Ausgrid – allegations concerning former engineer (Operation Jarah)

Year: 2015 Status: Completed

The ICAC investigated allegations that a former Ausgrid engineer, Phillip Cresnar, solicited and received benefits from Ausgrid contractors and subcontractors in exchange exercising his public official functions to show favour, or not to show disfavour, to them. It was also alleged that Mr Cresnar disclosed to contractors, and others, confidential information acquired in the course of his official functions.

In its report on the investigation, made public on 3 June 2015, the Commission makes corrupt conduct findings against Mr Cresnar, Jason Bastow, Dennis Twomey, Eamon Burke, Patrick Miskelly, John Madden and Fergal McGann. The Commission is of the opinion that consideration should be given to obtaining the advice of the Director of Public Prosecutions (DPP) with respect to the prosecution of Mr Cresnar, Mr Twomey, Mr Burke, Mr Miskelly, Mr Madden and Mr McGann for various offences.

The ICAC also makes three corruption prevention recommendations to Ausgrid to help prevent the recurrence of the conduct exposed in this investigation in the future.


Findings of corrupt conduct

The ICAC found that Phillip Cresnar engaged in corrupt conduct by:

  • accepting benefits to the value of at least $97,756 from Mr Bastow
  • accepting $2,500 from Mr Madden and Mr McGann

as an inducement or reward for Mr Cresnar exercising his public official functions as an Ausgrid employee to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid

  • accepting benefits from Mr Twomey to the value of $50,506, the use of a Bunnings trade card and the use of a Murray Civil company car
  • accepting four cheques from Mr Burke which Mr Cresnar used to purchase goods for his personal use to the value of $99,327
  • accepting two international airline tickets worth a total of $2,652.41 from Mr Miskelly
  • knowing that these benefits were intended to influence Mr Cresnar to exercise his public official functions to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid.

Jason Bastow, John Madden and Fergal McGann engaged in corrupt conduct by providing the above benefits to Mr Cresnar in the case of Mr Bastow and Mr McGann, and in the case of Mr Madden by being a party to an agreement whereby Mr McGann gave the $2,500 to Mr Cresnar, as an inducement or reward for Mr Cresnar exercising his public official functions as an Ausgrid employee to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid.

Dennis Twomey, Eamon Burke and Patrick Miskelly engaged in corrupt conduct by providing the above benefits to Mr Cresnar knowing that these benefits were intended to influence Mr Cresnar to exercise his public official functions to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid.

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 Director of Public Prosecutions should be obtained with respect to the prosecution of:

  • Phillip Cresnar for offences of receiving corrupt commissions or rewards pursuant to section 249B(1)(a) of the Crimes Act 1900 in relation to the benefits he received from Messrs Bastow, Madden and McGann; offences of receiving corrupt commissions or rewards pursuant to section 249B(1)(b) of the Crimes Act in relation to the benefits he received from Messrs Twomey, Burke and Miskelly; attempting to procure the giving of false testimony at a compulsory examination or public inquiry contrary to section 89(a) of the Independent Commission Against Corruption Act 1988 in relation to a letter sent to Mr Bastow; giving false or misleading evidence at a compulsory examination on 17 April 2014, contrary to section 87(1) of the ICAC Act, in relation to his evidence that he had done nothing in exchange for the benefits that were provided to him by Mr Bastow.
  • Dennis Twomey for offences under section 249B(2)(b) of the Crimes Act in relation to the benefits he supplied Mr Cresnar; and an offence under section 114(1) of the ICAC Act of disclosing information about a Commission summons that was likely to prejudice a Commission investigation.
  • Eamon Burke for offences under section 249B(2)(b) of the Crimes Act in relation to the four cheques he supplied to Mr Cresnar; and an offence under section 112 of the ICAC Act for disclosing information about his attendance at a compulsory examination.
  • Patrick Miskelly for a offences under section 249B(2)(b) of the Crimes Act in relation to the airline tickets he supplied to Mr Cresnar.
  • John Madden and Fergal McGann each for an offence under section 249B(2)(a) of the Crimes Act in relation to the $2,500 payment to Mr Cresnar.

A brief of evidence was provided to the DPP on 17 July 2015.

Updates

On 18 July 2017, the DPP advised that there is sufficient evidence to charge the following people with the following offences:

  • Phillip Cresnar for offences of receiving corrupt commissions or rewards pursuant to section 249B(1)(a) of the Crimes Act in relation to the benefits he received from Messrs Bastow, Madden and McGann; offences of receiving corrupt commissions or rewards pursuant to section 249B(1)(b) of the Crimes Act in relation to the benefits he received from Messrs Twomey, Burke and Miskelly; attempting to procure the giving of false testimony at a compulsory examination or public inquiry contrary to section 89(a) of the ICAC Act in relation to a letter sent to Mr Bastow; giving false or misleading evidence at a compulsory examination on 17 April 2014, contrary to section 87(1) of the ICAC Act, in relation to his evidence that he had done nothing in exchange for the benefits that were provided to him by Mr Bastow.
  • Dennis Twomey for offences under section 249B(2)(b) of the Crimes Act in relation to the benefits he supplied Mr Cresnar; and an offence under section 114(1) of the ICAC Act of disclosing information about a Commission summons that was likely to prejudice a Commission investigation.
  • Eamon Burke for offences under section 249B(2)(b) of the Crimes Act in relation to the four cheques he supplied to Mr Cresnar; and an offence under section 112 of the ICAC Act for disclosing information about his attendance at a compulsory examination.
  • Patrick Miskelly for offences under section 249B(2)(b) of the Crimes Act in relation to the airline tickets he supplied to Mr Cresnar.
  • John Madden for an offence under section 249B(2)(a) of the Crimes Act in relation to the $2,500 payment to Mr Cresnar.
  • Fergal McGann for an offence under section 249B(2)(a) of the Crimes Act in relation to the $2,500 payment to Mr Cresnar.

