There is more to be done and we must continue to work together to ensure that our processes are robust, our controls are clear and our culture is strong enough for us to have open conversations about the ethical issues that inevitably arise in complex environments such as ours.
The full report is available on the Ombudsman’s website at www.ombudsman.vic.gov.au and I’ll be online via LiveChat in the next few days to respond to questions.