Department of Health - allegations of money fraudulently obtained from the Royal Hospital for Women and Royal North Shore Hospital (Operation Charity)

Year: 2011 Status: Completed

The ICAC investigated allegations that Sandra Lazarus and others fraudulently obtained money from the funds of the Royal Hospital for Women and Royal North Shore Hospital by submitting false requisitions and invoices from companies in which she or her sister, Michelle Lazarus, was a shareholder when no services were provided. In its report on this investigation, which was made public on 31 August 2011, the ICAC made findings of corrupt conduct against Sandra Lazarus and Michelle Lazarus. The ICAC has stated its opinion that the advice of the Director of Public Prosecutions be sought with respect to the prosecution of Sandra Lazarus and Michelle Lazarus for various offences. The Commission has also made seven corruption prevention recommendations to the NSW Department of Health to help minimise or prevent such conduct from recurring.


Findings of corrupt conduct

The ICAC has found that Sandra Lazarus engaged in corrupt conduct in relation to the Royal Hospital for Women (RHW) by:

  • Preparing vendor maintenance forms that she knew falsely purported to be signed by Professor Neville Hacker and sending them to the South Eastern Sydney and Illawarra Area Health Service (SESIAHS) to procure payments from the RHW
  • Preparing five requisitions that she knew falsely purported to be signed by Professor Hacker and Dr Donald Marsden and sending them to the SESIAHS in support of two invoices from Wish Consulting Pty Ltd (Wish) and three invoices from Medical and Clinical Informatics Consultants Pty Ltd (MCIC)
  • Preparing and submitting nine invoices on behalf of MCIC and seven invoices on behalf of Wish seeking payment for goods and services that, with the exception of tests on one or two patients, she knew were not provided
  • Representing to each of Dominic McGee and Stacey Linton that she was a hospital representative chasing payments, without disclosing that she was the supplier to whom the payments were to be made.

The ICAC has found that Sandra Lazarus engaged in corrupt conduct in relation to the Royal North Shore Hospital (RNSH) by:

  • Preparing vendor maintenance forms that she knew falsely purported to be signed by Professor Ross Smith and sending them to Health Support Services (HSS) in order to procure payments from RNSH
  • Preparing 30 non-order vouchers that she knew falsely purported to be signed by Dr Mark Sywak, Dr Thomas Hugh or Dr Nick Pavlakis and sending them to HSS in support of four invoices from MCIC, 17 from Complete Health and Medicine Pty Ltd (CHM) and nine invoices from Wish
  • Preparing and submitting four invoices on behalf of MCIC, nine invoices on behalf of Wish and 22 invoices on behalf of CHM seeking payment for goods and services that she knew were not provided
  • Representing to Dr Sywak, in respect of one non-order voucher, and Dr Michael Back, in respect of four non-order vouchers, that is was necessary to sign them so that she could continue her research.

The ICAC has found that Michelle Lazarus engaged in corrupt conduct in relation to each of the RHW and RNSH by concurring with the submission of false invoices on behalf of Wish.

Recommendations for prosecutions

The Commission must seek the advice of the Director of Public Prosecutions (DPP) on whether any prosecution should be commenced. The DPP determines whether any criminal charges can be laid, and conducts all prosecutions. The Commission provides information on this website in relation to the status of prosecution recommendations and outcomes as advised by the DPP. The progress of matters is generally within the hands of the DPP. Accordingly, the Commission does not directly notify persons affected of advice received from the DPP or the progress of their matters generally.

The Commission is of the opinion that consideration should be given to obtaining the advice of the DPP with respect to the prosecution of Sandra Lazarus for the following offences in relation to her conduct concerning the Royal Hospital for Women:

  • offences of making or using false instruments contrary to section 300(1) of the Crimes Act 1900 in relation to two vendor maintenance forms and five requisitions
  • offences of obtaining money by false or misleading statements contrary to section 178BB of the Crimes Act in relation to: nine invoices submitted for Medical and Clinical Informatics Consultants Pty Ltd (MCIC); seven invoices submitted on behalf of Michelle Lazarus for Wish Consulting Pty Ltd (Wish); false statements made to Dominic McGee; and false statements made to Stacey Linton.

The Commission is of the opinion that consideration should be given to obtaining the advice of the DPP with respect to the prosecution of Sandra Lazarus for the following offences in relation to her conduct concerning the Royal North Shore Hospital:

  • offences of making or using false instruments contrary to section 300(1) of the Crimes Act in relation to three vendor maintenance forms and 30 non-order vouchers
  • offences of obtaining money by false or misleading statements contrary to section 178BB of the Crimes Act in relation to: four invoices submitted for MCIC; nine invoices submitted on behalf of Michelle Lazarus for Wish; 22 invoices for Complete Health and Medicine Pty Ltd; false statements make to Dr Michael Back; false statements made to Dr Mark Sywak.

