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IBAC investigation finds former CEO of regional health service misused position

An investigation by IBAC has found a former CEO of a Victorian regional health service misused their position by exploiting weaknesses in the agency’s systems and controls for their own financial benefit and the benefit of some close associates.

IBAC also found that the organisation had a culture which discouraged employees from speaking up. In addition, the Board failed to govern effectively and did not adequately oversee the former CEO.

Further, IBAC identified issues with the oversight of the health service by the then Department of Health and Human Services. The Department did not take sufficient action despite red flags regarding the conduct of the former CEO.

IBAC’s Operation Meroo special report, tabled to Parliament today, reveals the former CEO awarded a contract worth nearly $1 million to a consultancy while in a personal relationship with one of its directors, and, without verification inappropriately authorised payment of invoices to a company owned by a relative several years after the work was purportedly undertaken. The former CEO failed to declare and manage the clear conflicts of interest.

The report also outlines how the former CEO inappropriately expended the health service’s funds on travel and hospitality, and regularly failed to comply with policies and procedures.

"Public sector employees are expected to maintain strict separation between work-related and personal financial matters and must only use public financial resources for work-related purposes. The failure of the former CEO to do this resulted in significant costs to the health service," IBAC Commissioner The Honourable Robert Redlich AM, QC said

"Any misuse of public funds impacts communities and damages trust in public institutions, services and government. The public harm is particularly acute in health care where the misuse of funds comes at the expense of delivering vital services affecting people’s quality of life,” Commissioner Redlich said.

"The health service’s Board did not act in the best interests of the agency as it failed to scrutinise the former CEO’s expenditure and did not hold the longstanding former CEO to account. The Board’s inadequate oversight helped facilitate the former CEO’s conduct.

"The vulnerabilities highlighted in this investigation are not unique to this particular health service. There are 81 public health services and public hospitals in Victoria.

"I urge public health services and other public sector agencies, particularly in regional or rural areas and those governed by boards, to consider the corruption issues outlined in the Operation Meroo special report and consider how they can mitigate these risks in their own agencies.”

IBAC has made recommendations to the health service and the Department of Health to address the vulnerabilities identified in Operation Meroo. These include strengthening board capability and oversight, procurement practices, and conflict of interest management.

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