IBAC delivers report on South West TAFE funding scam



UPDATE: 1.35pm: South West TAFE has welcomed the findings of the investigation into allegations of serious corrupt conduct. 

In a statement chief executive officer Mark Fidge and board chair Felicity Melican said TAFE would learn from the IBAC findings and was committed to implementing continuous improvements across the organisation. 

 “We have been proactive through the whole process and have already taken steps to protect the integrity of the institute. We accept these finding and are committed to addressing all issues raised through the investigation,” Ms Melican said. 

Ms Melican said “once the discrepancies were noticed, the institute was very thorough in investigating and bringing it to the attention of relevant authorities”.

“Corrupt conduct will not be tolerated in our organisation and we will continue to ensure we operate with a culture of integrity and compliance,” she said.

Mr Fidge said South West TAFE remained committed to its values of accountability and transparency and providing education and training that the region can trust. 

“We are dedicated to continuous improvement of our policies, processes and people and believe we are a stronger organisation as a result of this investigation process,” Mr Fidge said.

SW TAFE has already submitted its response to IBAC, as per the investigations recommendations, well ahead of the December 31, 2018 deadline. 

UPDATE 1.30pm: The former executive at the centre of the South West TAFE training scam says the institute was under financial pressure at the time the rort was happening.

​Maurice Molan said he had not acted in a self-serving manner, and was personally against third party training agreements.

"If I had been self-serving and working in a self-serving way I would never have supported any of these third party agreements because I have a philosophical ​difference with them," he said.

"I have a strong and well-known dislike to the fact that public money was coming through the education system into private hands. 

"Anyone who knows me well knows that I have a total dislike for this.

"I am totally against it, the then-CEO, and I were told in no uncertain times in a meeting with top officials from the secretary's department, that if we didn't get more entrepreneurial, if we didn't start behaving like a private RTO (Registered Training Organisation), if we didn't start doing business with industry, the institute would not survive financially."

He said at the time the scam was unfolding South West TAFE was not financially sound.

"On the first of May 2012 the funding model rendered South West TAFE financially unsustainable," he said.

"Everyone is saying we had no systems in place and everyone is saying it wasn't well resourced, and it wasn't.

"Do you know what we should have done? We should have handed the keys in.

"We should have said 'right, we are not sustainable, let's give it away and let the politicians deal with it'.

"Do you know what we did do? We worked 70 or 80 hours a week trying to save the place for the sake of south-west students." 

He said he wasn't the only person at TAFE making decisions.

"It was always based on executive decisions," Mr Molan said.

"And the board was well aware of what was going on." 

UPDATE 12.35pm: The Department of Education is working to recover funds incorrectly claimed by South West TAFE. 

A department spokesperson said it welcomed the scrutiny of IBAC as a means of improving confidence in all elements of its training system, and fully accepted all recommendations made in the report.

“Operation Lansdowne investigated misconduct that occurred in 2013 and 2014 and as the report notes the department has already made significant progress in implementing IBAC’s recommendations,” the spokesman said.

“We are working with both TAFEs to ensure that appropriate governance arrangements and control mechanisms are implemented and maintained.

 “We have commenced action to recover the $2.7 million in training subsidies incorrectly claimed by South West TAFE and Bendigo Kangan Institute.”

EARLIER: A special investigation by Victoria’s corruption watch dog has found a multi-million dollar training scam exploited oversight weaknesses at South West Institute of TAFE.

An Independent Broad-based Anti-corruption Commission (IBAC) report released on Friday morning said training company TayTell owner and director Rebecca Taylor operated a scam through which she received more than $2 million of government funding under subcontracting arrangements with two TAFEs, for training that did not take place.

The investigation identified weaknesses in the systems and controls of SW TAFE and Bendigo Kangan Institute of TAFE which allowed the scam to flourish. The key weakness was a failure by both TAFEs to conduct any meaningful oversight of the training which was meant to be delivered on their behalf.

IBAC also found Maurice Molan, a former executive manager at SW TAFE, misused his position to award, or interfere in the awarding of, a Certificate IV in Training and Assessment and a Certificate IV in Engineering to Ms Taylor when she was not qualified.

IBAC Commissioner Stephen O’Bryan said the Victorian community would be right to be “extremely concerned with the misappropriation of funds”.

“In recent years, there has been considerable attention on the challenges confronting the vocational education and training sector, including concerns around TAFEs’ financial sustainability and the vulnerability of the sector to unscrupulous providers,” he said.

