Chapter 19: Coming to an Important Realization

Having my Cake and Eating It Too

Thursday April 13^th – Wednesday April 20^th, 2000

I woke up just before 6:00 am in the guest room at Megan’s place, I took a quick shower to refresh myself, put on my clothes, and left to get back to my apartment. I had told both Megan and Lori last night that I would leave as soon as I work up, since I had to get back to my place to get ready for work. Lori was just rising as I was about to leave, I said good morning to her, gave her a quick kiss, and told her I would see her tomorrow afternoon as we were at the gig at Selina’s. It was a quick drive through the city and across the bridge to St Leonards, once home I had a shave and a longer shower, then fixed myself some breakfast, before getting dressed for work. I took the train into the city, and I was at the office before 8:00am, not much later than my usual time.

Later this morning, Kaz was calling in with two investigators from ICAC to talk about some of the issues with the CLID project. She wanted Michelle to be there with me, and assured me that neither myself, nor WTM Consulting had anything to worry about what they were looking into. She had stressed that she wanted to make sure we knew what would be ‘going down’ before it happened, and we weren’t left wondering what was going on. I was curious to find out just what had been done to attract the attention of ICAC, that usually meant something serious, bribery, fraud, theft – something that would result in criminal convictions. I had some ideas on who might be caught, but I kept them to myself.

Just before 10:00 am Kaz arrived with two others, she introduced them as John Helms and Sandra Drake from ICAC. Michelle joined us in our small meeting room, and Kaz outlined the purpose of the meeting.

“One thing I will stress right now, everything that is said here has to be kept completely confidential; you can’t tell anyone else what has been discussed. Except for Mary Beth, since she’s the manager of WTM Consulting, and may be involved in any hearing or detailed inquiry. As you know, I’ve been looking into several areas where the State government is involved in leasing out public land assets, including Crown land and western land leases, leases of mooring and other waterfront areas, and unused public lands. In that investigation, I noted a few of what I thought were ‘strange’ business processes, lack of proper audit controls, or less that standard contract management procedures. I raised my concerns with the head of my division, and he agreed that we needed to bring these concerns to the attention of other agencies to investigate whether laws had been broken. The Auditor General is looking at some of the financial procedures to make sure government accounting rules are being followed, and other concerns where we believe corruption or other criminal acts may have been committed. First, I’ll hand things over to John, who is responsible for looking into contracts and the provision of services to the State Government departments and agencies.”

“Thanks, Kaz,” John said. “To introduce my role within ICAC, I look specifically into how contracts are set up, delivered and managed within government agencies, to make sure that all of the laws and regulations are followed, and the government gets the services and level of performance that is being paid for. Specifically, I look to make sure that tendering procedures were followed, there was no favouritism or special deals done in awarding contracts, services or products were delivered according to the contract, and there is proper accounting of costs associated with any contract. This also covers the proper management of any assets that are delivered under the contract, of course.

“Firstly, I want to assure you that nothing that WTM Consulting has done for the State has any hint of impropriety to it. I must say, your company has been squeaky clean in all of its dealings, and what surprised me is that one area where many IT contracts make lots of money is in ‘change requests’. What they do is bid for a project with a very low bid, knowing that once they are awarded the contract, they can make up any losses by drastically overcharging on the inevitable ‘project change requests’. Your average number of change requests across all of the projects you’ve been involved in is under half what other companies in the IT field typically have, and those which we have looked into were completely justified and costed at the same rates as the main project.

“Conversely, on the CLID project, there have been a very large number of change requests, and on an initial investigation, almost all of the requests were for things that should have been anticipated as part of the original project plan. My conclusion was that these rather pricey sections were removed from the original project bid to reduce the apparent cost, under the knowledge that they would be added in at a later date, where it wouldn’t be subject to the same external scrutiny as the original bid.”

“I know for the Y2K project,” I said, “there were a number of change requests and additional tasks added. But that was mainly in those situations where we didn’t know what major issues we would uncover, and the main bid included disclaimers and warnings that once we delved into the details of some systems, we would find problems or issues that no one knew about at the time.”

“And that’s perfectly understandable,” John said. “I was pleasantly surprised that for that Y2K project there were so few changes and additional work requests. Given the nature of that project, that showed me that your original proposal was very well thought out, and right from the start your company knew what it was doing and how it would proceed with the tasks. That can’t be said for CLID project; so, either there was serious incompetence all around, or substantial malfeasance.”

“Isn’t there a saying ‘Never attribute to malice that which is adequately explained by stupidity’?” Michelle said. “Hanlon’s razor, or something like that. Maybe the people running the project were just terrible at it.”

