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An investigation by the state’s anti-corruption watchdog has identified “organisational and systemic corruption vulnerabilities” at Bendigo Health, which “facilitated” the misappropriation of up to $10,000 in goods and services for the private use of hospital chief executive John Mulder.
Among a number of incidents exposed in an Independent Broad-based Anti-corruption Commission report tabled in state parliament on Thursday were revelations Mr Mulder used hospital resources in the maintenance of two properties he rented in 2012 and 2013, including one belonging to his wife.
The report on the IBAC investigation, dubbed Operation Liverpool, revealed that while living in the Flora Hill property owned by his wife in 2012 Mr Mulder engaged the hospital’s buildings and infrastructure division to conduct repairs to the property’s floorboards.
When he said this, I knew that this was meant to be a favour and that I shouldn’t send a bill at all.
- IBAC witness
The work, which took approximately four to five hours to complete, was done on Bendigo Health time at a cost of between $500 and $600 – as estimated by an employee, who later expressed reservations about whether it was an appropriate use of their time.
The IBAC investigation found Mr Mulder also used hospital resources to conduct, “significant” landscaping and painting work at the Flora Hill property, as well as electrical work at another rental property in Spring Gully.
It also found he arranged for a large glass ambulance depot door belonging to a company contracted to work on the demolition of the old hospital to be transported to a property belonging to Mr Mulder in Torquay at a cost of $1319, which was borne by another hospital contractor.
A director of the company that arranged the door’s transportation at Mr Mulder’s request, told the commission the hospital’s former construction manager, Adam Hardinge, who was also implicated in the report, said “we would sort out the bill down the track”.
“When he said this, I knew that this was meant to be a favour and that I shouldn’t send a bill at all,” the director said.
The report states that when the company’s office assistant sent the bill on to Bendigo Health without the director’s knowledge, it was questioned and returned to him. He later told investigators he didn’t follow up the matter with Mr Hardinge as he “knew [Mr] Mulder was the big boss”, saying “I wanted to continue working for [Bendigo Health] and enjoyed the relationship, so I did not take this bill any further”.
During the investigation, Mr Mulder told the commission the demolishers said he could have the door, saving them the cost and trouble of taking it to the tip. He also said Mr Hardinge told him the door could be delivered, “back-loaded”, on a truck at no cost to anyone. He said he expected to be billed for private works performed by Bendigo Health employees and contractors at his behest.
Mr Mulder also maintained he specifically told Mr Hardinge or his manager to make sure he was charged for work at his rental properties. He denies that he asked, wanted or expected such work to be done by Bendigo Health employees or contractors on Bendigo Health time and that he never intended to pay for it.
But investigators concluded that while he “sometimes used words to the effect of requesting a bill”, Mr Mulder was unable to satisfactorily explain what he meant by his use of qualifying words such as “it doesn't have to be a big bill, but needs to be something”.
“The natural meaning of such language by Mr Mulder, in context, was that he only expected ‘token’ bills for the sake of appearances, and not ones for true value,” the report reads.
The investigators concluded that “regardless of any requests he gave to Bendigo Health employees for him to be billed, Mr Mulder must have soon realised in that period he was not being billed or otherwise paying for the works in question, and was content for that to remain the case”.
“It was only after Mr Mulder became aware of IBAC’s investigation that he directed Bendigo Health finance staff to identify work undertaken at the properties he rented since his appointment as CEO, and to send him pertinent invoices for payment,” the report reads.
The report also reveals Bendigo Health employees and contractors were redeployed from a project at the hospital site to complete the landscaping at the Flora Hill property.
Two Bendigo Health employees who were involved in the landscaping told investigators they were called into Mr Hardinge’s office and castigated a few months later, for allegedly telling other staff about the work done at Mr Mulder’s home. One of the employees said Mr Hardinge threatened them with dismissal.
Mr Mulder denied having anything to do with Mr Hardinge castigating the employees and said he was unaware of the threats for “blowing the whistle” on this work.
IBAC found further allegations made against Mr Mulder involving the rental arrangements of the Flora Hill property and another house belonging to his wife in Harcourt North, through which his rent was paid by Bendigo Health, were unsubstantiated.
The finding came despite concerns investigators held about changes made to the arrangements while IBAC investigators were in Bendigo in June 2015.
“While it is difficult to accept that the timing of the termination of such arrangements was purely coincidental with IBAC’s inquiries, at the conclusion of the investigation, the corrupt conduct allegations concerning Mr Mulder’s remuneration arrangements were not substantiated to IBAC’s satisfaction,” the report reads.
“Whether these arrangements were consistent with the spirit and intent of applicable corporate policies and probity standards is a matter for Bendigo Health and the department.”
Citing Bendigo Health’s value of “trustworthiness” and the underpinning of an organisation’s ethical culture by the “tone from the top”, the report concluded Mr Mulder’s private use of hospital resources was in breach of “basic values for public sector employees and set a poor example for other staff”.
It also made a number of recommendations, including that Bendigo Health review its integrity and corruption policies and confirm that all goods and services provided to Mr Mulder in a private capacity have been paid for in full.
The commission requested reports on action taken in response to its investigations from Bendigo Health and on steps taken to address any similar vulnerabilities in the broader health sector from the Health Department by September 30.