wirc> - parliament of nsw mr m hoffman, secretary, ... mv appointment ... pursuant to section 47...

WiRC>

Mr M Hoffman, Secretary, Department of Finance, Services & Innovation, 2 -24 Rawson Place, SYDNEY NSW 2000

By email

Dear Mr Hoffman,

Level4, 1 Oxford Street, Darlinghurst NSW 2010 T:139476 [email protected] www.wiro.nsw.gov.au

I am writing in response to your Jetter of 21 August 2015 ("the DFSJ Letter"), received by me that day. I also acknowledge receipt of the four folders of supporting documentation which were delivered on 25 August 2015.

In accordance with your invitation I respond below, to the extent that I am able to do so, to the ten identified "matters of concern" (one general, nine specific) that are derived from the report of CPM Review Ply Limited supplied to me under cover of the DFSI Letter.

Before I do provide that response, there are some important preliminary matters which I believe I should draw to your attention and which I believe will assist your assessment of the CPM Review report and your assessment of my response.

That is, in my view it is important to appreciate the background to the creation of and the establishment of the office of the WorkCover Independent Review Officer and its role and functions.

IMPORTANT PRELIMINARY MATTERS

Background about the creation of the office of the WIRO

An office with the functions that WJRO has does not exist anywhere else in the world of workers compensation. There are a variety of Ombudsman style offices in some of the states of America, but with different approaches.

of 26

When the NSW Government embarked on its mission to reform the workers compensation system in the State the then WorkCover Authority was the relevant agency which had the responsibility for developing the legislation to reflect the intention of the Government and to implement the changes effected by the Parliament.

That process had been underway for some months prior to the introduction of the Workers Compensation Legislation Amendment Bi/12012 into the Parliament on 20 June 2012.

At the same time, the NSW Government introduced the Safety, Return to Work and Support Act 2012 which created a new agency, namely, the Safety Return to Work Support Division ("SRWSD") which had within its aegis the WorkCover Authority. The significance of that state of affairs is to thus appreciate that the various ·agencies that came together under this new banner were themselves undergoing change.

SRWSD had therefore been aware of the need to provide support for this new entity by way of funding, staffing, accommodation and other resources since prior to June 2012. The correspondence between Julie Newman in her position as Acting CEO of WorkCover to the Minister to which I refer below clearly demonstrates she and her advisers knew that the office was coming.

Despite this it was apparent that little or no preparation had been made to establish the office prior to my appointment in September 2012.

The functions of the WIRO are as set out in section 27 of the Workplace injury Management and Workers Compensation Act 1998. (WIM Act).

Those functions were:

(1) To deal with complaints by workers about the conduct of their claim;

(2) To review work capacity decisions of insurers;

(3) To inquire into and report to the Minister on matters arising in connection with the Workers Compensation Acts;

(4) To encourage the establishment by insurers and employers of complaint resolution processes;

(5) Such other functions as may be conferred on the Officer under any other Act.

Section 27C of that Act also required the Officer to prepare an Annual Report to be tabled in Parliament.

The Government established the Independent Legal Assistance and Review Service ("I LARS") to provide funding for injured workers to progress their claims. That is managed by the WIRO.

of 26

-----·---- .,, ______________ , ___ ··- .... "------------· --- -------

An extract from the Interim Report of the NSW Commission of Audit- Public Sector Management published in January 20121 made clear the how an Independent Statutory officer should function:

"It is noted that in some instances it is not appropriate for a CEO to report to a Director General. This is the case where a Statutory Officer reports directly to Parliament. ICAC and the Auditor General are in this category. Also where statutory officers exercise their statutory powers they are not (and should not be) subject to Ministerial or administrative direction and control."

I also refer to the statement by the then Treasurer, Mr M Baird MP, in the second reading speech of the Workers Compensation Legislation Amendment Bill 2012, in the Legislative Assembly on 19 June 2012:

"The WorkCover Independent Review Officer will have the dual roles of dealing with

individual complaints and overseeing the workers compensation scheme as a whole. It

will be an important accountability mechanism for the workers compensation scheme."

Funding for the Office

Section 1540 of the Workers Compensation Act 1987 ("1987 Act") established the Workers Compensation Insurance Fund. The Fund consists effectively of the premiums paid by employers and investment returns. It is managed by the Nominal Insurer and any surplus is not available to the Government.

The WorkCover Authority acts for the Nominal Insurer.

A separate fund known as the "WorkCover Authority Fund" was established by section 35 of " the Workplace Injury Management and Workers Compensation Act 1998 ("1998 Act') which

is also maintained by the WorkCover Authority.

That Fund receives monies from contributions by insurers (including self insurers) and from the Workers Compensation Insurance Fund. Payments from that Fund include:

(c) the remuneration of the Independent Review Officer and staff of the Independent Review Officer and costs incurred in connection with the exercise of the functions of the Independent Review Officer

There have been amendments to the structure of the workers compensation scheme as a result of legislative amendments effective from 1 September 2015.

