A new boss, his buddies and a $2.6 billion cash splash: Inside the ICAC probe into School Infrastructure

Seated in the austere confines of the Independent Commission Against Corruption’s witness box, Mark Scott, the former secretary of the NSW Education Department, remembered Anthony Manning as a popular choice as the first chief executive of a new school-building unit back in 2017.

Well-connected from his time working for the equivalent health agency, Manning’s name had been floated as a possible candidate by then-education minister Rob Stokes after a suggestion from PwC partner Amy Brown, and the former premier Mike Baird was among his referees.

Health minister Brad Hazzard complimented the appointment at the time, Scott recalled, and senior public servants who had worked with Manning gave Scott the impression of someone viewed as “can-do” and “focused”.

“I received no signals of concern or disquiet,” Scott recalled. There were no “red flags”.

Former NSW Education Department secretary Mark Scott leaving the ICAC building.Credit: Dean Sewell

But, as the ICAC has heard during a month of evidence in its public probe into Manning’s conduct as head of School Infrastructure NSW between 2017 and last year, alarm bells had been ringing among senior public servants in the Education Department for several years after he landed the job.

“Somewhere on the spectrum between a bully and completely corrupt,” is how director of strategic governance Sasha Holley remembered describing Manning to a friend in 2023.

The watchdog announced in April that it would hold a public inquiry to probe allegations Manning and others at School Infrastructure subverted recruitment practices, improperly awarded contracts and misallocated funds to benefit friends and associates during his time at the agency.

It is also probing whether Manning and others engaged in “reprisal action” against staff who raised concerns.

The probe came after Manning’s abrupt departure from the role in February last year. The Sydney Morning Herald first reported his referral to the watchdog in July, as well as concerns over an axed $40 million school building contract awarded by the agency.

That Manning was in the ICAC’s sights had been a discomforting discovery for successive education secretaries. Georgina Harrisson, who headed the department from 2021 to 2023, said she became “less assertive” in her attempts to track contractor spending in the agency after being notified of “a need not to disrupt things” because of the probe.

Former education minister Rob Stokes and then head of School Infrastructure Anthony Manning at North Kellyville Public School in 2018.Credit: Janie Barrett

At the heart of the ICAC inquiry are four contractors, and their relationship with the school building boss; Martin Berry, Stuart Suthern-Brunt, Michael Palassis and Kathy Jones.

All four were handed millions of dollars in contracts from the agency during Manning’s time as chief executive via their companies, and all four had personal and professional relationships with him.

Manning had known Berry since 2006 and organised his buck’s party. He took spin and yoga classes with Suthern-Brunt, and once described Jones as his “communications fairy godmother”.

In 2017, he and Palassis were part of a group trying to develop a “cancer wellness” hospital in China close to the time his company, Paxon, were bidding along with PwC to win a tender with the agency.

In total, the four contractors and their associated companies earned some $18 million from NSW taxpayers during Manning’s time in School Infrastructure.

But the inquiry has also laid bare a culture in which contingent workers on astronomical wages rode roughshod over the established bureaucracy – some 1,400 contractors were paid more than $344 million between 2017 and 2024, a figure which does not include the sums paid to Manning’s associates – and where officials who raised concerns about breaches of procurement rules were often swept aside.

Andrea Patrick appears as a witness at the ICAC.Credit: ICAC

It was an agency in which, at least according to some witnesses, the normal rules did not apply.

Andrea Patrick, a senior procurement officer at the department who was fired by Manning, alleged that at a meeting in 2017 he “made a comment along the lines of ‘I don’t need you or services or policies’.”

Manning, she claimed, told her he had a “direct line” to ministers and said words to the effect of “if I need to do things different, I just pick up the phone to them, and they’ll sort it”.

Running through the inquiry is a sense Manning believed he was brought in to the building unit to shake up a flailing department.

With a $2.6 billion funding injection for new school infrastructure coming, there was concern at senior levels of the NSW government that that current leadership wouldn’t be able to get the job done, Scott recalled.

