The Independent Commissioner Against Corruption has recommended Bachelor Institute train staff about their ethical responsibilities, reporting requirements, whistleblower protections, and management of improper conduct as part of his review of the troubled Indigenous training organisation, which also references missing artwork in passing, but no specific mention of misconduct.

The review was done without interviewing a previous whistleblower who had provided credible evidence of corruption at the organisation that is funded with public money.

Commissioner Michael Riches did not raise any specific wrongdoing or improper conduct he may have found when undertaking his review of Batchelor, which ran for up to a year, and which he conducted with the help of Bentleys Advisory consultants.

He said the review was about general education for the organisation, and other public organisations, and was not meant “to punish or embarrass the Institute”.

In mid-December, the NT Independent reported the Institute was looking for its ninth chief executive officer since August 2017, after the sudden and unexplained departure of Leon Yeatman, less than five months into the job, and that it had lost $11.1 million from 2016 – 2020. The 2021 annual report has not been published on the Batchelor website.

However, the ICAC report, tabled in Parliament while no sittings were taking place, does not address any wrongdoing or improper conduct, which can only be surmised through opaque generalised references in the report and motherhood statements in summaries on different topics.

The problems relating to improper conduct are presumed to be the underlying basis for his 27 recommendations, including his reference to training staff in their ethical responsibilities, reporting requirements, whistleblower protections, and management of improper conduct.

He made no specific mention of any retaliation or non-protection of whistleblowers at the Institute or what action he had taken if this was discovered.

Other serious problems are pointed at in the references to reviewing the assets register, issues with direct appointments when recruiting, missing procurement documentation and evidence of why suppliers were selected, a lack of conflict of interest provisions, the need to review the financial controls and risk management, and reviews of the code of conduct for staff and the board, known as the council.

Mr Riches did not specify say who was responsible for direct appointments, who was appointed, and how often this was happening, or if anyone had broken the code of conduct, or did something that should have been prohibited by the code of conduct.

However, he did make a brief mention to a number of assets, including artworks, that had been recorded as missing, and mobile phones still being recorded against staff who were no longer employed in the Institute, but did not say what action he has taken to investigate this further.

The NT Independent had previously revealed that a report written for the Chief Minister’s office in 2019, by a whistleblower with knowledge of the internal workings at the troubled institute, stated that former Batchelor chief executive officer Professor Steve Larkin employed his relative, Wendy Ludwig, as vocational education and training deputy chief executive, and negotiated a 17 per cent superannuation deal for her too.

The 2019 report also revealed Prof Larkin had employed his partner as a senior project officer, and another relative in an executive role. Prof Larkin did not respond to questions about the appointments at the time the NT Independent reported them.

However, in his report, Mr Riches said an audit or review of policies, practices and procedures was not an investigation into individual conduct, and if there was improper conduct found, or suspected improper conduct found, they would be considered separately.

Under the ICAC Act 2017, the ICAC is not required to include in a report any information that may prejudice a current or future investigation, prosecution or disciplinary action. Mr Riches has previously told the NT Independent he would not say if he was conducting a further investigation into Batchelor Institute.

The report did not mention any referrals to other authorities concerning the operations of the Institute, or the actions of anyone who works or worked there, or any members of the Institute’s council, or former members of the council.

ICAC announced the review into Batchelor in September 2021, in response to questions from the NT Independent about the existence of a report sources said was produced after an investigation the previous commissioner instigated. Two different, but very similar, emails detailing the review were sent by ICAC and Batchelor to the NT Independent, just minutes apart.

The NT Independent inquiry was based on information from the previously mentioned whistleblower, and another well-placed source, who told the NT Independent the watchdog had already investigated based on information it inherited from the former Office of Public Interest Disclosures and produced an earlier report which has not been released.

The whistleblower’s report that outlined credible allegations of ongoing fraud and misconduct at Batchelor Institute was given to then-chief minister Michael Gunner’s office in late 2019 – after it was requested by a senior ministerial advisor – but it appears the office took no further action.

It detailed 33 serious issues, including allegations that fraudulent qualifications paid for by governments were being handed out to staff, alleged rampant bullying and nepotism by some of the executives, executive contracts not being valid, and that the institute was considered by the Australian Skills Quality Authority of being at “high risk” of not meeting its national training accreditation obligations.

There were also allegations of stolen equipment, claims the institute was spending more money on executives than instructors, employed unqualified staff and that it could not provide student numbers per qualification awarded.

