Findings of corrupt conduct
The ICAC found that Daniel Paul engaged in corrupt conduct by:
- accepting $13,000 from Mr Diekman in 2008 as a reward for Mr Paul assisting Kings Security Group Pty Ltd in relation to the University of Western Sydney (UWS) access control project and to influence him to favour Kings in relation to that project in the future
- deliberately failing to disclose to the UWS tender evaluation committee (TEC) his conflict of interest arising from his personal and financial relationship with Mr Diekman
- accepting $20,000 in 2009 from Mr Diekman as a reward for Mr Paul having improperly exercised his public official functions to assist Kings to win an Art Gallery of NSW (AGNSW) tender
- accepting $27,500 from Q Video Systems (QVS) in 2009 as a reward for improperly exercising his public official functions to assist QVS to become the main supplier of security products for the AGNSW contract
- deliberately failing to disclose to the AGNSW his conflicts of interest arising from his relationships with Mr Diekman, Kings and QVS
- deliberately failing to disclose to Sydney Ports Corporation (SPC) and to Woollahra Municipal Council his conflicts of interest arising from his relationships with Mr Diekman and Kings.
The ICAC found that Peter (Charles) Diekman engaged in corrupt conduct by:
- paying Mr Paul $13,000 in 2008 as a reward for Mr Paul Mr Paul improperly exercising his public official functions to assist Kings in relation to the UWS access control project and for further assistance that Mr Diekman anticipated Mr Paul might provide in the future
- arranging for Mr Paul to be paid $20,000 in 2009 as a reward for Mr Paul exercising his public official functions to improperly assist Kings to win the AGNSW tender
- providing or authorising the provision of benefits to Mr Huskic, of the then Northern Sydney Central Coast Area Health Service (NSCCAHS) between 2006 and 2011 in return for Mr Huskic having exercised his public official functions to favour Kings and in the expectation that he would do so in the future
- agreeing with Mr Huskic, in 2010, to submit two dummy quotes to the NSCCAHS for the Gosford hospital carpark security upgrade, knowing Mr Huskic would represent them as genuine quotes, and authorising the submission of those quotes
- dishonestly providing Austek Security Solutions with the Kings costings for an SPC project in 2007 with the intention that these would be used by Austek managing director Jonathan Nguyen to submit a higher Austek quote to SPC, so Kings' chances of winning the contract for the SPC project would be increased.
The ICAC found that Robert Huskic engaged in corrupt conduct by:
- seeking and accepting benefits from Mr Diekam between 2006 and 2011 in return for exercising his public official functions to favour Kings and in the expectation that he would do so in the future
- Requesting Mr Diekman, in 2010, to arrange for the creation of dummy quotes for the Gosford hospital carpark security upgrade and his use of those quotes, knowing they were false.
The ICAC found that Peter Roche engaged in corrupt conduct by agreeing with Mr Diekman that:
- Mr Paul be paid $20,000 in 2009 as a reward for Mr Paul exercising his public official functions to improperly assist Kings to win the AGNSW tender
- Mr Huskic be provided with benefits between 2006 and 2011 as a reward for Mr Huskic having exercised his public official duties to favour Kings in the expectation that he would do so in the future.
Paul Thompson engaged in corrupt conduct by arranging for Mr Paul to be paid $27,500 by QVS in 2009 as a reward for Mr Paul exercising his public official functions to assist QVS to become the main supplier of security products for the AGNSW project.
David McMicking engaged in corrupt conduct by agreeing with Mr Huskic, in 2010, to submit two dummy quotes to the NSCCAHS for the Gosford hospital carpark security upgrade, knowing Mr Huskic would represent them as genuine quotes, and authorising the submission of those quotes.
Jonathan Nguyen engaged in corrupt conduct by dishonestly using Kings' costings for the SPC project in 2007 to ensure that his company, Austek, submitted a higher quote than Kings to SPC, so that Kings' chances of winning the contract for the SPC project would be increased.
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 ICAC is of the opinion that the advice of the DPP should be obtained with respect to the prosecution of:
- Daniel Paul for a criminal offence of corruptly receiving a benefit ($13,000) from Mr Diekman contrary to section 249B(1) of the Crimes Act 1900
- Peter (Charles) Diekman for: a criminal offence of corruptly giving a benefit to Mr Paul contrary to section 249B(2) of the Crimes Act; criminal offences of corruptly giving rewards to Mr Huskic contrary to section 249B(2) of the Crimes Act, the criminal offence of fraud under section 192E of the Crimes Act or the criminal offence of using a false document under section 254 of the Crimes Act in relation to authorising the preparation and submission of the two dummy quotes
- Robert Huskic, for a criminal offence of using a false document under section 254 of the Crimes Act in relation to his use of the two dummy quotes.
Briefs of evidence were provided to the DPP.
On 17 April 2015, the DPP advised the Commission that there was sufficient evidence to charge:
- Peter (Charles) Diekman with five counts of corruptly giving a benefit to Robert Huskic pursuant to section 249B(2) of the Crimes Act
- Robert Huskic with five counts of corruptly receiving a benefit from Peter Diekman pursuant to section 249B(1) of the Crimes Act and two counts of using a false document pursuant to section 254(b)(iii) of the Crimes Act.
The DPP further advised that there was insufficient evidence to proceed with charges against Daniel Paul.
On 9 December 2016, all charges were dismissed in respect of Mr Diekman and Mr Huskic at the Downing Centre Local Court.
Recommendations for disciplinary action
There are no recommendations for disciplinary action.