1 At page 22

of 26

Remuneration of the WJRO

As the WI RO was to be a Statutory Officer it was necessary for the remuneration of the Officer to be determined by the Statutory and Other Officers Remuneration Tribunal (SOORT). That determination was made on 10 August 2012.

Mv Appointment

I was appointed by the Governor in Council. I commenced my term on Monday 3 September 2012 and for that week and the following week I was allocated an office within the SRWSD office in Elizabeth Street,_ Sydney.

The terms of the DFSI Letter necessarily imply or at least suggest that I "accepted" an offer of employment by SRWSD.

I do not believe that to be correct. My appointment as a Statutory Officer by the Governor determined the terms upon which I was to carry out my duties. I was at no time then or now an "employee" of SRWSD.

There was no reference in any discussion at that time to the various "policies" referred to in the DFSI Letter nor was I provided with any.

The position of the Safetv. Return to Work and Support Division

I refer to the copy of a Ministerial submission from Julie Newman on 9 July 20122• That

submission purported to set out the background of the creation of the office and made particular reference to the need for the Premier to arrange for a determination by SOORT of the remuneration of the Officer.

The submission also referred to the need to make arrangements for the staffing of the Office which will be funded by the WorkCover Authority Fund.

The submission had one significant error (which does not appear to have been corrected by the Minister) in that it suggested that the Independent Review Officer:

"may employ staff under Chapter 1A of the Public Sector Employment and Management Act 2002"

That is the opposite of the provisions of the Act. Section 24(6) of the 1998 Act (as it was at that time) stated:

"The staff of the Independent Review Officer are to be employed under Chapter 1A of the Public Sector Employment and Management Act 2002."

2 Included with the DFSI documentation.

of 26

There is a very significant difference. Pursuant to section 47 A of the Constitution Act 1902, the Independent Review Officer is precluded from employing staff.

I also observe that in what appears to be an opinion from the Legal Group at SRWSD dated 19 October 20123 the following appears:

and:

and:

and:

and:

"The WorkCover Independent Review Officer is not a public servant and cannot employ staff."

"Staff of the WorkCover Independent Review Officer are staff of the Safety, Return to Work and Support Division. They are subject to the Chief Executive Officer of the Division in relation to employment matters."

"The NSW Commission of Audit Interim Report-Public Sector Management (January 2012) explains how the cluster structure works within NSW, and accommodates entities which exercise specific functions independent of Government."

"The WorkCover Independent Review Officer appears to fall within the category of Independent Commissions described as receiving support from and having an operational and/or administrative relationship with a principal Department, but not being under the direction of a Minister in relation to their statutory powers."

"Section 12 of the Public Finance and Audit Act 1983 provides that expenditure shall be committed or incurred by an officer of an authority only within the limits of a delegation in writing conferred on the officer by a person entitled to make the delegation."

"Staff of the WorkCover Independent Review Officer engaged by the Safety, Return to Work and Support Division and provided to the WIRO could be granted the relevant financial delegations.

On 11 September 2012 I received an email from Tony Lawler, the Director of Facilities &

Support Services within the Finance & Services Division of WorkCover. Attached to that email was a draft of the standard format for a CBD Office Accommodation Location Analysis apparently required by the State Property Authority.

That referred to the proposed accommodation for WIRO at 1 Oxford Street, Sydney.

3 Included with the DFSI documentation.

of 26

That Analysis was based upon the following principle:

"Due to the nature of the WIRO it is essential that accommodation is separate from other WolkCover activities and that it provides both independence and the perception of independence to allow the WIRO to fulfil their oversight and dispute resolution role effectively."

In a CEO submission dated 13 September 2012 Ms Newman sets out her view as at that date as to the responsibilities of SRWSD towards the WIRO. That submission states:

"The Safety, Return to Work and Support Division is responsible for supporting and resourcing the WIRO, therefore immediate arrangements need to occur regarding staffing and facilities."

and further:

"To prepare for the WIRO's official commencement on 1 October 2012, SRWSO needs to urgently allocate resources, including staffing and facilities."

There was an approval contained in that submission as follows:

1. The recommended preliminary structure for the Office of the WorkCover Independent Review Officer as outlined above

2. That recruitment activity commence immediately 3. The WIRO initially operate out of SRWSD's offices located at 1 Oxford Street

During meetings held with Ms Newman and other SRWSD senior executives during the week ending 7 September 20121 was informed by Ms Newman, then the Acting CEO of the WorkCover Authority (and recently of the newly created SRWSD), that she was responsible for providing staffing, accommodation, funding and other resources to enable the office to operate.

She would be responsible for ensuring that all appropriate approvals would be obtained from various agencies with an interest such as the Public Service Commission, Treasury and the relevant departments. I was not required to be involved in that process as that was her function.