“Funding for the sector is limited and should be directed towards ensuring people – including disadvantaged people in regional areas – obtain high quality, skills-based training that properly equips them for work.

“The community also expects that people who obtain qualifications in technical areas such as engineering, are in fact so qualified.”

IBAC recommended the responsible agencies address the identified vulnerabilities. Recommendations include:

  • the Department of Education and Training (DET) to review TAFE training delivered via other third-party agreements, to verify the legitimacy of that training
  • the Secretary of the Department of Premier and Cabinet, in conjunction with the Victorian Public Sector Commissioner, to review ways in which probity in public sector recruitment can be strengthened.

South West Institute of TAFE, Bendigo Kangan Institute of TAFE and DET are required to report on the implementation of these and other recommendations to IBAC by December 31, 2018.

IBAC will also consider whether it is appropriate to compile briefs of evidence for the consideration of the Office of Public Prosecutions.

IBAC found Mr Molan intervened to ensure Ms Taylor was issued a Certificate IV in Engineering based on recognition of prior learning (RPL).

The report said Jason Sealey, an RPL assessor at South West TAFE, gave evidence that he was asked by Mr Molan to assess Ms Taylor’s engineering capability. He deemed her not competent and advised Mr Molan of his assessment. As a result, Mr Molan accessed South West TAFE’s computer system, entered a ‘pass’ result for each of the units Ms Taylor was enrolled in for the Certificate IV in Engineering and then authorised the issuing of the Certificate IV in Engineering to Ms Taylor. 

“Mr Molan had no authorisation to do this as he had no engineering or training and assessment qualifications,” it said.

“He abused his position and misused South West TAFE’s student management system to award Ms Taylor the engineering qualification she needed to deliver training under the third-party agreement he had reached with TayTell months earlier.

“While it does not appear that Mr Molan received any direct financial gain, his actions appear self-serving.

“At a time of budget and staff cuts, he had brokered an agreement that delivered much needed funding to South West TAFE (TayTell received 80 per cent of funding associated with the training, and the TAFE received the remaining 20 per cent). It was not in his interests for the agreement to fail if it was revealed the sole trainer, Ms Taylor, did not have the required qualifications to deliver the training.

“Mr Molan’s employment was terminated by South West TAFE in December 2014.” 

The report said no one from South West TAFE visited or spoke to engineering firm Zinfra to observe or supervise the training ostensibly being conducted by Ms Taylor.

“There were no audits or other checks of the enrolments, training or assessments conducted,” it says.

“As Mr Molan said, the role of the TAFE was limited to inputting data provided by TayTell, without any assurance being conducted. South West TAFE wrongly abrogated its responsibility to oversight the training agreement. Between November 2013 and May 2014, TayTell received $1,824,134 of Victorian Government subsidies in connection with the purported training of 134 Zinfra employees under the agreement with South West TAFE.

“As a result of the third-party training agreement with TayTell, IBAC estimates that South West TAFE obtained $456,033 of Victorian Government funding.” 

The report said IBAC found no evidence that Mr Molan received any payment from TayTell.

“Nonetheless, uncertainty remains as to whether Mr Molan was aware that the training and assessment had not in fact occurred, or whether he was unwittingly involved in a scam,” it says.

“There is much evidence to suggest that Mr Molan actively facilitated the TayTell scheme when he must, at the very least, have been alert to facts that would raise real doubts as to the legitimacy of the TayTell arrangement.” 

In a statement on IBAC’s website, it says the special report details the findings and recommendations of a major IBAC investigation, Operation Lansdowne, into allegations of serious corrupt conduct relating to South West Institute of TAFE and Bendigo Kangan Institute of TAFE, and third-party agreements those TAFEs had entered into with TayTell Pty Ltd.

IBAC’s investigation expanded to include the circumstances surrounding the recruitment of particular employees and the engagement of certain contractors (including Ms Taylor) by V/Line.

The investigation identified that between 2013 and 2016 there was a clique of senior V/Line officers who placed undue emphasis on who people knew and personal friendships, wilfully disregarding the required public sector merit-based procurement and recruitment standards.

IBAC identified an environment at V/Line where clear conflicts of interest were not declared or managed, allowing a culture of cronyism to flourish. Red flags – including blatant contract splitting, a lack of documentation to justify procurement (such as business cases), insufficient segregation of duties, and inadequate contract documentation – were not acted upon.

Public examinations into allegations of serious corruption involving the Victorian vocational education and training and transport sectors were held in Melbourne from June 27 to July 21.