ICAC finds DFSI ICT project manager corrupt after “hijacking” business name to obtain half-million dollar benefit

Wednesday 16 January 2019

The NSW Independent Commission Against Corruption (ICAC) has found that former Department of Finance, Services and Innovation (DFSI) project manager Steven Prestage engaged in serious corrupt conduct through an elaborate scheme he concocted involving “hijacking” the name of his friend’s company to help deceive the department into making over $500,000 in payments that were ultimately used to dishonestly benefit himself.

In a report released today, Investigation into the conduct of a Department of Finance, Services and Innovation ICT project manager (Operation Yarrow), the Commission examines the conduct of Mr Prestage while he was engaged as a DFSI contractor to project manage the department’s implementation of CA Clarity Project Portfolio Management software (“the Clarity Project”).

The Commission found that Mr Prestage recommended to DFSI that it engage a company known as Petite Software Systems Pty Ltd to undertake information and communication and technologies (ICT) work on the project.

Petite Software Systems belonged to Mr Prestage’s friend, Michael Turner, who was its sole director and shareholder. However, Petite Software Systems never performed any work for DFSI, and Michael Turner was unaware that 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.

He used its 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. Petite Solutions was effectively under Mr Prestage’s control, having been registered by his mother-in-law on his behalf and at his request; she was also its sole director, secretary and shareholder. At Mr Prestage’s request, she also opened a bank account in the name of the company, into which DFSI made payments. 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.

From 15 June to 19 October 2016, Petite Solutions received $569,800 from DFSI. After payments from this account to a number of ICT contractors, the balance of $523,450 was transferred from Petite Solutions’ account into other accounts controlled by Mr Prestage. During the same period, Mr Prestage also received $101,980 for his services as project manager.

The report notes that Mr Prestage used the names Petite Software Systems, Petite Solutions, and “Petite” interchangeably in his dealings with DFSI and the ICT contractors. “This created uncertainty as to the identity of the supplier of ICT contractors to the Clarity Project and the identity of the party receiving payments from DFSI. The Commission is satisfied that this consequence was intended by Mr Prestage,” the report says. “It facilitated his dishonest scheme.”

The ICAC is of the opinion that the advice of the Director of Public Prosecutions should be obtained with respect to the prosecution of Mr Prestage for various offences.

The report notes that Mr Prestage facilitated over $500,000 worth of corrupt payments in a five-month period, both the quantum of the corrupt payments and that they were made in such a short period calling into question DFSI’s control framework. 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.

The Commission has made 15 corruption recommendations to DFSI, including that DFSI develops a framework to ensure that the employment screening checks conducted on contractors are commensurate with the level of risk posed by their respective engagements, and that DFSI provides guidance to its staff who hold a financial delegation about red flags on quotations that indicate that a supplier may not be genuine. DFSI has indicated that it is implementing, or intends to implement, the recommendations.

The ICAC determined that it was not satisfied that it was in the public interest to hold a public inquiry into this matter, but that the principal functions of the Commission to educate and inform the public about the detrimental effects of corrupt conduct, the promotion of the integrity and good repute of public administration, and the fostering of public support in combatting corruption would be absent without the issue of a public report.

Other factors the Commission had regard to in making the determination not to hold a public inquiry but to release a public report included that: a substantial amount of cogent evidence was obtained in the course of the investigation that indicated the likelihood of corrupt conduct; based on the evidence obtained during the investigation it was unlikely that a public inquiry would uncover new evidence relevant to the investigation; a public report would make the public aware of the relevant conduct and system weaknesses and set out corruption prevention recommendations; as a result of the investigation, the Commission was satisfied that Mr Prestage had engaged in serious corrupt conduct; and the corrupt conduct involved the expenditure of a significant amount of public funds for private advantage.

Media contact: ICAC Manager Communications & Media Nicole Thomas 02 8281 5799 / 0417 467 801

Full report

Fact sheet