ICAC finds corrupt conduct against former RailCorp employee for $200,000 scam

Thursday 24 September 2009

The Independent Commission Against Corruption (ICAC) has made corrupt conduct findings against former RailCorp employee Wasim Khan and his associates who were involved in a plan to swindle $200,000 from RailCorp in return for awarding a RailCorp security guard auditing services contract.

In its report on an Investigation into the solicitation and receipt of corrupt payments from a RailCorp contractor, released today, the Commission found that Wasim Khan planned to solicit the $200,000 over four years in return for awarding the contract to Unisec Security Pty Ltd. Wasim Khan – who admitted during the public inquiry into the matter that "I always wanted to try something corrupt" - enlisted the assistance of family friend Mohammed Ali and cousin Tabrez Khan to help execute the plan.

The ICAC has recommended that the advice of the Director of Public Prosecutions (DPP) be sought with respect to the prosecution of the three men for various offences under the Crimes Act 1900 (NSW).

The Commission found that when managing a tender process for the supply of RailCorp security guard auditing services this year, Wasim Khan arranged for Unisec's tender to be increased from about $115,000 per year over the four years to approximately $180,000 per year for the period. This would enable Unisec to afford to make the $200,000 in corrupt payments.

Wasim Khan saw an opportunity to engage in corrupt conduct through the significant difference between the prices quoted between the shortlisted tenderers Unisec ($114,939 based on 56 hours per week as per the tender specifications) and Davis Langdon Pty Ltd ($248,472 based on 72 hours work per week); he was able to convince RailCorp's Tender Evaluation Committee (TEC) to enter into direct negotiations with both companies to clarify issues relating to hours of work and ensure that both quoted on 72 hours per week.

"It is not clear why other members of the TEC agreed to negotiate with the two companies," the report says. It also notes that another member of the committee told the Commission that she had not received any training in procurement, and relied on Wasim Khan for advice on procurement policy and procedures.

The report also says that "RailCorp Procurement Technical Policy requires that the lowest commercially evaluated tender in terms of cost that satisfies all requirements including the technical criteria must be accepted", which means that Unisec should have been awarded the contract based on its original quotation.

Wasim Khan arranged for family friend Mohammed Ali, using the name "Yusuf", to contact Unisec Managing Director and General Manager Anes Harambasic with the suggestion that he could help get Unisec shortlisted and win the contract and future RailCorp contracts. He also asked for payment for his assistance. Mr Harambasic reported the matter to the Commission.

The day before Mr Harambasic was due to meet with the RailCorp TEC, Wasim Khan supplied him with the preferred answers to the questions that would be raised at the meeting and also advised that he would be asked to resubmit the tender based on 72 hours of work per week.

Mr Harambasic later met with Wasim Khan's cousin, Tabrez Khan, to make a payment of $15,000 pursuant to a controlled operation. The meeting was filmed and conversations between the parties were lawfully recorded by the Commission.

As a result of this investigation, RailCorp terminated Wasim Khan's employment.

The investigation identified inadequately trained staff as the major risk area that made it possible for the corrupt conduct to occur. The ICAC has made five corruption prevention recommendations to improve RailCorp's procurement systems and procedures, including revising its procurement training for staff and contractors, and implementing a system of random auditing to be done by senior managers of their middle managers' procurement approvals, with penalties to be enforced when approving officers approve orders that vary from standard procedures.

The Commission held a public inquiry, as part of this investigation, over three days between 15 and 17 June 2009. The ICAC Commissioner, the Hon Jerrold Cripps QC, presided at the inquiry at which six witnesses gave evidence.

Fact sheet

Investigation report