ICAC finds security providers and public officials corrupt

Thursday 26 September 2013

The NSW Independent Commission Against Corruption (ICAC) has found that security service providers and public officials engaged in corrupt conduct in relation to work for several NSW public authorities including the University of Western Sydney (UWS), the Art Gallery of NSW (AGNSW) and the then Northern Sydney Central Coast Area Health Service (NSCCAHS) which resulted in benefits including cash, trips to Las Vegas and a motor scooter being awarded to public officials in return for favouring particular companies.

In its report, Investigation into allegations of corrupt conduct in the provision of security products and services by suppliers, installers and consultants, released today, the Commission finds that security industry consultant, Daniel Paul, security systems installer and integrator Kings Security Group Pty Ltd directors Peter (Charles) Diekman and Peter Roche, NSCCAHS employee Robert Huskic, Q Video Systems' (QVS) Paul Thompson, Kings employee David McMicking and Austek Security managing director Jonathan Nguyen engaged in corrupt conduct.

Mr Paul provided consultancy services through his company, Hootspah Pty Ltd (trading as Security Consultants International), to UWS, the AGNSW and Sydney Ports Corporation (SPC). In performing his work for these agencies, the Commission is satisfied that Mr Paul was a public official for the purposes of the Independent Commission Against Corruption Act 1988. Mr Paul had particularly close relationships with Kings and Mr Diekman, with whom he had been friends from about 2007.

Mr Paul's conduct included accepting $13,000 from Mr Diekman in 2008 as a reward for assisting Kings in relation to a UWS access control project, and to influence him to favour Kings in relation to that project in the future. Mr Paul had served on the tender evaluation committee (TEC) for the project, but deliberately failed to disclose to the UWS TEC chairperson his conflict of interest arising out of his personal and financial relationship with Mr Diekman. He also used his influence on an AGNSW TEC, engaging in corrupt conduct by accepting $20,000 from Mr Diekman in 2009 as a reward for improperly exercising his public official function to help Kings win a tender associated with the AGNSW's security upgrade project. Mr Paul accepted $27,500 from QVS that year as a reward for improperly exercising his official functions to help QVS become the main supplier for the AGNSW contract, and deliberately failed to disclose to the gallery his conflicts of interest arising from his relationships with Kings, Mr Diekman and QVS. Mr Thompson engaged in corrupt conduct by arranging for QVS to pay Mr Paul the $27,500 reward. Mr Paul also deliberately failed to disclose to SPC and Woollahra Municipal Council, when engaged through his company to work for those public authorities, his conflicts of interest arising from his relationships with Mr Diekman and Kings.

Mr Diekman's corrupt conduct included paying Mr Paul the $13,000 in 2008 and arranging the $20,000 payment in 2009. He also acted corruptly by providing or authorising the provision of benefits including money, accommodation in Las Vegas and a Vespa scooter to Mr Huskic, 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. Kings experienced a substantial increase in business from NSCCAHS during that period, rising from $68,000 in 2006 for security work to between $800,000 and $1.2 million each year from 2007 to 2011. Mr Diekman also agreed with Mr Huskic in 2010 to submit two dummy quotes for the Gosford hospital carpark security upgrade, knowing Mr Huskic would represent them as genuine quotes and use them as genuine quotes. Mr Huskic's conduct in relation to these matters is also corrupt through seeking and accepting the benefits, and by requesting and using the dummy quotes, knowing that they were false.  Mr McMicking's conduct in agreeing with the submission of the dummy quotes knowing they were false and would be represented by Mr Huskic as genuine is also corrupt.

Mr Diekman also engaged in corrupt conduct by dishonestly providing Austek with the Kings costings for an SPC project in 2007 so they could be used by Mr Nguyen to submit a higher Austek quote to SPC, thereby increasing Kings chances of winning the SPC contract. Mr Nguyen conduct in this deceit is also corrupt.

Findings are made against Mr Roche for agreeing to pay the $20,000 reward in 2009 to Mr Paul over the AGNSW contract, and for agreeing with Mr Diekman to provide the benefits to Mr Huskic between 2006 and 2011.

The Commission has found that procurement processes for the provision of highly specialised security and IT services pose serious corruption risks and has made 11 corruption prevention recommendations. These include that NSW government agencies ensure that overall responsibility for identified tasks associated with the selection of security integrators is maintained in-house, and that agencies explore alternatives to relying exclusively on the advice of specialist consultants when selecting security integrators through a competitive process. NSW government agencies embarking on new large-scale security projects should also adopt a rigorous product selection process, and should ban employees directly involved in procurement activities from accepting any gifts, benefits and hospitality from potential and existing contractors and consultants.

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 Paul, Mr Diekman and Mr Huskic for offences under the Crimes Act 1900.

The Commission held a public inquiry, as part of the investigation, over 24 days between 18 June 2012 and 31 August 2012. Commissioner the Hon David Ipp AO QC presided at the public inquiry, at which 31 witnesses gave evidence.

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