As it happened: Community organisation allegedly pocketed $100,000 in grants

The public hearings running this week are part of an inquiry called Operation Watts into allegations of corrupt conduct involving Victorian public officers, including members of parliament.

It’s being run jointly by the Victorian Independent Broad-based Anti-corruption Commission and the Victorian Ombudsman and its remit includes allegations of branch stacking in the Victorian Labor Party, as first revealed in an investigation by The Age and 60 Minutes last year.

Branch stacking is an organised method of accumulating internal power in a party by recruiting, and usually paying the fees for, new members.

But it’s much more pointed than just that. The real question is whether public officers, including Victorian members of parliament, are engaging in corrupt conduct by directing ministerial or electorate office staff to perform party‐political work when they should instead be doing ministerial or electorate work.

It will also look at whether public money given by the Victorian government as grants to community associations, has been redirected and misused to fund party‐political activities, or for any other improper purposes. It will ask if ministers or others involved in granting the funds have “dishonestly performed their functions” or “knowingly or recklessly breached public trust”.

The inquiry will look into whether any public officer, their families or their associates, received a personal benefit from these things, and looks at what systems and controls are in place to monitor these money flows.

The hearing is expected to go for at least four weeks. It’s overseen by IBAC Commissioner Robert Redlich, QC, and run by counsel assisting Chris Carr, SC.

The corruption watchdog hearings have wrapped up for the day.

Hussein Haraco, the community leader accused in the hearing of pocketing a grant, was scheduled to give evidence on Wednesday and Thursday.

Dr Haraco.Credit: Teagan Glenane

But counsel assisting the inquiry Chris Carr, SC, told the commission Dr Haraco has been given a medical exemption that stated he was unfit to give evidence at the moment.

The public hearings will now resume at 2pm on Monday, November 1.

A tearful Banyule mayor Rick Garotti finished his evidence on Tuesday afternoon by saying he hoped the anti-corruption examination would finally change the culture within the Australian Labor Party.

“I suspect and believe given the significance of this investigation and the coverage and deep dive of it, I suspect there will be significant cultural change within the party, change that is probably under way for the better,” Cr Garotti said.

Rick Garotti appearing before the IBAC hearing on Monday.

“I’m not excusing my behaviour in the party, but hopefully for a young person coming through the ranks in the future, it’s a better culture, and they don’t get caught up.”

Cr Garotti said he believed he needed to be involved in unethical practices to achieve his political aspirations as that was the culture of the party and the faction.

Mr Carr summed up Tuesday’s shocking allegations with this quote:

“This system of factional patronage it involved you and others in various acts of dishonesty … it involved you and others engaging in, in various ways, the obtaining of public resources and public funds for factional purposes … it involved looking after factional allies, giving them paid but fictional jobs … and this is all done, isn’t it, in order to pursue power - power for the faction, power within the party, power politically … and it’s the influence that people who have power are able to exercise over these processes that allows them to continue to recruit the likes of you to engage in these sorts of activities, isn’t it?” Mr Carr said.

Cr Garotti responded: “Correct.”

The Victorian Opposition has called for an independent audit of all grants the Andrews government has awarded through the Victorian Responsible Gambling Foundation, following allegations during Tuesday’s corruption inquiry that a community leader pocketed the entire grant.

The Independent Broad-based Anti-Corruption Commission heard on Tuesday that respected community elder Hussein Haraco allegedly received a $75,000 in taxpayer-funded grant for his community organisation and pocketed almost the entire sum.

Hussein Haraco.Credit: Chris Hopkins

The grant for the organisation Dr Haraco founded, the Somali Australia Council of Victoria (SACOV), received the funding under the Victorian Responsible Gambling Foundation Prevention Partnership Program.

The Opposition’s gaming spokeswoman Steph Ryan said a “thorough and independent review must be undertaken immediately” to ensure no other grants awarded through the program were used for political purposes.

“Money administered by the Victorian Responsible Gambling Foundation has only one purpose: to reduce gambling harm,” Ms Ryan said.

“IBAC’s assertion that this money was siphoned off by Labor operatives to branch stack and for personal benefit is a betrayal of every single Victorian.”

The Somali Australia Council of Victoria (SACOV) pocketed $100,000 in taxpayer funds after the community organisation “double-counted” expenses, the state’s corruption watchdog has been told.

Over an unspecified period, Banyule City Council awarded SACOV grants totalling $430,000.

SACOV is alleged to have misused about $100,000 of those grants through what counsel assisting Chris Carr, SC, described as, “double counting”.

Mr Carr said SACOV would receive, for instance, $2000 for a computer from both the council and the Victorian government, totalling $4000.

It would then show council and the government department identical invoices, and ultimately pocket $2000.

“I’m gobsmacked by it, and it clearly shows an overall governance issue between state and local levels of funding going to agencies,” Banyule mayor Rick Garotti, who has been giving evidence in the hearing on Tuesday, said.

The organisation’s founder Hussein Haraco, a Moderate Labor factional operative, earlier on Tuesday was accused of separately pocketing almost $75,000 from a grant two years ago, IBAC heard earlier on Tuesday.

