CPM REVIEWS

REPORT

TO:

Anthony Lean A/Chief Executive

Office of Finance and Services NSW Department of Finance, Services and Innovation

CONCERNING:

Review o0f Employment and Procurement Decisions for WIRO

Phase 3

PREPARED BY:

Jann Gardner Senior Reviewer, CPM Reviews Pty Ltd

Quality Assurance by Jeff Lamond

Executive Director, CPM Reviews Pty Ltd

Submitted 14 August 2015

STAFF-IN-CONFIDENCE

PrO\ iding Reviews of Det rsiom ,111d All1ons, \Vorkplace ln\eslrgalion<>

anrl Rclaterl Stralcgi<. Ach ice lo lhe Public Sector and Other Organisation~

CPM Rev1ews Pty Ltd • ABN 93151808 374 · Address: 7 Lawry Place, Macquarie ACT 2614 · PO Box 42, Jamison ACT 2614

Phone: 02 6175 4500 • Fax: 02 6175 4555 · Email: enquirles@'cpmrevlews.com.au • Website: www.cpmrevlews.com.au

1. Introduction

CPM Reviews was instructed by Department of Finance Services and Innovation to investigate the decisions to appoint employees and to engage consultants/contractors to WorkCover Independent Review Officer (WIRO).

The investigation was divided into 3 phases. I was instructed to conduct Phase 1 and Phase 3 of the investigation.

Phase 1

Phase 1 involved an investigation of the appointment of Mr Paul Gregory, Mr Phil Jed lin and Ms Camilla Staff to permanent or temporary roles/positions and the engagement of Mr David Effeney, Mr Conrad Staff and Resolve Software as consultants/contractors to WIRO.

Phase 2

Phase 2 involved a desktop review of all other employment and procurement engagements at WIRO.

Phase 3

Phase 3 involved an investigation of the engagement of Mr Anthony Johnston, Ms Maria McNamara, Mr John Pinnock, Mr Chris Tait, Ms Roshana May, and Ms Tamera McManis to permanent or temporary roles/positions or as consultants/contractors to WIRO.

The Phase 3 report should be read in conjunction with the Phase 1 and 2 reports.

2. Terms of Reference

Employment decisions

In relation to the employment decisions I was asked to review the decisions to determine:

1. Were proper processes, as set out in legislation and NSW Government employment rules and guidelines, followed?

2. Specifically, were rules or guidelines for advertising positions, merit based selection, , disclosure of conflicts of interest (including personal relationships) and disclosure of

criminal convictions complied with? 3. Were proper processes followed to determine remuneration and entitlements for roles?

Contractors and consultants

In relation to consultants/contractors I was asked to review the decisions to determine:

1. Were proper procurement processes, as set out in legislation and NSW Government procurement policies, scheme rules and guidelines, followed?

2. Specifically, were rules concerning disclosure of conflicts of interest (including personal relationships) complied with?

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3. Does each engagement demonstrate value for money?

3. Background

The Background is more fully set out in the Phase 1 and 2 reports.

By way of summary, in 2012 the NSW Government introduced reforms to the Workers Compensation Scheme, which came into force on 27 June 2012. Those reforms established a WorkCover Independent Review Officer. The WIRO is a statutory officer who reports directly to the Minister. The WIRO is not a public servant and has no delegation authority.

The Safety Return to Work and Services Division (SRWSD - formerly WorkCover Authority) was responsible for funding the remuneration of the WIRO, the WIRO's staff and for costs incurred in connection with the exercise of the functions of the WIRO. The WIRO's staff were employed by SRWSD and are public servants.

A number of changes occurred to the title of the SRWSD, its reporting lines, and powers, and to the Acts relating to the employees, between 2012 and the present date and they are detailed in Annexure A. In this report, I have tried to use the title that was applicable at different relevant dates.

In addition, in about October 2014, it was decided that the shared services .functions provided by SRWS to WIRO were to be provided by Office of Finance and Services (OFS). The transition from SRWS to OFS as the shared services provider for WIRO is still occurring.

Mr Garling was appointed as the WIRO by Minister Pearce for a period of 5 years. He signed a Notification of Formal Acceptance on 3 September 2012 in which, amongst other things, he confirmed that he had read the Code of Conduct and understood that he must comply with all SRWSD Policies, Procedures and Delegations of Authority. He commenced in the role on 3 September 2012.

At the time Mr Garling commenced in the role, it was unclear as to how the WIRO functions would be discharged, the level of assistance the WIRO would require and the timing of the provision of that support to meet the needs of the office/function.

Mr Garling commenced discussions with SRWSD to plan for the operation of the WIRO office, including the preparation of an Organisation Chart. Mr Garling also contacted a number of people to discuss the operation of the office, and had a number of people contact him offering advice and recommendations.

SRWSD seconded two staff members, an Executive Officer, Linda Wilson, and a Policy Advisor, Brooke Benson, to assist Mr Garling set up the office.

On about 26 September 2012, Mr Garling was advised by the Minister, that WIRO would take on the Independent Legal Assistance and Review Service (ILARS) function. Conducting the ILARS function meant that WIRO had to be operational from 1 October 2012. Mr Garling had 2 working days' notice of this.

