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Corruption claims put IT contracting under the spotlight

Boils lanced in NSW, Victoria

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Two corruption scandals in the Australian tech sector came to a head yesterday, turning a harsh spotlight on how government bodies go about contracting out IT services.

Victoria’s Ombudsman released a damning report into that state’s IT body CeniTex, while in NSW, the Independent Commission Against Corruption (ICAC) released its report into IT procurement at Sydney University.

CeniTex, established in 2008 to act as a one-stop-shop for government IT in Victoria, became a feeding frenzy. According to the report tabled in parliament by acting Ombudsman John Taylor, contracts were awarded to companies operated by friends or family of CeniTex staffers, contractors were routinely paid $AU1,000 per day, and conflicts of interest were poorly handled.

The Ombudsman says that his investigation had identified “failures in internal checks and balances at CeniTex, serious improper conduct, undeclared and inadequately managed conflicts of interest”, and “poor procurement and recruitment processes”.

The report also suggests contract-splitting, in which projects were contracted out in small parcels to avoid them being put to tender, may have taken place, and accuses the agency of sham tendering.

One company, not identified in the report, was paid $AU40 million over more than 300 separate purchase orders. “This suggests that engagements may have been split by CeniTex in order to avoid tender thresholds”.

Last year, an investigation by the Fairfax newspaper The Age suggested that a hosting contract had been awarded to a shelf company established by CeniTex executives. That report sparked a police investigation which the Ombudsman said delayed his investigation.

In NSW, the University of Sydney is red-faced after ICAC announced the results of its investigation into contracting practises at the sandstone-league institution.

The ICAC has found that IT manager Atilla “Todd” Demiralay used a company operated by his wife to recruit contractors, engaged his brother-in-law to work at the university without disclosing their relationship, and handed a job to a close friend without considering other candidates.

The investigation has found that more than $AU1.5 million was paid to Demiralay’s companies.

The University’s decision to use the staffer’s companies for recruitment also gets a serve, since the NSW government has a panel of recruitment firms whose services were therefore already available to the institution. ®

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