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Legislative Council - Fifty-First Parliament, Third Session (51-3)
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SELECT COMMITTEE ON ALLEGEDLY UNLAWFUL PRACTICES RAISED IN THE AUDITOR-GENERAL'S REPORT 2003-04

The Hon. B.V. FINNIGAN (16:47): I move:

That the report be noted.

I will be fairly brief, given the number of items we have to deal with today. This committee is like most of the select committees in this place: appointed to enable witness evidence to cause a media furore on two or three occasions and then forgotten about.

It was originally started on 10 November 2004, and then started again in this parliament. The first committee heard evidence from 15 witnesses, but since then has not received evidence from many witnesses. However, this is an opportunity to table the evidence and the interim report, which basically acknowledges that we have not finalised a report and notes that legal action is pending in relation to some of these matters. The committee came about as part of the Hon. Mr Lucas and the Hon. Mr Lawson having some sort of obsession with the Attorney-General—

The Hon. I.K. Hunter interjecting:

The Hon. B.V. FINNIGAN: An unhealthy obsession, the Hon. Mr Hunter interjects. For a long time they were constantly trying to bring down the Attorney—and they still are, I suppose. I am not sure why, particularly; perhaps it is because he reflects community attitudes on law and order and justice, and that upsets them. This committee came out of that.

Essentially, the committee heard a lot of witness evidence that presented different sides of the story. However, the overwhelming majority of the evidence came down to finding that Ms Kate Lennon, former chief executive of the department, and certain other officers engaged in a conspiracy to avoid Treasurer's Instructions and to squirrel away money in the Crown Solicitor's Trust Account so that they did not have to give it back to Treasury but could use it for the purposes they desired. They got caught, and when they did they said, 'Well, the Attorney-General knew about it, the Crown Solicitor knew about it, everyone was in on it and it is their fault.' That is not borne out by the evidence.

I have no doubt that the Hon. Mr Lucas and others would claim that the Attorney knew all about it, that he is responsible and should resign, blah blah blah. Certainly, they continually say that the Attorney-General failed in his duty or that he knew all about it, or whatever. That is not borne out by the evidence. It is quite clear that certain officers in the Attorney-General's Department decided to engage in a conspiracy to conceal things from their superior officers and from Treasury and Finance because they wanted to put money into a little slush fund where Treasury would not be able to take it off them, so that they could use it later on for what they wanted. They were caught out and, in order to try to get out of it, they basically said, 'Oh well, the Attorney-General and the Crown Solicitor knew all about it.' As I said, that is not borne out by the evidence.

This is an interim report which simply acknowledges the evidence we have received and that legal action is pending in relation to Ms Kate Lennon, the former chief executive. I do not believe it is something on which the parliament needs to spend a lot of time or money, having already wasted five years on it.

The Hon. R.I. LUCAS (16:51): I have to say that that is probably the limpest and lamest defence of a minister of the Crown that I have ever heard, but I am not surprised, coming from the Hon. Mr Finnigan. He probably had a good hard look at the evidence, which was quite damning in relation to the Attorney-General, and decided that discretion was the better part of valour. Obviously, nothing else had been written for him. As I said, that was the limpest and lamest defence of a minister of the Crown's performance that I have ever had the misfortune to see in this chamber.

I actually want to refer to the evidence, not just make the sweeping and dismissive generalisations in which the Hon. Mr Finnigan indulges. I intend to look at the facts, at the evidence that was actually presented, in some detail. Obviously, time will not allow us to canvass all the issues on this occasion, but I do intend to canvass a significant number.

The first thing I would note—and I will return to this at the end of my contribution—is that, while this has been commonly referred to as the 'stashed cash' inquiry, it had the unfortunate title of 'Allegedly Unlawful Practices Raised in the Auditor-General's Report, 2003-2004.' I think we can thank the Clerk or Black Rod (I am not sure) for that phrase, but it was nevertheless technically accurate. It indicates that it was not just the stashed cash irregularity, albeit that that was the most controversial: there were other irregularities identified in that report.

The second most significant (and towards the end of my contribution I will return to a brief discussion of a couple of those issues) was an irregularity between the old DAIS department and the old department for water resources which involved an unlawful transaction of $5 million at the end of a financial year between those two departments. In essence, it was supposedly just a loan between friendly officers at a middle level of management within two departments, but it had nothing to do with stashed cash, and thankfully, from the Attorney-General viewpoint, it had nothing to do with the Attorney-General: it involved minister Hill and another minister.