Mr Garling was of the view that the SRWSD recruitment processes would not allow the timely recruitment of staff. SRWSD suggested WIRO utilise Smalls Recruiting Agency, and staff were

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engaged under Contract 100 -Temporary Staff Contingent Workforce. Both Ms Newman, CEO of SRWSD, and Mr Barnier, Chief Human Resource Officer (CHRO) of SRWSD, indicated in their transcripts that they told Mr Garling that the engagement of staff as agency temps was a short term solution in order to enable the office to function while it was still being set up.

4. Process of Phase 3 Investigation

I reviewed the documents held by SRWS and WIRO in relation to each of the staff and contractors I was appointed to investigate.

I conducted further interviews with Mr Garling and Mr Barnier and interviewed Ms Hancock, Acting CFO, SRWS. Ms Newman had provided limited information in relation to some of these staff members in her statement provided in Phase 1 of the investigation and I also relied on those comments. I relied on Mr Garling and Mr Barnier's interviews conducted in Phase 1.

All those interviewed, with the exception of Mr Barnier, reviewed and approved their transcripts. I contacted Mr Barnier on several occasions but he has not been in a position to return his transcripts to me. The transcript is a verbatim record and the recording is available. In the absence of arw comment from him I have relied on the evidence that he provided at the time of interview.

I formed the view that all interviewees attempted to recall events and conversations to the best of their ability.

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5.Appointments Mr John Pinnock

Interview

Mr Garling indicated that in the first few weeks he was in the job, someone contacted him and suggested that Mr Pinnock might be useful in setting up the office. Mr Garling could not recall who had made that recommendation. Mr Pinnock had previously been the Deputy Ombudsman and the Telecommunications Industry Ombudsman.

Initially, before WIRO was asked to manage the I LARS function, Mr Garling viewed the WIRO role as a type of Ombudsman role. Mr Garling spoke to Mr Pinnock, and having determined he may be suitable, spoke to Ms Newman about him.· He understood Ms Newman had a discussion within WorkCover following which Mr Garling believed that Mr Barnier indicated to him that he should send Mr Pinnock to Smalls, the preferred recruitment agency and smalls would employ Mr Pinnock on a temporary basis. Smalls would then provide Mr Pinnock's services to SRWSD.

Mr Garling said he discussed remuneration with WorkCover, who agreed with the amount, and he discussed that with Mr Pinnock. Mr Pinnock then turned up at work on 17 September 2012 and someone from WorkCover came across to the WIRO office, signed him up via Smalls and conducted his induction. Mr Garling indicated there was no job description for Mr Pinnock's role as he didn't know precisely what everyone would be doing in the early days of establishing the office.

Mr Garling said Mr Pinnock was of great help in setting up the phone systems and the call centres, due to his knowledge of the telecommunications systems.

Mr Garling indicated he subsequently discovered that Mr Pinnock attended the same school as he did, but Mr Pinnock was much younger and he didn't know him at school or subsequently.

A role as Director Complaints came up in November 2012 and Mr Pinnock applied for that position. The recruitment was conducted in the approved manner. Mr Garling was on the selection panel and he thought a female from WorkCover was on the panel with him. Mr Garling recalled that the process was delayed as a result of the Christmas period.

Mr Pinnock was successful in obtaining the position, and Mr Garling said Mr Pinnock's remuneration was set by WorkCover. His memory was that Mr Pinnock asked for a higher salary and that was granted.

Other Evidence

Mr Barnier recalled that Mr Garling sent him an email with John Pinnock's resume prior to Mr Pinnock starting with WIRO. Mr Barnier was of the view that Mr Garling had become aware there was a process, and that if he notified Recruitment, they could help him obtain the staff he required.

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Mr Barnier said that Mr Pinnock came on initially as a contractor or an agency temp, and then became a permanent member of staff through a merit selection process.

Ms Newman recalled receiving Mr Pinnock's CV from Mr Garling, prior to the WIRO office being opened. Based on the CV, she thought he would be an appropriate staff member.

Ms Hancock thought Mr Pinnock was brought on board by Mr Garling, and thought she and others only found out about his engagement when some form of payment was required.

Documents

A Chief Executive Officer Submission dated 13 September 2012 was prepared, seeking approval for the cost of premises at 1 Oxford St Sydney, and for the creation of the roles of Project Director for 6 months, to be filled by Brooke Benson; Senior Executive Assistant, to be filled by Linda Wilson until the position could be advertised; an Executive Officer and to engage John Pinnock as a Contractor for 3 months commencing on 17 September 2012. Mr Pinnock's CV was attached to the Submission which was approved by Julie Newman, possibly on 13 September 2012, although this is not entirely clear.

A screen print out from Procurement shows that Mr Pinnock's engagement as agency staff was created and approved· on 11 October 2012, for engagement from 17 September 2012 to 17 December 2012.

On 13 November 2012, the process for obtaining a permanent employee as Director Complaints was commenced by SRWSD Recruitment on Taleo, the computer based recruitment system. The position had been approved under the WIRO structure and was advertised on 15 November 2012.

Mr Garling and Ms Anderson, from the Dust Diseases Board, comprised the Selection Panel. Both indicated they did not have a conflict of interest.

