Two years after the ACT Integrity Commission began its investigation, and despite an attempt to suppress the release of its report, CIT CEO Leanne Cover has been found guilty of serious and corrupt conduct.

Between 2017 and March 2022, the Canberra Institute of Technology entered into six jargon-ridden and inscrutable contracts with ‘complexity and systems thinker’ Patrick Hollingworth’s Think Garden (‘a transdisciplinary complexity and design lab’) and Redrouge Nominees, for strategic guidance and mentoring, totalling $8.78 million.

Or, rather, Ms Cover did; she singularly failed to notify the CIT Board of the last two contracts, worth some $5.5 million. Those contracts – both Chris Steel, ACT Minister for Skills, and opposition leader Elizabeth Lee argued – did not represent value for money in the slightest.

In June 2022, the Integrity Commission began an investigation – codenamed ‘Operation Luna’ – into allegations of corrupt conduct by Ms Cover and the former CIT Board Chair, Craig Sloan. Had they failed to meet their duty to disclose vital information to the CIT Board and to Mr Steel?

The Integrity Commissioner yesterday presented his Special Report (part one of the investigation) to Joy Burch MLA, Speaker of the Legislative Assembly – delayed for a few days as ‘an interested party’ sought a Supreme Court injunction to prevent its release.

That interested party was Ms Cover, who received a copy of the report in November. Ms Cover resigned last Tuesday, 18 June, the week before the release of the report.

The Commissioner’s summing-up of Ms Cover’s behaviour was damning: she had intentionally concealed information from the Board, misled Minister Steel, breached public trust, and threatened public confidence in the CIT.

“The consequence of her conduct was to give Mr Hollingworth a substantial financial gain at the cost of the Territory,” the Commissioner declared.

No finding of corrupt conduct was found against Mr Sloan, however. True, he failed to “exercise due care and diligence in the performance of his statutory responsibilities” – he did not ensure that a certain letter from Mr Steel expressing his concerns about the contracts came to the Board’s attention, nor did he bring some information to Mr Steel’s own attention – but the Commissioner was not satisfied this was not mistaken judgement, rather than deliberate concealment.

Mr Steel said Ms Cover’s “acts of dishonesty and bad faith” were “bitterly disappointing”.

“A breach of public trust like this is unacceptable,” he said; “and this report sends a strong message to all senior executives in the ACT public service and in statutory authorities that they must uphold a high level of trust, they must comply with obligations, or there could be severe consequences for them potentially through a finding of corruption.”

“This is a very serious finding,” ACT Greens leader Shane Rattenbury said. “A lot of Canberrans hold CIT pretty dear in their heart – we treasure it as an institution – and to know that corrupt conduct has misused community funds is incredibly disappointing.”

There have been some concerns about the length of the Commission’s investigation. However, in its 542-day investigation, the Commission issued 86 summonses and 94 confidentiality notices, downloaded 3 million digital evidence items, and conducted 37 private examinations, to produce 92 hours of recordings and 1,866 pages of transcripts.

The CIT has a new Board – headed by chair Kate Lundy and deputy chair Natalie Howson (both appointed in July 2022) – has sought to improve procurement, financial management, and governance. They have changed financial delegations to ensure that only the Board, not the CEO, can approve procurements for goods and services over $1 million and consultancies over $500,000.

“It’s been really frustrating and disappointing for me as a minister,” Mr Steel said. “This has affected CIT’s reputation, badly affected their finances… This has not resulted in any tangible outcome for students or the economy. But I am positive about CIT’s future because they have undertaken significant reform.”

The contracts

In February 2017, Patrick Hollingworth was keynote speaker at the launch of the CIT’s strategic roadmap, Strategic Compass 2020 – Evolving Together. Five months later, Leanne Cover had signed the first of six contracts with Mr Hollingworth to help execute the 2020 and 2025 Strategic Compass program:

1.) July 2017 to April 2018: $198,000 to “guide the transformation of CIT… coach and mentor for the CEO, the new executive team and the leadership group … [and] assist with the design and delivery of various workshops and events”.

2.) July to September 2018: $151,000 “to guide CIT in it’s [sic] transformation”.

3.) November 2018 to April 2020: $1.2 million for mentoring and educating staff.

4.) April 2020 to December 2021: $1.7 million for “development of structures to analyse CIT services”.

In August 2020, an ABC journalist wrote to the CIT asking for information about its dealings with Mr Hollingworth, the contracts, and staff surveys. The matter might have caused “real world potential reputational risk for the CIT”, the Report stated, but the ABC dropped the story.

On 19 February 2021, however, the minister Chris Steel wrote to CEO chair Craig Sloan, asking how the contracts represented value for money, and how the CIT procured Mr Hollingworth’s services. That letter was not disclosed to the Board until June 2022, when the multi-million-dollar contracts made the news and Mr Steel sent another letter to the Board.

“Ms Cover’s failure to ensure that the letter was disclosed, when Mr Sloan did not do so, was a deliberate or calculated decision to remain silent to avoid, if possible, a reconsideration by the Board of the desirability of retaining Mr Hollingworth’s services,” the Report found.