This publication is also aware of at least eight internal or external investigations, reviews or audits, at the institute since about August 2017, that examined all aspects of management, allegations of corruption, gross financial mismanagement, bullying, nepotism, and its toxic culture.

The whistleblower said they had not received any formal response from Commissioner Riches, or been questioned for the review at all. But they said that since they took their concerns to the government they had not undertaken any projects or assignments for the NT Government or agencies despite previously working in a number of senior executive roles and successfully undertaking a variety of other projects and investigations for various NT Government agencies.

“I decided to conduct a review of the Institute after becoming aware of a number of reports made to my office, alleging various forms of impropriety and unsatisfactory process,” Commissioner Riches wrote in his review report.

“I was also aware, having read information from a range of sources, that the Institute had experienced a period of what I will describe as turbulence, in respect of its leadership, financial sustainability and operations.”

The Batchelor review summary and recommendations

Commissioner Riches broke his summaries and recommendations down into different categories including policies; financial controls; risk management; conflicts of interests; recruitment; performance review and development; training; corporate culture; and “other matters”.

The lack of specifics of what the ICAC found in the long process of discovery and interviews that underpin the report is exemplified in the summary sitting above the very serious recommendation about training staff in their ethical responsibilities, reporting requirements, whistleblower protections and management of improper conduct.

“A number of issues identified during the course of the review might indicate a lack of sufficient training and structured professional development for staff,” the report stated. “It is critical that staff are invested with the knowledge and skills necessary to perform their roles, and to model organisational expectations and values.”

There are also suggestions of problems in Mr Riches’ recommendation of a review of all financial controls contained within policies, procedures, guidelines and delegations, to ensure those controls are adequate and appropriate.

The recommendation of a leadership and governance training program for all staff who have management or governance responsibilities, and his recommendations based on identified problems in recruitment, also raise serious concerns.

He said his office did not undertake the review by itself but was assisted by Bentleys Advisory consultants, who conducted a review of financial management controls and found only 79 of 103 financial management controls were found to be effective or mostly effective. However in his report, this results were presented as a positive.

“[Bentleys] identified a number of anomalies, including observed workarounds of existing policy requirements, at least one occasion of an apparent failure to abide by statutory obligations in respect of a loan, failures to adhere to delegations and an absence of controls relating to accounts payable processes,” he wrote.

“Nevertheless, of the 103 financial management controls reviewed by Bentleys, 79 were found to be effective or mostly effective.”

Mr Riches followed up with a more generalised statement about public bodies and how he sees it: “Public bodies have an obligation to manage effectively the public resources for which they are responsible.

“Robust controls for the management of public finances is critical, not only to ensure the efficient use of money to advance the objectives of the body, but to minimise the risk of impropriety associated with those resources.“

He wrote that the “anomalies” identified in his review were likely the product of a turnover of key staff, a lack of understanding or awareness of process amongst existing staff, poor systems, and inadequate oversight and review to ensure compliance.

Mr Riches also wrote that “recruitment and appointment were the most prominent issues raised by current and former Institute staff spoken to during the review”, in a specific reference to Batchelor.

“Actual or perceived impropriety in recruitment can have a tremendous impact upon the culture of an organisation,” he wrote in a general observation.

“Confidence in the senior leadership of an organisation may decrease where recruitment processes have occurred, or are perceived to have occurred, outside established processes.

“There were a number of occasions identified where a recruitment process appeared to have occurred contrary to policy. Such occasions included direct appointment of staff without a selection process.”

Mr Riches said there were conflicts of interest reporting requirements missing from Batcher’s enabling legislation, with only the council, and not employees, subject to them. But even then, he said, the provisions address only pecuniary interests.

“They do not address other interests, such as familial or social interests,” he wrote.

“As a consequence, a member of the Institute’s council could conceivably sit on a selection panel where an applicant is a close family member, and the conflict of interest provisions in the BIITE Act would have no application.”

Under the heading of corporate culture, Mr Riches gave readers a short lesson in the role of leaders in making a organisation well functioning, and stopping corruption.

“Corporate culture relies heavily on the willingness of managers to model appropriate behaviours, champion organisational expectations, and call out and deal with conduct that falls short of those expectations.

“The attitudes and behaviours modelled by leaders not only influences the attitudes and behaviours of staff, but will also impact upon their job satisfaction and their commitment to the organisation.

