The man behind the $1m Ultranet payment: 'I saw it as my only option'

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The final day of the Victorian Education Department corruption inquiry heard former deputy secretary Darrell Fraser argue that secretly funneling $1 million to prop up Ultranet contracting company CSG was his “only option”, as well as former education minister Bronwyn Pike trying to organise a drink with him “surreptitiously”.

Fraser explained to the Independent Broad-based Anti-corruption Commission inquiry he had created a shell evaluation project to help transfer money to CSG, which at the time he feared was on the brink of abandoning Ultranet — a software project surrounded by claims of improper tendering processes which was ultimately shut down after the department spent up to $240 million building it.

The agreement to prop up CSG was designed to be untransparent, Fraser conceded. $4 short of $1 million was transferred to Alliance Consulting, which then passed on all but $60,000 to CSG. Fraser said he did not realise Alliance would take a large cut of the public money, claiming to have been “shocked” when he read that in earlier inquiry transcripts.

“I devised the strategy about using a consultancy as the vehicle to the million dollars,” he told the inquiry. He agreed that the amount of money was arrived at — just under $1 million, the threshold for review outside the department — as well as categorising the deal as a ‘contract’ rather than a ‘consultancy’ — the latter of which would have seen it published in the annual report — were to avoid transparency.

Yet Fraser refuted any notion he had subverted procurement processes and hidden transactions from view for personal gain.

“It was my only option working in government. I was charged with a responsibility of delivering this project,” he argued. He also denied ever having been given shares in CSG, as had been claimed by former principal Graeme Lane. Fraser did, however, work at CSG after he left the department.

‘We’ll probably have to do it fairly surreptitiously’

The court also heard a recording of former education minister Bronwyn Pike telling Fraser in 2014 they should catch up for a drink to “chew the fat” but noting “we’ll probably have to do it fairly surreptitiously”.

Pike indicated she considered Fraser a friend. “These things are horrible and there’s a bigger story, but we’re friends and I’ve appreciated our friendship and I don’t want to — I don’t want to lose that because of this sort of thing.”

“You won’t,” responded Fraser.

In another call made well after Pike’s time as minister, Fraser told Pike he gave the $1 million to CSG “sort of on the quiet … with Jeff [Rosewarne]’s support because they were running out of money at a critical point and we didn’t want to raise the attention of government by saying ‘give more’.”

The report produced in exchange for the $1 million payment was basically worthless, Fraser admitted. “I probably wouldn’t pay anything for it”, he said, reiterating that the point of it was not a real review but to hide the money.

Fraser told the hearing he now believes CSG were diverting resources away from the Ultranet project and that the money they were originally given by the department should have been enough to complete the job.

“Maybe … the million dollars shouldn’t have been forthcoming,” Fraser explained. “They may not have needed it if they had fully expended the resources that they had been provided with … in the first instance.”

The former deputy secretary said he had asked the technology department to wipe his computer when he left, arguing its contents were of “no interest for anyone else”. He destroyed paper files, but maintains he kept all hard records relating to Ultranet.

The inquiry heard to and fro about claims of improper contact with companies during the tender for Ultranet. Fraser disputed that he had ongoing contact with Oracle, which ended up being awarded the contract in consortium with CSG, during the tendering process for Ultranet. He initially stated he only recalled receiving one phone call from Oracle during that time — but counsel assisting Ian Hill QC revealed that in one six day period in 2009 Fraser spoke over the phone twelve times to Ian White, managing director at Oracle.

In response to this inquiry and IBAC’s earlier investigation of the department’s so-called ‘banker schools’ scandal, Department of Education and Training secretary Gill Callister announced yesterday the department would be introducing tougher anti-corruption measures, as well as working with other bodies to implement whole-of-government initiatives.

Hearings have concluded and IBAC expects a report will be released sometime this year.