House of Assembly Fifty-Second Parliament, First Session (52-1) 52 1 Parliament of South Australia House of Assembly published Ministerial Statement Ministerial Statement Printer Cartridge Scam PRINTER CARTRIDGE SCAM The Hon. M.F. O'BRIEN House of Assembly Napier Minister for Finance Minister for the Public Sector The Hon. M.F. O'BRIEN (Napier—Minister for Finance, Minister for the Public Sector) (14:19): I seek leave to make a ministerial statement. Leave granted. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! Mr Pederick House of Assembly Mr Pederick: Did you get a toaster? Mr Pisoni House of Assembly Mr Pisoni: They're borrowing to pay wages. The Speaker House of Assembly The SPEAKER: Order! The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: You've picked that up. I rise to inform the house on the process that I have set in motion in response to instances of inappropriate printer cartridge purchases within South Australian government agencies. Recently the Victorian Ombudsman released a report titled 'Corrupt conduct by public officers' which highlighted the business practices of a number of companies that offered inducements to Victorian procurement officers in purchasing printer cartridges at inflated prices. Any members interested in this document can find it on the Victorian Ombudsman's website. On 21 September 2011, specific allegations of inappropriate printer cartridge purchases in the Aboriginal Affairs and Reconciliation Division of the Department of the Premier and Cabinet were raised. They were referred to the Auditor-General and SA Police. The Chief Executive of the Department of the Premier and Cabinet wrote to all agencies on 22 September 2011 seeking that they undertake an urgent review of their procurement practices, particularly in relation to computer consumables. Those initial investigations indicate that the Consumable Management Group and associated companies have succeeded in also soliciting business within South Australia, with evidence of similar printed cartridge purchases in some South Australian agencies. In order to facilitate a more methodical cross-government approach to deal with this issue, I established the Procurement Working Group on 1 November 2011. This group is comprised of senior officials of the Department of the Premier and Cabinet, the Department of Treasury and Finance, the Crown Solicitor's Office and the State Procurement Board. The Chief Executive of the Department of the Premier and Cabinet was appointed the chair of the Procurement Working Group as a way of ensuring the most effective cross-agency coordination. The aim of the Procurement Working Group is to coordinate and oversee the investigations by public sector agencies of their records and procurement practices to identify abnormalities or irregularities in the procurement of office consumables involving the provision of gifts or incentives. The group will also assist to identify and provide advice and direction as to the resolution of any impediments to the task of gathering of information as to whether systemic or individual breaches of proper procurement processes have occurred. Also, the group will identify and oversee the immediate implementation of measures that are directed at ensuring that procurement practices are being undertaken lawfully and in accordance with proper procedures. Importantly, the Procurement Working Group will ensure the prompt gathering and referral to the appropriate authorities of any evidence indicating breaches of policy or law on the part of any individual and will make recommendations on policies, practices and controls needed to enhance procurement processes across government. At the first meeting, on 3 November, the Procurement Working Group looked at some high-level preliminary data that had been extracted by Shared Services SA from a search of known company names provided by the Victorian Ombudsman. This produced around 500 invoices, which totalled $921,333 dated from 1 June 2009, which was when— Mr Pisoni interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: —Shared Services SA took on the role of paying invoices on behalf of most government agencies. Mr Pengilly interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: This analysis showed 41 government entities as having used suppliers identified by earlier Western Australian and Victorian investigations. Of these 41 entities, there are instances of gifts being received in around half of them, but this will be further investigated; some show that product vouchers have been issued by the supplier. Product vouchers allow for the pre-purchase of printer cartridges for future delivery at agreed prices which may or may not be inflated. This practice is potentially contrary to Treasurer's Instruction 11. Any evidence of unethical or illegal conduct will be referred by the Procurement Working Group through the appropriate authorities, as is the standard practice in such matters. The government is committed to ensuring that a thorough and transparent investigation is conducted. Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: To facilitate this aim, Ernst & Young were engaged to review the process that I have outlined above, to ensure that the utmost rigour is applied in this circumstance. Ernst & Young have assembled two senior consultants who have expertise in fraud investigation, audit and special purpose reporting. I have also discussed this process with the Auditor-General and written to him, regarding the establishment of the working group. I have undertaken to keep the Auditor-General fully informed of the investigation as it unfolds. It is a matter for the Auditor-General to decide how he will review the outcomes of process carried out by the Procurement Working Group. Under the terms of reference— Members interjecting: The Speaker House of Assembly The SPEAKER: Order! The Hon. M.F. O'BRIEN House of Assembly The Hon. M.F. O'BRIEN: Under the terms of reference of the Procurement Working Group, I will be provided with initial advice within the next two weeks and then further advice as required when progress is made against the terms of reference criteria. I look forward to updating the house as developments unfold. Members interjecting: The Speaker House of Assembly The SPEAKER: Order!