The 'calculated' steps to hide controversial contracts

In his report handed down in June, Integrity Commissioner Michael Adams KC found the former CEO deliberately hid information from the CIT board, in what was a "pattern of conduct".

The commissioner said Ms Cover's progressive failure to consult the board on contracts with consultant Patrick Hollingworth could not be regarded as oversight or misjudgement.

"... any reasonable CEO must have known that consulting with the board was not only desirable but necessary," the commissioner wrote.

Prompted by a media inquiry from a journalist, Minister for Skills Chris Steel wrote to the CIT board in February 2021 seeking further information about a series of contracts awarded to Patrick Hollingworth between 2017 and 2020.

The commissioner said it was unmistakable that the minister "was not merely seeking information but was airing scepticism about the appropriateness and utility" of the contracts with Mr Hollingworth.

The letter was addressed to the CIT board chair at the time, Craig Sloan, and was forwarded to Ms Cover for her attention.

Minutes of the two subsequent board meetings in February and March 2021 made no mention of the minister's letter, the commission found.

The minister's letter was mentioned in the correspondence register for the April board meeting, however it made no mention of Mr Hollingworth or his contracts.

Instead it referenced "Evolving Together", shorthand frequently used by CIT in relation to its transformation project.

The commissioner said if the correspondence register had included an accurate summary of the minister's letter, there was no doubt one or more of the board members would have interrogated the matter, which may have resulted in a change to existing or future contracting with Mr Hollingworth.

The board only learned of the letter's substance when it was referred to in another letter from Mr Steel, more than a year later.

Ms Cover's failure to inform the board of the initial letter was part of a "pattern of conduct", the commissioner said.

It was a "deliberate or calculated decision to remain silent" in order to avoid the possibility that the board might reconsider Mr Hollingworth's services, the report noted.

In November 2021, the CIT board met in November 2021 to consider the proposed 2022 budget.

At that stage, plans were well-advanced for further "Evolving Together" contracts totalling $4.5 million.

This was not disclosed in the budget papers, the commissioner found.

Neither was it disclosed in the budget paper that the amount listed under "strategy bids nonsalaries" included a "significant sum" budgeted for an external consultant, which Ms Cover intended to be Mr Hollingworth.

Meanwhile, minutes of the board meeting showed there was concern among board members about the forecast $10 million deficit.

"This procedure ensured that the board was kept ignorant of the actual proposed procurement of the sixth contract," the commissioner said.

The sixth contract, as it is referred to in the inquiry, was eventually priced at $4,999,990 over two years.

"This was a serious breach of the obligation of disclosure for which Ms Cover, as CEO, must be held accountable," the commissioner said.

During an inquiry examination, the commissioner questioned Ms Cover over her efforts to hide plans for the contract.

It was put to Ms Cover that she made a deliberate omission to avoid informing the board of the planned spending.

"No, that's not the case, commissioner. This is consistent with how the budget is developed and reported at all times," Ms Cover said.

The commissioner pressed: "I'm suggesting to you that you took advantage of that to conceal from the board what you should have told them namely that $2.25 million was estimated to be spent on either Hollingworth or similar services for 2022?"

Ms Cover said that was not the intent.

"It wasn't, it wasn't intended to not disclose that," she said.

"It, the level of this detail - this is, this is the format, the process, the consistency consistent with the practices of the level of granularity.

"I take, I can understand your point that you're making but it was not, there is no intention to not be transparent. It's more about not being sure about what was going to happen."

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Board members gave evidence that they had no knowledge that the proposed 2022 budget included more than $2 million that was intended for the sixth contract with Mr Hollingworth.

The commissioner did not accept that while CIT was facing multimillion-dollar operating deficits Ms Cover would consider it appropriate to enter a two-year contract with Mr Hollingworth without first bringing it to the attention of the board.

In making his conclusion, the commissioner said Ms Cover deliberately concealed information in an effort to convey to the board that "no transactions involving Mr Hollingworth were envisaged or underway that needed to be brought to their attention".

Why exactly Ms Cover went to these great lengths to hide information from the board is yet to be established, but the integrity commission's investigation continues.