Labor Party factional leaders accused journalists of racism to try and prevent the exposure of allegations of branch-stacking and misuse of public money.

The anti-corruption commission inquiry has played a secretly recorded phone conversation between former minister Adem Somyurek and senior member of his faction, Banyule mayor Rick Garotti, during the hearing a short time ago to show one of the strategies used to prevent media exposure.

Banyule mayor Rick Garotti testifying at IBAC.

In the lead up to The Age and 60 Minutes investigation that exposed the scale of Mr Somyurek’s alleged branch-stacking operation, there was a “high degree of concern” among Moderate Labor factional operatives, the Independent Broad-based Anti-corruption Commission heard.

Cr Garotti told the commission the Moderate Labor faction would confect allegations of racism to “prevent people looking into dark corners, where his secrets are hidden” when journalists would reach out with questions.

Mr Somyurek and Cr Garotti were discussing how to shut down journalists’ questions about the Somali Australia Council of Victoria (SACOV).

Cr Garotti said he had discussions with Mr Somyurek about reaching out to Moderate Labor members in the lead up to the June 14 media expose, and that the former factional warlord was “worried about everything [the journalists] were looking into”.

“There would have been … reaching out for branch members to be aware they were going to be contacted or door knocked by journalists? Cr Garotti said.

Adem Somyurek is under investigation for alleged branch stacking.Credit: Jason South

Counsel assisting Chris Carr, SC, said: “Are you seriously suggesting you and Adem Somyurek had a discussion about going on to members because you were concerned about their welfare?”

Mr Carr put to Cr Garotti if there had been a “desperate scramble” to contact members to not speak to journalists or answer their questions in a particular way.

When Age journalists sent a media inquiry to Hussein Haraco about grants it had received from Moderate Labor ministers, Dr Haraco sent the email to Cr Garotti who spoke with Mr Somyurek about how to respond to the query.

They decided to invoke the “highly sensitive issue” of the Black Lives Matter movement in response to media questions.

Mr Carr said it was an attempt to “confect racism as an attempt to cower journalists from investigating things you did not want you and your mentor did not want investigated”.

Cr Garotti agreed with that characterisation.

“I might mention the Black Lives Matter and young people struggling with their identity and engagement in the community,” Cr Garotti told Mr Somyurek.

Mr Somyurek responded: “[Say] I’m sorry, but the black people at the moment are very, it’s a time of high sensitivity, and I’m very sensitive and this is part of racism. Can you go that hard?

“We’re talking about Black Lives Matter, it’s not just the police, it’s journalists as well, it’s media, just go hard.”

Mr Somyurek said responding this way would “relieve stress” because “that’s where the recruiting is”.

Earlier today, the corruption inquiry heard SACOV founder and respected community leader Hussein Haraco allegedly pocketed almost the entire total of a $75,000 taxpayer-funded grant for the community organisation.

Victorian Premier Daniel Andrews says he still has confidence in Legislative Council President Nazih Elasmar.

Mr Andrews was questioned about some of the allegations that have arisen from the anti-corruption commission hearings during the state’s COVID-19 press conference this morning.

Banyule mayor Rick Garotti told the Independent Broad-based Anti-corruption Commission on Monday that Mr Elasmar, President of the Victorian Parliament’s upper house, was involved in a branch stacking operation and that he had paid for Labor Party branch memberships.

Asked if he still had confidence in Mr Elasmar, Mr Andrews said: “Yes, I do. And so does the Legislative Council or he wouldn’t be the President.”

Mr Andrews would not comment specifically on any of the allegations while the inquiry continued.

“My concern is to allow IBAC to do its work and when that work is concluded, further to your earlier question, we have made some significant changes to rules in our party and if we have to go further we will. But it is not my practice to comment on those matters which … is literally happening as we stand here,” Mr Andrews said.

“As I said, my concern is to allow IBAC to do its job and when it has finished its job, if we have to go further and do things differently, if we have to implement recommendations and findings then we stand ready to do that.”

Asked whether Cr Garotti should remain in his position, Mr Andrews said: “That’s a matter for him”.

“This process is not yet concluded,” Mr Andrews said.

“Let’s allow it to run its course, and then we can be well informed by that afterwards.”

Respected community elder Hussein Haraco, who a corruption inquiry has heard was accused of stacking Labor Party branches, allegedly received a $75,000 taxpayer-funded grant for his community organisation and pocketed almost the entire sum.

The Somali Australia Council of Victoria (SACOV) received $75,000 in funding under the Victorian Responsible Gambling Foundation Prevention Partnership Program, which Moderate Labor-aligned Marlene Kairouz was responsible for as Minister for Gaming, in 2019.

Hussein Haraco. Credit: Jason South

The Independent Broad-based Anti-Corruption Commission (IBAC) inquiry heard a short time ago that during its investigation, the commission uncovered that Dr Haraco, who was the founder of SACOV, allegedly received almost the entire grant.

Financial records obtained by IBAC revealed SACOV had spent $50,000 in wages and salaries, and spent $6000 on admin fees, $7000 on videos and $4200 for training after it received the grant.