A fortnight later, on 5 March 2021, Mr Sloan replied to Mr Steel: “I am confident that the procurement processes to engage the service provider were consistent with all policy and practices and that given the enormity of transformation work, the investments in CIA via these contracts represent value for money”.

However, Mr Sloan’s confidence was not grounded in his own knowledge, the Commissioner stated. Although Mr Sloan “implied that his assurance was a personal one and resulted from his own examination of the matter”, he had not examined the process or the documents. “He should have stated that he was relying on what he had been told [by Ms Cover] and the omission to do so was thus misleading with respect to the level of assurance of probity afforded to the Minister.”

Two weeks later, on 17 March 2021, Mr Steel advised Mr Sloan and Ms Cover that the contracts “may not represent community or government expectations”, and that they may not be value for money.

5.) September 2021 to January 2022: $512,000 for work similar to the first two contracts.

Although this went to market as an open tender, the Commissioner suspects that it was written to exclude any bidder but Mr Hollingworth, who was the sole bidder. It was, according to the Report, “an unusual transaction that differed substantially from normal commercial practice” – including a “questionable” 50 per cent payment in advance.

This carried significant financial and reputational risk, the Report asserts, but Ms Cover did not inform the Board of the fifth contract, which was negotiated while the fourth contract was still current.

“This conduct of Ms Cover … amounted to misrepresentation by silence, constituting the intentional deception of the Board,” the Report said.

Mr Hollingworth, asked by the CIT’s Tender Evaluation Team to indicate any innovation his companies could provide, replied:

“A basic tenet of complexity theory is that innovation cannot be predicted or designed ex ante; rather, innovation is an emergent property of the novel recombination of a complex system’s component parts.”

A response that looks like it was spat out by the Postmodern Generator. As the Commissioner observed: “For obvious reasons, this should have sounded a warning.”

In September 2021, Ms Cover and Mr Hollingworth prepared a joint report to the CIT Board, which the Commissioner pointed out was different from the information provided to Mr Steel.

“The asserted substantial problems created by governmental shortcomings, board limitations, deficits in staff skillsets, and significant problems within the Executive … were not then signalled, let alone disclosed… The Minister was instead provided with a very misleading picture of the effectiveness of Mr Hollingworth’s work and the Evolving Together program and, in short, its value for money.”

On 22 December 2021, Mr Steel’s Chief of Staff, Dr Jennifer Rayner, told Ms Cover that the minister was concerned about the CIT engaging with Mr Hollingworth’s companies.

“We didn’t think that further work with him [Mr Hollingworth] was going to meet community expectations and that the minister had expressed that he wasn’t comfortable with them continuing to give work to the same firm all the time,” Dr Rayner later testified.

Ms Cover did not disclose Mr Steel’s doubts to the CIT Board nor to Mr Sloan.

6.) March 2022 to March 2024: $4,999,990 for “continuing, intensifying, and accelerating the transformation efforts of CIT using complexity theory”.

Under this contract – the biggest of all – Mr Hollingworth would “guide the organisation in the application of appropriate tools and approaches, for dealing in complex environments using sciences based on systems of connectivity and complexity, appropriate feedback loops and making visible patterns/dynamics that hinder or enable organisation transitions; and empower the organisation to evolve with the changing environment by being a system that learns, building adaptive capacity, and applying context appropriate responses in dealing with the opportunities and challenges of the future”.

This contract went to market in February 2022, although Ms Cover had sought advice on exempting the procurement from open tender.

Some of the money was paid in advance: $1.7 million was payable on the execution of the contract, and by May 2023 – little over halfway through, within 14 months of a two-year contract – more than 80 per cent would have been paid; 99 per cent four months before its end.

The Commissioner thought that this would have given rise to significant reputational risks and cause public controversy – but once more Ms Cover did not tell the Board that procurement was in market and shortly to close, nor the “unusual size and scope of the procurement, which exceeded by a considerable margin both the length of the engagement and its cost”, nor indeed the fact that the contract was more costly than the first four contracts put together.

“The only plausible reason for this is to avoid the risk of disapproval,” the Commissioner stated.

Likely, the Commissioner surmised, the Board would not have approved of budget allocations, given the CIT’s “parlous financial position”: in debt to the tune of $7 million (annual operating deficit).

Indeed, Board members have since said they would not have approved it, had they known.

“As it stood,” the Report said, “the information invited the Board to understand that this was simply more of the same. Its exceptional character was not mentioned and plainly not appreciated…

“Ms Cover’s dealings concerning the sixth contract alone constituted a gross breach of trust.”

Three months later, the story exploded. On 6 June 2022, opposition leader Elizabeth Lee demanded to know why Canberra taxpayers had paid nearly $9 million for what she described as “an unintelligible diatribe of words”.

“There is very little publicly available information to indicate what services were delivered under these contracts, and there is no transparency about what Canberrans have received for an eye-watering $10,000 per day.”

What Mr Hollingworth was paid to do was a mystery, Ms Lee argued. The contracts she had seen lacked information about personnel (including their qualifications and charge-out rate), milestones, and deliverables.