The Panel reviewed 21 applicants, shortlisted 3 applicants and interviewed two as one withdrew on the morning of the interviews.

Mr Pinnock was the recommended candidate while the other candidate was recommended for the Eligibility List.

Reference checks were carried out by Mr Garling. One was with a friend and the Recruitment Officer raised a concern about this and suggested a third referee be contacted, particularly from a manager, due to the level of the position. This was reviewed by the Manager of Recruitment, Lyn Doherty, who noted the issue but she also noted that the other reference from a peer was very good. Ms Doherty also indicated the documents supported the merit ranking which was recommended by the panel.

The appointment was approved by the CEO, CHRO and Recruitment Manager, SRWSD, on 4 March 2013. A higher salary was requested and this was approved on 6 March 2012 by Mr Barnier. The higher salary was within the SES2 range.

While this process was occurring it would appear that Mr Pinnock's initial engagement period expired without an extension being sought. An extension was sought on 11 January 2013 and approved by Mr Lusk, Acting CFO, SRWSD, on 15 January 2013. Based on this approval, a C100 Order Form dated 21 January 2013 provided for a further contract from 18 December 2012 to 28

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February 2013. That period also expired before Mr Pinnock's appointment was permanent and no extension was sought. The CHRO approved payment for the period from 1·9 March 2013 following Mr Pinnock's official end date as an agency temp.

Comment

As indicated in the previous report, in recognition of the extremely short time frame and the anticipated difficulties in securing staff to ensure that the office was operational on the required date, Ms Newman and Mr Barnier agreed for the initial staff members at WIRO to be sourced as agency temps through a pre-qualified· recruitment agency, Smalls Recruiting.

Mr Pinnock was not known to Mr Garling prior to the first discussion with him in September 2012. The process of Mr Pinnock's initial engagement was approved by both the CEO and the CHRO at SWRSD prior to him commencing work, although the Procurement documents were not completed ·for several weeks. Mr Pinnock's original contractual term expired without an extension being sought. Mr Pinnock continued working, so the approval needed to be backdated. That contract period also expired and Mr Pinnock continued working. No formal approval appears to have been sought for that third contract period and Mr Pinnock was simply paid for that period once he ceased his temporary status.

The permanent position description for the role Mr Pinnock was occupying was developed and advertised within 6 weeks of the office opening. This time period was in accordance with the understanding of the CEO and CHRO that the initial appointments were only very short term to enable the establishment of the office. The Recruitment followed the defined SRWSD policy and process, although the Selection Panel's comments are very brief.

I am of the opinion that Mr Pinnock was engaged with the approval of the CEO, SRWSD, although the paperwork took some weeks to catch up. The extensions to Mr Pinnock's contract did not follow the approved process. Extensions were sought after the contract term had expired, in relation to the first extension, and not at all in relation to the second extension. These two contract periods expired while the formal appointment process was being conducted. That process had been delayed due to the Christmas period, resulting in a longer time to approval than had been expected.

In relation to the permanent appointment, I am of the opinion that all processes and procedures were followed for the appointment of Mr Pinnock and the necessary approvals sought ·and provided. Mr Pinnock's salary and conditions were determined by SRWSD and were within the appropriate range for the public service grade relevant to the position, of SES2.

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Mr Anthony Johnston

Interview

Mr Garling indicated that Mr Pinnock had determined that Resolve Software was the most suitable software for use in managing complaints by the WI.RO office. Mr Garling indicated that SRWSD said it would take 12-18 months for them to install the software. He needed it immediately, so he had contacted Anthony Johnston.

Mr Johnston's partner worked in Minister Pearce's office with Mr Garling's wife. Mr Garling had met Mr Johnston socially and was aware he worked in IT. Mr Garling contacted Mr Johnston, to determine whether he would be interested in assisting him, or whether Mr Johnston knew of someone who could assist. Mr Garling said Mr Johnston indicated he would be interested in the work, and broke a contract to start at the WIRO office. Mr Johnston's role was to get Resolve installed and up and running which he did within 12 weeks, and then to customise it to WIRO's needs.

Mr Garling said Mr Johnston was engaged via Smalls Recruiting.

I asked Mr Garling whether he could recall a fuss about Mr Johnston not being paid.

Mr Garling said: "There was a fuss about them not being paid two weeks after Anthony Johnston turned up and that was due to a failure in the processing of their pay. I wouldn't call that "fuss" but certainly we had to follow through with WorkCover as to how the payment was being processed because that was the first of their payments I presume and there was some delay in it. We followed it through, said "what's the delay" and it was all explained and fixed and got resolved. It was nothing to do with us. It was all in WorkCover." (p13, Phase 3 transcript)

I put it to Mr Garling that SRWSD were not aware of Mr Johnston being engaged.

Mr Garling denied this and indicated he had prepared a Submission for Mr Johnston's engagement which he provided to Ms Newman. He said that no one could get an access pass to the building or get an email login or a telephone extension without WorkCover setting it up.

Mr Garling said Mr Johnston continued to work at WIRO until Ms Newman terminated his employment as a result of pressure from the media in August 2013.