I was informed by Ms Newman on Friday 14 September that the office at 1 Oxford Street would be available from Monday 17 September and that Brooke Benson and Linda. Wilson would be assisting with the set-up of the office for a short period (three to six weeks) but that Brooke and Linda retained their substantive posttions within the WorkCover Authority (within SRWSD) and were not seconded to the WIRO office.

of 26

--·-·---- ·-.. ··-· --- ·-·--·-·· -· ······---··--- ······-···-··· ··-·· -·------·-----···-·--------------··-··--·-

WIRO staff are engaged by SRWSD, and not by me

The WorkCover Independent Review Officer never had and still does not have any authority or ability to engage any employee (whether temporary or otheiWise) to work in the WIRO office. Any such engagement was reserved for SRWSD.

This was demonstrated from very early in my term of office.

The first external staff person engaged was John Pinnock. On Monday 17 September 2012 I received the following email from SRWSD about the engagement of John Pinnock:

"From: fljacDonald, Dorothy Sent: Monday, 17 September 2012 4:26 PM To: Garling, Kim Subject: Catch up with you and John Pinnock

Hi Kim,

Are you available on Wednesday morning?

I need to catch up with you regarding your resourcing needs, Johns contract. I spoke with him last

week and we are going to set up an arrangement with a recruitment agency for his remuneration,

this is better for him than coming to us as a stand alone contractor. They are awaiting my say so to

get the detail they need form John to put him on their books

regards

1Jot .'M.acdimaU£©

Manager Strategy and Culture People & Culture Group Safety, Return to Work and Support Division (SRWSD)"

Allegation of "numerous instances" of non compliance with policies and procedures (the general matter)

The paragraph numbered as 1 of the DFSI Letter states:

"The reports identify numerous instances where proper appointment and engagement processes and procedures have not been followed by the office of the WJRO in the on boarding of staff and contract resources"

I am very concerned about this allegation. generalised and imprecise as it is.

of 26

There are a number of things I wish to say about that.

(1) In light of my preliminary observations above, there is a real question as to whether or at least to what extent and which SRWSD policies and procedures actually apply to me or to the office ofWIRO, and I reserve my position in that regard. However for current purposes I will put those matters to one side, in the hope that this response will deal with the substance of what has been raised.

(2) Most importantly, I do not accept that there have been "numerous instances" where proper appointment and engagement processes have not been followed by me.

(3) If there have been any instances where the proper appointment and engagement processes were not followed then that is a result of the work of the employees of SRWSD, whether provided to WIRO or within SRWSD.

As the two employees of SRWSD (Linda Wilson and Brooke Benson) only had minor financial delegations from SRWSD issued on 12 December 2012, but no other delegations, recommendations by either of them had to be approved by another employee within SRWSD.

(This consideration is relevant to my approach to most of the particular appointments or engagements that you raise in the DFSI Letter, as to which see below.)

(4) The breadth and vagueness of the allegation, and your request for a response to it, is unfair to both me and to the staff who have supported me over these last 3 years.

It would seem to require that there be a response to each and every appointment process referred to in the Report of Ms Sandy Nix and to each and every generalised or specific assertion by her, as well as responding to each and every one of the nine more specific allegations that follow in your letter.

It is not clear whether that is required rather than a response to the nine specific matters in the DFSI Letter.

If that is required then clearly I and those staff would need more time to prepare a detailed response. A preliminary review of the allegations contained in the Report of Ms Nix reveals a multitude of errors. That may be a reflection of the very limited material which appears to have been considered by Ms Nix.

I observe that she confirmed that her Report was based entirely on that material.

(5) What I propose therefore at this stage is respond to the nine named appointments that the DFSI Letter identifies after the generalised allegation and ask that after consideration of those responses you advise whether any further response is required.

If it is, then I would ask that I be given details of precisely which of any remaining "concerns" you ask me to address and afford a reasonable time (bearing in mind I hold an office which requires full time duty) to provide that response.

of 26

In the DFSI Letter you raised nine specific matters in the paragraphs numbered 2 to 10. I respond as follows:

The nine specific matters

1. Appointment of Mr P Jed lin

"However, Mr Garling did not disclose a conflict of interest as a panel member."

I was then and remain firmly of the view that no such disclosure was required. The conflict of interest declaration form asks the following question:

"Aside from your professional affiliation within SRWSD, do you have any close family or other relationships including, but not limited to: relationships eg)as relatives, neighbours, community group members, personal friendships, sharing accommodation, private business/secondary employment commitments in relation to any candidate"

The mere fact that I had over a decade ago met Mr Jedlin and that one of my sons was at secondary school with his son until 2006 when they graduated was not in my opinion within the requisite examples set out above. That was particularly so given that Mr Jedlin had worked in the WIRO office for about eighteen months.

The suggestion in the Report prepared by Ms Nix on page 30 at paragraph 119 is not correct insofar as it is suggested that I had an obligation to disclose that Mr Jed lin worked with me in the WIRO Office.

