Tech players entangled in $5M council corruption probe

No fewer than five local tech players have been caught up in a corruption probe of the former City of Botany Bay Council chief financial officer, who allegedly raked in more than $5 million via dodgy invoices.

The NSW Independent Commission Against Corruption (ICAC) revealed on 26 July that it had found that former City of Botany Bay Council CFO, Gary Goodman, engaged in "serious corrupt conduct" involving more than $5 million in false or inflated invoices and another $620,000 from corporate credit cards.

In its report on its investigation, Operation Ricco, entitled Investigation into the conduct of the former City of Botany Bay Council Chief Financial Officer and others, the ICAC said it found that Goodman "dishonestly exercised his official functions" over 18 years from 1997 to October 2015 as Council CFO by "approving or causing the payment by the council" of the invoices in question.

The invoices were from, or purported to be from, a variety of companies, and were in varying amounts.

These companies included several local tech and IT businesses, including CND Computers, On Q Installations and Computer Intersection.

The ICAC investigation found that Goodman allegedly created false invoices in the name of CND Computers, without the company’s knowledge, totalling $2,097,021.74 between October 2007 and June 2011.

CND Computers was established in 2005, ICAC said. It also used a number of trading names, including 360 Vision and CND IT.

While CND Computers had done legitimate work for Goodman’s company, Gas Motorsports, including carrying out computer maintenance, Goodman subsequently created false CND Computers invoices, according to ICAC.

“He put his own bank account details on the invoices so that payments made by the council would be made directly into his bank account,” ICAC said in its report. “He authorised Council payment of the invoices.

“Between 18 October 2007 and 15 June 2011…Goodman, by misrepresenting these CND Computers invoices as genuine, caused $2,097,021.74, to be paid into bank accounts associated with him,” it said.

ICAC understands that the company did not issue these invoices.

Another company drawn into the corruption charges was Computer Intersection. According to ICAC, Computer Intersection founder, Keith Mark, allegedly knew Goodman for decades.

Between 1997 and 2005, in agreement with Goodman, Mark allegedly created false Computer Intersection invoices, which he submitted to the council for payment, allegedly knowing that either he had not done the work claimed or that the amounts claimed had been inflated, with the intention that Goodman would use his position at the council to dishonestly arrange for payment of the invoices to benefit Goodman himself.

According to evidence heard by ICAC, Mark started to produce inflated and false invoices through Computer Intersection in about 1997. Some of the invoices produced by Mark were allegedly completely false, while others were for legitimate work but inflated amounts. This was allegedly done at Goodman’s request.

During the investigation, Mark told ICAC that Goodman allegedly retained all the proceeds from the false invoices and the amount above the legitimate amount from the inflated invoices. Mark alleged that he had given approximately $1.3 million to Goodman through this scheme.

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Additionally, On Q Installations, a business that mainly supplied mobile telephones, car trackers, car alarms, car audios, computers and toner cartridges to the council, was also named in the ICAC investigation report.

For a period of time, On Q Installations was on a retainer with the council. In 2009, a payment from the council in an amount of $34,540 allegedly appeared in a bank account associated with Goodman with the reference “On Q Installations”. The council was not able to locate an invoice relating to this payment, ICAC said.

It is understood that On Q Installations’ management knew nothing about this payment.

Meanwhile, Emu Alarms, which traded from 15 June 1998 to 14 January 2007, and mainly sold and serviced security cameras, alarms and intercoms, carried out work for the Council and Goodman’s business, Gas Motorsports.

“Relevant banking and other records show that, between 11 August 2006 and 30 April 2009, $300,073.64 was paid into accounts associated with…Goodman as a result of the payment by the Council of invoices submitted in the name of Emu Alarms,” the ICAC report said.

According to ICAC, Goodman admitted that he had created and submitted false invoices in the name of Emu Alarms and had used his own bank account details on those invoices. He admitted that he was the sole person responsible for doing so and that Maton had no knowledge of what he did.

Finally, telecommunications hardware reseller, Teletec, was also allegedly entangled in Goodman’s invoicing activities, with the company’s operator, Sam Alexander, allegedly submitting false invoices – in agreement with Goodman – for work that had not been done.

The alleged intention was that Goodman would use his position at the council to dishonestly arrange for payment of the invoices in order to reap the financial gains himself.

Over a period of between about 18 to 24 months, Mr Alexander lent Mr Goodman about $35,000, of which about $10,000 was repaid to him, ICAC said.

According to the Commission, Alexander estimated that approximately $90,000 was allegedly improperly obtained from the council over a period of between about 12 to 15 months.

“Alexander said the arrangement to submit false invoices was initiated by…Goodman and all the proceeds were remitted to…Goodman either in cash or by making payments on his behalf,” ICAC said in its report.

With the investigation wrapped up, the Commission has issued the council with a number of recommendations to prevent such corruption from occurring in the future, including the recommendation that Bayside Council review its financial processes and makes any necessary changes to ensure that its vendor master file is subject to appropriate segregation and review-based controls.

It also recommended that Bayside Council undertake a review of the control frameworks governing processes that are vulnerable to corruption, including those related to procurement, invoice payment, fleet management and charge-card usage.