Other Evidence

Mr Barnier said he received a phone call from a Policy Officer in Minister Pearce's office on 19 October 2012 when he was driving home from an exam. Mr Barnier could not recall the Policy Officer's name. He was told the Minister was concerned that people in the WJRO office were not being paid and that he had to be in the Minister's office at 8pm that night with an explanation. Mr Barnier returned to the office, made some phone calls and ascertained the people being referred to were Anthony Johnston and Maria McNamara.

Mr Barnier said he spoke toMs Newman and Ms Hancock and neither of them were aware that Mr Johnston or Ms McNamara had been engaged at all or on what basis. Between the three of them they arranged for those staff members to be paid and Mr Barnier contacted the Policy Officer, to

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explain what steps they had taken. He was then told that he need not attend the Minister's office.

Ms Newman's evidence was consistent with Mr Barnier's version.

Ms Hancock indicated she also got a call regarding the lack of payment made to Mr Johnston and Ms McNamara, and was told that if she did not get them paid she needed to explain to the Minister why this had not happened. She could not recall who she had spoken to, but thought it was someone internal to SRWSD. She then spoke to Mr Barnier, and ascertained he had also had a call and was on his way back to the office. She was of the view that whether or not Mr Johnston and Ms McNamara had been brought in through the proper process, they had provided a service and she felt SRWSD had a responsibility to remunerate them for the work they had done.

Ms Newman confirmed that as soon as Minister Pearce was removed from office, she terminated Mr Johnston's employment. She believed Mr Johnston's employment was a clear conflict of interest as his partner was Minister Pearce's Chief of Staff. She was also concerned about the extent of media coverage of this issue.

Documents

Mr Garling sent me a Proposal to Retain the Services of Anthony Johnston for WIRO as an IT Consultant dated 18 October 2012. This detailed WIRO's IT requirements which he wanted to be operative ideally by 15 December 2012, but no later than 31 January 2013. He proposed a monthly contract with a review at the end of each month to determine forward requirements. He indicated he had already agreed a fee of $1,200 per day for Mr Johnston, regardless of the hours worked.

Ms Hancock accessed security and IT records and ascertained that Mr Johnston was provided with a security card on 9 October 2012 which was approved by Mr Garling. Mr Johnston was provided with computer access on 8 October 2012 which was approved by SRWSD Chief Information Officer, Fred Lusk.

The available Procurement documents show that Mr Johnston was engaged under a C100 contract as Temporary Staff Contingent Workforce initially from 23 October 2012 until 22 February 2013 through Greythorn Smalls (previously Smalls) recruitment agency. The Requisition was raised on 12 November 2012 and it was approved by Ms Hancock on 14 November 2012.

Mr Garling signed the official Order Form as the WorkCover NSW Delegate on 19 November 2012.

After an alert from Procurement, a Requisition was raised on 3 April, 2013, for an extension of Mr Johnston's contract for the period 25 February 2013 to 8 October 2013. Mr Garling signed the official Order Form as the WorkCover NSW Delegate, but the signature is not dated. It appears to be an electronic signature. Mr Johnston's position was described as Director IT.

The Order from Smalls is dated 8 April 2013. An email dated 17 April 2013 from Janelle Honor, Assistant Recruitment Officer, SRWSD, to Linda Wilson at WIRO, indicates approval has been granted for Mr Johnston's engagement from 8 October 2012 to 8 October 2013.

An email from Mr Garling toMs Newman dated 12 August 2013 confirms that Mr Garling told Mr Johnston of Ms Newman's decision to terminate his contract.

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Comment

Ms Newman, Mr Barnier and Ms Hancock all deny they were aware of Mr Johnston's engagement until Mr Barnier received a call from the Minister's office late in the afternoon on 19 October 2012. Ms Newman and Ms Hancock were also contacted that afternoon and they indicate that was the first they knew of Mr Johnston's engagement.

Mr Garling denies that SRWSD was not aware of Mr Johnston's engagement. In support of his position, he relies on a Proposal he prepared for Mr Johnston's engagement and the fact that Mr Johnston had access to the building and the computer system, which had to be supplied by SRWSD.

The records suggest that Mr Johnston commenced work on Monday 8 October 2012. The Proposal for Mr Johnston's services was only completed by Mr Garling on 18 October 2012, the day prior to the phone call from the Minister's office regarding non-payment of Mr Johnston. At that time, even on Mr Garling's own evidence, Mr Johnston had been working for 2 weeks. There is no documentary evidence to indicate what Mr Garling did with this proposal. Ms Newman no longer has access to her emails and was unable to confirm whether it had been sent to her.

In relation to the access issue, it appears that Mr Johnston's access to the building via a security card was authorised by Mr Garling. However, computer access was authorised by SRWSD CIO.

While the SRWSD CIO, and possibly others within SRWSD, may have known that Mr Johnston had commenced work, such an engagement required the approval of the CEO and/or CHRO, and the CFO. There are no available documents to indicate this approval had been provided prior to Mr Johnston being engaged. It would also appear from Mr Garling's Proposal that he agreed on a contract payment with Mr Johnston without reference to SRWSD.

