CSG accused of 'sham' business deal in anti-corruption hearing

Three past and present CSG executives have denied accusations that their firm participated in an improper deal worth almost $1 million.

The three men were being cross-examined by Victoria's corruption watchdog, which is probing the "exceptional and concerning" circumstances that ended in the state's Department of Education signing CSG and Oracle to roll out its multimillion-dollar Ultranet system.

All three figures disputed accusations by the Independent Broad-based Anti-corruption Commission (IBAC) that CSG had prepared a worthless report on learning technologies in 2011 so that it could claim $940,000 in indirect payments from the Department of Education.

Ian Hill QC told the commission that this was a way for the department to funnel money to CSG, because CSG was suffering cash flow problems and might otherwise have walked away from the Ultranet project.

The Department of Education paid Alliance Recruitment $1 million to prepare the report; the recruitment agency then subcontracted the job to CSG for $940,000, according to Hill.

Hill told the commission that this was a "sham transaction" – but this was disputed by Denis MacKenzie, who was then chief executive of CSG.

MacKenzie said that while he wasn't involved in the day-to-day preparation of the report, he had seen no evidence that anything untoward had occurred.

Heath Caban, an ex-CSG employee who oversaw the report, told Hill that the Department of Education had received value for money.

"Others have looked at the report that your team prepared and have said that it, effectively, was worthless. You disagree with that?" Hill asked Caban. "I do," Caban replied.

"Do you disagree with the assertion that this was a sham to get money, being $1 million, out of the education department to CSG?" Hill asked. "I do," Caban replied.

Stephen Birrell, who still works at CSG, disputed accusations that the report was "incompetent and effectively worthless" – although he conceded it wasn't worth anywhere near $1 million. "I would say that it would be worth at least $500,000," he said.

"Do you see this was not a real project, was it?" Hill asked.

"I don't agree with that. This was a real project," Birrell replied.

The hearings continue.