ICAC finds nine corrupt following Sydney Water investigation

Tuesday 22 March 2011

The Independent Commission Against Corruption (ICAC) has found that nine people, including Sydney Water employees and other individuals, engaged in corrupt conduct, one result of which was the unauthorised expenditure of close to $300,000 in public funds.

In its report on the Investigation into corrupt conduct of Sydney Water employees and others, released today, the Commission noted that there were "a number of prevailing flaws in the rules, relationships and systems at Sydney Water" and has made 18 corruption prevention recommendations to help the agency prevent similar conduct from recurring in the future.

The ICAC found that former Sydney Water Civil Delivery section inspectors Kenneth John Buckley and Bryan Kane engaged in corrupt conduct by soliciting and/or receiving payments from numerous Sydney Water accredited constructors. Another Civil Delivery section inspector, Robert Funovski, engaged in corrupt conduct by soliciting and receiving a $3,000 payment from another constructor in relation to work he arranged to be performed for the constructor's company using Sydney Water resources.

The ICAC also found that Sydney Water Plumbing Inspection and Assurance Service (PIAS) inspectors Richard Fayers and Anthony Vecchio engaged in corrupt conduct by accepting payments in return for favourably exercising their duties towards a number of licensed plumbers, while PIAS inspector Robert Rodgers engaged in corrupt conduct by deliberately failing to seek Sydney Water's permission to engage in secondary employment in circumstances where he knew his secondary employment adversely impacted on his performance as a PIAS inspector.

Many of the constructors made full and frank admissions to the Commission, which has decided to exercise its discretion to not make corrupt conduct findings against them, with the exception of John Gerard Ryan, who engaged in corrupt conduct by paying money to Mr Buckley to influence the exercise of his official functions.

Sydney Water property asset manager, Edward Harvey, engaged in corrupt conduct by authorising payments of invoices submitted by businessman Paul Makucha and his accountants totalling $293,000 when he had no authority to do so, and by falsely representing to the Supreme Court of NSW that he had authority to agree to the release of a $25,000 bond lodged in the Court. Mr Harvey also engaged in corrupt conduct by executing a Business Implementation and Confidentiality Agreement on behalf of Sydney Water when he had no authority to do so.

Mr Makucha, who at one time resided in a shipping container on Sydney Water land at Mascot, engaged in corrupt conduct by submitting invoices to Sydney Water for payment, which he knew contained false information. These included outdoor advertising services that delivered very limited material which was of no real value. Among other things, Mr Makucha paid his bill from the Sydney Hilton Hotel, where he took up residence after vacating the Mascot site, with money received from Sydney Water to which he was not entitled.

Mr Makucha also engaged in corrupt conduct by attempting to obtain a financial advantage by procuring Mr Harvey's execution of the Business Implementation and Confidentiality Agreement when he knew Mr Harvey had no authority to do so, and by deliberately misleading Mr Harvey about the nature and purpose of a document he persuaded Mr Harvey to sign which Mr Makucha then used to falsely represent that he had Sydney Water's consent to the registration of its trademark and logo with respect to bottled water.

The Commission is of the opinion that the advice of the Director of Public Prosecutions (DPP) should be sought in relation to the prosecution of Messrs Buckley, Funovski, Kane, Harvey and Makucha for various criminal offences.

Messrs Buckley, Funovski, Kane and Harvey have been dismissed by Sydney Water, and Mr Fayers has resigned. The Commission is of the opinion that Sydney Water should give consideration to the taking of disciplinary action against Mr Rodgers and that the Department of Services, Technology & Administration, which is now responsible for PIAS inspectors and their functions, should give consideration to taking disciplinary action against Mr Vecchio.

The Commission's corruption prevention recommendations to Sydney Water include that it ensures staff in identified risk areas of operational and/or fraud risk are subject to intrusive supervision, and that it reviews its organisational structure to identify and remedy situations where supervisory arrangements are split or unclear.

The Commission held a public inquiry as part of the investigation over 18 days in September 2010, at which Commissioner the Hon David Ipp AO QC presided and 62 witnesses gave evidence.

Media Inquiries: ICAC Manager Communications & Media Nicole Thomas 02 8281 5799 / 0417 467 801

Fact sheet: This fact sheet is available on request.

Investigation report