While this engagement occurred in a period in which the staff had to be commenced quickly, Mr Garling had obtained the services of Mr Pinnock prior to this and had sought and received formal approval from the CEO for that engagement. He had also engaged Mr Gregory who was brought on board from 2 October 2012 via Smalls Recruiting, with the CHRO's approval. Mr Garling had therefore been through a modified but approved process in September 2012 for other staff.

I am therefore of the opinion that the appropriate process and procedures were not followed for the initial engagement of Mr Johnston.

Mr Garling did not declare a conflict of interest, but the Procurement Process does not explicitly require such a disclosure.

Further there was no opportunity for SRWSD to assess whethe-r the contract offered value for money as Mr Garling had agreed on a daily rate prior to preparing his Proposal for Mr Johnston's engagement.

The extension to Mr Johnston's contract from February 2013 also did not follow the appropriate process as Mr Johnston continued working beyond the contract expiry date. An extension was sought only after an alert by Procurement that the contract needed to be extended. As noted, Mr Garling signed the official Order Form as the WorkCover NSW Delegate. It is not clear that he had authority to do this.

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Ms Maria McNamara

Maria McNamara is a marketing, communications and business development expert who worked for many years in the marketing departments of a number of legal firms.

In October 2012 she was appointed as the Interim Marketing Director at WIRO until October 2013.

Interview

Mr Garling indicated he did not know Ms McNamara prior to her commencing work at WIRO. She had been recommended to him by someone who rang and said she would be a big help to him in setting up the office. He could not remember who had made the recommendation. Ms McNamara put together a program for establishing the office, setting up a website and dealing with the communications and policies. Mr Garling thought this looked good so put a proposal in to WorkCover which they approved. He thought she had come in via Smalls Recruiting but did not have a lot to do with the engagement process as he says that was handled by WorkCover.

Mr Garling said Ms McNamara completed some of the required work, then left to do another project.

Mr Garling was adamant that SWRSD knew of the appointment of Ms McNamara prior to her commencing.

Other Evidence

Mr Barnier said he did not know Ms McNamara had been engaged until he received the phone call from the Minister's office on 19 October 2012 to ask why Mr Johnston and Ms McNamara had not been paid.

Ms Newman and Ms Hancock both confirm that they also did not know of Ms McNamara being engaged until this phone call was received. Ms Newman believes she was able to authorise payment of Ms McNamara that evening, as she still had staff in the office, and Ms McNamara had submitted an invoice, allowing Ms Hancock to approve payment.

Subsequently, Mr Barnier says that a meeting was organised on 23 October 2012 between himself, Ms Hancock, Mr Garling and a person he noted asS Marriott from the Minister's Office to discuss the complaints of 19 October 2012 and to outline recruitment and contractor governance for the future.

Mr Barnier thought Ms McNamara had an ABN and was paid as a consultant, while Ms Hancock believed Ms McNamara was initially a contractor but became a consultant at a later point.

Ms Newman indicated that when she terminated Mr Johnston's employment, she also requested that Ms McNamara be engaged as a consultant through her business. Ms Newman thought that Ms McNamara should be placed on a proper procurement contract, and not remain as an agency temp, as she was providing professional services.

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Documents

Mr Garling sent me a document headed Scope of Works by Marea MacNamara (sic) for the WIRO dated 18 October 2012. This indicated Ms McNamara was to establish the communication and stakeholder management program and set out a list of tasks she would be required to complete. He stated that the program would involve an initial two month stage, at which time a decision would be made whether work would continue on the implementation of the stakeholder management program over the following 6 months. The document indicates that Mr Garling understood that Ms McNamara had provided services to other government entities and her services are provided at a cost of $1, 500 per day.

A tax invoice dated 17 October 2012 and an accompanying timesheet submitted by Ms McNamara, in the name of her company, Portal Consulting Services Pty Ltd, indicate she worked 3.5 days in the week commencing 8 October 2012 and 2.5 days in the week commencing 15 October 2012. She claimed a daily rate of $1,500.00 plus GST.

Ms Hancock accessed security and IT records and ascertained that Ms McNamara was provided with a security card on 9 October 2012 which was approved by Mr Garling. Ms McNamara was provided with computer access on 8 October 2012. The request was logged by Linda Wilson and actio ned by IT.

Procurement documents indicate that a requisition for Maria McNamara was raised on 12 November 2012 to cover the period from 22 October 2012 to 22 February 2013. It was approved by Ms Hancock.

After an alert from Procurement to Recruitment, a further requisition was raised on 3 April 2013 to cover the period from 25 February 2013 to 8 October 2013. At that time Ms McNamara's position title changed from Communications and Stakeholder Manager to Director Communications.

Notes from Procurement indicate that Mr Garling insisted Ms McNamara continue to be engaged for continuity. This would appear to have occurred around the time that Mr Johnston's engagement was terminated. As a result, Procurement drafted an agreement between SRWSD and Portal Consulting, Ms McNamara's business, following approval provided by CHRO.

This agreement operated between 28 August and 1 October 2013. It was then varied to extend to 30 November 2013. Procurement indicated that no competitive process or assessment of services occurred.

