The Victorian Ombudsman’s report into Goulburn-Murray Water has resulted in a stinging rebuke from one of the state’s senior public servants.
Ombudsman Deborah Glass said her investigation into allegations of improper conduct, by former GMW chair Jo Anderson and managing director Pat Lennon, exposed failings with individuals and the systems that supported them. She found GMW had five chairs and seven managing directors since 2012.
The report prompted Department of Environment, Land, Water and Planning secretary John Bradley to require all boards in the water sector to review existing hospitality and related personal expenses policies.
“Your report brings to light serious integrity failures of the former chair and managing director of GMW,” Mr Bradley said.
Your report brings to light serious integrity failures of the former chair and managing director of GMW.
Ms Glass said GMW, Australia’s largest rural water corporation, had ridden some rapids, in recent years.
“To paraphrase Oscar Wilde, to lose one director may be regarded as a misfortune, to lose multiple board members, chairs and managing directors since 2011 looks like carelessness,” Ms Glass said.
She was was particularly scathing of former chair, Jo Anderson, who had held three successive leadership positions at public water corporations.
“It is surprising, therefore, that she showed little insight into the principals and values of public sector leadership, in accepting the managing directors claims, seemingly without scrutiny,” Ms Glass found.
“Equally, the managing director claimed his attitudes towards this expenditure from the public purse were endorsed by his peers at other water corporations, and unquestioned during his years in the private and public sector.”
She found the GMW board had been warned in 2011 about misuse of public resources.
Ms Glass found the investigation revealed a gap in values between the public and private sector.
She was also critical of the board, saying while it couldn’t be held responsible for the conduct of the individuals, it was responsible for ensuring it properly informed itself about such matters.
“The board did not appear to question the use of public funds for this purpose, despite the managing director and chair being new to the organisation and this being the managing directors first appointment to such a role in the public sector,” Ms Glass said.
Former board member Neil Pankhurst, who was mayor of Campaspe shire at the time, said he felt the composition of the board could be one of the reasons behind the issues which arose. Cr Pankhurst, who served for four years until 2015, said board members from a corporate background might not have questioned the expenditure.
“When you are used to being in local government, or any public organisation, how public funds are being spent is critical. It’s always got to be high on the list of questions,” Cr Pankhurst said.
And Central Goulburn Water Services committee chair Peter Hacon questioned how much the board knew.
“The question is, why didn’t they know?” Mr Hacon said. “Where are the checks and balances?”
Current chair Di James, who currently heads up the board of Southern Rural Water, said no other director was involved in the expense scandal, nor did they have any knowledge of it.
Independent Shepparton MP Suzanna Sheed said she was confident Ms James would address the transformation of GMW, after what had been a “revolving door” at the organisation.
“It’s particularly disappointing the last chairman and managing director have left under these circumstances – it’s not about the organisation, in terms of its operation, so much as governance issues.”
She said the biggest challenge for organisations in regional Victoria was recruiting the right people.
“That makes me wonder whether we pay enough, whether we have a big enough pool to recruit from and how we are going about it,” she said.
Water Minister Lisa Neville said she did not believe there was an issue with the corporate governance culture within GMW. She told Ms Glass the report highlighted poor judgement and leadership by the former chair and managing director.
Ms Neville said Ms James brought a huge amount of experience and skills to GMW.
“I have utilised her when we have had other organisations, in similar situations to this, where they are struggling with governance and transformation,” Ms Neville said.
Ms James said the GMW Board was an excellent mix of expertise and diversity, with local knowledge high among its attributes. Directors included David McKenzie, Co-convenor of the Goulburn Murray Irrigation District Water Leadership Forum, Cohuna dairy farmer Margot Henty, Lurg Cattle Company’s Alana Johnson, mixed farmer Jonathan Koop and former Victorian deputy Premier Pat McNamara.
She said she was “absolutely focused” on ensuring GMW had the highest standards of governance and transparency right across the organisation.
“My overall mandate is to advance the process of transforming GMW into the best organisation it can be to ensure we deliver sustainable and affordable services for our customers,” Ms James said. “I have also been focused on meeting customers and stakeholders and continue to do so.”