The Commission is of the opinion that consideration should be given to obtaining the advice of the DPP with respect to the prosecution of Michelle Lazarus for offences of giving false or misleading evidence contrary to section 87(1) of the Independent Commission Against Corruption Act 1988 in relation to:

  • her knowledge of the purpose for the preparation of three MCIC pay slips showing her as an employee
  • her knowledge of the purpose for the preparation of the letter of appointment, dated 17 April 2008, from Wish to Jessica Lazarus
  • whether or not she met Dr Gilbert Burton
  • her knowledge of two cheques drawn on the Wish account and paid to St Vincent's Hospital.

Updates

On 23 May 2014, Michelle Lazarus was convicted in the Local Court of seven offences of giving false or misleading evidence to the Commission contrary to section 87(1) of the ICAC Act. On 14 July 2014, she was sentenced to 9 months imprisonment, wholly suspended. The same day, she filed a notice of appeal to the District Court against her conviction and sentence.

On 27 November 2014, Sandra Lazarus was found guilty of 16 offences of dishonestly obtaining a benefit by deception contrary to section 178BB of the Crimes Act and 27 offences of making or using a false instrument contrary to section 300(1) of the Crimes Act. She was found not guilty of a further 15 offences under section 300(1) of the Crimes Act. Her matter was adjourned for sentence 27 April 2015.

On 5 February 2015, Sandra Lazarus commenced proceedings by summons in the Supreme Court seeking judicial review of the magistrate's decision. Garling J dismissed the summons on 16 April 2015 and ordered Sandra Lazarus to pay the Crown’s costs.

On 23 February 2015, Michelle Lazarus commenced proceedings by summons in the Supreme Court seeking judicial review of the magistrate's decision.

On 27 April 2015, Sandra Lazarus was sentenced in the Local Court to an aggregate term of 21 months imprisonment with a non-parole period of 16 months. The same day, she filed a notice of appeal to the District Court against her conviction and sentence.

On 12 May 2015, Sandra Lazarus filed a notice of intention to appeal against the decision of Garling J on 16 April 2015 in the Court of Appeal.

On 15 May 2015, Sandra Lazarus filed a further summons seeking a review of the magistrate’s decision to convict her. A further summons was filed on 20 July 2015 seeking to have her convictions set aside and the proceedings against her struck out. Hulme J dismissed both of these summonses as abuses of process on 2 December 2015.

On 21 August 2015, Garling J in the Supreme Court dismissed Michelle Lazarus’ summons of 23 February 2015 and ordered her to pay the Crown’s costs. Michelle Lazarus then filed a notice of intention to appeal against the decision of Garling J.

On 15 December 2015, Sandra Lazarus’ application for leave to appeal against Garling J’s decision was heard in the Court of Appeal. Sandra Lazarus did not appear that day and sought an adjournment by email. Having concluded that the appeal had no realistic prospects of success, the Court of Appeal refused leave and ordered Sandra Lazarus to pay the Crown’s costs.

On 14 March 2016, the Court of appeal heard Michelle Lazarus’ application for leave to appeal against Garling J’s decision of 21 August 2015. That application was refused and Michelle Lazarus was ordered to pay the Crown’s costs.

Thereafter, Sandra Lazarus and her sister Michelle Lazarus filed a number of notices of motion in the District Court seeking an order that the criminal proceedings against them be stayed.

The motions were heard on 16 November 2015 and 24 June 2016. On 19 August 2016, Judge Zahra of the District Court declined to stay the proceedings.

On 24 November 2016 Sandra Lazarus and Michelle Lazarus filed a further summons in the Court of Appeal seeking judicial review of Judge Zahra’s decision of 19 August 2016. That appeal challenged the validity of the Independent Commission Against Corruption (Validation) Act 2015. The Court of Appeal dismissed the summons on 7 March 2017.

The appeals against conviction and sentence of Sandra Lazarus and Michelle Lazarus were both listed for hearing before the District Court on 19 June 2017. On that day, Michelle Lazarus failed to attend Court. Her appeals against conviction and sentence were dismissed for want of prosecution and her sentence from the Local Court was confirmed. Sandra Lazarus appeared and sought an adjournment of proceedings. King J refused the adjournment and stood the matter over to 20 June 2017 for hearing. On that day, Sandra Lazarus failed to attend Court and her appeal against conviction was dismissed. Her appeal against sentence was adjourned to 28 June 2017.