Recommendations for corruption prevention
The Commission has made 11 corruption prevention recommendations to help NSW government agencies address weaknesses in the procurement and management of security services as follows:
Recommendation 1
That NSW government agencies ensure that overall responsibility for identified tasks associated with the selection of security integrators is maintained in-house, including:
- determining project budgets
- determining the scope of projects
- selecting tenderers to bid for contracts (in the case of limited and select tenders)
- communicating with tenderers
- coordinating tender evaluation panels and making recommendations
- evaluating tender submissions and writing selection reports.
Recommendation 2
That NSW government agencies embarking on new large-scale security projects adopt a rigorous product selection approach. The selection process could include:
- obtaining feedback regarding product specifications from a variety of sources, including end-users
- extensive product testing and the evaluation of test results by a panel either to inform the development of tender specifications or as part of a tender evaluation process.
Recommendation 3
That NSW government agencies explore alternatives to relying exclusively on the advice of specialist consultants when selecting security integrators through a competitive process. Options for diluting the influence of specialist consultants include:
- identifying in-house security experts from other public sector agencies for tender evaluation panel participation
- ensuring that when consultants sit on tender evaluation panels, it is only in a technical advisory capacity
- identifying and seeking advice from agencies that have undertaken similar projects.
Recommendation 4
That NSW government agencies consider the feasibility of separating tasks between security consultants for large-scale and complex projects, in cases where specialist advice is required.
Recommendation 5
That NSW government agencies adopt a broad approach to the due diligence enquiries that are conducted as part of a security procurement process, including:
- the scrutiny of low bids
- consideration of previous performance
- seeking referee reports beyond those nominated by the tenderer
- the verification of case studies provided by tenderers
- conducting criminal record checks on successful applicants
- seeking information from established information networks.
Recommendation 6
That NSW government agencies adopt a preference for open tender methodologies (including staged processes that involve open expressions of interest) for new security installation projects above $250,000 in value. For contracts up to $250,000 in value, a minimum of three written quotes should be obtained, unless exceptional circumstances exist and are documented or the contract is worth $30,000 or less.
This recommendation does not apply where whole-of-government or multi-agency arrangements are in place. It also does not apply where the agency has a pre-qualification scheme in place or where existing warranty or integration issues preclude open competition.
Recommendation 7
That NSW Health adopts a range of audit activities to ensure compliance with the requirements of its Purchasing and Supply Manual, including the formalisation of pre-qualification arrangements for contractors and obtaining the requisite number of quotations.
Recommendation 8
That NSW government agencies improve their project management systems by:
- clarifying project roles and responsibilities
- developing in-depth project scopes and plans, as appropriate, to the size and complexity of a project
- specifying and ensuring compliance with contract terms and conditions
- introducing tight inventory controls
- close monitoring of project budgets and project expenditure
- establishing processes to verify and approve variations, including the use of quantity surveyors.
Recommendation 9
That NSW government agencies ban employees directly involved in procurement activities from accepting any gifts, benefits and hospitality from potential contractors and consultants and existing contractors and consultants.
Recommendation 10
That NSW government agencies be proactive in explaining the obligations on contractors and consultants to declare conflicts of interest, including those arising from either a pecuniary or non-pecuniary relationship.
Recommendation 11
That NSW government agencies ensure compliance with the Department of Premier and Cabinet's Guidelines for the Engagement and Use of Consultants (C2004-17) when engaging and using consultants.
These recommendations are made pursuant to s 13(3)(b) of the Independent Commission Against Corruption Act 1988 ("the ICAC Act") and, as required by s 111E of the ICAC Act, will be furnished to the relevant public authorities and the ministers responsible for those authorities. As required by s 111E(2) of the ICAC Act, the relevant public authorities must inform the Commission in writing within three months (or such longer period as the Commission may agree to in writing) after receiving the recommendations whether they propose to implement any plan of action in response to the recommendations affecting them and, if so, the plan of action.
In the event a plan of action is prepared, the relevant public authorities are required to provide a written report to the Commission of their progress in implementing the plan 12 months after informing the Commission of the plan. If the plan has not been fully implemented by then, a further written report must be provided 12 months after the first report.
Implementation plans
The implementation plans posted below have been provided in response to the ICAC's corruption prevention recommendations. Their appearance here is for information only and does not constitute the approval or endorsement of the plans by the Commission.
Art Gallery NSW - Implementation Plan (PDF)
NSW Businesslink - Implementation Plan (PDF)
NSW Health - Implementation Plan (PDF)
Sydney Ports Corporation - Implementation Plan (PDF)
University of Western Sydney - Implementation Plan (PDF)
Woollahra Municipal Council - Implementation Plan (PDF)*
*Other reports will not be requested from Woollahra Municipal Council as it has completed its implementation of the recommendations.
12 month progress reports
The 12 month progress reports posted below have been provided in response to the ICAC's corruption prevention recommendations. Their appearance here is for information only and does not constitute the approval or endorsement of the reports by the Commission.
NSW Health - 12 Month Progress Report
University of Western Sydney - 12 Month Progress Report
Port Authority of New South Wales - 12 month progress report
Final reports
The final reports posted below have been provided in response to the ICAC's corruption prevention recommendations. Their appearance here is for information only and does not constitute the approval or endorsement of the reports by the Commission.
Art Gallery of NSW - Final Report
Department of
Family and Community Services - Business Services - Final Report
NSW Health - Final Report (PDF)
Port Authority of New South Wales - Final Report (PDF)
Western Sydney University - Final Report (PDF)