As the Hon. Mr Finnigan indicated, the bulk of the evidence taken by this committee had been prior to the 2006 election. For those who remember, because of the government's passionate desire to close down that committee, it prorogued the parliament almost immediately upon parliament getting up prior to the 2006 election. The then auditor-general attended with the committee and said basically that he did not really feel as if he would be inclined to give evidence, and that was the end of it prior to the 2006 election.

Subsequent to the election, we took evidence again; we had taken some evidence from the auditor-general prior to 2006, but he subsequently came back and presented further evidence in 2007. We had been pursuing Mr Mark Johns who is now the State Coroner and who at that stage had the senior position within the justice department, and we had a long discussion via correspondence with Mr Johns as to whether it was appropriate, now that he was the Coroner, for him to have to attend before a parliamentary committee and answer questions. Mr President, you will be delighted to know that the parliament prevailed and Mr Johns eventually—I think it was towards the end of 2007—agreed to attend before the committee and respond to questions.

Then, there were some remaining witnesses who continued to indicate that they did not want to present evidence, and then in February 2008 we became aware that there had been a $1 million legal claim, although I see in recent media reports that it had somehow gone to $2 million; I am not sure how that occurred. In February 2008, almost two years ago now, the former chief executive, Kate Lennon, lodged a statement of claim in the Supreme Court against the Rann government.

I will not go through all the details of that statement of claim but, as the Hon. Mr Finnigan has indicated, that case is still before the courts. So, almost two years later we have not seen any progress, as we understand it, in relation to a resolution of that legal action against the Rann government. Ultimately, if and when there is some resolution of that issue, I guess we may well be better informed as to some further unanswered questions that obviously have arisen through the evidence given to this committee.

The first thing I want to address—and perhaps it will not surprise—is to look at what the Attorney's position was. I think that is best summarised that, on 17 September 2004, the former auditor-general, Mr MacPherson, interviewed or questioned the Attorney-General. He swore an oath that the evidence he was giving would be accurate, so it was sworn testimony before the auditor-general. I will read from page 3 onto the transcript, where, in very friendly terms between the former auditor-general and our Attorney-General, the auditor-general says:

Now, Michael, are you aware that the Attorney-General's Department maintains an account called the Crown Solicitor's Trust Account?

MR ATKINSON: Well, I only became aware of that after I recently returned to Australia and the Chief Executive, Mark Johns mentioned that Deb Contala had inquired into a matter.

THE AUDITOR-GENERAL: So before that you weren't aware that such an account was in existence?

MR ATKINSON: No.

Further on, on page 8 of the transcript of the evidence, the auditor-general again says:

...you weren't aware of the existence of the Crown Solicitor's Trust Account as an account within the Attorney-General's Department?

Mr Atkinson against says no. So, Mr Atkinson's position, which, as I will outline later, is a foolish one—Mr Atkinson's sworn evidence and sworn testimony before the auditor-general—is that until August of 2004 he did not even know, as the state's Attorney-General, that the Crown Solicitor's Trust existed. His evidence was not that he was aware of the account and had not been aware of the abuses of the account. That was not his position. His position in sworn testimony before the auditor-general was, 'I didn't even know that the Crown Solicitor's Trust Account even existed prior to August of 2004.' Let us turn to the significance of the sworn statement. On 26 October 2005, I put a question to the former auditor-general:

In the first instance, do you accept that if someone swears a false oath to you that is a criminal offence?

Mr MacPherson replied:

It is a criminal offence.

I asked a further question:

And that offence would be what?

Mr MacPherson replied:

Perjury.

So, Mr MacPherson makes it quite clear that if you swear a false oath to the Auditor-General you have committed a criminal offence and you have committed perjury. Members will recall that I recently cited evidence relating to the Atkinson/Ashbourne affair and the statement of the majority three members of that committee. I indicated that it was our view that our Attorney-General was guilty of perjury in relation to evidence that he had given about the Atkinson/Ashbourne affair. As I said, I referred to that statement of the three members in a recent contribution in this council.

