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​IBAC unveils a web of misconduct in Victorian schools

The Victorian corruption watchdog has heard that a AU$100 million project blowout was not the only concern in the state's education system, with its inquiry revealing tales of lavish spending, boys' clubs, money funnelling, and blatant abuse of power.

Victoria's Independent Broad-based Anti-corruption Commission (IBAC) has wrapped up its 18-day investigation into the failed multimillion dollar state schools IT project.

Spiked in 2013, electronic learning initiative Ultranet was purpose-built for Victorian schools to bring an online education network to connect its 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.

Although the true cost of Ultranet may never be known, IBAC heard that the total could be somewhere in the ballpark of AU$180 million and AU$240 million -- all for a computer interface that was supposed to connect students, staff and parents but never really worked.

Throughout the inquiry it was revealed that there were so many backdoor payments and secret deals happening, even the most senior auditors have found it hard to trace what money was spent and where.

Print solutions provider cum IT services firm CSG was awarded the failed contract back in 2010.

A blatant abuse of power by officials during the tender process became obvious during the hearings into misconduct within the education department.

Well-known for its tight-knit boys' club, the questionable actions of past and present bureaucrats quickly unravelled during the hearings as allegations of dodgy deals, lavish junkets, destroyed documents, and overspending were confirmed.

The blame pointed towards Darrell Fraser, the former principal at Glen Waverley Secondary College in Victoria. During his time at Glen Waverly, Fraser allegedly had his finger in every pie imaginable.

Throughout the course of the hearing, many blamed Fraser for the failings of the Ultranet project by breaking procurement rules, while others argued his rule-breaking and "liberal" spending of department money was all for the good of education.

His lawyers argued for him to be questioned in private, or not at all -- claiming anything he said could prejudice any future criminal trials -- but when he finally took the stand he said nothing many did not already know.

Fraser admitted funnelling almost AU$1 million into CSG and claimed he did so to save the project.

Fraser confirmed allegations he destroyed 10-12 tubs of documents he took home with him when he left the department, and also admitted to spending AU$1.4 million on a day-long project launch -- which included dancing girls, internet booth displays, and trade show fees -- although he said he never realised it cost that much.

Fraser was not the only official to come under scrutiny, as other senior department officials admitted purchasing over AU$110,000 in shares in Australian-listed CSG, using insider information, taking jobs with the company that was awarded the contract, and going on lavish overseas junkets.

Previously, IBAC heard that a private company called Cortecnica Property Limited was registered in 2002 with its principle place of business recorded as at the secondary college.

Cortecnica, which later commercially developed the college's intranet system, had a director by the name of Frank Aloisio, who was also the school's technology and development manager. It was alleged by counsel assisting Ian Hill QC that Fraser was instrumental in Cortecnica's inception.

Cortecnica folded six months later and in 2003 Fraser commenced discussions with Oracle Corporation regarding a collaborative project, Hill alleged.

Hill told the corruption commission that Oracle and the school then collaborated on the design and prototype development of a solution that leveraged off both the Oracle L360 solution and the Glen Waverley Secondary College's intranet, with the expectation that Oracle would take that platform to the rest of the schools in the state.

Previously, the commission heard that both Fraser and Aloisio left the school in early 2004, with Fraser promoted to the position of deputy secretary within the Department School Education Secretariat and Aloisio taking up a consultancy role at Oracle.

In 2004, the Victorian Education Department reported that it had 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 signed a research agreement with Oracle Australia 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.

In November 2006, the then Premier of Victoria Steve Bracks announced a commitment to develop and deploy a state-wide online teaching and learning system to be called the Ultranet project.

The first request for tender for the development and management of the Ultranet project was released to the marketplace in August 2007, with IBAC hearing a company known as Cinglevue Proprietary Limited was first registered on the same day.

"Significantly, the directors of that private company were Mr Aloisio, a Gregory Tolefe, a Gregory Martin, and a Tony Sala," Hill said. "At that time, Tolefe was employed by ASG Group Limited, and it appears that Aloisio was now engaged by ASG on a consultancy basis. Martin was an employee of Oracle."

It was then revealed that at the conclusion of the first Ultranet tender, ASG and RM Asia Pacific were the only two shortlisted companies selected to proceed.

In 2008, Aloisio ceased his engagement with ASG and commenced employment as a business analyst with CSG, Hill told IBAC.

"It was around that time that CSG acquired Cinglevue Proprietary Limited for a sum of approximately AU$5 million," he said.

Former public servants played coy at the beginning of the inquiry, but had no choice but to make admissions when secretly recorded telephone conversations were played during the hearings.

One of those expletive-ridden bugged phone calls led to the suspension of current regional director Matt Dunkley.

During that conversation Dunkley told former acting deputy secretary John Allman "you told me you f***ing destroyed all the evidence as soon as you knew ... the empire was gone".

It is believed Dunkley was also removed from the department's integrity committee -- set up after IBAC began its investigation.

Former education minister Bronwyn Pike also found herself at the centre of the corruption scandal, admitting she did not act on allegations linked to the Ultranet tender process because it "was not her job".

She was first made aware of probity concerns about Fraser -- who was revealed as being her friend -- in 2008 but was told the allegations were from a disgruntled bidder and followed standard departmental procedure, which was forwarding the email on.

Pike's friendship with Fraser and former department secretary Jeff Rosewarne, which continued well after her time as education minister, was highlighted numerous times during the hearing.

In another bugged phone call played to the hearing, Pike agreed to a secret meeting with both of them, well after numerous corruption allegations against the pair were aired.

IBAC heard that in another conversation, Pike told Fraser: "You know how those things get blown up" after he told her about his secret payment to CSG.

Pike was education minister between 2007 and 2010 and spearheaded the government's plan to modernise the education system -- including major technological upgrades to schools across the state.

At the completion of the hearing, IBAC commissioner Stephen O'Bryan said he would prepare a report which would be tabled in Parliament later this year.

Public examinations have now closed; however, IBAC said the hearing formed just one part of its ongoing investigation into alleged serious corruption at the education department.

The corruption commission said that Operation Dunham is still an open investigation, and once the investigation is complete, it will release a public report with findings and recommendations, currently slated for sometime this year.

As a result of its investigation, IBAC has the right to refer matters to other agencies for action, or to consider the commencement of criminal proceedings.

With AAP