CSG chief faces criminal charges after anti-corruption investigation

IBAC filed criminal charges in the Magistrates Court in relation to a consulting project dubbed the Learning Technologies and Quality Assurance Project

CSG (ASX:CSV) has warned shareholders that its CEO and managing director has had criminal charges filed against her by Victoria’s Independent Broad-based Anti-corruption Commission (IBAC).

Julie-Ann Kerin was appointed as chief executive officer and managing director of CSG in 2012, replacing a founding shareholder and former managing director -- who asked to not be named. Prior to her appointment as CEO, Kerin was CSG's group general manager of the company's former Technology Solutions division.

According to a statement to shareholders, IBAC filed criminal charges in the Magistrates Court in relation to a consulting project dubbed the Learning Technologies and Quality Assurance Project (LTQAP).

According to CSG, the project was referred to in a report released by IBAC on 27 January 2017 detailing the findings of its Operation Dunham investigation, which examined issues relating to the Ultranet project which dates back to 2006.

Broadly, the report shone a spotlight on the alleged widespread corruption within the senior ranks of Victoria’s Department of Education and Training, following the collapse of the failed Ultranet computer program – touted to cost $60 million – that stung taxpayers for as much as $240 million.

The report saw IBAC allege that the state government’s procurement of services from Oracle and CSG Services for the failed project was subject to process corruption, improper diversion of funds, conflict of interest, and mismanagement at senior levels.

Indeed, Operation Dunham, which was launched in 2014, was set up to investigate the allegations that the tendering process in relation to the Ultranet project – in particular, the awarding of a contract to CSG Services (CSG), which was at the time owned by CSG Limited – may have been compromised.

The report, resulting from the investigation, tabled in Victorian parliament on 27 January, alleged that improper relationships that certain senior departmental officers had with Oracle, and then with CSG, “effectively corrupted” the project’s tender process.

In its latest communiqué to shareholders, CSG said that the charges against Kerin allege that the Department of Education and Early Childhood Development (DEECD) and its officers were deceived in 2011 about the true nature and purpose of the Learning Technologies and Quality Assurance Project, and into believing that Alliance Recruitment would complete all the work on that project.

CSG has stressed that the matters giving rise to the charges have been on public record since at least the release of the Operation Dunham report and that it has received no new information relating to the matters cited in the IBAC report. 

“After reviewing the IBAC report, CSG denies that it and its officers have done anything wrong. CSG has responded to the adverse statements against it [and its former subsidiary] through the appropriate channels,” the publicly-listed company said in an Australian Securities Exchange (ASX) release, dated 27 January 2017.

The company said it fully supports its managing director and chief executive officer in the defence of the charges.

It should be noted that no charges have been brought against CSG itself.

“CSG notes that the subsidiary involved in providing the services on the LTQAP in 2011 is no longer part of the CSG Group following its divestment in 2012,” the company said.

IBAC said in a statement on 21 May that it had charged three people in relation to the failed Ultranet project for Victorian Government schools.

"The three people - a former Managing Director and CEO, a former Group General Manager Technology Solutions, and a former Department of Education and Training Deputy Secretary - have each been charged with five counts of obtaining property by deception," IBAC said.

"The former Department of Education and Training Deputy Secretary has also been charged with one count of misconduct in public office," it said.

The three have been summoned to appear in the Melbourne Magistrates' Court on 3 July.