The Auditor-General makes it quite clear that it is perjury if you swear a false oath. So, if the evidence can demonstrate that the state Attorney-General, Mr Atkinson, had not told the truth when he said that he did not know of the existence of the Crown Solicitor's Trust Account prior to August 2004, then it is clear that he has committed a criminal offence and, in the former Auditor-General's terms, is guilty of perjury.

In looking at the Crown Solicitor's Trust Account, there have been claims over the years that this was a relatively insignificant account within the minister's portfolio, one that a minister may or may not have taken the trouble of noticing. I point out that in 2003-04 $58 million was deposited, in different transactions, in the Crown Solicitor's Trust Account. In that same year, payments totalling $53 million were made in various transactions. So, in total, $111 million of transactions, both in deposits and in payments, went into and out of the Crown Solicitor's Trust Account.

This is the account, if you believe his sworn testimony, that the Attorney-General says he never even knew existed. He was made Attorney-General in 2002, so this was more than two years later, and his sworn testimony was, 'I didn't even know this thing existed,' yet transactions amounting to $111 million are going into and out of that particular account just in the one financial year 2003-04.

Let us look at the evidence that has been provided relating to the Crown Solicitor's Trust Account and the Attorney-General. When the Attorney-General was appointed in 2002, the justice department prepared a comprehensive briefing for him called, 'The briefing for incoming government folder', which is a transition to government folder, and that particular briefing for him, as the Attorney-General, made specific reference to the Crown Solicitor's Trust Account.

Mr Atkinson himself presented two separate annual reports of his own department to parliament which had a total of four separate references to the Crown Solicitor's Trust Account. So, these are his own annual reports that he presented to the parliament which he would have discussed with the chief executive of the department, in terms of approving, ultimately, the contents and layout of those particular annual reports.

Mr Atkinson had also received two separate Auditor-General's reports, which referred to his department and which had a total of eight separate references to the Crown Solicitor's Trust Account. So, let us be clear on that: two of his own annual reports and two Auditor-General's reports, with four and eight separate references to the Crown Solicitor's Trust Account.

The committee also took evidence from the former chief executive of the department, Kate Lennon. She indicated in her evidence that she had specifically referred to the Crown Solicitor's Trust Account on about six to eight separate occasions in meetings and briefings with Mr Atkinson, in particular, what she referred to as her exit meeting as she left being the chief executive of that department and was appointed chief executive of the Department for Families and Communities. (She was appointed late in 2003 and took up the appointment in early 2004.)

If one is to believe—and I have to say that based on his record, I do not—the state Attorney-General, he clearly did not read his incoming transition to government briefing. He clearly did not read his own two annual reports presented to parliament which had references to the Crown Solicitor's Trust Account. He clearly did not read the Auditor-General's Report on his own department. I interpose there, as a former minister, that the first thing you do when the Auditor-General's Report lands on the desk in parliament is dive for your particular department, or departments, and you look at what the Auditor-General has said about the performance of your department, or departments, in the area. One then has to believe either that the former chief executive was lying when she indicated that she had told him on six to eight separate occasions, or that she had told him but he had his ears closed, he did not hear or he did not comprehend what he was being told. The evidence is overwhelming that the state Attorney-General, Mr Atkinson, must have known of the existence of the Crown Solicitor's Trust Account. Let us bear in mind that he is saying that he was not aware of even the existence of the Crown Solicitor's Trust Account.

Very wise words were given to me by a former member of parliament, who will remain unnamed, that if you are going to tell lies you had better have a very good memory because you have to remember what you have said previously on all occasions. The Attorney-General's story unravels with the evidence that is there, but also in a number of other statements to which I will refer. On 2 December in The Australian Michelle V.C. Bochmann wrote an article and quoted the Attorney-General. She put a question to the Attorney as to when he was aware of the Crown Solicitor's Trust Account and what was his knowledge. The paragraph states:

Amid Liberal opposition calls for him to stand aside, Mr Atkinson dismissed the conflicting evidence as a sideshow. Asked whether he knew about the use and operation of the account, Mr Atkinson replied, 'The general use and operation, not the misuse as revealed by the Auditor-General.'

