Carol Altmann – The Terrier

As the count goes on to decide who will sit alongside frontrunner Vicki Jellie on the new Warrnambool City Council, we must remember that there is important, unfinished business from the last go round.

The first is whether the WCC has referred a crime to the police – the abuse and misuse of a council corporate credit card.

It is now almost four weeks since the Ombudsman recommended it consider doing so: we still don’t know if it has.

The latest statement from Acting CEO Vikki King is “at this stage there is no update in relation to the referral of the credit card findings to the Warrnambool Police”.

A former senior council manager lied and covered up his spending on a council credit card and yet, four weeks on from this confirmation, the council is apparently no further forward on pursuing any criminal charges.

For a council that allegedly couldn’t wait to throw a CEO out the door for pressing pause on a fishing pontoon, this is disturbing.

And for our local paper to argue that the stolen money was “paid back”…if only such justice was served to the poor bastards thrown into court for pinching a packet of chops.

Just as disturbing is the second item of unfinished business: the leaking of highly sensitive, highly personal documents from within council to at least two councillors, in the mail.

Three sworn affidavits from Tony Herbert, Sue Cassidy and Kylie Gaston all revealed that psychometric test results for those who applied for the position of CEO were leaked.

Senior council staff have known about this leak since at least April this year, when Robert Anderson asked for an investigation.

Has it been investigated? Did it turn the joint upside down? Did it run a full IT audit to see who had access to these highly personal documents? (I would guess, not many people.)

Has it contacted the Inspectorate or the anti-corruption body IBAC?

We don’t know, because the Acting CEO – as of today – has declined to comment.

“It would be inappropriate to comment on matters currently before the Supreme Court,” is the statement.

But this leak is not being challenged in the Supreme Court. It happened. And nothing, it seems, has been done to track down the person/s responsible.

As it happens, IBAC just today issued a newsletter on this very topic of misuse of private and personal information held by councils.

IBAC warns that such misuse “may constitute corrupt conduct”.

There is that c word again.

I am as invigorated as you are by the wave of change that is poised to roll through our council and the above just underscores – yet again – why such a change can’t come soon enough.

Carol Altmann – The Terrier

A final post on the Ombudsman’s report: the story does not end here.

One of the things picked up by the Ombudsman’s investigation was a strong sense of disunity and discord within the W’bool city Council, both among councillors and council officers.

A number of “concerns” about senior management’s handling of misconduct were raised with the Ombudsman during the investigation into the credit cards, but some were unfounded, some lacked substance and some were beyond the scope of this particular investigation.

These concerns may, however, still point to a broader problem that was most recently played out by the sacking of Peter Schneider (which rates a mention).

The Ombudsman, Deborah Glass, writes:

“While we did not find evidence of systemic abuse by Council officers or systemic failings by senior management…we did not deal with every allegation aired publicly or privately, and which continued during the investigation.

“Their prevalence and persistence suggest a disunity within Council which this investigation does not purport to deal with, but for the sake of ratepayers and the community must be addressed.

“Communities rely on their council to practice unified and strong civic leadership.”

No truer words have been spoken and none more timely.

Thankyou for hanging in here: this is a report with a lot to digest and it is worth a full read.

I am now off to have a lie down, but before I do, I just want to say this:

Thankyou to all of the brave souls who have helped to bring the truth to the surface today, despite the denials, excuses and dismissals that go on from enablers, even as we speak.

I remember the day these brave souls came to me about the busted culture at the WCC, because they had nowhere else to go. They had tried the “internal systems” and they got nowhere. They had approached councillors for help, and they got nowhere.

Nobody would listen. But they are listening now.

It has been a long, slow and exhausting road but here we are. Change has come and change is coming.

On. We. Go.

Carol Altmann – The Terrier

Update: The Ombudsman’s report reveals the 10 recommendations from the external auditor that were adopted by the council in March this year.

Why, oh why, were these rules around credit cards not in place in the first place? They seem so straight forward.

Here is the summary of the changes:

1. Provide fraud and corruption control training to all Council staff including reporting of actual or suspected fraud and corruption.

2. Review and update Fraud and Corruption Control Plan and Procedure to include fraud incident reporting protocols to the Council.

3. Establish a criterion to determine the need for a credit card by a staff member.

4. Review and update the existing Corporate Credit Card Procedures, including to stipulate the roles and responsibilities of an authoriser, create list of risk factors for authorisers to be aware and create guidelines on ‘taking face value explanations’ versus ‘appropriate inquiry’.

5. Provide training to authorisers with respect to approval of monthly credit card expenses.

6. Review and update the existing Fraud and Corruption Controls Procedure to include specific trigger points when an independent auditor should be brought in (i.e. the period after unusual/misuse has been identified to when possible fraud is suspected).

7. Implement a process wherein pre-approvals (except CEO) shall be required for expenses such as (but not limited to):
a. Business travel
b. Accommodation
c. Conferences
d. Seminars

8. Implement an approval process which aligns with the practice recommended by the Victorian Auditor General. The Council’s Chief Financial Officer or Director Corporate Strategies, shall approve CEO’s credit card expenditure, and table the full transaction history to the Audit and Risk Committee.

