Leadership turmoil deepens crisis enveloping $40b rail corporation

A controversial $40 billion rail corporation set up by the NSW government six years ago to artificially inflate the state budget is in turmoil amid revelations it has appointed its third chief executive in just over a year.

The leadership fiasco at the Transport Asset Holding Entity comes as the NSW Auditor-General announced it will conduct a deep-dive audit into its affairs which will be released in a separate report to Parliament.

The Herald revealed this week that the government seriously considered commercialising the entire public transport and road networks as part of its plans for TAHE, which were designed to boost the budget by shifting billions of dollars of costs into the state-owned corporation.

About $40 billion of rail assets including trains are owned by the government’s Transport Asset Holding Entity.Credit: Kate Geraghty

A revolving door of CEOs at TAHE since July last year has raised further questions about its future, as internal documents show the government has considered winding up the entity.

Growing concerns within the highest levels of the public sector about TAHE, which has just 20 staff, adds further pressure to the Berejiklian government, which is under fire for its handling of the latest COVID-19 outbreak.

Shadow treasurer Daniel Mookhey said the government had clearly struggled to find a CEO willing to bet their reputation on “this budget trick”.

“This organisation is either an accounting sham trying to masquerade as real business or it is Australia’s most incompetently run corporation,” he said.

“[Treasurer] Dominic Perrottet has to take responsibility. He has let a company the size of Telstra go without a permanent CEO for more than a year.”

A spokesman for Mr Perrottet, who is one of the government’s two voting shareholders of TAHE, said a new full-time CEO would commence in the role shortly as intended.

The controversy surrounding TAHE comes as Treasury secretary Michael Pratt faces a grilling at a budget estimates hearing on Friday.

Treasurer Dominic Perrottet is one of the government’s two voting shareholders of TAHE.Credit: Edwina Pickles

A trove of internal documents released to Parliament also shows that TAHE has paid high salaries to attract executives.

TAHE company secretary Andrew Alam, who previously worked for NSW Treasury, is paid $465,814 a year via a consultancy firm he set up shortly after leaving Treasury. It puts him on a higher remuneration than Premier Gladys Berejiklian and more than twice that of a secretary on a publicly listed company.

It can also be revealed that TAHE has appointed Benedicte Colin, a former boss of public transport group Keolis Downer, as its new chief executive.

Ms Colin, who more recently worked at a Canadian pension fund, will start next month, taking over from David Jurd, who was appointed interim CEO on April 26.

Mr Jurd replaced the inaugural CEO Anne Hayes, a former Sydney Trains finance director, who was appointed in an acting role in June last year, days before TAHE’s deadline to transition into a state-owned corporation, which required a board and a chief executive.

According to a ministerial briefing note in early May, Ms Hayes “took planned sick leave from TAHE on 27 April 2021 and will not return, having already been advised that she was not successful in the permanent CEO recruitment process”.

The briefing note said Mr Jurd’s appointment was for an “initial period of four months while work continues in sourcing a suitable candidate for the role of permanent CEO”.

Mr Jurd is a former executive of construction giant Lend Lease. He was the boss of its Abigroup subsidiary until October 2012 when he quit a month after the company launched an investigation into accounting discrepancies relating to two road projects worth $1.5 billion. At the time, Mr Jurd said his work at Lend Lease involved “no impropriety”.

The government declined to say what it paid its CEOs at TAHE, but a source close to the board, who asked for anonymity, said it had discussed payments of up to $1 million a year, although it was more likely to be between $600,000 to $800,000.

Documents reveal that the CEO pay requires the approval of the government’s two voting shareholders, Mr Perrottet and Finance Minister Damien Tudehope.

A whistleblower, who has intimate knowledge of TAHE, said the revolving door of leaders smacks of chaos.

“Serious legitimacy gaps have made it hard for Treasury and the board to source a credible CEO, despite the high salaries TAHE is paying,” he said. “This has resulted in a leadership vacuum and low morale among staff.”

The whistleblower said it was difficult to attract a wide range of candidates to apply “when no one knows what TAHE is, what it does or even if it will still exist in a year”.

TAHE confirmed that Ms Colin had been appointed CEO but said it was not appropriate to comment on the “circumstances of individual staff members”.

“The appointment and remuneration of TAHE employees and conduct of staff is managed in accordance with all relevant government policies and processes,” it said.

NSW Treasury referred questions about TAHE to Transport for NSW.

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