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​How "corrupted" tech tender that cost Aussie taxpayers $240 million was won

​How "corrupted" tech tender that cost Aussie taxpayers $240 million was won

Dark chapter exposed as IT corruption “goes all the way to the top” in Victoria.

“Serious corrupt conduct”; “improperly influenced”; “overly aggressive behaviour”; “conflicts of interest” and a “serious lack of transparency”.

Just some of the damning descriptions that best summarise the Ultranet scandal currently shaming an exposed Australian government department.

But this isn’t tabloid sensationalism, rather the verbatim findings of the Operation Dunham investigation, detailed by Victoria’s Independent Broad-based Anti-Corruption Commission (IBAC).

In short, the report shines a spotlight on the alleged widespread corruption within the senior ranks of the state's Department of Education and Training, following the collapse of a failed computer program - touted to cost $60 million - that stung taxpayers for as much as $240 million.

This isn’t merely another IT budget that has ballooned out of complete control however, rather a systematic and deliberate ploy to deceive and mislead, according to reports.

Because as the Operation Dunham report highlighted, Ultranet - branded “a shambles in every sense of the word” - is one step beyond a costly computer program.

Questioning claims that “Australia is not a screw-up nation”, the 116-page document - released on January 27 and seen by ARN - highlighted a tender process built on corruption, improper diversion of funds, conflict of interest, and mismanagement at senior levels.

“IBAC examined and exposed past patterns of conduct that are completely unacceptable and have no place in Victoria, particularly in the Department responsible for the education and development of our children and young people,” said, Secretary of the Department of Education and Training, Gill Callister, following the release of the report.

“Many people within the Department and our school communities will feel greatly let down by the people they were entitled to trust.

“This is failure that goes all the way to the top. I’m leading a complete overhaul of past practices, processes and culture to ensure we act with the utmost integrity.”

Following months of allegations, the final reckoning has now been made by the IBAC - here’s how the “corrupted” tech tender that cost Australian taxpayers $240 million was won.

Planting the seeds of corruption

In November 2006, the then Premier of Victoria announced a $60.5 million commitment to develop and deploy a statewide online teaching and learning system, to be called the Ultranet.

The Ultranet was to be a virtual learning portal through which schools, students and parents could access and deliver curriculum content, student reports and other information.

As reported by ARN however, education department official, Darrell Fraser - central to many allegations examined in the investigation - played a critical role in promoting the project that would evolve into the Ultranet, at least a decade before it was launched.

This is backed up by The Age, which reported that; “in the 1990s, as principal of Glen Waverley Secondary College (GWSC), he was directing his staff to build what was a Victorian first, an intranet school system that would give parents, teachers and students 24-hour access to course content and student reports.

“Fraser sensed a commercial opportunity, and he and a handful of Glen Waverley teachers secretly set up a private company, Cortecnica, to sell their new product.”

In early 2002, Cortecnica was registered - its directors were Ron Schlosser (an English teacher), Frank Aloisio (a maths and physics teachers) and Ben Cushing (the school’s network manager), who developed a customised intranet for use at GWSC.

“In essence, Cortecnica was established to commercialise the GWSC Intranet," the report stated. "It was to be the vehicle through which financing could be obtained to develop the Intranet into a saleable and scaleable product.

“Although he was not registered as a director or shareholder, Mr Fraser was instrumental in the establishment of Cortecnica and its activities.

“The enterprise attracted the interest of multinational IT company Oracle, and the company and school started trading knowledge about their software.”

“An extraordinary promotion”

Fraser worked at GWSC as a classroom teacher, assistant principal and principal from 1977 until 2003, in a career that spanned 26 years.

During 2003 - Fraser’s final year in charge - GWSC attracted the interest of Oracle.

According to the investigation, Greg Martin, a senior education consultant at Oracle, visited GWSC and Fraser on “six or seven occasions during 2003”, based on opportunities around the vendor’s L360 product and an opportunity to develop, with Oracle, a commercial version of the Intranet.

“Throughout 2003, Mr Martin was able to cultivate a strong relationship with Mr Fraser and other staff at the school through frequent visits and the provision of valuable software and other professional services, such as a functional review of the Intranet,” the report stated.

“These services were provided at no cost to GWSC. All of this occurred in the context of an unusually commercial attitude on the part of Mr Fraser with respect to school affairs.”

In late 2003, Fraser left GWSC and was appointed Deputy Secretary for the Department, responsible for the administration of the Office for Government School Education (OGSE).

At the time, the OGSE was responsible for approximately 70 per cent of the Department’s multi-billion dollar budget ($8.6 billion in 2010/11), as the source of funding for each government school, from which curriculum and staffing expenses were met.

Yet according to the investigation, Fraser’s appointment to the Deputy Secretary position was, by all accounts, “an extraordinary promotion”.

“No witness could recall any other occasion when a school principal, without any other executive level experience, had stepped directly into such a senior departmental position,” the report stated.

Consequently, the investigation found evidence the tender process - to be submitted in the years ahead - for the Ultranet project was “improperly influenced and therefore corrupted”, through “improper relationships” that senior departmental officers had primarily with Oracle and then with CSG.

“From the outset and while a school principal at GWSC, Mr Fraser sought to exploit the commercial potential of the technology that would become known as the Ultranet; he did so in a way that was not in keeping with the standards of conduct expected of a public servant,” the report stated.

Oracle’s preferential treatment

From his new position of power, Fraser introduced a “Research and Development Initiative” known as Students@Centre.

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