Comment

Ms Newman, Mr Barnier and Ms Hancock all deny they were aware of Ms McNamara's engagement until Mr Barnier received a call from the Minister's office late in the afternoon on 19 October 2012. Ms Newman and Ms Hancock were also contacted that afternoon and they indicate that was the first they knew of Ms McNamara's engagement.

Mr Garling denies that SRWSD was not aware of Ms McNamara's engagement. In support of his position, he relies on a Proposal he prepared for Ms McNamara's engagement and the fact that Ms McNamara had access to the building and the computer system, which had to be supplied by SRWSD.

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The invoice submitted by Ms McNamara and the access records suggest that Ms McNamara commenced work on Monday 8 October 2012. The Proposal for Ms McNamara's services was only completed by Mr Garling on 18 October 2012, the day prior to the phone call from the Minister's office regarding non-payment of Ms McNamara. At that time, Ms McNamara had already started work.

There is no documentary evidence to indicate what Mr Garling did with this Proposal. Ms Newman no longer has access to her emails and was unable to confirm whether it had been sent to her.

In relation to the access issue, it appears that Ms McNamara's access to the building via a security card was authorised by Mr Garling. However, computer access was authorised by SRWSD IT.

While the SRWSD CIO, and possibly others within SRWSD, may have known that Ms McNamara had commenced work, such an engagement required the approval of the CEO and/or CHRO, and the CJ;O. There are no available documents to indicate this approval had been provided prior to Ms McNamara being engaged.

While this engagement occurred in a period in which the staff had to be commenced quickly, Mr Garling had obtained the services of Mr Pinnock prior to this and had sought and received formal approval from the CEO for that engagement. He had also engaged Mr Gregory who commenced work on 2 October 2012 via Smalls recruiting, with the CHRO's approval. Mr Garling had therefore been through a modified but approved process in September 2012 for other staff.

I am therefore of the opinion that the appropriate process and procedures were not followed for the initial engagement of Ms McNamara.

Further Mr Garling stated that he understood Ms McNamara had performed work for other government entities and her rate was $1,500 per day. On the evidence available to me in this investigation it is not clear whether he had independently confirmed this. As Ms McNamara had already started work before those with approval authority were aware of this, there was no opportunity for SRWSD to assess whether the contract offered value for money.

On the evidence available to this investigation Mr Garling did not know Ms McNamara prior to her initial engagement so there was no conflict of interest to be disclosed.

The extension toMs McNamara's contract from February 2013 also did not follow the appropriate process as Ms McNamara continued working beyond the contract expiry date. An extension was sought only after an alert by Procurement that the contract needed to be extended.

While no competitive tender occurred in relation to the contract Ms McNamara's business entered with SRWSD in August 2013, engagement by contract occurred at the CEO's direction, so impliedly had her approval.

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Ms Roshana May

Roshana May was a partner at Slater and Gordon, solicitors, and practised in the personal injury field.

She was the NSW Law Society representative on the Workers Compensation Insurance Legal Stakeholders Group, a member of the I LARS Panel and a member of the Workers Compensation Commission Users Group.

In July 2014, she ceased her involvement with Slater and Gordon and commenced as the Director of the Parkes Project in December 2014. For a fuller discussion of the Parkes Project, see the Phase 1 report relating to Conrad Staff.

Interview

Mr Garling decided to institute an Inquiry with all the stakeholders to assist the Minister with the Workers Compensation amendments he had foreshadowed in June 2014.

He put forward a business case to the Office of Finance and Services, and the CEO indicated he would neither approve nor disapprove it.

Mr Garling said he then went to the Minister and was told that as he was an independent officer, he was entitled to undertake this Inquiry, and it was not for the Minister to approve it. Mr Garling said the Minister wanted to be kept informed and for the identity of the Chair and the Director to be discussed with him. He said he told the Minister he was appointing Ms May as the Project Director and Mr Conrad Staff as the Chair.

Mr Garling said that after he had the meeting with the Minister, the CEO approved the appointments of Ms May and Mr Staff.

Mr Garling called the Inquiry the Parkes Project.

Mr Garling did not know Ms May prior to becoming the WIRO. In that role, he met her in her capacity as a member of the stakeholders group and a member of Committees at the Law Society, which he addressed on occasion in his statutory role. Ms May left Slater and Gordon and Mr Garling approached her to determine whether she would be interested in assisting with the Parkes Project. He said she was an acknowledged expert in her field and was available.

Mr Garling arranged for a contract to be prepared for Ms May which he thought went through Procurement or OFS and was approved by John Hubby, CEO, on 11 December 2014.

Mr Garling anticipated the report from the Parkes Project would have been finalised by 30 June 2015. However, he indicated a further 6 weeks was required for the Project to be completed.·

After discussions with a number of people within OFS stalled, Mr Garling prepared a request for extension of that contract by letter to Mr Hubby, Acting CEO, OFS, dated 17 July 2015. The extension was to enable Ms May to complete the Parkes Project and also to assist with any other Inquiries that were potentially being undertaken in the next 12 months.

He has not been able to obtain that extension at this stage.

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Other Evidence

Ms Newman indicated that if Mr Garling had the support of government to commence an inquiry, then inherent in that approval would be the ability to appoint the appropriate people.