So the Attorney-General is indicating publicly that he was aware of the general use and operation of the Crown Solicitor's Trust Account. Therefore, he was saying publicly that he was aware of the existence of the Crown Solicitor's Trust Account. He had changed his story from his sworn testimony. He was now saying, which as I said from the outset may have been a more defensible position from the word go, that of course he was aware of the general use and operation of the Crown Solicitor's Trust Account but was not aware of the misuse, as had been revealed by the Auditor-General. So the Attorney-General damns himself and his sworn testimony by his own public response to questions.

I turn now to the evidence given by the former auditor-general, who gave evidence on a number of occasions to the select committee. This evidence was on 6 September 2006. The then auditor-general gave evidence with his senior audit officer, Mr Simon Marsh. I put a question to Mr Marsh, quoting his evidence to the Economic and Finance Committee. Members need to bear in mind that the Economic and Finance Committee of the House of Assembly was also inquiring into the stashed cash affair. There was concern from the government that considerable embarrassment and unfavourable publicly was being generated by the upper house committee and the government wanted a friendlier committee in the House of Assembly to take evidence on this issue.

Mr Marsh's evidence to the Economic and Finance Committee was in relation to the exit meeting, which was probably in early 2004 when Kate Lennon was moving from Justice to Families and Communities. She gave evidence that she met with Mr Atkinson and his former chief of staff, Mr Andrew Lamb, and, amongst other things in her evidence, she indicated further information about the Crown Solicitor's Trust Account. She had been quizzed or corresponded with the then auditor-general about that in the preparation of his report. This is Mr Marsh's evidence to the Economic and Finance Committee:

It is my assessment the Attorney-General's evidence was absolutely consistent with and corroborated what Ms Lennon had said. That is, she has said that she had talked to him about the use of the Crown Solicitor's Trust Account at a meeting, but he had not understood what she had told him.

This is the senior audit officer saying that it was his assessment that the Attorney-General's evidence was consistent with and corroborated what Kate Lennon had said, namely, that she had talked to him about the use of the Crown Solicitor's Trust Account at this meeting, which would have been in or around March 2004—well before Mr Atkinson said that he first became aware of the existence of the Crown Solicitor's Trust Account, which was in August 2004. We are talking almost five or six months earlier than that. The senior audit officer said that in his view Mr Atkinson had corroborated what Kate Lennon had said. That is on the public record at page 594. On page 595 of the evidence, Mr MacPherson then came in and said:

Mr Chairman, I would like to make an observation. I will read this in a moment. The evidence we have given is that the only occasion on which the Attorney-General was informed about the existence of the trust account was when Ms Lennon was exiting the department. She has given evidence to this committee that she communicated the existence of this trust account to the Attorney on up to eight occasions, I think was the evidence she gave.

The point that I made and the point that Mr Marsh has been making is that there is no evidence to suggest that there was any communication to the Attorney-General about the existence of this trust account other than on the occasion that she was exiting the department.

So here is the auditor-general saying that he accepts that Ms Lennon has given the evidence that she told the Attorney-General in about March 2004 about the existence of the Crown Solicitor's Trust Account. Further on, at page 598, Mr MacPherson again confirms and says:

She [Kate Lennon] stated quite unequivocally that she referred to the Crown Solicitor's Trust Account to him as she was exiting the department. No-one is backing away from that.

So, the former auditor-general, on a number of occasions in the evidence that I have referred to and elsewhere, says that they accept that Kate Lennon's evidence was that she had given this information, at the very least, at this exit meeting which was in March 2004. As I said, Mr Marsh, the audit officer who also attended that meeting, indicated that he believed that the Attorney-General's evidence supported and corroborated what Kate Lennon had said about that.

What we have there is absolutely damning evidence on the record from the auditor-general and his chief audit officer which indicates that Kate Lennon told the Attorney-General, at least in this meeting in about March 2004, about the Crown Solicitor's Trust Account. Yet the Attorney-General swears an oath, later in 2004, that the first time he was aware of the Crown Solicitor's Trust Account was in August 2004.

When one summarises it (and there are the references in the evidence), the evidence that is before this committee and before the parliament is that the Attorney-General was briefed about it in his transition to government folder; the Attorney-General had references to it in two annual reports he presented to parliament; two Auditor-General's reports that he received referred to the Crown Solicitor's Trust Account; Kate Lennon's evidence was that she told him on six to eight occasions about the Crown Solicitor's Trust Account; her evidence also was that at the exit meeting she told him about the Crown Solicitor's Trust Account again; and the auditor-general and his senior audit officer's evidence to the parliamentary committee of inquiry indicated that they accepted that Kate Lennon had told the Attorney-General about the Crown Solicitor's Trust Account at the very least on that particular occasion of the exit meeting in about March 2004.

