An Independent Commission Against Corruption investigation has underlined the importance of reviewing contractor arrangements to reduce the risk of losing thousands of dollars as a result of corrupt behaviour.

ICAC found that a former IT contract project manager at the then Department of Education and Training made more than $400,000 by manipulating recruitment and payment processes.

The Commission found that David Johnson prepared contractor assessment forms containing false representations to gain approval to engage five contractors associated with his own private company, Ogawie Pty Ltd.

Between March 2008 and January 2009 alone, ICAC found that Johnson earned more than $290,000 through Ogawie as a result of the services performed by the five contractors. Until the investigation took place, most of these contractors were unaware of the margins that Ogawie received for their work – which were as high as $57.90 per hour.

Other findings of the ICAC investigation were as follows:

• Johnson falsely represented that two Ogawie contractors had performed services for, and on behalf of, the department, when they had not.
• Johnson signed timesheets for the contractors to falsely represent that they had performed the services. The total benefit received by Ogawie, and ultimately Mr Johnson, in this instance was more than $84,000.
• Johnson falsely represented that another IT company, Catalina IT, was an approved contractor and purported to authorise payment of two invoices received from the company so he could benefit financially from its engagement to provide services. In this case the total benefit to Johnson before GST was $82,000.

The newly created Department of Education and Communities (DEC) has since taken steps to rectify the lack of risk management safeguards within the department that were exploited by Johnson in the course of his corrupt conduct.

The ICAC made seven corruption prevention recommendations to address outstanding issues. These included recommending that DEC’s Information Technology Directorate (ITD) should:

• Review its use of contract staff when it exceeds its predetermined ratio of contract staff to permanent staff. This review should focus on whether the engagement of contract staff – as opposed to permanent employees – is justifiable, and the continuing need for individual contractors to be retained.
• Take measures to verify the arrangements surrounding the contracting of individual personnel – including personnel pay rates, how contracted personnel were sourced and to whom personnel are contracted – and take steps to communicate these arrangements to relevant staff involved in the recruitment and engagement of contractors.
• Take measures to ensure that candidates it has sourced have the requisite skills for the position.
• Place obligations on contractors to disclose any subcontracting arrangements that relate to the performance of their contracts.