NACC dragging chain on $31m tender probe

Allegations of corruption over the award of a $31m contract are gathering dust, 16 months after a whistleblower asked the national anti-corruption watchdog to investigate.

National Anti-Corruption Commission commissioner Paul Brereton.

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The national anti-corruption watchdog has failed for 16 months to decide whether to investigate serious corruption allegations involving the award of a $31m contract to a company that allegedly paid a $900,000 “success fee” to a contractor engaged by the ­Department of Industry to advise on the tender program.

The department awarded the contract under the now-closed Entrepreneurs Program to i4 Connect, a $100 shell company registered just 13 days before the tender closed, despite not meeting crucial tender requirements and being $10m more expensive than any other tenders.

The case was referred to the National Anti-Corruption Commission in March last year by a whistleblower – one of the unsuccessful tenderers – and later by the department itself, but after more than 500 days it “remains under active consideration”, with the commission providing no indication of whether it plans to investigate the case.

Under its service charter, the NACC aims “to assess all reports within 90 days”.

The i4 Connect case is one of hundreds caught in an apparent backlog at the NACC, fuelling concerns about the focus and performance of the commission after its initial refusal to investigate the Robodebt scandal and its decision to ditch a full investigation into the $2.4m Brittany Higgins compensation payout.

The NACC came under fire earlier this month over its first finding of misconduct against a public official when commissioner Paul Brereton shielded the identity of a ­ senior public servant who had lied and abused her ­position to get her sister’s fiance a plum government job.

Questions about the i4 Connect case first arose when the company was selected in 2019 ahead of several much more established companies to be the delivery partner for the national commercialisation service under the Entrepreneurs Program, raising immediate alarm bells.

At least two other tenderers had decades of operating experience and demonstrable success in raising hundreds of millions of dollars for hundreds of start-ups.

A report by the Australian National Audit Office in June 2022 found “ bias was evident” in the decision to recommend i4 Connect over another shortlisted ­tenderer.

The ANAO found that the department breached 11 commonwealth procurement rules, failed to act ethically, manage conflicts of interest, institute probity measures, or meet appropriate standards of transparency, consist­ency and fairness, and did not achieve value for money.

In August 2022, after one of the unsuccessful tenderers requested the allegations be investigated, the department claimed in Senate estimates that even if the contractor, Northgate Australia, had been paid the near-million dollar fee, it would not have been unlawful. The department claimed that a contract breach was required before it could investigate corruption or seek to inspect i4 Connect’s books for any evidence of the payment.

The only investigation undertaken by the department was to call the contractor – who had been contracted to the department as an adviser – to ask if he had taken the money. It appears he denied it.

A visibly shocked Greens senator, Barbara Pocock, asked: “There was no requirement or obligation on the person who was delivering the contract – this is delivering a program – preventing a person from receiving a payment from someone who was tendering for that work?”

“If somebody was tendering at that time and sought advice to support them with that tender, that would not have been prevented under that particular contract,” Department of Industry official Neal Mason conceded.

That was “a gap” that had since been closed, he said.

The department had never asked to have a look at i4 Connect’s books to see if the $900,000 payment had been made because “at the time our conclusion was that making such a payment would not have been unlawful”, another official said.

After the corruption allegation was raised at Senate estimates, i4 Connect applied to deregister with ASIC, a move that would have rendered its books inaccessible, in breach of its contract with the commonwealth.

Despite being paid more than $31m by the commonwealth over the preceding three years, the ­application for deregistration in February last year said i4 Connect had less than $1000 in assets.

In November last year the Department of Industry, Science and Resources said it had now asked an “independent contractor” to seek the company’s books, after two years of refusing to do so.

Responding to questions from The Australian about whether any payment was made to departmental staff members or contractors, the department said only that “to date no evidence of such a payment has been presented”.

i4 Connect declined to answer questions about whether any payment was made to contractors or departmental staff in connection with the tender.

“The department is handling all responses in this matter and I’m told they are in contact with you directly,” a spokesperson said.

On March 1 last year, frustrated by two years of obfuscation, the tenderer referred the case to the NAAC. Four months later, the department also reported it.

On March 20 this year, after repeated attempts by the whistleblower to get a response, the NACC advised it was “still considering your submission”. That was the last he heard from them.

A spokesperson for the NACC said it had received referrals about the case “which remain under active consideration”. “Beyond that, it is not appropriate for us to publicise information about the receipt, status or existence of individual referrals,” they said.

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