All of that is evidence that is contrary to the sworn oath that the Attorney-General gave to the auditor-general. In the words of the former auditor-general, Mr MacPherson, evidence that is contrary to a sworn oath is evidence of perjury being committed by the Attorney-General of this state. I think that is a sad and damning indictment on the state Attorney-General. It is our sad duty in this chamber to have to report the evidence that this committee has received over a period of time in relation to that issue.

As I said, it ought to be read because the Attorney-General indeed has form when it comes to this particular issue. I refer members to the previous evidence on the Atkinson/Ashbourne inquiry. I might say that I found the position of the former auditor-general quite extraordinary in relation to his position when these issues were put to him. I will refer to page 470 of the transcript of evidence when these issues were put to the auditor-general.

In essence, what we were saying to the auditor-general was, 'Look, this bloke swears evidence to you and says that he didn't know that this account existed and yet all of this information is available in documentation that was provided to him. Are you saying that it is entirely acceptable to you as an auditor-general that a minister, who has all this information before him, can just blithely say, "Well, I didn't read these particular documents. I didn't take the trouble to read my briefing folder, the annual report, the Auditor-General's Report, etc."'?

We put the question to the auditor-general and his senior audit officer whether, on a reasonable person test, one could say that that was reasonable in terms of the performance of a minister of the crown. That is, depending on what view you have, that either the attorney has not told the truth or he is just incompetent and negligent and he does not read anything that is presented to him. We put the questions to the auditor-general and his audit staff as to whether or not it was actually reasonable in relation to a minister of the crown that that might be his attempted defence in relation to these issues.

In the end, the auditor-general would not be drawn to criticise the Attorney-General at all. He steadfastly defended the Attorney-General. Even when all the overwhelming and damning evidence was presented to the auditor-general, he continued to hang onto and defend the Attorney-General. It got to the stage, at page 470 of the transcript, where we put the question to the auditor-general as follows:

Okay, but I ask you now whether, on the basis of the evidence you have given us, in future audits if a minister of the crown such as the Attorney-General says, 'I had the briefing but I did not read it,' in essence you would accept that as reasonable? He's had the briefing but he's just not read it. So, if he says he did not read it, he did not read it—would you just accept it, as the auditor-general, as a reasonable person?

In light of the responses to the questions you gave earlier, is that going to be your response in the future? Ministers are going to be able to say to you, 'I had a briefing on this issue; I just did not read it,' and that is going to be accepted.

Mr MacPherson then realised that he had backed himself into a bit of a corner having defended the Attorney-General, so he attempts to try to backslide. He said:

Well, that is really a very difficult question to answer.

Of course it is. He then goes on:

It depends on the context. If at the time something comes across a minister's desk and it is not a matter that has been highlighted as a matter of major political administrative moment, I can fully understand the minister not focusing on that and the matter just being allowed to slide through. There would be hundreds of those instances that would happen.

A question from me:

But in your experience with politics, auditing and financial accounting, I am sure that you would be aware that some things that occur at one point in time have no immediate significance.

Mr. MacPherson said, 'That is right.' Then I said, 'Further down the track, for a variety of reasons, they take on enormous significance.' Mr MacPherson said, 'That is right; I agree.' Another question from me:

Is it acceptable in that context for the minister to say to you, 'Yes, I had a briefing and it was given to me, but I just did not read it,' and you as the Auditor-General say, 'Okay, that is acceptable. It was not on the horizon as a major political issue at the time.'

Then the chairman (a government member) could see the difficulty that the Auditor-General was in and he came in with a diversionary tactic to divert the auditor-general from further response to that question. Later, I said to the auditor-general again:

How much slack do you cut a minister? If someone is a serial offender who reads a form guide in a meeting with the Chief Justice, does not read his annual reports, does not read his audit reports, does not read his transition to government briefing folder—how much slack do you cut a minister?