On 28 June 2017,  the Court adjourned the hearing of the appeal against sentence to 14 July 2017. On 14 July 2017, the matter was adjourned for mention on 19 July 2017 and for hearing of the appeal on 18 August 2017. On that day, an application to set aside the dismissal of the conviction appeal was refused. The matter was further listed for the hearing of the severity appeal on 18, 20, 22 and 29 September 2017. On 29 September 2017, the matter was adjourned for hearing on 7 and 8 December 2017. On 13 December 2017, Hoy DCJ confirmed the sentence of 21 months imprisonment but varied the non-parole period to 13 months. The sentence was stayed by virtue of section 69C(2)(a) of the Supreme Court Act 1970 due to separate civil proceedings brought by Sandra and Michelle Lazarus in July 2017 in the Court of Appeal seeking, among other things, the quashing of their convictions. Under the Supreme Court Act, the stay of proceedings continues until the proceedings for judicial review are finally determined, subject to any order or direction of the Court of Appeal. The civil proceedings were heard by the NSW Court of Appeal on 23 November 2018. On 8 May 2019, judgment was given dismissing the proceedings.

Recommendations for disciplinary action

Neither Sandra Lazarus nor Michelle Lazarus are public officials so it is not necessary to make any recommendation in relation to disciplinary action.

Recommendations for corruption prevention

The Commission has made the following seven corruption prevention recommendations to the NSW Department of Health to help minimise or prevent such conduct from recurring:

Recommendation 1

That the NSW Department of Health ("NSW Health") requires that non-employees who are to be given access to hospital campuses, records, facilities and patients, be subjected to screening checks and afforded a level of access that is determined by the role they are to perform and the degree of risk attached to this role.

Recommendation 2

That NSW Health ensures that a centralised record of screening checks and access levels is maintained by hospitals in respect of each individual and that records are made available to staff who are required to access them.

Recommendation 3

That NSW Health ensures that ID cards for security access are not issued until all relevant screening and other checks have been satisfactorily completed.

Recommendation 4

That NSW Health develops procedures for ensuring that electronic approvals are used for all procurement transactions except for emergencies.

Recommendation 5

That NSW Health takes action to ensure that complainant vendors, as well as NSW Health employees following up payment on behalf of vendors, are dealt with by a designated responsible person(s) at Health Support Services and Local Health Networks in order to prevent direct access to staff who process claims for payment.

Recommendation 6

That NSW Health revises its corruption risk management policies and procedures to ensure that organisational restructures are explicitly mentioned as a risk that needs to be identified and managed.

Recommendation 7

That NSW Health incorporates an assessment of the usefulness and accessibility of information provided to cost centre managers from the continuous control monitoring (CCM) system into its regular cycle of performance audits.

Implementation Plan

The implementation plan posted below has been provided by the NSW Department of Health in response to the ICAC's corruption prevention recommendations. Its appearance here is for information only and does not constitute the approval or endorsement of the plan by the Commission.

Implementation plan

12 month progress reports

The progress report posted below has been provided by the NSW Department of Health in response to the ICAC's corruption prevention recommendations. Its appearance here is for information only and does not constitute the approval or endorsement of the plans by the Commission.

12 month progress report 

24 month progress reports

The final progress report posted below has been provided by the NSW Ministry of Health in response to the ICAC's corruption prevention recommendations. Its appearance here is for information only and does not constitute the approval or endorsement of the plan by the Commission.

24 month progress report 


Media Releases Witness

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Download the Witness List (PDF)

Transcripts

View all transcripts associated with this investigation. The Commission makes every effort to post the daily transcripts of its public inquiries on its website by 8:00 pm each day when possible. If the Commission sits later than 4:00 pm, the daily transcripts, particularly the afternoon session, may not be available until the next working day.

 

