The Victorian Independent Broad-based Anti-corruption Commission (the IBAC) inquiry into serious fraud at the Victorian Department of Education and Training (the Department) has heard how a former Department employee allegedly stole funds from the Department to fund overseas holidays and personal expenses. The IBAC inquiry commenced hearing public examinations in April and further examinations are scheduled to recommence later this month in the County Court of Victoria.
The Age reported that former finance manager Mr Nino Napoli has admitted to engaging in ‘corrupt’ behaviour while employed by the Department.
According to the media report, the allegations against Mr Napoli include that he:
The alleged crime scheme run by Mr Napoli, which is alleged to have stolen $2.5 million from the Department over many years, involved fake invoices being issued to the Department from companies run by Mr Napoli’s relatives.
According to the IBAC opening statement by Ian Hill, QC, the scheme also involved the establishment of ‘banker schools’ which were entrusted by the Department to hold public funds in the schools’ own bank accounts when the funds were not always intended to be used to pay for those schools’ expenses. The banker schools were allegedly used to process the fake invoices issued by companies within Mr Napoli’s network.
According to Mr Hill, Mr Napoli had unfettered discretion of approximately $7 million annually of Department funds.
Mr Rosewarne, a former employee at the Department, has also been implicated in the corruption allegations and he has since left his position as a director at the Catholic Education Office, Archdiocese of Melbourne.
We’ve written various articles on incidents of fraud occurring in schools. For example Fraud & Corruption – what can your school do to prevent it? and ‘Fraud in schools – it couldn’t happen to me‘.
This latest incident, involving serious conflicts of interest and allegations of fraud, is disheartening given it involves a State education department – the primary source of funding for government schools and the authority on their registration and quality of education.
Although the Department publishes fraud and corruption control policies for government schools on its website, it’s unknown if the Department has similar policies governing its internal administration.
An internal whistleblower policy is one element of a robust risk management framework which, as described in our two part series on whistleblower policies and why your school needs one, is an important part of an organisation’s governance framework. In the school context a whistleblower program can help the school to manage a school’s student duty of care, workplace health and safety and school governance requirements.
For a government entity such as the Department, a whistleblower policy achieves the same benefits. But given that the Department is responsible for the protection and proper administration of taxpayer funds, having a whistleblower policy in place, in addition to other elements of a functional risk management framework, is also important from political and community perspectives.
The public examinations into the alleged corruption at the Department recommence on 22 June. The inquiry expects to examine around 50 witnesses including school Principals and business managers who may have approved the fake invoices. According to Mr Hill, ‘the value of the impugned transactions to date, the duration of the conduct and the apparently pervasive operation and effect of the conduct within the Department and among State schools, combine to make the circumstances exceptional and concerning’.