I think those members who are interested might like to look at the cut and thrust with the former auditor-general in relation to these issues. I note that the former auditor-general has done extraordinarily well out of this government and the Attorney-General. The government tried to introduce legislation to extend his term of office beyond the compulsory retirement age, but that was thrown out comprehensively in this parliament as being an unreasonable endeavour by the government to extend Mr MacPherson's position.

He was then appointed—unlawfully in my view and in the views given to me—as the acting ombudsman for a period of time, because the Ombudsman's Act has the same provision which states that a person over the age of 65 should not be the Ombudsman. The government got some advice supposedly that that only applies to the Ombudsman and not the acting ombudsman. So, the Ombudsman is not allowed to be over 65, but the acting ombudsman can be over the age of 65.

Of course, more recently, the government appointed Mr MacPherson to conduct an investigation into the Burnside council. It certainly did not surprise me that the inquiry date of October, or whatever it was, has now been extended well beyond that. I know that there are other members in this chamber who have views on the number of staff that Mr MacPherson now has employed there and the amount of work that he and his staff are doing in relation to—

The Hon. CARMEL ZOLLO: On a point of order, Mr President, what is the relevance of this? I cannot remember. It was so long ago since the honourable member started talking to this motion, but I did not think it was to do with the Auditor-General.

The PRESIDENT: It is to do with the Auditor-General. It has probably all been repeated before but, unfortunately, in this chamber we have no time limit on speeches. It might be a good thing if we did introduce something.

The Hon. R.I. LUCAS: I might remind the Hon. Ms Zollo that the select committee was actually into allegedly unlawful practices raised in the Auditor-General's Report 2003-04. That was an extraordinarily helpful interjection from the Hon. Ms Zollo. It is actually in the title of the select committee.

Members interjecting:

The PRESIDENT: Order!

The Hon. R.I. LUCAS: I can only suggest that the whip might advise the Hon. Ms Zollo to retire to another room.

The PRESIDENT: Order! I suggest the honourable member get on with it.

The Hon. R.I. LUCAS: Her interventions are not of great assistance to me in concluding what needs to be said.

The Hon. Carmel Zollo: We're so bored by you, Rob. You're so boring.

The Hon. R.I. LUCAS: Thank you. At least that is something that we can argue about. In relation to what this has to do with the Auditor-General, I do not think that was a particularly useful point of order.

The Hon. Carmel Zollo: Well, it gave us a bit of entertainment for a while.

The Hon. R.I. LUCAS: Thank you, Hon. Mrs Zollo. The second broad issue that I wanted to raise was the claim that the Attorney-General and other government members who supported him made in the house. In the Hansard of 7 February 2005, the Attorney-General made an accusation that Kate Lennon and others had been involved in keeping a second set of books. The direct quote from the Attorney-General is as follows:

...Kate Lennon used one of the oldest accounting tricks known to man: she had two sets of books, one for the Treasurer, the Auditor-General, the parliament and the public and me, and a second set of books for a small circle who needed to know.

That is an extraordinarily damning allegation for the Attorney-General to make under parliamentary privilege against a former chief executive. That is the same sort of accusation—although one would say it was not an accusation, it was probably accurate—that was made against the mafia in relation to keeping a second set of books. That was clearly the inference or the impression that was meant to be conjured up by the Attorney-General's statement: that there was this secret second set of books.

What evidence did this committee take on that? We took considerable evidence. We put questions to Mr Ray Bown, the Principal Policy Officer in Treasury, and Mr Andrew Swanson, the then acting manager of the Business and Financial Services Division in the Attorney-General's Department. We asked them whether or not they had established that two sets of books, accounts, journals or ledgers were being kept.

Mr Bown, the senior officer from Treasury, and Mr Swanson both specifically denied in the evidence—and I will not read all of it—that two sets of books, accounts, journals or ledgers were kept by Kate Lennon or the Attorney-General's Department.

Then we took further evidence from Mr Kym Pennifold, a third witness. Again, the question was put to him as to whether or not two sets of books had been kept and, again, he gave evidence which was consistent with the Treasury officer, Mr Bown, and the Attorney-General's officer, Mr Swanson. In fact, Mr Pennifold said that it would have been impossible to do so, as it would have required separate bank accounts to be established. Even the auditor-general made no claim about secret bank accounts. So, a number of senior officers of Treasury and the Attorney-General's Department indicated that there was no evidence of this outrageous allegation that had been made by the Attorney-General, protected by parliamentary privilege, in the House of Assembly against Kate Lennon—that is, that there had been a second set of books being kept which were hidden.