9. Implement ongoing reporting and monitoring processes that fosters continuous improvement of credit card processes (with suggested areas for improvements including implementing Breach reports and Repeat Offenders report)

10. Incorporate a process wherein Statutory Declarations are witnessed by one of the many people authorised to do so (outside the Council).

I have one more update to come.

(You can download the full report here.)

Carol Altmann – The Terrier

More on the Ombudsman’s report – some key names:

Former WCC tourism chief David McMahon: found by the Ombudsman to have clearly misused his credit card and has recommended the council investigate further and consider police action.

The council accepts this recommendation.

Mr McMahon, the report says, has since expressed remorse, regret and shame and admitted he had openly betrayed his manager, Andrew Paton.
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City Growth Manager, Andrew Paton: the report says Mr Paton felt deceived by Mr McMahon, whom he trusted.

Given Mr McMahon adjusted some of his receipts and invoices, Mr Paton “could be excused for some of his errors” in approving this spending and failing to pick up other excessive spending “was due to his own inadvertence”.

The report says Mr Paton was considered by former CEOs Bruce Anson and Peter Schneider to be “of the highest level of professionalism and integrity and that he accepted his mistakes”.

Even so, the report says, once Mr McMahon’s spending was first exposed in November 2018 (after the Cape Schanck function), a “more structured approach to addressing the problem should have been instituted … including revisiting credit card oversight processes”.
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Former CEO Bruce Anson: took Mr McMahon’s explanations at face value and considered a first and final warning to be an appropriate response after Mr McMahon repaid some of his spending in November 2018.

At that time, based on Mr McMahon’s explanations, Mr Anson did not believe Mr McMahon’s conduct was criminal or corrupt and did not report it to IBAC.

Given this was Mr Anson’s belief, the Ombudsman accepts Mr Anson was not legally required to report the matter to IBAC.

He should, however, have reported it to the council’s Internal Auditor for further investigation, the report says.

Mr Anson “acknowledged in retrospect there should have been an independent audit of David McMahon’s credit card transactions in accordance with Council policy.”
—-
Former CEO Peter Schneider: was not aware of Mr McMahon’s credit card misuse – or the first and final warning in Nov 2018 – until inquiries by the media (The Terrier) in mid last year.

Mr Schneider met with Mr McMahon in early July last year and asked if there was anything else he should be aware of.

Mr McMahon said no.

After stories began to appear in The Terrier, Mr Schneider began his own inquiries on 8 July. Mr McMahon resigned on 16 July 2019, having repaid a further $3071.

Mr Schneider referred the matter to IBAC on 15 July, under mandatory notification. The council later hired an external auditor to assess the council’s credit card policies and make changes.

A memorable line from Mr Schneider in the report: “When asked by the investigation what a reasonable meal purchase under Council’s policies would be, Peter Schneider noted that a meal might be a ham and cheese sandwich, not ‘a T-bone steak washed down with a bottle of Grange”.

Amen to that.

The auditor’s 10 recommendations to follow.

Carol Altmann – The Terrier

More on the Ombudsman’s incredible report:

If ever there was an example of how loose the goose was running down at 25 Liebig St, it is this one – the “spend local” idea during the Liebig St upgrade.

A large swathe of the spending on credit cards held by managers other than David McMahon – including City Growth Manager Andrew Paton and former Economic Growth Manager Shaun Miller – is explained away by the council through its “spend local” idea.

According to the Ombudsman’s report, the council had set aside a budget of $170,000 a year for “support local” activities during the Liebig St upgrade.

Under this, “council officers were encouraged to hold work-related meetings at local cafés and restaurants, and to use their Council credit cards to pay for food and coffees”.

A noble cause, perhaps, but this is a remarkably generous eat-and-drink plan that I don’t recall ratepayers ever being told about.

More importantly, as the Ombudsman points out: “No guidance was issued by Council to assist Council officers decide what was an acceptable purchase using Council funds and what was not, other than the directives in the Procurement Policy and the Credit Card Policy.”

No guidance and a $170,000 a year budget: that’s a winning formula.

Mr Paton told the Ombudsman he was mindful of community perceptions and told his team that the “rules” were the meeting had to be business related, and involve another council officer or stakeholder.

(Call me naive, but that sounds like a recipe for pretty much anything goes.)

Here is Mr Paton’s response to the Ombudsman: “… it’s easy to look at a spreadsheet and say, ‘You spent $600 on coffees. How do you justify that?’ with no context of why that meeting occurred and why that expenditure occurred. And that’s a hard one to explain sometimes even to the people who are involved in it …

“I can see how that would look. But in terms of the context of the space we were in and the battle we were in, I’ll use that language … it was a bit of a battle to try and keep the wheels spinning because it was a day-today thing.”

I am not sure how this accounts for the after-hours work drinks on a Friday night at places like the Hairy Goat or the Warrnambool Hotel.

I am also curious as to why the “spend local” was confined to pretty much the same places: Fishtales, The Hairy Goat, Seanchai, Whaler’s, Warrnambool Hotel….

Nobody ever opted for Mack’s Snacks.

As the Ombudsman says, while this “shop local” idea may have been well-intentioned, the approach was “fundamentally unwise” and the public perception could rightly be council staff eating and drinking on the public purse, as opposed to doing “business”.

Again, this report not only reveals what was clearly misuse of a credit card by one person, but what was permissible use of a credit card by others who were simply following the “rules”.

Thankfully those rules have now changed.