Stokes, who was education minister when the agency was set up but is not accused of any wrongdoing, described a feeling of “exasperation” with the department over issues such as a new high-rise school, Arthur Phillip in Parramatta, which was plagued by cost blow-outs and delays.

The agency was established in 2017 as the state’s public schools were facing an explosion in enrolments and overcrowding was hitting primary and high schools. At the time Stokes described the new unit as “a centre of excellence for assets and their delivery” in response to “changes around population growth, new ways of teaching and learning, and social change”.

But from very early in his tenure, the behaviour which ICAC is now probing began to emerge. Only six weeks into the job, ICAC has heard, Manning spoke to his former boss and friend, Martin Berry, about engaging him and his company, Heathwest Advisory.

Manning and Berry had known each other since about 2006, ICAC has heard, and in his first round of evidence to the commission last week, Berry conceded the two were friends.

He gave Manning a job in the Sydney office of consulting firm Turner & Townsend and the two men often socialised together. Manning organised Berry’s buck’s party and attended his wedding, and in text messages dating back to 2015 they bantered about England’s success in the cricket – both are from that country – and arranged to catch up for dinner and drinks near their homes on Sydney’s northern beaches. They also discussed work, and Berry admitted Manning had helped get him a job at Health Infrastructure NSW. But, he also said the men “kept our relationship at a professional level”.

“Sorry, just, what do you mean by that?” counsel assisting the inquiry Jamie Darams asked during the examination.

“Well, we recognised that there would be occasions where we might be in roles that would need to be seen to be maintaining a professional relationship,” Berry responded.

Two weeks after their meeting in 2017, ICAC has heard, Berry sent Manning a “proposed scope of works” to his private email address. The schools’ boss then passed on Berry’s wording to several of his staff – without telling them where it had come from – and a similar document was issued as a “request for quotations” from the agency which Heathwest Advisory went on to win.

In other words, as Darams put it, Berry drafted the scope of work put out to a tender that his own company was then awarded, giving it an “obvious advantage” over its competitors.

During a second round of evidence on Friday, Berry said he provided the document for Manning, and had believed the agency would eventually need similar services. But, he said, he did not know that the same information ended up in the tender, and said he was “surprised” by the similarities when he was first shown them by ICAC investigators.

“Without sounding too arrogant, I would be seen as one of the most knowledgeable people around investor assurance in NSW,” he told the inquiry on Friday.

“I would say this is quite generic published material, when I looked at the tender it’s kind of what I expected a tender for investor assurance would look like.”

In total, ICAC has heard, Berry and Heathwest were paid more than $3 million between 2018 and 2022. In one case, a contract awarded to his company that was originally worth $87,000 ended up costing almost $500,000. It was extended for another 12 months for another $500,000.

Paul Hannan leaving the ICAC on Friday after giving evidence about the culture within Schools Infrastructure.Credit: Sam Mooy

His company was also awarded a contract worth almost $600,000 in a direct engagement, meaning it was “outside normal procurement thresholds”.

Paul Hannan, a senior procurement official inside the agency, previously provided evidence that many of the contracts raised by the inquiry either breached or “pushed the boundaries” of departmental rules.

He agreed on Friday that he had told colleagues in a meeting last year that “in School Infrastructure there has always been an attitude of if we fail to deliver we’ll lose our job, if we don’t follow the rules we’ll get a slap on the wrist”.

The ICAC has heard evidence from education officials that spending on consultants was difficult to track, and in his opening address Darams said almost two-thirds of it came out of the capital budget rather than recurrent funding.

Darams said that was likely a breach of Treasury guidelines, and, he said, may have been “a means of circumventing the heavily scrutinised, competitive bidding process” that would have been necessary to increase the agency’s overall funding.

Murat Dizdar, the current education secretary, gave evidence that 26 people were on salaries of more than $500,000 a year when he took over in 2023. ICAC has also heard large sums allegedly flowed to other associates of Manning’s, detailed in documents prepared by ICAC which show members of his “Tom, Dick and Harry Breakfast Club” and “Cycling” and “Beer and Curry” groups.