The SRWSD COl declaration specifically does not require such disclosure.

I also observe that the allegation that Mr Jedlin and I lived for a period in the same street is not correct. 4 We have always lived in differing suburbs.

2. Engagement of David Effeney

"Mr Effeney's engagement does not appear to have complied with the appropriate processes. No role description was prepared, and the position did not go through the procurement process. There was no urgency for this position to be filled and other potential applicants were not considered."

It is clear that the proposal to engage David Effeney was the subject of discussion between myself and Ms Newman and Mr Barnier between February and June 2013.

4 Page 11 of 29 of Phase 1 report by Ms Gardner

of 26

I requested approval for the engagement of David Effeney. This was submitted in accordance with the approved process through Taleo. It followed the usual process and the engagement was approved by Mr Barnier and also by the CEO.

As far as I am aware that was the approved process.

The extension of the engagement was also requested in advance and was approved in the usual process. The CEO also approved the engagement.

The urgency of the engagement was in an endeavour to ascertain how the significant expenditure on the system for provision of hearing aids to workers with hearing loss could be reduced; the delay reduced and the unnecessary disputes reduced. In my view at that time this was urgent.

I did not consider that the proposed role should be advertised as it required particular skills. Mr Barnier and the CEO both agreed.

Mr Effeney has since presented the results of his research and the proposed new method for measurement of hearing loss to the senior executives at SRWS (including Mr V Bhatia, Mr Nagle, Ms Walsh and Ms Donnelly) and there appeared to be unanimous support for his work.

It is important to acknowledge that Mr Effeney identified errors in the tables issued by the National Acoustics Laboratory which are used to measure hearing loss throughout Australia. That there was an error has been confirmed by NAL.

Mr Effeney has also met with and consulted with the Australian Association of Audiologists and the Ear Nose and Throat specialists who provide the majority of the reports for use in measuring hearing loss for the NSW workers compensation scheme.

They are all very supportive of the findings and the proposed new system.

This project has widespread acclaim. The savings are estimated to exceed $1Om per annum once implemented and it is predicted there will be a flow on effect to other schemes in Australia.

3. Engagement of the Honourable Conrad Staff

"Mr Staff's appointment would not appear to fit into any of the SRWS or OFS processes as he was a direct appointment by WIRO apparently with the Ministers knowledge. It was not a merit appointment but it is not clear that it had to be.

Mr Staff was clearly well known to Mr Garling.

Mr Staff's skill sets appear to be appropriate for the position.

The difficulty with this appointment was fitting him into a process in order to be paid.

of 26

I determined to hold an enquiry pursuant to my power to do so contained in section

27(c) of the 1998 Act into the anomalies and ambiguities within the workers compensation legislation.

This was to be known as the "Parkes Project" and was a very important initiative

designed to deal with these very significant daily issues which cause unnecessary conflicts in the delivery of benefits.

As is the usual practice with such inquiries, I considered which retired judicial officer would be appropriate to chair the Inquiry. I determined that the Honourable Conrad Staff was appropriate.

I offered that he would be paid at the rate determined by SOORT for an acting judge.

While I was mindful that in other roles the Honourable Conrad Staff could command remuneration significantly higher I was of the view in this governmental related role

the SOORT determination should apply.

Fortunately he agreed.

This arrangement had to be approved by the Office of Finance & Services.

There was apparently confusion within that Office as to how the provision of shared services to this office would be provided as they had commenced the transition of the provision of shared services for this office from SRWS to OFS. That transition is still continuing almost a year later.

Ultimately they decided there was a simple solution which was to put his engagement in a particular category which applied to members of boards.

This is as set out in this email from Reece Collin at what was then the OFS:

"From: Reece Collin [mailto:[email protected]] Sent: Friday, 22 May 2015 11:20 AM To: Wilson, Linda Cc: Doherty, Lyn; Clark, Megan; Haberley, Sharon Subject: Re: Han Conrad Staff

Hi Linda

I the absence of Monica I have drafted a brief seeking approval for the engagement of Conrad Staff as a casual officer. If approved this will allow for payment to Mr Staff for days that he has sat on the committee to occur.

Mr Staff will required to be set up as a casual employee and held against the position you advised Monica of a couple if weeks ago.

That BN is going forward for consideration at the present time.

Referred for your information.

Reece"

of 26

That process was one that SRWS and OFS had considered since the Inquiry commenced. I was concerned that it took so long to find a regular solution.

4. Engagement of Camilla Staff

"This appointment does not appear to have followed the appropriate processes and procedures. A role appears to have been created as a result of an enquiry by Ms Staff's father, who was a long-time acquaintance of Mr Garling. Mr Garling had known Mr Staff for 40 years or so, as he was the business partner of Mr Garling's friend and Mr Garling had performance some consultancy work for that firm for 8 years.