On 1 February 2018, Mr Burke entered a plea of guilty. On 29 May 2018, he was sentenced to an intensive corrections order for a period of 12 months.

Mr Madden and Mr McGann appeared at the Downing Centre Local Court on 17 April 2018. Following a plea of guilty, and after a number of adjournments, on 7 August 2018 they were each sentenced to an intensive correction order for a period of 7 months.

Mr Twomey pleaded guilty to his charge and on 27 September 2018 he was sentenced to an intensive correction order for a period of 8 months.

On 23 November 2018, both Mr Cresnar's and Mr Kelly's matters were set down for trial at the Sydney District Court on 14 October 2019.

Recommendations for disciplinary action

Phillip Cresnar resigned from his position at Ausgrid prior to disciplinary action being instigated. The ICAC, therefore, makes no recommendation in relation to the consideration of disciplinary or dismissal action.

Recommendations for corruption prevention

The Commission has made three corruption prevention recommendations to Ausgrid as follows:

Recommendation 1

That, in the short term, Ausgrid tightens processes within the existing system for contract cable laying work orders to reduce existing corruption opportunities. In this regard, Ausgrid should focus on processes for approving variations, tightening the scope and budget for work order contracts, and reducing opportunities for individual officers to control key tasks, including the selection of contractors.

Recommendation 2

That Ausgrid improves its data management and retention systems. Data capture should, as a minimum, be able to provide Ausgrid with the capability to establish unusual expenditure patterns, improve the accuracy of estimates for work orders, capture information on environmental and site conditions to inform project design and budgeting, and help to establish cost benchmarks.

Recommendation 3

That Ausgrid considers and adopts the optimum contracting model to deliver contract cable laying work. Central to this consideration should be the alignment of Ausgrid and contractor motivations, Ausgrid's current operating environment, and the efficiency and effectiveness of any such contracting model.

Implementation Plan

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

Implementation plan - Ausgrid
 

12 Month Implementation Plan

The Commission recognises that Ausgrid has made considerable headway towards the implementation of the three corruption prevention recommendations. In regards to the final recommendation, the Commission acknowledges that Ausgrid has considered an optimum contracting model, but that it remains to be adopted. The Commission accepts the Ausgrid has declared the adoption of the contracting model as imminent. Nonetheless, the Commission is of the opinion that the achievement of Recommendation 3 remains outstanding and, thus, Ausgrid has been asked to provide a further and final implementation plan in 12 months time.

12 months Implementation Plan - Ausgrid


Media Releases
Witness 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
19-01-2015_Operation_Jarah_transcript_pp._00001-00059_from_10.10am_to_1.14pm.pdf 201 19/01/15 00001-00059 10.10am_to_1.14pm
19-01-2015_Operation_Jarah_transcript_pp._00060-00087_from_2.10pm_to_3.12pm.pdf 94 19/01/15 00060-00087 2.10pm_to_3.12pm
20-01-2015_Operation_Jarah_transcript_pp._00088-00147_from_10.13am_to_12.59pm.pdf 202 20/01/15 00088-00147 10.13am_to_12.59pm
20-01-2015_Operation_Jarah_transcript_pp._00148-00185_from_2.02pm_to_3.41pm.pdf 127 20/01/15 00148-00185 2.02pm_to_3.41pm
21-01-2015_Operation_Jarah_transcript_pp._00186-00237_from_10.06am_to_12.36pm.pdf 173 21/01/15 00186-00237 10.06am_to_12.36pm
21-01-2015_Operation_Jarah_transcript_pp._00238-00272_from_2.05pm_to_3.39pm.pdf 124 21/01/15 00238-00272 2.05pm_to_3.39pm
22-01-2015_Operation_Jarah_transcript_pp._00273-00333_from_10.13am_to_1.00pm.pdf 212 22/01/15 00273-00333 10.13am_to_1.00pm
22-01-2015_Operation_Jarah_transcript_pp._00334-00382_from_2.02pm_to_4.02pm.pdf 166 22/01/15 00334-00382 2.02pm_to_4.02pm
23-01-2015_Operation_Jarah_transcript_pp._00383-00449_from_10.14am_to_1.18pm.pdf 244 23/01/15 00383-00449 10.14am_to_1.18pm
23-01-2015_Operation_Jarah_transcript_pp._00450-00478_from_2.17pm_to_3.33pm.pdf 106 23/01/15 00450-00478 2.17pm_to_3.33pm
27-01-2015_Operation_Jarah_transcript_pp._00479-00548_from_10.11am_to_1.23pm.pdf 241 27/01/15 00479-00548 10.11am_to_1.23pm
27-01-2015_Operation_Jarah_transcript_pp._00549-00617_from_2.05pm_to_4.43pm.pdf 249 27/01/15 00549-00617 2.05pm_to_4.43pm
Exhibits Public notices