ICAC finds former RTA/RMS employees received over $7 million in corrupt benefits over nine years, aided by lax control and poor oversight
Tuesday 7 March 2023
The NSW Independent Commission Against Corruption (ICAC) has found that two former employees of the then Roads and Traffic Authority and/or Roads and Maritime Services (RTA/RMS) engaged in serious corrupt conduct over nine years that netted them at least $7.47 million in benefits, aided by lax supervision and poor managerial oversight.
The Commission’s report, Investigation into the awarding of Roads and Traffic Authority and Roads and Maritime Services contracts (Operation Paragon), released today, finds that former employees Alexandre Dubois and Craig Steyn, along with 13 contractors, conducted or were involved in various schemes and activities concerning the awarding of RTA/RMS contract work between about mid-2010 and mid-2019. The Commission has found that, ultimately, Mr Dubois and Mr Steyn’s corrupt conduct involved the awarding of at least $38,639,606 during the same period. At least $6,726,657 of these payments were corrupt benefits to Mr Dubois, while Mr Steyn received benefits to the value of at least $743,841.
In addition to cash payments, other benefits provided to Mr Dubois included the provision of a number of luxury sports cars. Benefits provided to Mr Steyn included iPhones, iPads, payment for school fees, birthday parties and overseas travel, and the purchase of housing materials towards the construction of his house.
The report notes that while the Commission accepts it was unfortunate to have two corrupt public officials with procurement delegations under the supervision of another corrupt public official (the subject of the ICAC 2022 Operation Ember report, Investigation into the awarding of contracts by employees of the former Roads and Maritime Services), “that situation is indicative of widespread failures in the fundamentals of procurement and management which allowed such a situation to come about”.
The RTA/RMS did not conduct proper due diligence checks, which would have raised red flags and encouraged questions about the activities that were occurring. However, even if a red flag was identified and questions asked, it was never meaningfully followed through.
At times, order splitting occurred to ensure amounts were split so that they would be kept under certain price thresholds, thereby avoiding a different procurement process which required greater oversight. Work could also be split with, in one example, separate contracts being created for opposing exit lanes from the same road. Mr Dubois manipulated the “three-quote process” for works below the $250,000 threshold, by encouraging the submission of “dummy quotes” to ensure a pre-determined outcome. Prices were inflated to ensure that the employee/s would receive a benefit. Many of the contractors awarded RTA/RMS work had no experience in road works project management.
There was also nepotism involved, with Mr Steyn allocating RMS work to a company of which his cousin was director. Mr Steyn also permitted his father-in-law to work on RMS job sites and controlled a company that was in his father-in-law’s name. Mr Steyn received benefits through the payment of invoices via this company. Mr Dubois also awarded work to his cousin and to his friends. There was also confusion within the RTA/RMS, as to whether the Engineering Contracts Manual applied for the project works that were being carried out, and as to how delegation sometimes was exercised in the approval of the works. The Commission found that there was insufficient procurement competence, limited assurance and accountability and inadequate record management. This investigation also revealed issues with the broader control framework that were conducive to the corrupt conduct found, including: inadequate responses to reported conflicts of interest, limited staff management, chaotic budget management and insufficient support for suppliers making complaints.
The Commission has made nine recommendations to assist TfNSW to improve its systems around construction procurement to make it more corruption resistant. These include that TfNSW reviews its processes surrounding construction procurement to ensure that planning of minor works is based on meaningful analysis of need, properly considers relevant market(s), is guided by an appropriately detailed procurement strategy, and is only conducted in accordance with its delegation framework.
The Commission also recommends that TfNSW ensures that it has a robust supplier due diligence framework that includes: routinely obtaining full ASIC records of new suppliers, routinely conducting internet searches on new suppliers, further due diligence checks being conducted on a risk-basis; due diligence checks being conducted by an individual who is not involved in selecting the supplier; and processes to follow up supplier red flags in a meaningful manner. TfNSW should also review its governance of procurement information to ensure that accurate and completed records are kept, and should review the supervision of staff involved in procurement processes to ensure that managers are alert to, and aware of, red flags of misconduct and act upon them appropriately.
The Commission seeks 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 is of the opinion that consideration should be given to obtaining the advice of the DPP about the prosecution of Mr Dubois, Mr Steyn and another 12 individuals for various offences.
The Commission notes that as a result of the Operation Paragon investigation, separate NSW Supreme Court proceedings were commenced against Mr Dubois, by the NSW Crime Commission, and Mr Steyn, by TfNSW, that resulted in the recovery of $3.94 million from Mr Dubois and $745,000 from Mr Steyn. In total, both public authorities collectively recovered $4.685 million from Mr Dubois and Mr Steyn.
The Commission held a public inquiry as part of the investigation, over 51 hearing days from 10 May 2021 to 23 June 2021, 6 December 2021 to 9 December 2021, 21 and 22 March 2022 and on 29 March 2022. Former Chief Commissioner the Hon Peter Hall KC presided at the public inquiry, and 21 witnesses gave evidence.