“I wish you were right, Michelle,” John said. “If there were other situations where bad or incompetent management was apparent in that project, your explanation might be valid. But there’s just too much evidence of corruption for us to ignore it. One of the other concerns we’ve had with this project is the State is paying the contractor to develop significant enhancements to a commercial piece of software that the contractor already has, but those enhancements will become part of their standard offering – so, in effect, the State is paying for a private company to develop a product that they will be selling to other customers, with no compensation to the State. In the past where things like that have been done, the State either gets a considerable discount on the development of the software, or the State gets a share of the ownership. In this situation, neither of those apply, so we are bankrolling a private company in developing a product that they will then go on to sell to other customers – no doubt using the State Government as a reference. That’s clearly not acceptable to us.”

“It sounds like a sweetheart deal all around,” I said. “I know that when I first looked at the project, I was astounded by the reported development costs to this stage; something in the order of twenty million dollars. I then asked just how much the state collects in revenue from these Crown Land leases, and it was only a few million dollars a year. I asked what the cost justification was for the system and got dead silence; I got the impression that any questions of ‘cost justification’ or economic reasons for it were not meant to be asked.”

“That’s something that I will be looking into,” Sandra said. “That, and other dubious accounting issues with it.”

“It was your initial concerns in that area, Will, that first got my interest in looking at this project,” Kaz said. “My immediate thought was that there must be some ulterior motive for this project being pushed through the way it has been. It’s a pet project of a few of the senior management in the Lands organization, and that often indicates that something is happening ‘under the table’.”

“The more we looked into this project, the more the number of red flags we uncovered,” John said. “Given how defensive the people running the project were, how they tried resisting any investigation into things – that was, until we got the Premier to contact the head of the Department directly, with the Minister, and issue a formal directive that they are to fully cooperate with our investigation, under penalty of summary dismissal. That got at least some grudging cooperation, but it was like pulling teeth to get anything from them. I actually said in one meeting, with the head of their Information Systems Division, ‘what is it you are trying to hide here? If we uncover anything illegal, and you’ve been actively trying to cover things up, that will not go well for you, or anyone else involved.’ That seemed to focus their attention somewhat!”

“Makes me wonder if some of the document shredders have been working overtime in the Lands Department building,” I said.

“Oh, don’t worry about that,” Sandra said. “We’ve already uncovered evidence of them destroying documents and records, the trouble is, they aren’t smart enough to completely cover their tracks. We aren’t as green as we are cabbage-looking, as my grandmother would say.”

“In the time we’ve been operating, we’ve become very skilled at finding things that corrupt officials might try to hide,” John said. “Investigating fraud and corruption isn’t rocket surgery, if I might mix my metaphors.”

“Isn’t rocket surgery, I like that,” I said. “I assume it’s also not brain science. I have to say, in all the dealings WTM Consulting has done – not just with the State Government, but with all our clients – we’ve been scrupulously honest and above board. We’ve found that if you deliver a good result at a fair price, treat your customer with complete openness, not try to pull any swifties on them with the old ‘bait and switch’ con, you get repeat business, and they will refer you to other potential customers without being asked. It’s far more profitable in the long run, and once you have a reputation for being a bit shady, it’s very hard to lose that. In this business, you live and die by your reputation – in fact the perception of your reputation; even if you stick to the letter of the law, but play fast and loose with it, you are perceived as being a bit dodgy.”

“If more companies that did business with the State shared your attitude, we would have very little to do in ICAC,” Sandra said. “Sadly, that’s not the case! Now, I’ve got some questions that relate to the financial side of the application, can you, Will, tell me what data base triggers are?”

“Sure, they are a way of building what we call ‘business rules’ into the core of how the database management software manages the data. Let me give an answer that is probably relevant to the CLID application. Assume that we have a business rule that any changes to the financial conditions of a lease – the term, the annual rates, or whatever – any changes to those can only be made by a user with sufficient authority, and all changes need to be logged to a permanent record of changes. Now, if I’m writing the program to do that, I can make sure those business rules are implemented in the logic of the code. But, if I have access to the raw data tables in the database, I can – assuming I know the right SQL commands – I am able to update the data directly, bypassing all the controls that have been implemented in the program. This defeats the auditability of the system, as well as allowing unauthorized changes, which now go without being logged. If someone wants to know who made those changes, there’s no record in the system logs.