Among them was Manning’s cycling friend Stuart Suthern-Brunt, who was hired — still as a contractor — to be the agency’s executive director of infrastructure planning. He was paid $2800 a day, the equivalent of $644,000 a year. An equivalent public service senior executive doing the same job was paid $268,300 to $337,000.

In total, Suthern-Brunt’s companies earned $1.7 million from School Infrastructure contracts across two-and-a-half years. After he left the agency, he was later involved in the successful tender bid for the axed $40 million project, and during his evidence was challenged over two documents on his personal computer which he conceded he “should have deleted”.

However, he also said the information was “generic” and that there were “no secrets in there”.

The inquiry has also heard that soon after Manning started he steered a multimillion-dollar contract to consultant Kathy Jones, whom he allegedly once described as his “communications fairy godmother”. It is alleged her firm, Kathy Jones and Associates, was awarded a “strategic communications advisory contract”, despite not being ranked first in the tender evaluation. KJA and associated companies was paid $9 million over about four years. Jones has yet to give evidence to the inquiry.

As the enormous sums slushed around School Infrastructure, those who got in the way often found themselves on the outer.

One long-time official in the NSW Education Department, Tony McCabe, had been posted in the new agency from its inception, when a massive $2.6 billion funding injection saw an influx of contractors and advisors walking through the doors of the new unit.

They would “just turn up”, McCabe remembered, some of them on “astounding” rates of pay. On one occasion in October 2017, Manning emailed McCabe and another education official late on a Friday afternoon asking for a particular new procurement contractor to begin working for the agency the following Monday on a daily rate of $1,920.

Sydney’s high-growth areas were in need of new schools.Credit: Edwina Pickles

During his evidence McCabe gave a wry smile as he remembered thinking “how inappropriate, and almost comical, that you would procure a procurement advisor outside procurement guidelines”.

He quickly became “lost in the chaos”, and was pushed to the side in the new agency. Manning gave him a new boss, John Taylor, who would “belittle” and “humiliate” him in meetings, he remembered. Other colleagues were “verbally brutalised” by Manning, he alleged.

“It broke me,” he said. “I had never felt like that in my career anywhere ... it was getting so outrageous that I thought this will end up in ICAC sooner than later.”

Despite that, Manning continued to be held in high regard with the Coalition and senior levels of the public service. Harrisson, who said she heard reports of Manning being difficult to work with in her time in the job, said “we were overall pleased and proud” of the job School Infrastructure was doing.

That began to change after Labor was elected in March 2023, following a campaign in which it was highly critical of what it saw as a failure to build new schools in Sydney’s north and south-west growth areas.

The new government commissioned an enrolment growth audit which said growth corridors exceeded the population projections made in 2016.

That same concern was raised during the ICAC hearings by Jannatun Haque, a senior data expert in the department who alleged Manning had instructed her to manipulate demographic data.

Haque told the inquiry that in a 2021 meeting with Manning, he had been unhappy with falling population data and instructed her to “make it a higher number”. Haque alleged Manning told her to “change” the figures before a pre-budget submission, a demand she understood to be related to fears lower population numbers would make it harder to extract funding out of Treasury.

Part of the tension, she said, was a desire on her part to provide more granular data.

Jannatun Haque gave evidence that she was asked to change her demographic analysis.

Despite a statewide fall in the population, there had been a “huge growth” in north and south-west Sydney’s population. She told the hearing that during the 2021 meeting with Manning, she warned him it would be “misleading and incorrect” and “do a disservice to where we need to spend money” to look at statewide data.

Private schools picked up enrolments in outer suburbs as the public system struggled to meet demand driven by an influx of families to the city’s outskirts.

In his opening address to the inquiry, Darams pointed out that funding large contractor spends via the agency’s capital budget also added tens of millions of dollars to the cost of school infrastructure projects.

Manning is due to appear before the inquiry next week. His former barrister, Tim Hale, argued the ICAC’s arguments against Manning had been “relatively unspecific” and raised concern that “we’re not being told really what the issues are”.

“There is extreme doubt certainly from my client’s point of view what actually is being alleged to be the corrupt conduct,” he said.

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