Monday, 3 August 2009

Due Diligence - 1: government negligence comes home to roost

Are Australians too optimistic, too casual, too laid back, or too lazy? Too [whatever] to undertake the task of methodical and forensic due diligence.

Following hard on the heels of the Victorian Government's announcement that it has given the contract for the desalination plant at Wonthaggi to Suez Environment whose parent company GDF Suez has been fined for wiping out rainforests in the Amazon, we have come to separate situations - one Victorian and the other Federal - where public entities seem to have failed the Due Diligence hurdle.

  1. How Firepower ripped off Austrade and how Austrade warned one of its diplomats he was being investigated on child sex charges and how the person under investigation left Austrade and went to work for Firepower. (090804: Austrade qualification here)
  2. Then there is this episode which involves Deakin University in Geelong, the Victorian Government and the Indian IT company, Mahindra Satyam. What was to become a massive IT centre in Geelong - which would provide employment as the motor industry on which Geelong is heavily dependent declined - has collapsed in absolute disaster because of fraud.
  3. It is interesting that Tim Holding has seminal involvement in both the desalination contract and the IT development. Theo Theophanous was involved in the IT development and I have my wonders about that, wouldn't you, dear Networker?
  4. Another public entity asleep at the wheel, is the Reserve Bank of Australia. My guess is that somewhere in the RBA the culture is that right hand must not know what left hand is doing. Not good enough. Not ethical. And chickens do come home to roost as they are now busily doing.
Satyam Computer Services chairman B. Ramalinga Raju.
From here
So what is going on? We know that Ministers and Members of Parliament like to grovel for a buck and this is why Anna Bligh is leading the charge to restore standards to government and governance. It seems to me though that bureaucrats are just as involved in all of this by commission or by omission; by seeking high flying projects or by omitting to do the hard yards required of due diligence.

Queensland and New South Wales have anti-corruption bodies. They are not perfect - and, certainly, the Queensland body acted, along with significant members of the legal profession in Queensland, disgracefully in the matter involving Chief Magistrate Diane Fingleton.

However, for all the faults of the systems in NSW and Queensland, the absence of such a system in the Commonwealth Government and the remaining states is quite marked. One doesn't have to be intimate with political gossip to query the backscratching that goes on in the public sector - politicians, police unions, the rotation of bureaucrats through Federal and State systems according to political preference, and so on.

However, I have one special request for Due Diligence and that is the Formula 1 Australian Grand Prix. Many Victorians watch on in amazement as their government pays higher and ever higher subsidies to the Grand Prix. I find it amazing how much Ron Walker, a significant member of the Liberal Party, benefits personally from the patronage of the Australian Labor Party, the incumbent government of Victoria.

In this respect I am very much reminded of this quote and the phrase that refers to knowledge of where corpses are interred. Could these figures of speech relate, dear Networker, to the relationship of the good Lib, Ron, and the ALP in Spring Street?

Further reading:

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