IBAC finds former Victorian public servant invested AU$110k into contracted CSG

Victoria's anti-corruption commission has found that a former employee of the Department of Education spent almost AU$110,000 on shares in the company contracted by the department.

A former Victorian education official purchased almost AU$110,000 worth of shares in a company awarded a controversial department IT contract the day after a department board meeting discussed the tender.

Print solutions provider cum IT services firm CSG was awarded the contract for a multi-million dollar state-wide Department of Education IT project back in 2010.

Spiked in 2013, electronic learning initiative Ultranet was created to bring an online education network to connect students, teachers, and parents by providing access to online learning materials and student information.

Ultranet was rarely used due to the amount of technical issues it faced from day one and the scheme was consequently scrapped when costs blew out from AU$60 million to the AU$180 million total.

Victoria's Independent Broad-based Anti-corruption Commission (IBAC) heard on Thursday that former Loddon-Mallee regional director and Ultranet project board member Ron Lake bought 100,000 shares in CSG, for a cost of almost AU$110,000.

"I believed in the ... program strongly," Lake told IBAC.

The anti-corruption hearing found that Lake's shares were purchased with 20 percent of his superannuation; it was also found that Lake had not owned shares in any organisation before that.

Eight days into IBAC's Operation Dunham Investigation, Lake admitted that he directed his assistant regional director and girlfriend Julie Baker to also purchase CSG shares.

The commission found that Baker was given a bank cheque for AU$10,500 on July 30, 2009 -- her birthday -- which she used to buy 9,710 CSG shares.

Lake denied that information shared in the board meeting had piqued his interest in buying the shares, despite knowing that ASX-listed CSG had been awarded the contract.

"I had been watching the market and made the decision very quickly," Lake said.

At the next board meeting two weeks later, Lake failed to disclose his purchase of the shares and did not request to be excused from the board.

He later called his former brother-in-law Tony Budgen, who was the chair of the department's Ultranet project board, and told him of the shares purchase but did not offer his resignation.

Budgen told Lake not to attend the next meeting as his purchase would be discussed.

On Wednesday, the anti-corruption commission heard that Ian Morrison, a former teacher, also took a stake in CSG. In May 2009, he bought 11,200 shares to the value of AU$9,978.90.

Acting nonchalantly about fronting almost AU$10,000, Morrison said he already owned shares prior to acquiring CSG ones, which was later found to be 20 years prior, in the late 1980s.

Morrison then told counsel assisting Ian Hill QC that he had purchased the CSG shares following a tip he received from John Allman, a close friend of his, and also a former employee of the now disolved Office of Government Schools Education.

He also said that he was not necessarily interested in finding out what he was spending AU$10,000 on.

"I'm a gambler and so it was a large -- a large outlay, but I've spent money on the horses before," Morrison said. "I haven't had a bet of AU$10,000, but I've turned over two to three thousand dollars on a race meeting."

He did say, however, that prior to his conversation with Allman that he had never heard of CSG. Allman purchased 12,300 shares two days prior to Morrison.

In January 2010, Morrison sold his shares for AU$22,317.50, and just over a year later, he invested a further AU$6,850 into CSG, scooping up 5,000 shares in March 2011.

Morrison also told the hearing that he had not heard of Ultranet until word broke of employees of the education department being embroiled in a scandal regarding the failed IT project.

In his opening address on Monday of last week, Hill said IBAC believed top-ranking education department officials used their positions to benefit from the failed project.

He alleged that in addition to purchasing shares in CSG, department officials also took on consulting roles within the Darwin-based IT firm.

Hill said, however, that none of them declared a conflict of interest.

In 2004, the Victorian Education Department started a research and development program to produce a proof-of-concept student-centric IT centre to support online teaching and learning. After finding no commercial system that matched the department's requirements, it talked to Oracle Australia and signed a research agreement with them in 2004.

From the agreement came the Students@Centre portal, which was trialled from January 2006 at 12 government schools in Melbourne with around 630 teachers, 10,000 students, and 300 parents. That proof of concept was decommissioned in March 2007.

Ultranet was then activated in May 2010 before being spiked three years later.

During the first day of the hearing, IBAC found that AU$1.4 million was spent on an opulent day-long presentation to introduce Ultranet to the state's school principals and deputy principals.

The hearing continues.

With AAP