Watchdog finds former CIT CEO engaged in 'serious corrupt conduct'

Leanne Cover was found to have deliberately concealed information about the contracts from the institute's board.

"The consequence of her conduct was to give [Patrick Hollingworth] a substantial financial gain at the cost of the Territory," Integrity Commissioner Michael Adams KC wrote.

"This was not isolated conduct by Ms Cover but a pattern of concealment."

The ACT Integrity Commission on Thursday handed down a report which showed Ms Cover did not consult the board about a contract worth $4.99 million.

CIT awarded companies owned by Patrick Hollingworth, a consultant, more than $8.5 million in contracts over a five-year period. The companies included Redrouge and Think Garden.

The investigation concluded the $4.99 million and the $1.7 million contracts would not have been awarded to Mr Hollingworth's companies if the board had been properly informed.

"Ms Cover's conduct has badly affected the reputation of the CIT and led to substantial adverse financial consequences," the commission report said.

Ms Cover was stood down on full pay when the Integrity Commission announced its investigation two years ago.She resigned from her role last week. Ms Cover received an annual salary of more than $370,000.

The investigation also found ACT Skills Minister Chris Steel was misled.

Mr Steel on Thursday said he was bitterly disappointed Ms Cover had been found to have acted corruptly.

"The actions of this former CEO are incredibly frustrating and disappointing for myself as minister, for staff and students at CIT, as well as the ACT community," Mr Steel said.

"Ministers trust, and have a high expectation, that that senior executives act with honesty, integrity and use public funds efficiently and effectively and in accordance with procurement law."

The investigation showed Mr Steel and his chief of staff had expressed their concerns about CIT entering into another contract with Mr Hollingworth's entities in December 2021.

But Ms Cover did not inform the board of this phone call. The institute would go on to enter into a $4,999,990 contract in March 2022. This contract was suspended three months later, however, Mr Hollingworth received a $1.7 million payment that April.

"I am satisfied to the requisite degree of certainty that Ms Cover, in breach of her duty of disclosure, intentionally concealed from the board matters referred to in order to avoid or reduce the risk that the board may has disapproved of the transactions," the report said.

Mr Steel sought an explanation on the contracts in a letter to former board chair Craig Sloan on February 19 2021 but the letter was never presented to the board.

Board members told the Integrity Commission they were unaware of the substance of the 2021 letter until June 2022.

"Mr Sloan agreed that, in light of the unusual character of the minister's letter, it should have been brought to the board's attention and that it was not, although he had thought it had been circulated," the report said.

The commission's report said the board should have taken the concerns of the minister very seriously and this omission meant it was edited out of the narrative.

"In effect, the Minister's questions - which fundamentally concerned the major policy implications about the progress of transformation and the connected utility of Mr Hollingworth's contracts - were edited out of the narrative when any reasonable person should have understood they were an important part of the conversation," the report said.

The report showed the $4.99 million contract was a substantial proportion of CIT's budget which was in deficit. The commission found Ms Cover had an obligation to bring the awareness of this contract to the board, especially considering the conversation she had with Mr Steel's chief of staff.

The commission said the failure to consult the board could not be reasonably regarded as an oversight or a misjudgement and any chief executive would have know consulting with the board was not only desirable but necessary.

"Had the board been aware of this contract, it was bound by virtue of its statutory responsibilities to have brought it to the minister's attention; and there was a substantial likelihood that the board would not have approved the contract," the report said.

The commissioner said Ms Cover had claimed to have informed Mr Sloan of the contract but he did not accepted "the truthfulness of her evidence on this".

Mr Adams said, in the report, he was satisfied Ms Cover had "deliberately decided" not to inform the board.

"In coming to this conclusion, I am conscious of the fact that there is no evidence from which it is reasonable to infer any particular underlying motive. A number of possibilities are speculatively open but it is unnecessary to deal with them," the report said.

An ACT Auditor-General report revealed the payment schedule was based on five time-based milestones as Mr Hollingworth's company, Think Garden, offered a 12 per cent discount for an up front payment. This was described as a "preferred client discount".

The audit, released last year, also revealed Think Garden's offer was more than $2 million higher than the two other offers which were $805,183 and $1,979,000.

The ACT Integrity Commission first announced it was investigating the awarding of the contracts on June 23, 2022.

Over the past two years very few details were released about the investigation and no public hearings were held by the commission.

The report was first distributed to 35 people in November who were given the opportunity to provide comments on the findings.

Under law, parties must be given a minimum of six weeks to respond but parties are able to request an extension.

The commission revealed in April it intended to hand over the report before the end of the financial year.

The commission was due to hand over the report to Legislative Assembly Speaker Joy Burch last Wednesday but this was brought to a halt after a person sought an injunction.

The ACT Supreme Court dismissed the application for the injunction on Tuesday but the release of the report was further delayed after a temporary injunction was imposed until 4.30pm on Thursday to allow the person the opportunity to seek an appeal.

No appeal was sought.