This was not a high level role requiring specialist expertise and there was no urgency for the recruitment. There is therefore no apparent reason why the usual procurement process could not have been followed, with a position being identified and the preferred pre-qualified contractors being requested to source appropriate candidates. This would have resulted in more transparency around the appointment.

Further, the appointment appears to have been approved after Ms Staff had commenced work. The approval was notified to WIRO on 28 May 2013, but Ms Staff had commenced work on 15 May 2013. Ms Newman and Mr Barniercomplained ·that staff had commenced work to WIRO and SRWS had to prepare the paperwork later to fix up the non-compliance with policy. This appointment appears to be an example of that.

Camilla Staff was engaged to provide data entry and research for various projects that were being undertaken by Brooke Benson and also Phil Jedlin at the time.

In relation to the request for extension of the approval for her to be engaged by Smalls, I set out the email trail:

Email from Linda Wilson on 21 August 2013:

From: Wilson, Linda Sent: Wednesday, 21 August 2013 12:26 PM To: Jed lin, Phil; Benson, Brooke Subject: Camilla Staff

Hi Phil and Brooke,

Just to clarify, at this stage, Camilla's last day with the WIRO office is Friday 30 August 2013.

I have spoken with Kim and as he understands Camilla had commitments which resulted in her not being able to continue past this date- but he does feel these plans have fallen through (although he was not sure).

Kim is happy to keep Camilla as a temporary staff member, but would like you both to decide if you do feel you need her.

of26

··--------·-·------ ----------------------------

f this is the case, I will need to put this request through our recruitment system (TALEO). I will equire a small (three paragraphs or so) business case on why you are requesting an extension of her temporary employment and also what projects she will be working on during this time. Through TALEO I can request 1- 3 months or6 months to12 months, so if you could please also indicate the duration as well.

If you don't mind me also putting forward that we do have another Team Assistant commencing employment with us in the next month, she is from Employers Mutual and is currently a Case Manager- she will be full time five days per week so you will have her as a resource to help with anything you need as well.

Thank you.

Email from Phil Jed lin on 22 August 2013

From: Jedlin, Phil Sent: Thursday, 22 August 2013 11:14 AM To: Wilson, Linda; Benson, Brooke Subject: RE: Camilla Staff

Hi Linda

We would like to keep Camilla on board for another 3 months. She is currently working on WIRO Assist and doing preliminary research for an investigation into the claims process.

On WIRO Assist Camilla is working with me and Chris Tail to develop training material, processes and scripts. This project will run through to the end of September.

Camilla is also doing research on global best practice claims management for managing worker compensation claims by insurers. WIRO has commenced a research practice investigating the claims process for non-trauma injuries where a work place injury may not be directly attributed to a single incident or employer. This includes degenerative and psychological injuries and diseases. As this project develops we need Camilla's skills and product knowledge to take the research into recommendations for reform.

Camilla will also do some work on a proposed project focussing on premium calculation and the determination of liability for degenerative and psychological injuries and diseases. Please let me know if you need further information.

Phil

Email from Linda Wilson dated 22 August 2013:

From: Wilson, Linda Sent: Thursday, 22 August 2013 11:23 AM To: Jedlin, Phil Subject: RE: Camilla Staff

Thanks Phil, I have put through a TAL EO request to extend Camilla. I willie! you know when I get confirmation that the request has been finalised.

Linda

Email from Brooke Benson on 4 September 2013

of 26

---·---·---------····-·---·-···-· -··-··-··

Karen Morrison Recruitment Advisor

5. Engagement of John Pinnock

"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."

I reject unequivocally the suggestion that I personally did not follow "the approved process".

My involvement in his engagement was to follow the direction of Ms Newman and that was to provide her with his resume. It was then for her to approve for him to be engaged.

In my view it was an excellent opportunity to have a former NSW Deputy Ombudsman and a former Telecommunications Industry Ombudsman assist with the establishment of the Ombudsman function of the office ofWIRO. It proved to be a master stroke with the combination of that experience.

He was at no time engaged as a "contractor''. The following sets out how he was engaged by SRWSD:

On Monday 17 September 2012 I received the following email from SRWSD about the engagement of John Pinnock:

"From: MacDonald, Dorothy Sent: Monday, 17 September 2012 4:26 PM To: Garling, Kim Subject: Catch up with you and John Pinnock

Hi Kim,

Are you available on Wednesday morning 7

I need to catch up with you regarding your resourcing needs, Johns contract. I spoke with

him last week and we are going to set up an arrangement with a recruitment agency for his

remuneration, this is better for him than coming to us as a stand alone contractor. They are

awaiting my say so to get the detail they need form John to put him on their books

Manager Strategy and Culture

On Thursday 20 September 2012 the following email was sent to SRWSD by Smalls:

of26

From: Rachel Tchappat [mailto:[email protected]] Sent: Thursday, 20 September 2012 4:13 PM To: MacDonald, Dorothy Subject: ClOD Order form

Hi Dot,

Please see attached the order form for John Pinnock.