“Staff look to their leaders to set the standard, to value their contribution and to motivate and encourage them to perform.

“Poor leadership, disenfranchisement of staff and dissatisfaction with the work environment create an organisation more vulnerable to improper conduct.”

The only reference to Batchelor he made was: “A number of current and former Institute staff described the Institute’s corporate culture in negative terms. Improving the Institute’s corporate culture is critical”.

Although he said fixing the Batchelor corporate culture was critical, and that poor culture was the single biggest driver of corruption, he did not directly state any corruption found at the Institute.

Under the banner of “other matters” was procurement, where Mr Riches wrote that “in many cases important documents were missing and there was a lack of information as to how certain suppliers had been selected”.

“Procurement is universally regarded as a high risk activity susceptible to corruption,” he wrote.

In response to these serious findings the Commissioner recommended: “The Institute reinforce to all staff the need for strict compliance with procurement policies and procedures.“

He made no mention of finding any procurement corruption in Batchelor despite having couched procurement as a high-risk activity susceptible to corruption, and briefly mentioning the missing procurement documentation and unexplained reasons for supplier selection.

All the recommendations:

Policies

1. The Institute should establish a mechanism to ensure that any new or amended policy is either drafted by, or considered by, a central body prior to submission for approval.
2. All organisational policies and procedures should be approved by the Institute’s Council or executive team.
3. Steps are taken to ensure the BIITE Policy Library is a single, central electronic location accessible by all Institute staff.
4. Steps are taken to ensure the BIITE Policy Library contains only those policies and procedures that have current operation.
5. Steps are taken to ensure the content of the BIITE Policy Library can be easily searched to identify guidance relevant to any particular issue.
6. A dissemination and training strategy accompanies the approval of any new or amended policy.
7. The Institute, as a matter of priority, conduct a wholesale review of its policies to ensure contemporary relevance, consistency and clarity.

8. The Council should review the Staff Code of Conduct to ensure its content is relevant and meets contemporary expectations and needs.
9. The Council should review the Council Members Code of Conduct to ensure its content is relevant and meets contemporary expectations and needs.

Financial controls and risk management

10. The Institute conducts a review of all financial controls contained within policies, procedures, guidelines and delegations, to ensure those controls are adequate and appropriate for the Institute’s contemporary operations.
11. Include in new staff induction programs information about relevant policies and procedures, and how those policies and procedures may be identified and accessed.
12. The Institute develops an internal controls framework that can form a Controls Self–Assessment (CSA) tool for regular internal assessment of controls, identifying on an annual basis the level of compliance and key areas for improvement.
13. The Financial, Audit and Risk Management Committee (FARMC) include risk management as a standing item on its agenda.

Conflicts of interest

14. An Institute wide policy and procedure is developed and implemented requiring staff, not captured by the disclosure of interests requirements in the BIITE Act, to disclose such
categories of interests as are articulated in the policy.
15. The policy and procedures should include information about the nature of interests to be disclosed, the circumstances in which a conflict of interest must be disclosed, to whom such disclosures are to be made and how decisions will be made as to how such conflicts will be managed.
16. The policy and procedure must address administrative process such as how information about interests and conflicts will be stored and how they will be reviewed.
17. The Institute develop and deliver training to staff about the identification, disclosure and management of conflicts of interest

Recruitment

18. Approval to depart from the Institute’s standard recruitment process should only occur after consideration by the executive team.
19. Where a decision is made to depart from the Institute’s standard recruitment process, detailed reasons for that decision must be recorded in writing by the decision maker.
20. To the extent that training does not currently occur, any staff member who is to sit on a recruitment panel ought to be required to participate in dedicated recruitment training.

Performance review and development

21. The Institute applies the performance development processes to every staff member as required by the Enterprise Agreement.

Training

22. The Institute develops and delivers a training program aimed at informing staff of their ethical responsibilities, reporting requirements, whistleblower protections and management of improper conduct.
23. The Institute ought to implement a leadership and governance training program for all staff who have management or governance responsibilities.

Corporate culture

24. The Council, and the executive team, commit to such steps as are necessary to ensure shared values and objectives underpin and support improvements to the Institution’s
corporate culture.

Other matters

25. The Institute’s asset management register ought to be reviewed to ensure accuracy and completeness.

26. The Institute reinforce to all staff the need for strict compliance with procurement policies and procedures.

27. The Institute Advisory Board should be reconstituted to comply with legislation.