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Senior public servant involved in Australia’s largest public sector fraud

Publisher
West Australian, Perth
Date published
May 2022

Relevant impacts: Financial impact, government outcomes impact, reputational impact

A former Western Australian senior public official used an elaborate fake invoicing scheme, in what has been described as Australia's largest public sector fraud.

The WA Department of Communities helps ensure vulnerable people can access public housing. Yet over an 11-year period, a public servant exploited his senior position in the department to steal $27 million to fund his own lavish lifestyle, which included an insatiable gambling habit, race horses and a riverside mansion.

He stole the funds by submitting false invoices to the department for shell companies he controlled. The false invoices for various sums were approved by himself, even though no products or services were delivered. At the time he oversaw the department's corporate operations and large-scale government procurements. By exploiting his position of considerable influence, he could direct these fraudulent payments to accounts he had access to without any further checks or oversight.

The fraud was unravelled in 2019 when an analysis of his corporate credit cards found matches to the shell companies he controlled. Covert surveillance then identified that he withdrew cash from the accounts linked to the shell companies

Related countermeasures

Clearly document decision-makers using delegations, authorisations and instructions. Clearly defined decision-making powers increase transparency and reduce the opportunity for fraud and corruption.

Limit and control functionality within systems with user permissions. Assign permissions to users based on specific business needs, such as making high-risk functions limited to specialised users. The Protective Security Policy Framework sets out the government protective security policies that support this countermeasure.

Separate duties by allocating tasks and associated privileges for a business process to multiple staff. This is very important in areas such as payroll, finance, procurement, contract management and human resources. Systems help to enforce the strong separation of duties. This is also known as segregation of duties.

Reconcile records to make sure that 2 sets of records (usually the balances of 2 accounts) match. Reconciling records and accounts can detect if something is different from what is standard, normal, or expected, which may indicate fraud.

Internal or external audits or reviews evaluate the process, purpose and outcome of activities. Clients, public officials or contractors can take advantage of weaknesses in government programs and systems to commit fraud, act corruptly, and avoid exposure.

Prepare summary reports on activities for clients, managers or responsible staff.

 Investigate fraud in line with the Australian Government Investigation Standards (AGIS).

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