Cheers

Rachel

Rachel Tchappat Consultant

As to the "first extension" the position was that Brooke Benson contacted Karen Morrison to clarify the term of the approval of all temporary staff with Smalls including John Pinnock. Linda Wilson then took the matter up with the SRWSD relevant personnel:

From: Wilson, Linda Sent: Tuesday, 11 December 2012 11:51 AM To: Morrison, Karen; Smith, Wayne; Huntley, Fiona Subject: FW: contract end dates for WIRO contractors

Hi All,

Following on from the email which was sent to Brooke below:

John Pinnock has been extended until end of February 2013 (agreed by Kim Garling).

Please see below confirmation:

Name of Supplier: Smalls Recruiting Name of Temporary: John Pinnock Position of Temporary: Executive Officer Assignment Commencement Date: 17 September 2012 Assignment completion date: 22 February 2013 Charge Rate: $ 850.98 per day+ GST Payment Details: As per contract

Thank you.

The following reply was received:

From: Huntley, Fiona Sent: Thursday, 13 December201211:01 AM

of 26

- ··- .. ··------·-·---·-·-··----··--·-·-·---

To: Wilson, Linda Subject: RE: contract end dates for WIRO contractors Hi Linda,

We will need to create a new C100 form and another requisition for the extension period for John Pinnocks engagement. We have also been advised that you have a new starter- Jayne Madden. We will require paperwork for her too.

Perhaps if you wait until! finalised your Oracle Access- you can complete the a-requisitions for all these outstanding orders and then send to Megan for approval.

I will email the details once finalised.

Fiona Huntley

Senior Purchasing Officer Procurement Group] Finance & Services Division Safety Return to Work and Support Division

The allegation in the DFSI Letter that the approved process was not followed in the first extension is clearly factually incorrect. Linda Wilson (an SRWSD employee) followed precisely the direction she was given by the relevant officer in the Procurement Group as set out in the emails above.

It is correct to state that there was no extension of the approval to Smalls from 28 February 2012 to10 March 2013. That occurred during the final phase of the filling of the permanent recruitment of Mr Pinnock which was approved by the CEO on 1 March 2013.

This office did not receive any details of the date of commencement of the permanent employment of Mr Pinnock who was engaged formally by the Secretary of the Treasury and this office was therefore unaware of the specific dates which may have been required to formalise any necessary extension.

That is why it was attended to internally at SRWS.

I refer to the document contained within the folder delivered to my office on Tuesday 25 August 2015 and marked with a post it note as "Phase 3 A to K" and which was behind Tab "F". It also appears behind Tab I in "Phase 2 M to K".

In the notes section of that document which refers to John Pinnock it states:

"Engagements had been confinned between IMRO and Smalls prior to Procurement involvement. 11

of 26

-··--------··---------

That statement is untrue. The engagement was between SRWSD and Smalls. There had been no contact at that time at all between WIRO and Smalls. Ms Tchappat was not known to anyone in the WI RO office.

The next statement:

"No agency temp approval from P&C for initial engagement"

That statement is also untrue. I refer to the CEO submission of 13 September 2012 and also to the email from Dot McDonald which demonstrate that this allegation is false.

The next statement:

"Retrospective approval for extensions following Procurement alert to Recruitment"

That obviously refers to an internal communication within SRWSD of which I am unaware.

Insofar as it suggests that the first extension was as a result of the "alert'' that is clearly incorrect as demonstrated in the ~mails set out above.

6. Anthony Johnston

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 nonpayment of Mr Johnson. At that time, even on Mr Garling's own evidence, Mr Johnston had been working for 2 weeks. There is no documentary evidence to suggest what Mr Garling did with this proposal. Ms Newman no longer has access to her em ails and was unable to confirm whether it had been sent to her.

While the SRWS 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.

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 whether the contract offered value for money as MrGarling 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

of 26

--· -· .. -· --------------·· -------·-

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 Fonn as the WorkCover NSW Delegate. It is not clear that he had authority to do this.

Anthony Johnston was contracted to provide project management services from 10 October 2012 for a period of 5.5 days in relation to the Resolve installation. That installation was crucial to the capability of the WIRO office to maintain a record of its work including the dealings with workers with complaints about insurers.

This information was required in order for WIRO to fulfil the reporting obligation in the 1998 Act. It was information which had to be maintained throughout the period from the operation of the Office.

I should observe that Wayne Smith attended a meeting at which Resolve presented in relation to their proposed case management system on 8 October 2012 and was there with Anthony Johnston and communicated with him the following day about the procurement process for the Resolve installation.

Mr Johnston submitted an invoice for his services on Monday 22 October 2012 but dated 20 October 2012 in respect to services provided between 10 October and 19 October 2012 which was received by Brooke Benson and then approved by her and sent to SRWSD on 22 October 2012.