Documents

Records from Procurement refer to a quote dated 24 November 2014, but it was not available to me.

Ms May entered into an agreement with WorkCover Independent Review Officer in its own capacity, for and on behalf of SRWS, for the provision of defined services for 3 days per week at a rate of $1,375.00 per day. The Agreement commenced on 1 December 2014 and concluded on 30 June 2015. It was signed by Mr Garling and Ms May.

An email from Fiona Huntley, the Team Leader, Purchasing for SRWS, suggests that this contract was approved by Kirsten Watson, the Deputy Director Corporate Services OFS. Mr Garling indicated Ms Watson was acting for Mr Hubby at that time.

An email trail shows that Mr Garling is currently having trouble extending Ms May's contract. There is no evidence available to this investigation that states the reason for the delay in approval of that contract.

Comment

Ms May's appointment would not appear to fit into any of the SRWS or OFS processes as she was a direct appointment by WIRO apparently with the Minister's knowledge. It was not a merit appointment, but it is not clear that it had to be.

A quote appears to have been submitted prior to the commencement of Ms May's engagement and the contract appears to have been drawn up by SWRSD.

Ms May was known to Mr Garling at the time he entered the contract with her, but only due to his role as WIRO. There is therefore no conflict of interest which needed to be declared.

Ms May's legal experience and knowledge and her involvement in the sector appears to be appropriate for the position and Mr Garling had taken those skills and experience into account in taking the decision to recommend the appointment of Ms May.

The rate paid to Ms May was not market tested and it is not clear on what basis it was arrived at. I am therefore unable to assess whether it offered value for money.

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Mr Chris Tait

During the course of Phase 1 I interviewed Mr Garling. He told me on the day prior to our interview he had been contacted by a journalist at The Daily Telegraph regarding Mr Chris Tait.

Two days later, an article appeared in The Daily Telegraph indicating Mr Garling had supplied a job to Mr Tait, who was described as "an acquaintance from the Riverview Old Boys Club."

Interview

Mr Garling indicated he occasionally manned the BBQ at Riverview school Rugby games and occasionally Mr Tait was also manning the BBQ at the same time. They had had general conversations on the occasions they were doing this.

Mr Garling said that the WIRO office was operating without any policies or procedures and this · was causing difficulty when new staff arrived. He determined the office needed to have the

policies and procedures in written form as well as manuals prepared.

From his discussions with Mr Tait, regarding his office and its electronic systems, Mr Tait indicated he could help with documenting the policies.

Mr Garling invited him to put in a proposal.

Mr Garling said he thought this was then submitted through Procurement and Mr Tait came on board for a short time for that specific project.

Due to the short term nature of the project, and the specific skills it required, he believed this was exempt from a wider tender.

He recalled that Mr Tait was engaged for a few months only.

Other Evidence

Mr Barnier and Ms Hancock did not have any specific recollection of Mr Tait.

Documents

Documents show a Requisition was raised on 20 June 2013 for Mr Tait's engagement to perform a Business Review of WIRO Operations from 11 June 2013 to 30 August 2013. This was approved by Ms Hancock on 18 July 2013. Invoices received from Mr Tait were approved by Ms Hancock on 30 September 2013 and by Mr Lusk, Acting CFO, SRWSD, on 2 January 2014.

Mr Tait was paid $1,000.00 per day.

Comment

This appointment does not appear to have followed the appropriate processes and procedures.

Mr Garling appears to have identified a need for the policies and procedures of WIRO to be documented, and approached Mr Tait to provide this service. No competitive tender was conducted.

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There was no apparent urgency for this service, and it is not highly specialised, so there is therefore no apparent reason why the usual procurement process could not have been followed. This would have resulted in more transparency around the engagement and the rate at which Mr Tait was paid could have been market tested.

Further, the engagement appears to have been approved after Mr Tait had commenced work. The requisition was raised on 20 June 2013, but Mr Tait had commenced work on 11 June 2013, and the approval had to be backdated.

Mr Tait was a direct contractor so there was no requirement in the process for Mr Garling to declare a conflict of interest. In any event, it is likely that this relationship would not have fallen within the conflict of interest disclosure requirement. The Code of Conduct requires disclosure of any interest which a staff member, or any member of their family, or any close friends and relationships, hold or are offered, which may be perceived to conflict with their obligations of confidentiality and probity. Mr Tait was only an acquaintance with whom Mr Garling had very limited contact, so it is unlikely he would fall within this definition.

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/Ills Tamera McManis

During the earlier investigations, information came to hand to suggest that Mr Garling had a connection toMs McManis, a current WIRO employee, through the school Mr Garling and his sons attended.

Interview

Mr Garling indicated that /Ills McManis applied for a position as an I LARS lawyer, went through the merit process and obtained employment.

Mr Garling indicated that in May 2014 he had to fill eight legal positions. He said it was a significant process. Mr Garling chaired the Selection panel and he was assisted by Ms Shauna Jarrett, a senior executive at University of Sydney, with Mr Paul Gregory from WIRO as an Observer.

Mr Garling indicated he did know Ms McManis previously. He had met her in about 1988 when her son played cricket with his son. He thought this was for one season. In about 2003 he conducted a short probate matter for her, following the death of her husband. He did not have further contact with her. While the sons went to the same school, they were not friends and Mr Garling believed they were in different houses at school, so they was little opportunity for the parents to socialise.