The next day, 7 June 2022, Mr Steel sent a letter to Mr Sloan raising his concerns about the $4.5 million contract, and demanded whether the procurement processes were above board and the contracts value for money.

“The government flagged concerns that these contracts may not represent efficient use of public funds in line with community expectations,” Mr Steel wrote.

“I am therefore concerned that the CIT has entered into another, significantly larger contract with this provider, following those discussions and advice. I have reviewed the tender documentation and contract for this procurement and am unable to determine the specific work to be delivered through it, based on the use of jargon and an ill-defined statement of requirements.”

A fortnight later, on 22 June 2022, the Integrity Commission announced its decision to investigate.

Political fallout

Opposition leader Elizabeth Lee today criticised Mr Steel for failing to provide adequate oversight, and claimed his lack of action against Ms Cover, despite knowledge of corruption allegations, undermined public confidence.

“Chris Steel has dropped the ball as the minister with oversight over these contracts, and at worst, has been utterly useless and ineffective in bringing scrutiny to what has been done,” Ms Lee said.

Mr Steel explained, however, that his powers were limited: while he has “very broad, high-level, direction-making power” in relation to the CIT, he cannot tell the CIT whom to contract with, or to get involved in procurements.

“Procurements are a matter for the agency; employment is a matter for the statutory authority as well. But what I could do was question the contracts when I became aware of them. That’s exactly what I did.”

Mr Steel said that he and his office had scrutinised the earlier contracts, and warned Ms Cover that it would not meet the ‘pub test’ to have any further contracts with Mr Hollingworth and his companies.

“If the Board had known about those large procurements, and had also known about my concerns, they would not have allowed her to go ahead with the contracts.”

Ms Lee, however, queried Mr Steel’s statement that he had no knowledge of the further contracts, noting that concerned CIT staff had raised the issue with the Canberra Liberals.

“The fact is, Chris Steel only went to the media and went to the Board on 7 June (2022) because it was already hitting the public and raising significant concern,” Ms Lee said.

Ms Cover was stood down in June 2022; she and her interim replacement, Christine Robertson, were each paid a salary, increased to more than $383,000 only last month.

Ms Lee wanted to know why, despite both the Chief Minister and Mr Steel having seven months to consider the report’s “scathing findings”, the minister had allowed Ms Cover to collect her $385,000 salary.

“Canberrans are now out of pocket to the tune of more than $750,000 to pay for a CEO who has now been found to have engaged in serious corruption,” Ms Lee said.

Mr Steel said he had sought advice to recover all public funds.

Mr Steel also asked the Auditor-General in June 2022 to audit the CIT’s contracts. The ACT Government has enacted its recommendations to improve the government procurement act, including setting up a new escalation process that reaches directly to the minister. These changes come into effect on 1 July 2024.

“I want to know as a minister if one of my agencies or statutory authorities is breaching procurement rules, is not addressing risks that have been identified by the Government Procurement Board,” Mr Steel said.

ACT Greens call for more accountability

The ACT Greens said the first finding of corrupt conduct made by the ACT’s Integrity Commission was a victory for transparency, but insisted that Ms Cover must be held accountable and pay the consequences, in order to restore the community’s trust. 

Andrew Braddock MLA, ACT Greens spokesman on democracy, integrity and community engagement, said: “The Greens proposed an Integrity Commission for the ACT at the 2016 election exactly for this reason – to investigate and expose corruption. Now the Commission is up and running, and it’s made a finding of serious corrupt conduct, we must ensure accountability. 

“Resigning from your position should not let you escape consequences for a violation of the ACT Public Service code of conduct or even the Financial Management Act. 

“A finding of serious corrupt conduct has been made. Ms Cover can and should be held accountable for her actions. 

“A good start could be recovering those parts of her salary that she was paid while under investigation.

“The ACT Integrity Commissions Special Report – Operation Luna (part one) demonstrates the value of a statutory independent office to investigate and report on integrity matters.

“Whilst understanding there will be more to come from the Integrity Commissioner on this matter, the Greens welcome this first detailed report being publicly released.”

Elizabeth Lee was not impressed, noting that the ACT Greens had voted with ACT Labor earlier this week to oppose her motion that the Legislative Assembly investigate Ms Cover’s resignation, her severance payment, and changing the Remuneration Tribunal Act 1995 to postpone remuneration if the Integrity Commission was investigating the incumbent.

“The ACT Greens really have no shame,” Ms Lee said. “They’re as gutless as they are hypocritical. Every one of them blocked every move by the Canberra Liberals about the outrageous situation of the former CEO of CIT receiving her full salary plus several pay rises over the last two years.

“Just this week, every single one of the ACT Greens voted with ACT Labor against my motion for an inquiry on legislative changes so this shameful situation cannot continue.

“Over the last two years, the ACT Greens had numerous opportunities to put a stop to this outrageous waste of ACT taxpayer money. They failed at every hurdle.

“Make no mistake, Canberra. The ACT Greens will vote for their political interests above the community every time.”