Email trail:

From Mr Johnston to Linda Wilson:

From: Anthony Johnston [mailto:[email protected] Sent: Monday, October 22, 2012 06:50AM To: Wilson, Linda Subject: Invoice from AJ

Hi Linda,

Attached is my invoice for the first two weeks. See you tomorrow.

Cheers

From Ms Hancock to Brooke Benson

From: Hancock, Megan Sent: Monday, 22 October 2012 3:45 PM To: Benson, Brooke Subject: RE: Invoice from AJ Importance: High Hi Brooke,

Can you please certify in the relevant space on the attached that the services have been received and send back to me. Don't worry about the coding at this stage- we can look after this.

of 26

--·-····- ····-· -··-- ------ ----- ... --- ·---- .... -__ , ____________ _

Thanks,

Megan Hancock AICFO I Finance and Services Division

I prepared a Proposal to retain the services of Anthony following the initial scope and I provided that to the CEO. I also sent it to Wayne Smith at SRWSD by email on 18 October 2012.

Wayne

Here is my understanding of the work to be undertaken.

Kim

Kim Garling WorkCover Independent Review Officer

It required his approval. That approval must have been forthcoming because Mr Johnston was engaged as an Agency Temp from 23 October 2012 through to 22 February 2013.

I further observe the comment in the documentation that Mr Johnston had been engaged by WIRO with Smalls prior to Procurement involvement.

Clearly that is not correct.

I was wholly unaware of any reason for the Minister's office to raise the payment of an invoice by Mr Johnston with the executives at SRWSD. It came as a complete surprise to me when I was informed. Obviously I was only informed of the call afterwards. That there was some pressure is also a mystery to me as my office had not even been billed for the work performed.

In relation to the extension of the arrangements with Smalls I set out the communications which seems to negate the suggestion that the arrangements were not properly extended.

Initial email:

From: Morrison, Karen Sent: Monday, 10 December20121:14 PM To: Smith, Wayne Subject: contract end dates for WIRO contractors

Hi Wayne,

I've been asked by Brooke Benson in WIRO to find out the end dates of a number of their contractors so they know who they need to extend. As they are contractors, they weren't

of 26

---·-·· --~-------------·---------- ----·--·

done via a recruitment requisition and don't appear to be in Chris so I am unable to see when the contracts finish. Are you able to please check from your end as I'm assuming their contracts must have been done through procurement.

The names are as follows:

John Pinnock Paul Gregory Lorinda Wellings Anthony Johnston

If you could please Jet me know when their contracts finish that would be great.

Kind Regards

Karen Morrison

Recruitment Supervisor Recruitment & Workforce Planning Team People & Culture Group

The next email is from Wayne Smith (Manager, Procurement) to Fiona Huntley

(Senior Purchasing Officer, Procurement Group):

From: Smith, Wayne Sent: Monday, 1 0 December 2012 1 :23 PM To: Huntley, Fiona Subject: RE: contract end dates for WIRO contractors

Hi Fiona,

See message below. Can you assist Karen with the required information. Thanks Wayne

Fiona Huntley replied to Brooke Benson in the next email:

From: Huntley, Fiona Sent: Monday, 10 December 2012 2:57PM To: Benson, Brooke Cc: Morrison, Karen; Smith, Wayne Subject: RE: contract end dates for WIRO contractors

Hi Brooke,

Karen Morrison has requested I forward the following engagement dates for the agency temps currently working in WIRO. These dates are listed on the C1 00 contract between WIRO and the recruitment agency.

Please see the below details as requested:

of 26

----------· --····--- --·· --- ...... ---- ...... --- -----------·------------····-----

John Pinnock from 17/09/2012 to 17/12/2012 Paul Gregory from 02/1 0/2012 - 22/02/2013 Laurinda Wellings from 22/10/2012 - 22/02/2013 Anthony Johnston from 23/10/2012 - 22/02/2013 Kate Stevenson from 05/11/2012- 31/01/2013 Maria McNamara from 22/10/2012 - 22/02/2013 Phil Jed lin from 12/11/2012-22/02/2013 Laura Thompson from 30/10/2012 - 22/02/2013

Kind Regards

Fiona Huntley Senior Purchasing Officer Procurement Group

7. Maria Macnamara

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

The invoice submitted by Ms McNamara and the access records suggest that Ms McNamara commenced work on Monday 8 October 2012. The Proposal forMs McNamara's services as 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 commenced work.

While the SRWSD CIO, and possibly others within SRWSD, may have known Ms McNamara 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 toMs McNamara being engaged.

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 ofthis, there was no opportunity for SRWSD to assess whether the contract offered value for money.

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.

of 26

----------------··--------- -·---··· ·-··-· --·--·-·---·--·-··------- --·---

As to the telephone call from the Ministers office I did not recall any reference to Ms MacNamara not being paid. She was not known to the Minister or his staff at that time and had only rendered an invoice on the morning on 19 October 2012 and had not expressed any urgency for its payment.

