By Lucy Carroll
The former boss of the NSW government’s school-building unit was in contact with the director of consulting firm Paxon in the lead-up to the group winning a multimillion-dollar contract with the agency, an anti-corruption probe has heard.
The NSW Independent Commission Against Corruption is holding public hearings into allegations about the conduct of Anthony Manning, who led School Infrastructure from 2017 until last year.
The inquiry is probing claims that under Manning the public school-building unit engaged more than 1400 contingent workers at a cost exceeding $344 million. The ICAC has previously heard employees from rival major consulting firms were deeply embedded in School Infrastructure after it was established in 2017.
Michael Palassis, executive director at Paxon consulting firm arrives at ICAC on Thursday.Credit: Sam Mooy
On Thursday, the inquiry heard from Michael Palassis, the sole director and shareholder of Paxon Group, a finance and infrastructure consultancy.
The inquiry heard that during 2017 Manning was in contact with Palassis about setting up a private business venture for the construction of an “Australian Cancer Wellness Hospital” in China.
Palassis said the pair had met several years before when they were working at Health Infrastructure on the Northern Beaches Hospital project. Manning was employed at Health Infrastructure from 2009 to 2017, and Paxon was advising on the viability of a public-private partnership on the northern beaches project.
Within a few months of Manning starting as head of School Infrastructure in June 2017, the building unit awarded PwC and Paxon contracts which in combination were worth millions of dollars.
On Thursday, counsel assisting Jamie Darams, SC, questioned Palassis about his involvement a proposal to build a hospital in China throughout 2017.
Palassis said he recalled Manning approached him about doing work for a developer looking to build the hospital, and the inquiry showed Manning emailed Palassis about the project in July 2017.
“Do you know when you stopped discussing the project with Mr Manning?” Darams asked. “My recollection was when he was closing out his obligations to the developer as part of commencing with School Infrastructure,” Palassis replied.
In late September 2017, two months after Manning was appointed head of the school-building unit, the agency awarded PwC and Paxon contracts to advise on “procurement and delivery models” for public schools to 2031.
The inquiry was shown evidence of multiple calls and texts between Palassis, Manning and PwC partner Amy Brown in the weeks before the tender was awarded.
During his evidence, Palassis was asked if he was in contact with Manning before the tender was awarded to Paxon and PwC. “Only in the context of closing out the Chinese hospital arrangements,” he said, adding that Paxon declined to be engaged in that hospital project.
The ICAC has previously heard Manning was not directly involved in the Paxon and PwC tender process, although he was in communication with Palassis and Brown while it was happening.
The inquiry has heard that Manning made personal interest declaration when he started at School Infrastructure about the Chinese hospital venture, but not in relation to Palassis.
Last month the inquiry heard evidence that Manning steered contracts to PwC and Brown, who was a partner at the firm, and that she suggested Manning as a candidate for the top job and reviewed his CV before he applied.
“Almost immediately after the contract was awarded to PwC and Paxon, it was converted to a ‘standing offer arrangement’, and at one stage the PwC partner referred to it as a ‘$20 million project’,” the probe heard last month.
PwC prepared briefing papers for the school agency unit titled “Schools of our Future”, which said the unit was “ushering in a new era” that needed a “response to thriving student demand and developments in pedagogy and technology”.
The inquiry heard in May that it expects evidence will show that the PwC and Paxon contract was one of the first examples of a broader pattern of alleged behaviour during Manning’s employment in the unit.
The ICAC has previously heard that $344 million figure spent on consultants excludes payments to prominent contractors, including Kathy Jones, Michael Palassis and Stuart Suthern-Brunt. “Millions more were spent on those contractors,” the inquiry has heard.
Of the 1400 contingent workers engaged at the agency, many were in administration, information technology, accounting and communications roles, “for which it is not obvious why an employee could not have been engaged”, the inquiry heard last month.
On Thursday morning, Adam Smith returned to the witness box. Smith, a former advisor for consultancy EIG, was brought on by Manning to School Infrastructure as a short-term contractor and was the chair of the tender panel for the “School Pilot Projects” work that PwC and Paxon won.
Adam Smith outside the commission.Credit: Sam Mooy
Darams asked: “Did you know when you were doing the evaluation of this tender that Mr Manning was in contact with both Ms Brown and Mr Palassis?”
Smith said: “I don’t recall.”
In an email shown on Wednesday, Smith wrote to NSW Treasury saying Manning “would like the ability to hire the subcontractor company [working for the successful big four tenderer] to do work directly” for the school-building agency in future.
Emails show Palassis requested a “separate contract with SINSW”, rather than a subcontracting arrangement.
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