IBAC: CEO used Victorian regional hospital as personal ‘fiefdom’

CORRUPTION PROBE: Fake construction quotes, dodgy contracts to friends and family and high-end meals charged to regional hospital.

The Independent Broad-based Anti-corruption Commission revealed on Friday April 30 that a former CEO of a regional health service was the target of an investigation, code named Operation Meroo.

The former boss of a regional health service turned the hospital into their personal “fiefdom”, signing off on hundred thousand-dollar contracts to friends and family and using public funds on junkets and lobster dinners.

The Independent Broad-based Anti-corruption Commission has revealed a former CEO of a regional health service was the target of an investigation, code named Operation Meroo.

IBAC did not name the former executive in question, or the regional health service involved, but said the person in question had a long career in the Victorian public health sector and was responsible for the day-to-day management of the “geographically remote” service.

The person in question formally resigned from the health service in 2017.

Among the corruption watchdog’s investigation are accusations of nepotism, the creation of fictitious building companies to apply for works grants, and trips, meals and booze billed to the health service.

IBAC’s investigation found the former chief executive used hospital funds “inappropriately”, including one lavish Thailand adventure, which cost the regional health service $20,000.

The report said the then chief executive, board president and vice president billed a seven-night overseas stay and a $656 lobster dinner to the regional health service to attend a one-day conference in Bangkok in 2011.

The commission said the then chief executive also billed the hospital $2600 to attend the 2015 AFL Grand Final, and repeatedly claimed high-end Melbourne dinners as a business expense.

One outing to a posh Melbourne-restaurant cost the health service $772, with the meal including oysters, lobster, brandy, a $90 bottle of wine and a $30 tip.

According to the report by the time the person left the health service, their annual travel expenses were on average $100,000 — more than three times the entire hospital’s travel budget.

The commission also found generous, open-ended and poorly-scrutinised hospital contracts were given to family and friends of the then chief executive.

The findings reveal between 2010 and 2017 the former chief executive gave a $960,000, “poorly defined”, contract to the spouse of a long-term friend to book flights, accommodation and event tickets, buy gifts for employees, choose hospital furniture and organise hospital fundraisers.

The then chief executive also signed off on $74,000 in unverified invoices to a relative’s electrical company for work allegedly completed eight years earlier.

According to the investigation findings the then chief executive deceived both state and federal governments by inventing two fictitious building companies and creating false quotes to support at least 10 applications for capital works grants.

However there is no evidence the then chief executive received a direct personal benefit from the grants.

The report also revealed the person gave career bumps to friends, with an executive assistant promoted to a management role and a hospital position created specifically for the child of a friend.

While in a long-term personal relationship with an employee, the then chief executive approved $92,000 in bonuses and paid study leave for them.

The corruption watchdog slammed the health service for failing to govern effectively, with poor invoice controls, a lack of oversight, poor record keeping and a failure to comply with policies highlighted.

The investigation also uncovered a cultural problem within the health service, with employees discouraged from making complaints.

One employee who raised concerns about the chief executive in 2005 was targeted in a civil case, which awarded the then chief executive significant damages, sending the employee into bankruptcy.

The regional health service told watchdog it had since reformed its practices.