Ms MacNamara performed some work on a preliminary basis which was invoiced by her company and paid. That engagement would have been handled by Brooke Benson at the time.

I submitted a Proposal for further work which I sentto Ms Newman and also to Wayne Smith on 18 October 2012.

That was approved for her to be engaged as temporary agency employee and she did so until August 2013 when Ms Newman altered the arrangement.

8. Chris Tait

"Mr Garling appears to have identified the needs for the policies and procedures of WIRO to be documented and approached Mr Taft to provide this service. No competitive tender was conducted.

There was no apparent urgency for this service, and it is not highly specialized, 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 Taft was paid could have been market tested.

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

It appears that the arrangements for Mr Tail to be contracted were handled by Shane Lopez. She tells me that she would have contacted SRWSD and sought their advice as to how to proceed. They provided the standard form of contract that was required to be completed by the contractor. That was the first such contract for procurement utilised in this office.

of26

--------------- ....... ------ ------------------------------------------

Ms Lopez received the following email from SWRSD:

From: Shepherd, Margaret Sent: Thursday, 27 June 2013 12:52 PM To: Lopez, Shane Subject: PO 1043 Chris Tait

uoear Shane CC. Brooke

Purchasing has received and processed your requisition (41) as requested. Please be advised that Purchasing has changed the nominated line item (2335) to a more appropriate and accurate coding for your request (2347). This change has been made in consultation with Management Accounting Group.

If you have any issues with this alteration, please contact Selina Smithers or email [email protected]"

I trust this process will assist you, however if any issues arise please feel free to contact me.

Kind Regards Margaret Shepherd Purchasing Officer Procurement Group I Finance & Services Division

Mr Tail submitted invoices for the work he performed and these were duly submitted

to SRWSD for payment which was made in the ordinary course.

I became aware of a concern within Procurement Group which I understood related

to the failure to predict what work would be done as a whole by the contractor. It was

referred to as possible "invoice splitting".

On 2 September 2013 I sent the following email to Wayne Smith about Mr Tail:

Wayne,

I am now coming to understand better the detail of the process that has occurred. In simple terms I asked Mr Tait to undertake a review of the processes and how the staff perceived the success or otherwise of those. It was a Business Review. That was approved and performed. It became apparent that the office was lacking in proper "Office Manuals" and procedures in various areas.

Accordingly given that Mr Tait was already familiar with the personnel and the way in which the office proceeded I asked him to produce the documentation to support our work in the Complaints area. This took longer than I had anticipated due to the pressures within that group. That has now been completed.

In August it was appropriate for Mr Tail to work on one of initiatives WIRO Assist and also on the procedures in the I LARS area.

of 26

There is more to be done and I would suggest that it would solve some of our internal issues if that can be completed expeditiously. I therefore seek approval for a further four weeks at a maximum cost of $20,000. If it can be achieved under that time then I will let you know.

If there is any further information you need please let me know.

Kim Garling

Mr Smith replied:

Hi Kim,

Thanks for the advice regarding Mr Taifs engagement. Based on the content of your message and the internal issues and timeframes you have indicated, I would support your finalising this engagement with Mr Tail. Your team can contact Fiona Huntley in Procurement to finalise the arrangements.

However, this should be the last engagement of this type and in the event that there is likely to be the need flow on work from this then there will need to be a competitive procurement process carried out to select a contractor. Procurement Group will be happy to assist your staff with this if the need arises. Let me know if you have any questions.

Regards Wayne

Wayne Smith Manager, Procurement

9. Tamera McManis

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 deteiT11ined that there was not a conflict. He did inform the other panel members that he knew the candidate. That 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 shottlisting. Failure to complete the declaration at this time does not give the recruitment staff the oppottunity to manage potential conflicts of interest.

Eight positions were being offered and had the ninth highest score the applicant with the seventh highest score was not made an offer.

Of some concern is the fact that Ms McManis was offered a position 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 not have the necessary score the reasons for offering her the

of 26

position need to be clearly stated and in particular there needs to be clear articulation of why she was preferred to the more highly rated candidate.

The Confiict of Interest Declaration was completed by me in April 2014 through an

automated process. Without that having being done the recruitment process could not continue. It was not until May 2014 that SRWSD could not locate that record and requested that I provide another declaration.

Given that the Declaration was in terms that I did not have a conflict, then there could have been no prejudice.

After the interview process the independent panel member and myself ranked Ms McManis higher. She was therefore properly selected not only based on that ranking but also on other factors such as gender diversity, specific skills and the business needs of the office.

That is a usual practice.

I stand by the recommendation of the Panel.

As I said earlier please let me know if you require any further information. I again reject any allegation that I had not followed·any incorrect process.

Yours faithfully,

;.,_ __ p

KA Garling Workers Compensation Independent Review Officer 11 September 2015

of 26

wirc> - parliament of nsw mr m hoffman, secretary, ... mv appointment ... pursuant to section 47...

Documents