19 January 2012
A report released yesterday by the New South Wales Independent Commission Against Corruption (ICAC) indicates how readily some agencies’ senior managers can manipulate their agency controls to personal advantage. The Department of Education and Training engaged an IT project manager on contract (and contractors of course bring special expertise, entrepreneurship and innovation to a cautious, risk averse public sector). But he applied his innovation to manipulating recruitment and payment processes, corruptly acquiring more than A$400,000.
ICAC found that the manager engaged staff who were the employees of his private company, taking a margin of up to $57 an hour on the services of five contractors retained for ten months. He also obtained benefits by approving falsified timesheets for the contractors and payments claims by an associated company for work not performed.

Many New Zealand agencies have contractors in controlling positions, although the State Sector Act precludes them having financial authorities. The probability is that similar risks exist. Some characteristics in the Australian case reflect events at Otago DHB four years ago. That agency’s IT manager was later convicted of corruptly acquiring approximately $17 million.

ICAC recommendations include reviewing the use, qualifications, ratio and management of contractors.

The Australian case is small beer compared with fraud by top management in Chinese agencies. According to media reports, the incidence of corruption by ”top executives” is increasing although the sums involved are reducing. In just 88 publicly reported cases last year in State Owned Enterprises, an average per incident of NZ$6.5 million was taken, compared with almost NZ$12 million per incident in 2010. The largest reported sum involved the controller of a State owned furniture manufacturing business who fraudulent extracted approximately $NZ 950 million. He was sentenced to death, as were five other agency leaders. (Two corrupt officials were executed last year). Eleven others were given life sentences.

An official survey apparently found that 60% of Chinese are ‘very confident’ or ‘relatively confident’ about the Chinese Government’s anti corruption measures.