Icare workers reported to NSW Police, ICAC over recruitment scam

Two icare workers were allowed to resign despite being reported to the police and the anti-corruption watchdog over a recruitment scam that cost the scandal-ridden workers’ compensation agency more than $150,000.

Internal documents obtained by The Sydney Morning Herald show the icare employee and a contractor resigned late last year after being told they were being investigated by law firm Norton Rose Fulbright.

NSW Treasurer Dominic Perrottet oversees icare.
NSW Treasurer Dominic Perrottet oversees icare.Credit:Steven Siewert, Kate Geraghty

Other internal documents obtained by the Herald reveal that consulting giant KPMG and law firm Allens Linklaters investigated another icare employee in late 2018 over their role in contracts valued at more than $26 million. That employee, who resigned in mid-2018, was also referred to ICAC and the NSW Police.

Icare is overseen by NSW Treasurer Dominic Perrottet to provide workers’ compensation insurance to more than 326,000 businesses and insures 3.6 million employees in the state. The organisation has been hit by series of scandals unearthed by the Herald in recent months, culminating in the resignation of its chief executive and the chief of staff to the Treasurer.


The latest revelations about contracts come amid heightened scrutiny of icare’s procurement processes after the Information and Privacy Commission in NSW found it had breached its obligations to publicly register hundreds of contracts worth more than $150,000 since its creation in 2015.

The NSW Law and Justice parliamentary committee raised weaknesses in icare’s compliance and procurement processes during a series of hearings this year. They included the testimony of former compliance head Chris McCann, who alleged contracts worth hundreds of millions of dollars were awarded for critical claims-management systems in a tender process described by Labor finance spokesman Daniel Mookhey as “rushed” and a “sham”.

“Icare’s habit of letting employees quietly resign after they did wrong meant it never fixed its lax procurement standards until it was too late,” Mr Mookhey said.

Chris McCann is a former head of compliance at icare and a whistleblower.
Chris McCann is a former head of compliance at icare and a whistleblower.Credit:Kate Geraghty

In law firm Norton Rose Fulbright’s investigation into the misconduct of two workers, it was found that the pair set up recruitment firms after joining icare for the purpose of diverting candidates to their own recruitment operations to collect fees.

Between September and November 2019, the workers were paid an estimated $158,000 plus GST via the recruitment of 10 employees through their recruitment agencies. They sent additional invoices valued at $71,000 which icare declined to pay.

A February 2020 icare audit and risk committee paper obtained by the Herald, marked confidential, says “the committee was advised that since the employee and contingent worker resigned rather than having their positions terminated, the persons involved could repeat the misconduct (if found).”

Icare referred the workers to ICAC and NSW Police in May 2020. Icare said in a statement it was assessing options to recover the money.

A separate investigation into an employee in icare’s facilities division who resigned in March 2018 uncovered contract tampering, breakdowns in procedures surrounding the approval and payment of invoices and confidential and privileged icare communications forwarded to an office fitout and refurbishment company.

The investigation was launched following the employee’s departure. Internal audit papers said issues included “the payment of overtime which appeared not to be substantiated, and apparent tampering with a contract … At this stage, it appeared that procurement controls required review. An internal audit report on procurement had just been completed and management would look to implement this report as a priority”.

The report by Allens Linklaters into the worker found no evidence that a personal benefit had been obtained in connection with the contracts. But it said emails reviewed indicated that two workers in the facilities division had “friendly social relationships” with certain employees from the fitout firms that were characterised by “informality, banter, in-jokes and innuendo”.

It said the emails sent on employee email addresses weren’t appropriate.

“By way of example, the emails include references to sexual acts, consumption of alcohol and the possible use of drugs. The emails also suggest that some of this conduct may have taken place in a storeroom on icare premises.”

The report said there were isolated incidents of confidential and privileged care communications being forwarded to one of the firms, Shape Australia, and that KPMG identified a handful of breakdowns in procedures surrounding the approval of invoices.

“There are anomalies in the footers and page numbers on the two versions which give rise to a strong inference that the version on icare’s files was changed in an attempt to make it less obvious that the execution page had been substituted,” the report said.

It said Shape issued invoices totalling more than $160,000 for which an underlying contract was not located.

In a statement icare said it had launched a remediation program into the hundreds of contracts that required disclosure.

“Closed contracts entered before July 2018, which includes the contracts with Shape Australia, are not a part of the … remediation program. Icare advised the Information Privacy Commissioner of this approach,” it said.

Shape did not respond to inquiries. The former facilities employee also failed to respond to questions.

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Source: Thanks smh.com