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