“However, if I implement those business rules in what we call a ‘trigger’, anytime changes are made to the lease rates table, the database management system itself runs a special program which can make sure those rules are followed, the changes and user making them get logged into the system. It can’t be bypassed by updating the table itself, because the rules are implemented directly on that table. Does that make sense?”

“Yes, that’s pretty clear. The original Auditor-General’s report into the design of the application noted that such triggers – almost identical to the case you mentioned – should be developed as a core part of the system, primarily to avoid any possibility of fraud that would not be able to be traced. But the development team said, ‘triggers like that aren’t required, and would make the system unnecessarily inefficient and slow’. What you’ve said confirms to me that the system is being designed to allow for corrupt actions to go undetected. There’s been a long history of shortfalls in lease receipts, and there’s been no way to track any unauthorized changes to the lease rates, where someone has their rent reduced, maybe as a result of the lease-holder bribing someone in the Crown Lands office.”

“Do you think that’s being done?” Michelle asked.

“We are certain of it, it’s been going on for years, people with extensive leases will pay money directly to the Lands officers to reduce their payments,” she said.

“There’s been strong pushback from the rural lobbies against charging what would be something close to market rates for leases,” Kaz said. “One lobbyist told me that doing that would guarantee the Labor party never winning another seat in country NSW, and it would be ‘political suicide’ for the government to try to attempt it.”

“Of course, government assistance and subsidies to the rural sector has never been considered ‘socialism’ by the Country or National party,” I said. “Paying assistance to city people, or unemployment assistance is just a ‘handout to bludgers’, but if it goes to farmers or graziers, then it’s essential to keep rural industries afloat. I guess that’s one reason why when the Coalition was in government, the Lands Ministry would always go to a Country Party or National Party member, so they could make sure any proposal to increase Crown Land lease rates were squashed before it emerged from some discussion group.”

“You can see now, Will, how we’ve managed to open a can of worms here,” John said. “Some very nasty, slimy, venomous worms, too!”

“Rather you than me,” I said. “It’s bad enough trying to get cooperation from them for the Integrated Land Information System project as it is.”

“I expect you will get some of the collateral damage, so to speak, from our inquiry,” John said. “Some people leading that project are likely to be no longer employed, and parts of the project could very well get cancelled. I suspect the reason why they are fighting your work is because that would mean the system managing leases would be out of their control, and instead a system with proper security, auditing and logging would be in its place. That would end the ability for some people to ‘make adjustments’ to lease rates, without being detected. That would end their nice little rort.”

“If the CLID project is cancelled,” Sandra said, “is there the possibility that a replacement system could be done as part of your overall Land Information System project? I know that’s a hard question to answer on the spur of the moment.”

“Well, anything could be done, the standard response is ‘SMOP’ – simply a matter of programming,” I said. “But being serious, yes, we could develop a replacement to what CLID has done so far. At least as far as the lease management component goes, that’s not too difficult, not from what I’ve seen. The additional mapping components, that can all be done with systems that the Central Mapping Authority has – not to the same level that the CLID team are attempting to do, but good enough. Don’t ask me to give time and cost estimates though, that will take some time to work out.”

“But something less than twenty million dollars?” she said.

“Hell yeah!” I said. “If I charged that much, I could retire somewhere on a tropical island!”

“You would have to take me with you, Will,” Michelle said. “Someone would have to keep you out of trouble!”

“If you want, we can kick around some ideas back at our company’s office, get back with a ballpark estimate if you want,” I said. “Purely for planning purposes, I wouldn’t want us to be held to that if we were asked to implement a system.”

“Would that require replacing much of the hardware and software that’s already been acquired for the project?” John asked.

“I wouldn’t imagine so,” I said. “Certainly not the various computer servers, but the high-powered graphics workstations wouldn’t be needed, and some of the mapping software would be discarded. Any system we developed could be accessed from the standard desktop personal computers that the rest of the Land and Water Conservation Department has and make use of the existing computer networks that are in place. We worked on that network redevelopment a few years ago, and even though CLID was going to be a separate system back then, we made sure the network would be compatible with that system.”

“I was hoping the answer would be something like that,” he said. “I know that once we present our report to the Premier that we believe the current system has huge problems with it, and the existing project should be cancelled, he will want to know what options there are to get something else in place. Particularly by a company that has a proven record of developing and delivering computer systems to the State.”

“Well, it will be interesting to see what comes of your work,” I said. “Either way, we will continue with the Land Information Project as it is currently defined, with the agreed set of deliverables, working towards the project plan that we have committed to, and has been accepted by the client. At least until we get official word that the project is to be altered, and a new scope of work agreed to, that’s what we are legally obliged to do.”