He recognised Ms McManis' name when she applied for the position. He checked the Conflict of Interest declaration and formed the view that it did not require him to declare a conflict. However, he did disclose to Ms Jarrett and Mr Gregory that he had previously had contact with her.

Documents

The documents reveal that approval had been granted to fill 6 legal positions at WIRO. The process was commenced through Taleo on 14 February 2014. Positions were advertised and 44 applications were received. It would appear that Recruiting raised an issue with Mr Garling about the inclusion of Ms Jarrett on the Selection Panel: The full email history is not available so it is not clear what this relates to. The email indicates that Mr Garling said he had no issue with Ms Jarrett being impartial, that she was not a close friend and it was difficult in the legal profession to find people who were not affiliated with each other.

A Conflict of Interest declaration was received from Ms Jarrett and Mr Gregory on 9 April 2014. Mr Garling was followed up by email on the same date but apparently indicated he was unable to locate the declaration button, but told the Recruitment staff member that he was dealing with it: Mr Garling's declaration was not received until 5 May 2014 when Recruitment followed it up as part of the post recommendation sign off process.

The panel culled the applications and 13 applicants were interviewed. The appropriate documents were completed at every interview, by each of the 3 panel members. Eight people were selected for the positions, 2 placed on the eligibility list and 3 were unsuccessful.

Ms McManis had the Lowest score of the successful applicants, mainly due to her unfamiliarity with the legislation.

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One of the applicants placed on the Eligibility List had a higher score than both Ms McManis and the next lowest candidate.

A list of 8 recommended candidates was put forward by the panel. Some concern regarding the exclusion of a SRWSD employee from the short list was raised, but this was ultimately dealt with by Mr Garling and the response was approved by Mr Barnier.

There were further emails back and forth regarding the fact that 6 positions had been approved and 8 candidates were being recommended. Mr Garling indicated that he had been told on more than one occasion that 8 positions were in the budget, were approved and could be filled immediately. He expressed concern that he had effectively ended their careers by making the reference checks and was concerned for the potential for any loss he had caused, if the eight people were not appointed.

Apparently 8 positions had been budgeted for, and ultimately, Mr Barnier approved the 2 additional positions.

Paul Gregory conducted the reference checks and Ms McManis was offered a position by letter dated 27 May 2014.

Comment

Mr Garling knew Ms McManis prior to receiving her application. The contact was some years previously, and they were not well known to each other. Mr Garling considered the Conflict of Interest situation and determined there was not a conflict. He did inform the other panel members that he knew the candidate. This appears to be appropriate in the circumstances.

However, Mr Garling did not complete the Conflict of Interest declaration in accordance with the process, which requires Conflict of Interest Declarations to be completed prior to shortlisting. Failure to complete the Declaration at this time does not give the Recruitment staff the opportunity to manage potential conflicts of interest.

Eight ,rositions were being offered and Ms McManis had the 9th highest score. The applicant with the 7 highest score was not made an offer.

While this may suggest some preference on Mr Garling's part, on the basis of prior acquaintance, it was in fact his score of Ms McManis which was the lowest of the 3 panel member scores. The scores were 22, 15 and 13. It would therefore appear that Mr Garling was not over rating her skills and experience.

It is not clear from the documents why Ms McManis was preferred to a candidate with a higher assessment score.

While the process has not been followed in relation to the timing of the completion of the Conflict of Interest Declaration it would not appear that Mr Garling had a conflict that needed to be declared in this instance.

Of some concern is the fact that Ms McManis was offered a po~ition, when she did not have the score from the panel that would entitle her to that job. There may be other reasons for the position being offered to her, but they are not clearly articulated. In a situation where she did

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not have the necessary score, the reasons for offering her the position need to be clearly stated, and in particular, there needs to be a clear articulation of why she was preferred to the more highly rated candidate.

Ms McManis does seem to bring a different set of skills and experience to the role and there is no suggestion that she is unsuitable for the position.

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6. Conclusion

Due to the short time frame Mr Garling had to set up his office, the CEO and CHRO of SRWSD approved a modified process for engaging staff, which was to operate for a limited time.

It would appear that Mr Garling engaged Mr Pinnock utilising this process.

However, it would appear that he engaged Mr Johnston and Ms McNamara directly, despite having no delegation to do so, and without following any agreed process.

Mr Tait was engaged at a later date, when there was less urgency surrounding recruitment, but his engagement did not follow the approved processes.

Ms May's engagement did not follow any process, but it was an unusual appointment and there does not appear to be any process that would be applicable. A quote was submitted and a contract covering the engagement was drawn up by SWRSD. The Minister was aware of the appointment and it had been approved by OFS. Ms May does appear to have had the skills and experience required for the position.

Ms McManis' appointment followed the approved recruitment process. However, she was offered a position over a more highly rated applicant, with no explanation. Ms McManis was not well known to Mr Garling, and his rating of her was the lowest rating of the panel. On the face of the documents, there therefore does not appear to be any partiality on Mr Garling's part in favour of Ms McManis

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