Corruption claims over failed $240m Ultranet project

Inquiry finds evidence of process corruption, improper diversion of funds, conflict of interest and mismanagement

The launch was extravagant. Dancers and singers were hired to perform a specially choreographed musical number. A bespoke stage was constructed to look like a giant laptop. Kindles and iPads were given away as spot prizes.

A branded bus ferried then Victorian education minister Browyn Pike and special guests to the ‘Big Day Out’ event at Melbourne Convention and Exhibition Centre. Today, they would launch Ultranet, a virtual learning portal that promised to ‘revolutionise learning’ for every Victorian school pupil.

Poised at their computers in schools across the state, teachers readied themselves to log-on to the system as it went live. It crashed. The million-dollar event was a damp squib. And so was Ultranet.

Three years later, in 2013, plagued by limited functionality and declining student take-up from an already pitiful base of 10 per cent, the Ultranet project was abandoned. Although the exact cost is unknown, estimates go as high as $240 million.

Today Victoria’s Independent Broad-based Anti-corruption Commission (IBAC) said its investigation into the project had “exposed a range of improper actions and behaviours by senior departmental staff that effectively corrupted the tender process.”

“Central to many of the allegations examined”, the report released by IBAC today says, is former teacher turned senior state politician Darrell Fraser who one person told IBAC “broke every f---ing rule in the book”.

Serious concerns

The anti-corruption agency’s report was tabled in state parliament today. It accuses the former education department official and other senior departmental staff of making decisions that were “contrary to the proper procurement process”. These decisions resulted in a preference for systems integrator CSG “despite serious concerns about its commercial credentials in the relevant area” and an Oracle-based solution.

“Mr Fraser was instrumental in manipulating procurement processes to ensure the Ultranet contract was awarded to the CSG/Oracle consortium – companies with whom he had a longstanding relationship,” the report says.

Fraser has denied he had a bias towards the Oracle software solution. The report, covering the findings of IBAC's Operation Dunham, says Fraser was part of the team at Glen Waverley Senior College that helped develop a pilot of the Ultranet project. Oracle collaborated on the pilot.

“Having been given what an Oracle executive regarded as the ‘box seat’, Oracle was able to identify, develop and strengthen relationships with key people in the Department who were in a position to influence the future tender process, particularly including Mr Fraser,” states the IBAC report, prepared by commissioner Stephen O’Bryan QC.

The report also highlights what it says is evidence of a number of probity breaches during the tender process and “evidence of senior departmental staff and their associates purchasing shares in CSG in circumstances that raised significant concerns about the appropriateness of that conduct”.

In 2011, the report says, Fraser resigned from the Department to take up employment with CSG.

There were significant breaches of the department’s policy towards travel and gifts, the report says. Among the claims is evidence that Oracle took two staff on an all-expenses trip to New York where they enjoyed lavish dinners, business class travel and an evening at a Broadway show.

“The trip offered no benefit to the Department, nor to students and staff of Victorian government schools,” the report said.

IBAC also criticised the “boozy, blokey culture” that existed within the department at the time, and the fact that concerns around Frasers’ and others’ behaviour was escalated without consequence.

No excuse

“In the case of the Ultranet, the single-minded pursuit of an outcome dependent on the involvement of Oracle and CSG resulted in an appalling waste that can be measured in many millions of dollars of public money,” the report states.

It says that “the behaviours described in this report were engaged in by public servants in senior roles, invested with considerable authority and bound by the public service code of conduct. The anticipated potential of the Ultranet (no matter how exciting that promise) was no excuse for corruption of process.”

IBAC is compiling a brief of evidence for advice by the Office of Public Prosecutions, the commission said.

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