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ICAC finds former Ausgrid engineer and contractors corrupt

04 June, 2015

The NSW Independent Commission Against Corruption (ICAC) has found that former Ausgrid engineer, Phillip Cresnar, and several Ausgrid contractors and subcontractors engaged in corrupt conduct which resulted in Cresnar receiving more than $252,000 in benefits.

In its report, Investigation into allegations that an Ausgrid engineer corruptly solicited and accepted benefits from Ausgrid contractors and subcontractors, released recently, the Commission finds that, between 2008 and 2014, Cresnar accepted benefits including cash, payments to cover extensive kitchen and bathroom renovations at his house, the use of a company vehicle and airline tickets from Ausgrid contractors Bastow Civil Constructions Pty Ltd and Murray Civil Works Pty Ltd, and subcontractors MDM Formwork Pty Ltd, Cloughcor Pty Ltd and Fer-Aim Pty Ltd. Cresnar accepted these benefits while he was responsible for overseeing the work those companies did on behalf of Ausgrid.

The ICAC makes corrupt conduct findings against company directors Dennis Twomey (Murray Civil Works), Eamon Burke (Cloughcor) and Patrick Miskelly (Fer-Aim) for providing the benefits to Cresnar. The directors provided the benefits to Cresnar knowing that they would tend to influence Cresnar to exercise his public official functions as an Ausgrid employee to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid.

Bastow Civil director Jason Bastow and MDM Formwork directors John Madden and Fergal McGann engaged in corrupt conduct by giving benefits to Cresnar (in Madden's case, by being a party to an agreement whereby McGann gave money to Cresnar) as an inducement or reward for him exercising his public official functions as an Ausgrid employee to show favour, or not to show disfavour, to their businesses in relation to their work for Ausgrid.

Some of the benefits the Commission found that Cresnar received included: at least $97,756 from Bastow, including the use of a Bastow Civil credit card on at least 44 occasions; two international airline tickets worth a total of $2,652 from Miskelly; benefits to the value of $50,506 from Twomey, use of a Murray Civil Bunnings trade card and the use of a Murray Civil company car during summer holiday periods; four Cloughcor company cheques supplied by Burke which Cresnar used to purchase goods for his personal use to the value of $99,327; and $2,500 cash from Madden and McGann.

As a contract inspector in Ausgrid's Contract Cable Laying (CCL) division, Cresnar was responsible for receiving, assessing and making recommendations about contract variations. Another area in which contract inspectors were given considerable latitude was the issuing of non-conformance notices, covering defective or substandard work.

The Commission is satisfied that Cresnar was in a position to affect the granting of variations and the issuing of non-conformance notices, and that the information he provided to Ausgrid senior managers was influential in relation to the decisions they made, which directly affected the commercial interests of contractors and subcontractors.

Some of the companies also saw increased revenues once they were admitted to the Ausgrid contractor panel; Bastow Civil's turnover increased from approximately $6 million per annum in 2007 when it was admitted to the panel, to $12 million per annum in 2008. Between 2011 and 2013, Murray Civil received approximately $26 million for work it did for Ausgrid, compared to the approximate $2 million annual turnover it had prior to acceptance onto the panel.                                  

The Commission has made three corruption prevention recommendations to Ausgrid to help prevent the recurrence of the conduct exposed in this investigation, including that, in the short term, Ausgrid tightens processes within the existing system for CCL work orders. In this regard, Ausgrid should focus on processes for approving variations, tightening the scope and budget for work order contracts, and reducing opportunities for individual officers to control key tasks, including the selection of contractors.

The ICAC is of the opinion that the advice of the Director of Public Prosecutions should be obtained with respect to the prosecution of Messrs Cresnar, Twomey, Burke, Miskelly, Madden and McGann for various offences.

The Commission held a public inquiry, as part of the investigation, over six days from 19 to 27 January 2015. Assistant Commissioner Theresa Hamilton presided at the public inquiry, at which 12 witnesses gave evidence. The report and a fact sheet are available on the ICAC website at www.icac.nsw.gov.au.

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