A former South West TAFE executive is alleged to have helped a friend scam $1.8 million from taxpayers, a public hearing was told on Wednesday.
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An Independent Broad-based Anti-Corruption Commission (IBAC) inquiry heard Maurice Molan, a former TAFE employee, was involved in an alleged scam in which funds were suspected to have been siphoned to members of a Daylesford family.
On the second day of the public hearing, current South West TAFE chief executive Mark Fidge alleged Mr Molan managed a contract in which training company Taytell received $1.8 million in government subsidies to provide 172,000 student contact hours.
But the hearing was told minimal hours were provided and TAFE received about $500,000.
Mr Fidge, who at the time was the corporate services manager, told the hearing he had questioned the arrangement between the organisation and Taytell, believing that TAFE should have received 30 per cent of the subsidies and Taytell 70 per cent, however the deal put forward by Mr Molan was split 20/80.
That deal was approved.
Mr Fidge said that Mr Molan said he felt that there was no need for an independent review of that contract.
Mr Fidge told the inquiry that Mr Molan and the owner and director of Taytell, Rebecca Taylor, had a professional relationship. Council assisting the inquiry Ian Hill QC said employees of the Zinfra power company at Clayton were meant to take part in an engineering course.
But Ms Taylor lacked the appropriate qualification to oversee it and Mr Molan used his position to access the TAFE computer system and falsely recorded she was qualified to conduct the engineering course.
Mr Fidge told the hearing Mr Molan was “terminated” from his role in 2014 for “gross misconduct” in regards to the issuing of certificates to someone that wasn’t qualified, and also potentially conducting business activities while on sick leave with the institute.
He also said at the time of the alleged fraudulent enrolments, in 2013, South West TAFE had not yet fully implemented a set of standard policies and procedures when dealing with third-party contracts.
IBAC began to investigate the matter in late 2015, after a referral by the Victorian Ombudsman. Ms Taylor denied any wrong doing on the opening day of the inquiry and claimed she was not sure why she was being investigated.
On day one the inquiry heard, budget airline Jetstar was caught up in an alleged multimillion-dollar rort of Victoria's TAFE training system.
Training company Taytell and its director and owner, Rebecca Taylor, are suspected by Victoria's anti-corruption watchdog of engineering the alleged scam, in which Taytell was paid more than $2.2 million for delivering hundreds of sham engineering qualifications at two regional Victorian TAFE campuses.
Jetstar, regional rail operator V/Line and infrastructure company Zinfra are alleged by IBAC to have been ensnared in the alleged rort, said to be masterminded by Ms Taylor in collusion with family members, as well as employees of the two TAFE campuses and three transport entities.
Details of the alleged corrupt dealings were aired by the Independent Broad-based Anti-Corruption Commission on day one of a public examination in the County Court on Tuesday.
IBAC presented evidence that Taytell falsely claimed subsidies from Victoria's Department of Education and Training totalling more than $2.2 million, beginning in late 2013 and continuing into 2014.
IBAC began to investigate the matter in late 2015, after a referral by the Victorian Ombudsman.
In his opening statement for IBAC, Ian Hill, QC, said the watchdog had found evidence "suggesting a sustained pattern of suspicious conduct involving a group of people employed in, or contracted by, the Victorian TAFE and transport sectors, and involving the flow of millions of dollars of public funds".
The money was paid by South West TAFE in Warrnambool and Bendigo Kangan TAFE, in exchange for training and assessing more than 200 students for a certificate four in engineering.
The TAFEs were also paid a smaller subsidy for contracting the training work to Taytell in a third-party deal.
IBAC tabled evidence that Ms Taylor and family members calculated to run the Taytell business as a means to defraud the training sector.
Alleged coded text messages between Ms Taylor and her daughter, Heather Snelleksz, which referred to "1m sausages", with sausages referring to siphoned money, were presented as initial evidence.
Also presented as evidence was a glowing reference letter by Heather, using her married name Snelleksz, which Ms Taylor used to gain the qualification she needed to accredit students enrolled in the TAFE engineering courses.
The family link was not disclosed in the letter, even though Ms Snelleksz was employed by Taytell as a trainer and administrator, the investigation heard.
Questioned in court on Tuesday, Ms Taylor denied any wrongdoing and claimed not to know why she was a key figure in the IBAC investigation.
Ms Taylor said she was "not sure what was going on and why this was happening".
Ms Taylor denied references to sausages and a "sausage machine" in text messages obtained by IBAC were slang for money made through the alleged scam, but offered no alternative explanation for its meaning.
More than 130 students trained and assessed by Ms Taylor were based with Zinfra in Clayton, hundreds of kilometres from the Warrnambool campus that contracted Taytell to assess them.
Ms Taylor admitted that no one from South West TAFE ever visited Zinfra in Clayton to check on her work as a qualification trainer, even though she billed the TAFE $1.4 million in a lump sum invoice.
Evidence was presented that Ms Taylor submitted false assessment documents of training that never occurred in order to be paid.
Ms Taylor said she found that allegation "offensive".
The examination, called Operation Lansdowne, continues.