University of Sydney - allegations concerning contract security suppliers (Operation Gerda)

Findings of corrupt conduct

The ICAC found that Emir Balicevac engaged in serious corrupt conduct by:

• between December 2015 and April 2018, dishonestly obtaining approximately $222,905 from Sydney Night Patrol and Inquiry Co Pty Ltd (SNP) by submitting timesheets in which he made false representations as to the identities of guards who provided or purported to provide ad hoc security services to the University of Sydney knowing that the funds to pay those claims would ultimately come from the University
• in late 2016, providing a pinball machine at a cost of $10,650 to the University’s security operations manager, Dennis Smith, for which he ultimately contributed $4,650 and arranged for another SNP employee, Frank Lu, to contribute $6,000, for the purpose of inducing or rewarding Mr Smith to show favour to Mr Balicevac and SIG in relation to the provision of security guarding services to the University.

The ICAC found that Daryl McCreadie engaged in serious corrupt conduct by, between December 2015 and April 2018, dishonestly obtaining approximately $27,283 from SNP by submitting timesheets in which he made false representations as to the identities of the persons who provided or purported to provide ad hoc security guarding services to the University knowing that the funds to pay those claims would ultimately come from the University.

The ICAC found that Mr Lu engaged in serious corrupt conduct by, between December 2015 and April 2018, dishonestly obtaining approximately $244,091 from SNP by submitting timesheets in which he made false representations as to the identities of the persons who provided or purported to provide ad hoc security guarding services to the University knowing that the funds to pay those claims would ultimately come from the University.

The ICAC found that George Boutros engaged in serious corrupt conduct by, between October 2016 and April 2018, dishonestly obtaining payment from SNP by submitting timesheets in which he made false representations as to the identities of the persons who provided or purported to provide ad hoc security guarding services to the University knowing that the funds to pay those claims would ultimately come from the University. The precise amount dishonestly obtained by George Boutros is unknown because, as an S International Group Pty Ltd (SIG) employee, it is difficult to differentiate between the rostered shifts he legitimately claimed and the ghosting shifts he illegitimately claimed.

The ICAC found that Taher Sirour engaged in serious corrupt conduct by:

• facilitating payments to Mr Balicevac, Mr McCreadie, Mr Lu, and Mr Boutros on the basis of false timesheets, through which he knowingly assisted them to obtain a financial advantage from SNP at the cost of the University. In the case of Mr Balicevac and Mr Lu, Mr Sirour was aware that they were falsely claiming payments in respect of ad hoc services that had not been provided.
• giving or offering to provide the following to Mr Smith as an inducement or reward for using his position at the University to favour the interests of SIG and Mr Sirour or to influence him to show such favour:

• payment for accommodation for Mr Smith and his wife at the Shangri-La Hotel, Sydney, between 4 and 6 October 2015 in the amount of $850, a meal at Wolfies restaurant on 5 October 2015 in the amount of $369.50, and transport costs of a car and driver to and from the hotel in the amount of $250
• payment for a further stay at the Shangri-La Hotel, Sydney, for Mr Smith and his wife between 17 and 19 March 2017 in the amount of $1,368 (although the booking was subsequently cancelled due to Mr Smith’s family circumstances)
• tickets for an overseas trip in April 2018.

The ICAC found that Mr Smith engaged in serious corrupt conduct by accepting, or agreeing to accept, the following gifts as an inducement or reward to use his position at the University to favour the interests of SIG:

• payment by Mr Sirour for accommodation for himself and his wife at the Shangri-La Hotel, Sydney, between 4 and 6 October 2015 in the amount of $850, a meal at Wolfies restaurant on 5 October 2015 in the amount of $369.50 and transport costs of a car and driver to and from the hotel in the amount of $250
• payment by Mr Sirour for a further stay at the Shangri-La Hotel, Sydney, between 17 and 19 March 2017 in the amount of $1,368 (although the booking was subsequently cancelled due to his family’s circumstances)
• a pinball machine worth $10,650 paid for by Mr Balicevac and Mr Lu
• tickets for an overseas trip from Mr Sirour in April 2018.

For more information about the conduct of the above individuals, please refer to the summary chapter of the full report.

Recommendations for prosecutions

The Commission must seek 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 provides information on this website in relation to the status of prosecution recommendations and outcomes as advised by the DPP. The progress of matters is generally within the hands of the DPP. Accordingly, the Commission does not directly notify persons affected of advice received from the DPP or the progress of their matters generally.

The ICAC is satisfied that there is sufficient admissible evidence to seek the advice of the DPP with respect to the prosecution of Emir Balicevac, Daryl McCreadie, Frank Lu, George Boutros, Taher Sirour and Dennis Smith for offences as follows.