“That’s what we would expect,” John said. “At least from your company, totally professional, focused on delivering what you’ve committed to, and not on profiteering from some fortunate opportunity that may come your way. Thank you, Will, Michelle for your time this morning, if there’s anything else we need from you, any other information that we think you can help us with, I’ll be in touch.”

We thanked John and Sandra for taking the time to come and brief us, they said it was only three floors down from their offices in the building. After they left, Kaz remained to speak with Michelle and me.

“Thank you for that, taking the time to speak with them,” she said to us. “That technical explanation of some of the database stuff, I had a vague idea what it was about, that was in one of the initial A-G’s reports on the system – one which the CLID project team completely ignored, which didn’t go down well with the ICAC people.”

“I guess when advice on ways to reduce the potential for fraud is ignored, then the corruption watchdog gets a bit suspicious,” Michelle said. “It’s almost like saying ‘we don’t want any anti-fraud controls on this system’, they might have well have said we want fraud to occur.”

“They certainly haven’t done anything to show that they are trying to be responsible, trying to cooperate with other government agencies,” Kaz said. “I think some people will be out of a job soon, and fighting criminal charges. Not that you heard that from me, of course.”

“We will be very discrete,” I said. “There’s no problem with me briefing Mary Beth, on the understanding what I say doesn’t go anywhere?”

“That’s perfectly okay,” she said. “I probably mentioned that at the start, and just you two and Mary Beth are fine knowing what’s taking place. I expect that at some point in the formal ICAC inquiry, the three of you will be called to give evidence and some expert opinions on database security, all that stuff on triggers and how to properly implement audit trails. Just between us, your company, and you two in particular, have the reputation as being totally professional, and your track record in delivering projects on time, on budget, and exceeding expectations is second to none within the Treasury and Premier’s Department.”

“Well, as I said, companies like ours live and die on our reputation; if you screw something up, that’s remembered long after whatever successes you might have achieved. We have to prove ourselves every time we take on a new project. That’s not just with the State government, but with every customer. I don’t believe in our history we’ve ever had an unhappy customer, and we get new business, new customers primarily on the recommendations of our existing customers.”

“Now, onto something completely different,” Kaz said, “April 30th, in a bit over two weeks, Angie is thinking about another plane excursion, this time out to Cowra. Would you two like to come with us? You specifically, Will, she would need you to help navigate; she will probably rent the same plane as we did last month when we went to the picnic races, that Piper Chieftain. We can take up to eight, do you think Lori and Megan would be interested? There will be Angie and me, you, Michelle, Allison and Jenny, and possibly Lori and Megan. The plan is to fly up first thing in the morning, leaving around 7:00, looking at places like the Japanese memorial gardens, having lunch, and flying back early afternoon, so we are back at Bankstown by 5:00.”

“That would be fun,” Michelle said. “Why back so early?”

“Well, she doesn’t have enough hours to get the endorsement to fly when it’s not daylight,” Kaz said. “The whole pilot licensing stuff is so complicated, she’s tried to explain it to me, but it’s so involved. At least as I understand it, you get your basic private pilot’s license, and they have various ‘endorsements’. So to fly a certain type of plane – single engine, twin engine, retractable undercarriage – each is a separate endorsement. Flying during daylight hours is another – what they call ‘Visual Flight Rules’, VFR – where you can see where you are going, see other planes, is the basic qualification. If you want to fly at night, where you have to rely on instruments, either at night, or when the weather is such that you can’t rely on just seeing stuff, that’s Instrument Flight Rules.

“Now she hasn’t had enough flight time under those conditions to get the IFR endorsement to her license, so if conditions are such that VFR doesn’t apply, then she has to have a suitable qualified instructor flying with her. It’s all pretty complicated, the Civil Aviation Authority – CAA – sets the rules, but she hopes to get her instrument rating sometime this year. But assuming the weather is good enough for visual flight rules to apply, there won’t be a problem.”

“Sounds good to me, count me in,” I said. “I guess I’ll be doing radio and navigation again?”

“Yeah, she mentioned something about navigating using radio beacons, but she will go over that before the flight,” Kaz said. “There are all these radio beacons that there’s some instrument in the plane that works out the bearing to that beacon, and some way by correlating several beacons, you can work out where you are. I guess that’s much the same as how you would navigate when you did those ocean yacht races, isn’t it?”

“Yes, I think I can still do that,” I said. “Mind you, satellite navigation using GPS is starting to take over, we used that for a few of the Coffs Races, it made things so much easier.”