Counsel assisting Chris Carr, SC, told the inquiry’s hearing on Monday that the wages went entirely to Dr Haraco. About $4500 of the video fees and the entire $4200 training cost also went directly to Dr Haraco, Mr Carr said.

Banyule mayor Rick Garotti, who was lobbying ministers on behalf of SACOV to secure government grants, told the inquiry’s hearing on Monday that he believed Dr Haraco had always acted with integrity.

“[This is a man] who is involved in the improper practice together with you [Cr Garotti] using factional alliances to try to influence government decisions about who gets jobs, and who gets government grants,” Mr Carr said.

“And the man who was being paid to work in an electorate office and not doing any real work. On what basis could you possibly say that you thought you put any store in Dr Haraco’s integrity?”

Cr Garotti said he believed SACOV was a genuine community group.

“I never for one moment believed that Hussein personally proffered in any way. If anything, he was contributing his own money [to SACOV],” Cr Garotti said.

Dr Haraco will give evidence to the inquiry on Wednesday and Thursday.

An adviser for former Labor minister Robin Scott’s allegedly agreed to “manipulate” the grant process to secure funding for Moderate Labor factional allies, an anti-corruption hearing has been told.

Banyule mayor Rick Garotti told the Independent Broad-based anti-Corruption Commission inquiry on Monday that he had been lobbying Andrews government ministers for public funds on behalf of factional allies in Melbourne’s northern suburbs.

Banyule mayor Rick Garotti before the IBAC inquiry on Tuesday.

In late 2017, Cr Garotti messaged Adem Somyurek about $1 million in government funding that he said “must go” to Moderate Labor factional operatives, and falsely claimed that was the formal position of Banyule City Council, where he was a councillor at the time.

He told Mr Somyurek the Himilo Project in Heidelberg West was to be extended with another $1 million in funding, which was going to e-focus, another group working with the Somali Australia Council of Victoria, whose founder was Moderate Labor factional ally Hussein Haraco.

“If e-focus receives the growth funding they will set up another Somali group in competition to SACOV as they are being concerned about the increasing power/influence of SACOV,” Cr Garotti said in a text to Mr Somyurek, according to evidence uncovered by IBAC.

“The CEO of e-focus is connected very closely with Jenny Macklin. The new funding must go directly to SACOV. This is what Dr Hussein wants, what I want and is also the formal position of Banyule City Council.”

In another text message to Mr Somyurek, Cr Garotti said he had spoken with Mohammed, a ministerial adviser for Mr Scott, and there was an agreement they would do what they needed to help SACOV get the funding.

Cr Garotti said he did not know the level of involvement of Mr Scott, who was the multicultural affairs minister.

“A ministerial adviser was being approached and agreeing to manipulate grant processes so as to secure the outcome desirable for the faction?” counsel assisting the inquiry, Chris Carr, SC, asked.

Cr Garotti responded: “Correct.”

Welcome to our live coverage of Victoria’s Independent Broad-based Corruption Commission (IBAC) inquiry into allegations of serious corrupt conduct involving Victorian public officers, including Members of Parliament.

Banyule mayor Rick Garotti will continue giving evidence today, with the big news out of yesterday’s hearing being the allegation he levelled against State Parliament upper house president Nazih Elasmar.

Banyule mayor Rick Garotti testifying at IBAC on Monday.

As The Age’s state political reporter Sumeyya Ilanbey wrote, Cr Garotti told the hearing on Monday that Mr Elasmar was involving in a branch-stacking operation in Melbourne’s northern suburbs.

Cr Garotti told IBAC there had been a “factional patronage culture” within the Moderate Labor group led by former minister Adem Somyurek in which allies would be rewarded with taxpayer-funded jobs and senior factional figures would need to stack branches to advance their political careers.

The inquiry also heard there was an “embedded culture” within the Labor Party to “gift” people who were “doing good factional work” with electorate and ministerial jobs.

You can read the full summation here.

The public hearings running this week are part of an inquiry called Operation Watts into allegations of corrupt conduct involving Victorian public officers, including members of parliament.

It’s being run jointly by the Victorian Independent Broad-based Anti-corruption Commission and the Victorian Ombudsman and its remit includes allegations of branch stacking in the Victorian Labor Party, as first revealed in an investigation by The Age and 60 Minutes last year.

Branch stacking is an organised method of accumulating internal power in a party by recruiting, and usually paying the fees for, new members.

But it’s much more pointed than just that. The real question is whether public officers, including Victorian members of parliament, are engaging in corrupt conduct by directing ministerial or electorate office staff to perform party‐political work when they should instead be doing ministerial or electorate work.

It will also look at whether public money given by the Victorian government as grants to community associations, has been redirected and misused to fund party‐political activities, or for any other improper purposes. It will ask if ministers or others involved in granting the funds have “dishonestly performed their functions” or “knowingly or recklessly breached public trust”.

The inquiry will look into whether any public officer, their families or their associates, received a personal benefit from these things, and looks at what systems and controls are in place to monitor these money flows.

The hearing is expected to go for at least four weeks. It’s overseen by IBAC Commissioner Robert Redlich, QC, and run by counsel assisting Chris Carr, SC.