Victoria starts corruption enquiry into CSG-Oracle deal

Victoria’s corruption watchdog has started public hearings into what it describes as “exceptional and concerning” circumstances that ended in the state's Department of Education signing CSG and Oracle to roll out its multi-million dollar Ultranet system.

The Independent Broad-based Anti-corruption Commission (IBAC) will call as many as 35 witnesses over the coming weeks, as it hears evidence that the $180 million IT failure was doomed before it even started, having been undermined by procurement irregularities and the pursuit of personal interests.

In June 2009, Victoria’s Department of Education committed to what was originally a $71 million deal signed with a consortium made up of CSG and Oracle that would see the pair roll out a new state-wide student management system.

But IBAC alleges no other competitors in the bidding process ever stood a chance, with senior Education officials determined to ensure the CSG/Oracle tender came out on top.

IBAC yesterday opened its case with explosive claims that Ultranet project sponsor and senior Education bureaucrat Darrell Fraser was leaking sensitive information to the consortium, and maintaining “inappropriate” contact with representatives of the company throughout.

Fraser’s relationship with Oracle dated back several years to when he was principal of Glen Waverley Secondary College, a selected pilot school testing new Victorian e-learning strategies.

By November 2011, Fraser had quit the department to become chief education officer for bidding partner CSG.

His “close friend” and one-time Education deputy secretary John Allman is accused of buying $10,000 worth of shares in CSG the day before its successful tender was announced, while departmental regional director Ron Lake bought shares in the months following, despite being a member of the project board.

IBAC will also probe “inexplicably high” tender evaluation scores given to the Oracle/CSG Ultranet tender by the evaluation panel - which it alleges included associates of Fraser - despite the fact that the product it was pitching had yet to be fully developed and prime contractor CSG had never delivered a project on the scale of what was being proposed with Ultranet.

It revealed the contract went ahead in spite of legal action against CSG by competitor ASG, which laid claim to intellectual property shared with CSG by former employees.

At the time the contract was signed, “a real concern existed in some within the department as to whether CSG had the ability to deliver the Ultranet project”, the corruption watchdog said.

In the second inquiry into alleged corruption and lax procurement at the Department of Education in 12 months, IBAC intends to tease out the organisational weaknesses that it says “allowed such conduct to flourish”.

IBAC has already called recent Education secretary Richard Bolt to give evidence, as well as education official Graeme Lane and former Glen Waverley teacher Ron Schlosser.

Hearings will continue for the next three weeks.