“That’s what I asked Angie, can’t you just use the sat nav,” Kaz said. “Angie said we can, but if something goes wrong with that, it’s critical to be able to navigate using the old school techniques. But talk to her about that, Will, she knows far more about it than I do; even though she’s explained all this stuff to me – and all that licensing and endorsement stuff – I don’t fully understand it. But it will all make sense to you, I’m sure.”

“That would be good, I’ll put that date in my diary,” I said. “April 30th? Getting to the airport at Bankstown early, I’ll be there.”

“Me too,” Michelle said. “Flying like that is so much fun! I guess no fancy outfit for the races though.”

“No, it’s just a flight there, stopping to look around, and coming back.”

“Well, it will still be a fun day,” Michelle said. “Count me in.”

“I’ll let Angie know you are both interested,” Kaz said. “She will let you know the details sometime this weekend. Now, time for me to get back to my work; thanks for everything this morning, as soon as I hear any more about what’s happening with that project and the people involved, I’ll call you.”

“Thanks, Kaz, it was good of you to get us in the loop on all this stuff,” I said.

She headed off to get back to the Treasury Department, and Michelle and I spoke briefly about what might be involved in us rewriting the CLID application – at least the lease management aspect of the system. We had already documented the data model of their lease management system and a basic summary of the functions that had to support. I felt that we could rewrite their current application, using SQL Windows, or some other windows development software, within six to nine months, and including proper security and audit elements. I spent the rest of the morning writing up a summary of what I felt would be required, the staff resources we would need, and what hardware or network changes would be required for DLWC to incorporate our solution, so I could give that to Mary Beth when Michelle and I brief her this afternoon.

After lunch, Michelle and I took the train back to our office at St Leonards, to meet with Mary Beth. She was quite interested – although not all that surprised – about the ICAC involvement in the CLID project, and how some people were about to be placed under investigation.

“Do you think they are likely to get the current system thrown out?” she asked. “What about the deal between them and Genasys for all that software development? I would assume, from what you said about them asking if we could redo some of the core parts of the system, that all that complicated and super-expensive mapping part would not be continued with?”

“That’s my guess,” I said. “Here’s my quick assessment of what it would take to redo the non-mapping part of it, the basic lease management components.”

I handed over the report I had knocked up earlier.

“Now, if the ongoing development of that mapping software gets scrapped, then Genasys would be pissed off, they are relying on the money from CLID to fund their software development work. That’s not our problem, though, and frankly, what they have at the moment for producing maps of Crown Land leases is perfectly acceptable, at least in my view.”

“Okay, let me look at this, is it okay for me to float this past David, get his views on it, and confirm what resources we would need?”

“Sure, just tell him everything about this is super confidential at the moment.”

“I understand, I know from what I hear through the grapevine there are several senior managers over there, in the Lands part of DLWC who are feeling rather nervous, and they are looking to blame anyone who they believe is responsible for upsetting their little scheme,” she said. “We have to be particularly careful to play everything by the rules, so they can’t point fingers at us, and say we are getting favourable treatment. But once the dust settles, this could turn into a lucrative contract for us, plus if we carry it off, be a huge plus to show we can do something properly, deliver results where others have failed and wasted money. Good work, both of you on this!”

“I would like to recommend Tim Collins be used on that project, assuming we get it,” Michelle said. “He’s got a great understanding of what they are trying to do, not just the mapping side, but land management, titles, and all of that. He’s been the key expert on the current project; I know it would mean extending his time up here, but so far, he’s happy staying in one of the apartments.”

“Should it look likely to happen; I’ll speak with him” Mary Beth said. “Do you think he’s project manager material? Or do you think we will need to find someone else to manage the overall project, with him as the solutions architect?”

“Architect, not manager, I think,” Michelle said. “What do you think, Will?”

“Michelle’s right, Tim’s a smart guy, really knows the stuff for the Land Information system, he’s got a quick mind, can come up with some great application designs. Maybe in a year or two, he will be ready as a project manager, we can start to develop his skills, prepare him for that role. But not yet, and particularly not on something that will be as critical and as politically sensitive as this one.”

“Fair enough,” Mary Beth said. “We really need to look at one or two additional project managers, Ian van der Poel is one person I’ve got my eye on for that, I’ll check with Linda, see if there’s anyone in Canberra suitable who might want to move to Sydney. I hate to take resources from her branch, we are getting more and more work down there, too. She’s looking at expanding the office space, fortunately there’s more room where they are in that building in O’Connor, next to the rooms they have. I’ve been speaking with Frank Cometti about it, he’s prepared to do us a good deal for a long-term lease.”