Emir Balicevac, for

• offences against s 192E and s 192G of the Crimes Act 1900, regulation 42 of the Security Industry Regulation 2016 and regulation 44 of the Security Industry Regulation 2007. The evidence includes the weekly personal timesheets emailed by Mr Balicevac to S International Group Pty Ltd (SIG), together with SIG business records, such as the weekly Excel spreadsheets prepared for the purposes of payroll and invoicing Security Night Patrol and Inquiry Co Pty Ltd (SNP).
• an offence under section 249B(1)(a) of the Crimes Act of corruptly soliciting or receiving benefits as an inducement or reward for showing favour to SIG in relation to SNP’s 2015 contract with the University
• offences against section 249B(2)(a) and section 249B(2)(b) of the Crimes Act of corruptly giving a benefit to Mr Smith as an inducement or reward for Mr Smith showing favour, or not showing disfavour, to Mr Balicevac and companies associated with Mr Sirour in relation to security guarding services at the University
• giving false or misleading evidence at the public inquiry contrary to section 87(1) of the ICAC Act.

Daryl McCreadie, for:

• offences against section 192E and section 192G of the Crimes Act, regulation 42 of the Security Industry Regulation 2016 and regulation 44 of the Security Industry Regulation 2007. The evidence includes the weekly personal timesheets emailed by Mr McCreadie and Mr Balicevac to SIG, together with SIG business records, such as the weekly Excel spreadsheets prepared for the purposes of payroll and invoicing SNP
• an offence under section 249B(1)(a) of the Crimes Act of corruptly soliciting or receiving benefits as an inducement or reward for showing favour to SIG in relation to SNP’s 2015 contract with the University.

Frank Lu, for offences against section 192E and section 192G of the Crimes Act, regulation 42 of the Security Industry Regulation 2016 and regulation 44 of the Security Industry Regulation 2007. The evidence includes the weekly personal timesheets emailed by Mr Lu to SIG, lawfully intercepted telephone calls between Mr Lu and Mr Sirour, together with SIG business records, such as the weekly Excel spreadsheets prepared for the purposes of payroll and invoicing SNP.

George Boutros, for offences against section 192E and section 192G of the Crimes Act, regulation 42 of the Security Industry Regulation 2016 and regulation 44 of the Security Industry Regulation 2007. The evidence includes the weekly personal timesheets emailed by George Boutros to SIG, together with SIG business records, such as the weekly Excel spreadsheets prepared for the purposes of payroll and invoicing SNP.

Taher Sirour, for

• offences against section 192E and section 192G of the Crimes Act. The evidence includes lawfully intercepted telephone calls between Mr Sirour and Mr Lu, and the evidence of the SIG administrative staff who created the weekly payroll and invoicing records at various points between August 2016 and April 2018
• offences against section 249B(2)(a) of the Crimes Act of corruptly giving or offering benefits as an inducement or reward for showing favour to SIG in relation to SNP’s 2015 contract with the University
• aiding and abetting offences by SIG contrary to section 135.1 of the Criminal Code Act 1995 (Cwth) of dishonestly obtaining a gain from the Commonwealth in relation to SIG’s cash payment system, including claiming false GST input credits and failing to pay withholding tax
• offences against section 249B(2)(a) or section 249B(2)(b) of the Crimes Act of corruptly giving benefits to Mr Smith as an inducement or reward for Mr Smith showing favour, or not showing disfavour, to Mr Balicevac and companies associated with Mr Sirour in relation to security guarding services at the University.

Dennis Smith, for

• offences against section 249B(1)(a) or section 249B(1)(b) of the Crimes Act of corruptly receiving benefits from Mr Sirour and Mr Balicevac as an inducement or reward for Mr Smith showing favour, or not showing disfavour, to Mr Balicevac and companies associated with Mr Sirour in relation to security guarding services at the University
• giving false or misleading evidence at the public inquiry contrary to section 87(1) of the Independent Commission Against Corruption Act 1988.

For more information about the recommendations, please refer to chapters 2, 3, 5 and 6 of the full report.

Recommendations for disciplinary action

Dennis Smith is no longer employed by the University of Sydney. The question of disciplinary action or terminating his employment does not arise.

Recommendations for corruption prevention

The Commission makes 24 corruption prevention recommendations to assist the University of Sydney to improve its systems as follows:

Recommendation 1

That the University ensures that key tender documentation, such as procurement strategies, tender evaluation plans and tender evaluation committee (TEC) reports, include a realistic and detailed assessment of procurement and contract risks. This assessment should be conducted in a manner that incorporates operational risks and complies with the risk management principles in the International Standard on Risk Management ISO 31000:2018.

