ICAC - Independent Commission Against Corruption

04/30/2024 | Press release | Distributed by Public on 04/29/2024 22:23

ICAC finds former Inner West Council and Transport for NSW employees and contractors corrupt

ICAC finds former Inner West Council and Transport for NSW employees and contractors corrupt

Tuesday 30 April 2024

The NSW Independent Commission Against Corruption (ICAC) has found that a former Inner West Council (IWC) senior project engineer, Tony Nguyen, was able to engage in corrupt conduct that resulted in contracts at times totalling more than $1 million being awarded to businesses with which he had undisclosed associations.

In its report released today, Investigation into the awarding of Transport for NSW and Inner West Council contracts (Operation Hector), the Commission's investigation also identified multiple instances of collusion between Downer EDI Works Pty Ltd ("Downer") project managers and private contractors tendering for subcontracts on Transport for NSW (TfNSW) projects. Many projects involved Mr Nguyen and some of the contracts were worth millions of dollars, with three works packages at Wollstonecraft station alone totalling $4.6 million in value.

Prior to working at the former Leichardt Council as a project engineer in 2015, Mr Nguyen was part of the Glenfield Junction Alliance working for a partner company as a site engineer. The Glenfield Junction Alliance was a partnership between what is now TfNSW and a number of companies for the design of the Glenfield Junction project. It was through the Glenfield Junction Alliance that Mr Nguyen met TfNSW employees, Nima Abdi and Raja Sanber, and commenced his corrupt schemes, starting with the Glenfield Transport Interchange multi-storey car park rectification work in 2014. The Commission found that the project's TfNSW project manager, Mr Abdi, manipulated the tender process to ensure the contract was awarded to ASN Contractors Pty Ltd (a company in which Mr Abdi was part owner with Mr Nguyen and Mr Sanber). The work was wholly subcontracted to another company and the cost "marked up" by $125,000, being the total profit which all three divided between them.

Between 2016 and 2020, Mr Nguyen engaged in elaborate collusive tendering schemes with multiple IWC subcontractors, with which he had an undeclared association, to influence the awarding of IWC contracts. The schemes included dummy bidding, collusive tendering and order splitting.

Although there were measures in place to manage procurement and other risks, Mr Nguyen admitted that he ignored them. There was evidence that the period following Leichardt, Ashfield and Marrickville councils being amalgamated to form IWC as of 12 May 2016 was chaotic and uncertain. Following amalgamation, IWC experienced a period of ongoing change that made it very difficult to establish effective organisational systems. These included at least five changes to organisational structures that impacted on the governance and/or risk structures within IWC, which made it difficult to establish robust systems and processes in procurement, project governance and staff management. This contributed to control deficiencies at IWC including poor enforcement of procurement rules, deficiencies in managing building projects and personnel, and poor conflicts of interest oversight between IWC contractors and officers.

This contributed to Mr Nguyen being able to engage in his schemes, which involved the awarding of IWC contracts to companies that were owned by his friends. By the time Mr Nguyen resigned from IWC in October 2020, his involvement had helped some businesses benefit from up to $1.4 million worth of contracts. While employed at IWC, Mr Nguyen was also conducting business with his TfNSW associates, including being in a silent partnership along with Mr Abdi in Mr Sanber's company, Sanber Group Pty Ltd, which was awarded IWC contracts by Mr Nguyen. Corrupt conduct findings are made against Mr Nguyen, his friend and business owner Monty Nguy, and business owner Seng Du Laphai in relation to the IWC contracts.

With regard to TfNSW, the Commission's investigation primarily involved two TfNSW multimillion-dollar work programs: the Transport Access Program (TAP), which was aimed at modernising NSW public transport infrastructure; and the New Intercity Fleet (NIF) Program, which was intended to replace ageing train services. TfNSW had entered into a managing contractor framework agreement with Downer in July 2016 as the proponent for some of the train station upgrades under the TAP and the NIF program.

While still in his IWC role, in June 2018 Mr Nguyen incorporated and became the sole director of RJS Infrastructure Group Pty Ltd. Mr Abdi and Downer employee Abdal Aziz were silent partners in this entity. Mr Aziz was a friend of Mr Abdi's, and had secured his employment at Downer on the back of a glowing but false reference provided by Mr Abdi.

RJS Infrastructure was intended to be used to tender for Downer subcontracts on TAP and NIF projects. These included projects at various train stations including Victoria Street (Maitland), Central, Lithgow, Kingswood, North Strathfield, Wollstonecraft, Banksia and Birrong. On examining the managing contractor framework at TfNSW, the Commission found that there were three specific weaknesses regarding its implementation: total budget estimates or relevant projects were overestimated; confidential procurement-related information was inadequately controlled; and TfNSW did not enforce contractual subcontracting requirements. These issues rose from broad project oversight weaknesses including that corruption risks were inadequately captured on relevant risk registers, and TfNSW staff lacked a sufficient understanding of the contract model. Even when red flags or concerns were raised, they could be ignored; when a senior project manager tried to warn TfNSW project directors that they had concerns about the legitimacy of RJS Infrastructure, their concerns were dismissed and they were told they had "trust issues".

The Commission has made corrupt conduct findings against multiple people regarding the TfNSW projects and programs including Mr Nguyen, Mr Abdi, Mr Sanber, TfNSW project manager George Panagakis, Aidan Cox of Marble Arch, Mr Aziz, Downer project engineer, Sairam Pilli and Sydney Trains employee Benjamin Vardanega.

The Commission has made nine corruption prevention recommendations to TfNSW to help enhance TfNSW's systems and processes in these areas including: that TfNSW conducts a detailed risk assessment regarding information security related to projects utilising the managing contractor framework and identifies and implements controls to enhance the security of project information; and that TfNSW's infrastructure and place division develops a tailored corruption awareness course for its staff that addresses corruption risks in its projects. The Commission has made seven corruption prevention recommendations to IWC, including that it reviews its management of supplier panels to ensure that panels address business needs, panelled suppliers are skilled and experienced, and the operation and membership of panels is periodically reviewed.

The Commission also recommends that the NSW Government considers a debarment scheme to assist public authorities to identify suppliers that have had previous issues with misconduct or breaches of relevant requirements.

The Commission seeks the advice of the Director of Public Prosecutions (DPP) on whether any prosecution should be commenced. The DPP determines whether any criminal charges can be laid and conducts all prosecutions. The Commission is of the opinion that consideration should be given to obtaining the advice of the DPP about the prosecution of Mr Nguyen, Mr Laphai, Mr Nguy, Mr Sanber, Mr Pilli, Mr Aziz, Mr Abdi, Mr Panagakis and Andrew Gayed for various offences.

IWC reported the matter concerning Mr Nguyen under section 11 of the ICAC Act following an anonymous complaint that he had received financial benefits from Mr Nguy in return for Mr Nguyen using his council position to provide insider information to Mr Nguy to ensure that Mr Nguy's company, Constructicon Pty Ltd, would be awarded IWC contracts. Over the course of the Commission's investigation, using its coercive powers, the ICAC uncovered the spread of the corrupt activity to also include TfNSW and Downer. This matter reiterates the importance of vigilance and reporting to the Commission.

The Commission held a public inquiry, as part of this investigation, over 25 sitting days from 20 March 2023 to 10 May 2023. Chief Commissioner the Hon John Hatzistergos presided at the public inquiry at which 16 witnesses gave evidence. Final substantive submissions were received on 23 November 2023, signalling completion of the public inquiry period. The report is available on the ICAC website at www.icac.nsw.gov.au.

Investigation report