The NSW corruption watchdog has found a former Department of Finance, Services and Innovation IT contractor corrupt following its investigation into a dishonesty scheme that allegedly defrauded over $500,000.
The Independent Commission Against Corruption (ICAC) today released its report [pdf] into the conduct of Steven Prestage, a project manager contracted for the “implementation of CA [CA Technologies] Clarity Project Portfolio Management software”.
It found that the Hays contractor had recommended the department engage Petite Software Systems Pty Ltd – a company belonging to his friend, Michael Turner – to undertake IT work on the “Clarity Project”.
But the watchdog said this work was never carried out by Petite Software Systems, and Turner was “unaware Mr Prestage had “hijacked” the name and was using it to obtain a financial benefit from the department”.
“Mr Prestage orchestrated the appointment of Petite Software Systems as a supplier to DFSI, by falsely representing to the department that ICT government-accredited suppliers could not fulfil DFSI’s requirements,” ICAC said.
The watchdog said Prestage then used the company’s name to “disguise the fact that another company with a similar moniker, Petite Solutions Pty Ltd, was paid by DFSI for work carried out by ICT contractors on the Clarity Project, purportedly on behalf of Petite Software Systems”.
Unlike Petite Software Systems, Petite Solutions was “effectively” under the control of Prestage and had been registered by his mother-in-law at his request, the ICAC said.
To do this he assumed various names in his communications with DFSI and ICT contractors "to create the impression that Petite Software Systems ... was a legitimate service provider".
“Mr Prestage secured payments to Petite Solutions by issuing invoices in the name of Petite Software Systems but which contained the bank account details of Petite Solutions,” ICAC said, adding that the names were used interchangable to create uncertainty.
The ICAC said that between 15 June 2016 and 19 October 2016, Petite Solutions netted a total of $569,800 from the department.
This was reduced to $523,450 after payments were made to a number of other ICT contractors, which was subsequently transferred to accounts controlled by Prestage, who also received $101,980 for his services as a project management.
The ICAC said it would now consider obtaining the advice of the state Director of Public Prosecutions over prosecuting Prestage for various offences, including giving false and misleading evidence to the Commission.
It also said Prestage’s ability to facilitate “over $500,000 worth of corrupt payments in a five-month period” also called into question control framework at DFSI.
“Mr Prestage’s conduct was facilitated by numerous control failings, that included risks inherent in engaging him in the first place as he had a history of engaging in misconduct,” it said.
The watchdog has made 15 recommendations to strengthen DFSI screening processes, which the department said it was either implementing or intending to implement.
This includes developing "a framework to ensure that the employment screening checks conducted on contractors a commensurate with the level of risk posed by their respective engagements" and providing "guidance to its staff who hold a financial delegation about red flags on quotations that indicate that a supplier may not be genuine".
A special business unit for managing contingent labour engagements, ensuring that all new suppliers are subject to a due diligence process and data analytics tools for managing the risks associated with red flags on invoices have also been recommended.
In a statement to iTnews, DFSI acknowledged the "serious issues" raised in the ICAC report, and said it had already incorporated most of the recommendations into its business operations.
This includes deploying "a centralised software platform, Contractor Central, to manage and monitor contingent labour hire across the Cluster" and strengthening the process behind engaging or extending contractors.
A formal ICT Capital Review Board consisting of the secretary, deputy secretary, CFO and CIO has also been introduced to "consider all project business cases before they are approved for delivery".
"The ICT project mentioned in the ICAC report was successfully completed, and the Clarity project management system is now in use across DFSI, and has delivered real value in improved delivery results," the spokesperson said.