Recommendation 2

That the University amends its Guidelines for using the risk assessment tool to provide more detailed guidance on major contract risks.

Recommendation 3

That the University assesses contract assurance frameworks that cover key risks involved in the provision of services, such as a reliance on subcontracting, when assessing the capability and capacity of tenderers.

Recommendation 4

That the chief procurement officer formally reviews requests for tender (RFTs) for high-risk tenders and tender evaluation plans for significant procurement undertakings.

Recommendation 5

That the University should review its tender assessment criteria and weightings to avoid perceptions that unwarranted advantages are provided to a particular tenderer.

Recommendation 6

That probity walls and/or other safeguards should be established where there is a risk that someone connected to a tenderer could access confidential information about a tender process and tenderers’ submissions.

Recommendation 7

That the University should ensure consistency across its tender documentation concerning how tenders will be evaluated.

Recommendation 8

That the University should continue to assess all tenderers and, where relevant, their supply chains to ensure compliance with Awards.

Recommendation 9

That all TEC chairs and/or appointed probity advisers should ensure that tender scoring methodologies are clear to evaluators and that the tender assessment criteria have been followed.

Recommendation 10

That tender reports to the Finance and Audit Committee (FAC) and the tender board should contain adequate information to enable key issues to be understood. The information should include:

• tenders’ assessment criteria scores
• key contract risks and their mitigation
• key assumptions
• any significant probity concerns and the manner in which they were resolved.

Recommendation 11

That the University should ensure all future contracts for the provision of security services include adequate provisions covering:

• subcontracting terms
• contractor assurance frameworks
• right-to-audit clauses
• timesheet access
• technology requirements.

Recommendation 12

That security contractors should be required to provide evidence that they have properly implemented internal controls to ensure that security staff (including subcontractors) have completed their duties in accordance with the contract and work orders.

Recommendation 13

That the University should document its internal contractor controls. A report of the conduct of the controls, exceptions to the controls and the resolution of those exceptions should be given to relevant managers in CIS.

Recommendation 14

That the University should perform random checks that security guards are on duty. These could include GPS monitoring, reviewing CCTV and access records, and surprise visits to certain locations.

Recommendation 15

That there should be a regular rotation between at least two University employees who undertake contractor checks to ensure that security services are provided.

Recommendation 16

That the University should have access to guard timesheets. The University should also inspect the timesheets to ensure compliance with legislative requirements and the contract, and to help confirm charges on invoices.

Recommendation 17

That security contractors should be required to provide specimen signatures against which the signatures of guards should be checked.

Recommendation 18

That the University should have key performance indicators (KPIs) in place that cover the essential requirements for the provision of security services. It should also ensure KPI monitoring for security contracts is based on data that is trustworthy, measurable and relevant, and that reliance on contractor self-reporting is minimalised.

Recommendation 19

That the University should develop controls to identify when contract variations exceed 10% of the original contract amount. It should also clarify that a sufficiently senior delegate is required to scrutinise and approve cumulative ad hoc contract payments that exceed 10% of the contract value.

Recommendation 20

That the University considers sharing some contract management duties between internal staff, who are co-located with security contractors, and staff, who do not have day-to-day contact with security contractors.

Recommendation 21

That the University should develop a code of business practice or similar document and contractually bind major suppliers to comply with it. The document should include:

• a prohibition on suppliers or potential suppliers offering gifts and benefits
• a prohibition on actions that place University staff or other individuals in the supply                      chain in conflict of interest situations
• a requirement for suppliers to have comparable provisions in contracts with subcontractors or other companies in the supply chain
• details of where people can make reports (including anonymous reports) of breaches of the code of business practice.

Recommendation 22

That the University should establish a clear mechanism, and one that is clearly communicated, for the staff of suppliers and subcontractors to report corrupt conduct.

Recommendation 23

That the University adopts a fraud and corruption control plan that appropriately addresses the risks of fraud and corruption. Among other things, the plan should reflect the findings made in previous Commission investigation reports concerning universities and ensure that the corruption prevention issues are not dealt with in isolation, but that the cumulative implications are properly considered.

Recommendation 24

That all internal audit reports should be given to the director of internal audit and reported to the FAC. The internal audits should be reviewed by an internal audit manager to assess the implications of the report and whether there are red flags of possible fraud and corruption. If necessary, internal auditors’ working papers should also be obtained.

Responses to ICAC recommendations

The action plan posted below has been provided by the University of Sydney in response to the ICAC’s recommendations. Its publication here is to show the status of the responses. It does not constitute approval or endorsement by the Commission.

12 month progress report - University of Sydney

Plan of Action - University of Sydney