Filename File Size KB Date pp. Time
14-02-2011_Operation_Charity_transcript_pp._00001-00055_from_10.10am_to_12.49pm.pdf 158 14/02/11 00001-00055 10.10am_to_12.49pm
14-02-2011_Operation_Charity_transcript_pp._00056-00108_from_2.20pm_to_4.20pm.pdf 145 14/02/11 00056-00108 2.20pm_to_4.20pm
28-02-2011_Operation_Charity_transcript_pp._001085-001137_from_10.10am_to_12.50pm.pdf 151 28/02/11 001085-001137 10.10am_to_12.50pm
15-02-2011_Operation_Charity_transcript_pp._00109-00176_from_9.40am_to_1.02pm.pdf 185 15/02/11 00109-00176 9.40am_to_1.02pm
15-02-2011_Operation_Charity_transcript_pp._00177-00233_from_1.50pm_to_4.51pm.pdf 153 15/02/11 00177-00233 1.50pm_to_4.51pm
16-02-2011_Operation_Charity_transcript_pp._00234-00300_from_9.45am_to_1.01pm.pdf 179 16/02/11 00234-00300 9.45am_to_1.01pm
16-02-2011_Operation_Charity_transcript_pp._00301-00353_from_1.50pm_to_4.44pm.pdf 153 16/02/11 00301-00353 1.50pm_to_4.44pm
17-02-2011_Operation_Charity_transcript_pp._00354-00401_from_10.05am_to_12.53pm.pdf 129 17/02/11 00354-00401 10.05am_to_12.53pm
17-02-2011_Operation_Charity_transcript_pp._00402-00445_from_2.05pm_to_4.39pm.pdf 118 17/02/11 00402-00445 2.05pm_to_4.39pm
18-02-2011_Operation_Charity_transcript_pp._00446-00510_from_10.09am_to_1.02pm.pdf 175 18/02/11 00446-00510 10.09am_to_1.02pm
21-02-2011_Operation_Charity_transcript_pp._00511-00565_from_10.05am_to_12.50pm.pdf 144 21/02/11 00511-00565 10.05am_to_12.50pm
21-02-2011_Operation_Charity_transcript_pp._00566-00616_from_2.15pm_to_4.35pm.pdf 134 21/02/11 00566-00616 2.15pm_to_4.35pm
22-02-2011_Operation_Charity_transcript_pp._00617-00678_from_10.08am_to_1.05pm.pdf 165 22/02/11 00617-00678 10.08am_to_1.05pm
22-02-2011_Operation_Charity_transcript_pp._00679-00722_from_2.25pm_to_4.33pm.pdf 117 22/02/11 00679-00722 2.25pm_to_4.33pm
23-02-2011_Operation_Charity_transcript_pp._00723-00782_from_10.10am_to_1.08pm.pdf 163 23/02/11 00723-00782 10.10am_to_1.08pm
23-02-2011_Operation_Charity_transcript_pp._00783-00829_from_2.05pm_to_4.30pm.pdf 131 23/02/11 00783-00829 2.05pm_to_4.30pm
24-02-2011_Operation_Charity_transcript_pp._00830-00922_from_9.40am_to_1.46pm.pdf 237 24/02/11 00830-00922 9.40am_to_1.46pm
24-02-2011_Operation_Charity_transcript_pp._00923-00977_from_2.20pm_to_5.03pm.pdf 157 24/02/11 00923-00977 2.20pm_to_5.03pm
25-02-2011_Operation_Charity_transcript_pp._00978-01031_from_10.05am_to_1.05pm.pdf 143 25/02/11 00978-01031 10.05am_to_1.05pm
25-02-2011_Operation_Charity_transcript_pp._01032-01084_from_2.05pm_to_4.27pm.pdf 139 25/02/11 01032-01084 2.05pm_to_4.27pm
28-02-2011_Operation_Charity_transcript_pp._01138-01173_from_2.25pm_to_3.53pm.pdf 97 28/02/11 01138-01173 2.25pm_to_3.53pm
01-03-2011_Operation_Charity_transcript_pp._01174-01224_from_10.10am_to_1.08pm.pdf 136 01/03/11 01174-01224 10.10am_to_1.08pm
01-03-2011_Operation_Charity_transcript_pp._01225-01279_from_1.50pm_to_4.30pm.pdf 137 01/03/11 01225-01279 1.50pm_to_4.30pm
02-03-2011_Operation_Charity_transcript_pp._01280-01301_from_10.05am_to_11.08pm.pdf 65 02/03/11 01280-01301 10.05am_to_11.08pm
23-03-2011_Operation_Charity_transcript_pp._01302-01346_from_11.05am_to_12.47pm.pdf 122 23/03/11 01302-01346 11.05am_to_12.47pm
23-03-2011_Operation_Charity_transcript_pp._01347-01410_from_2.02pm_to_4.59pm.pdf 173 23/03/11 01347-01410 2.02pm_to_4.59pm
24-03-2011_Operation_Charity_transcript_pp._01411-01475_from_10.10am_to_1.04pm.pdf 176 24/03/11 01411-01475 10.10am_to_1.04pm
24-03-2011_Operation_Charity_transcript_pp._01476-01544_from_2.03pm_to_5.07pm.pdf 191 24/03/11 01476-01544 2.03pm_to_5.07pm
25-03-2011_Operation_Charity_transcript_pp._01545-01596_from_11.05am_to_1.03pm.pdf 135 25/03/11 01545-01596 11.05am_to_1.03pm
25-03-2011_Operation_Charity_transcript_pp._01597-01668_from_1.50pm_to_4.42pm.pdf 184 25/03/11 01597-01668 1.50pm_to_4.42pm
Exhibits Public notices