In looking at this issue of the allegation of the second set of books, I want to raise some issues in relation to the performance of the former auditor-general and his staff in particular in relation to the audit of the Attorney-General's Department and the transactions that relate to this issue. I have spoken previously on the issue of some of the audit failures that I believe have occurred. Whether we are in government when, hopefully, we will be able to look at some policy changes to help correct the situation, or in opposition, we will continue to raise these issues and see what the Legislative Council might be able to do, and I intend to return to some of these issues after the election next year.

There are a number of issues that I think ought to be of concern to anyone interested in appropriate audit function and audit processes. One of the issues is that the former auditor-general took sworn testimony from the Attorney-General but, in doing so, did not put some of the specific accusations and evidence to the Attorney-General in relation to the Crown Solicitor's Trust Account. Let me summarise that: the former auditor-general knew that the former chief executive had indicated that she had advised the Attorney-General not only of the existence of the Crown Solicitor's Trust Account on a number of occasions but had also advised the Attorney-General of the use of the Crown Solicitor's Trust Account.

When one looks at the transcript of evidence that the auditor-general took from the Attorney-General, he at no stage put those accusations to the Attorney-General. When he was asked why he did not, he gave no satisfactory response. He made some general comments that they were comfortable with what they believed they knew and did not believe they needed to put those accusations. So here is an Attorney-General swearing testimony to the auditor-general saying, 'I do not know this exists and, therefore, obviously, I do not know about the use of the account.' The auditor-general has evidence from the chief executive to say, 'That is not right; I actually told him about it,' yet in sworn testimony the auditor-general does not put any question to the Attorney-General based on the claims being made by Kate Lennon. It just seems extraordinary to me that, if he is conducting a proper investigation and someone makes a serious claim against a minister of the Crown, the auditor-general, who is conducting the investigation, would not put those questions to the Attorney-General as part of the evidence taken.

The other extraordinary thing is that the auditor-general took sworn evidence from the Attorney-General but did not take sworn evidence from the former chief executive, Kate Lennon. We put the question to the former auditor-general, 'Why is that? You take sworn evidence from the Attorney-General and you have two people with conflicting stories, so why would you not take sworn evidence from the chief executive?' Again, the former auditor-general has no convincing response as to why he did not do that. I refer to page 480 of the select committee transcript of evidence where I put this question to the former auditor-general:

How is any witness's evidence, whether it be Ms Lennon, any more or less unsubstantiated than say the Attorney-General's recollection of the conversation?

The former auditor-general is saying Kate Lennon's evidence is unsubstantiated. This is a two person conversation in which one person says one thing and one says another. So I say to him, 'Well, how can her evidence be any more or less unsubstantiated than the Attorney-General's recollection?' I asked:

If you have a conversation with two people and there are no other witnesses, and one person says, 'I told the Attorney this' and the Attorney says that it did not happen, you have two people.

Mr MacPherson said:

That is correct.

I then asked:

I presume if you are making a criticism about unsubstantiation in relation to Ms Lennon, you have to make the same criticism of the Attorney-General, that his recollections are unsubstantiated as well.

Mr MacPherson says—and listen to this:

But his recollections are under oath, which gives them a little bit more weight than the recollections of another person.

So the former auditor-general says, 'I am going to give Mr Atkinson's evidence more weight because he gave his evidence under oath and Kate Lennon did not give her evidence under oath.' And whose decision was that? It was the decision of the former auditor-general to take the evidence under oath from the Attorney-General, and then he says, 'I will give that more weight than the evidence of Kate Lennon because her evidence was not given under oath.'

Again, we put the questions to him, 'Why didn't you take evidence from Kate Lennon?' It was not as if they sought to take evidence on oath and she refused—you cannot refuse the auditor-general, anyway, because he has the powers of a royal commissioner, but I will put that to one side. It was not put to Kate Lennon, yet that distinction is then used by the former auditor-general to try to defend the Attorney-General and present a further damning picture of the former chief executive, Kate Lennon.

I refer to another matter relating to this audit. Mr Marsh refers to notes the Attorney-General had taken; that is, he said that the Attorney-General had referred to notes he had taken at the meeting with Kate Lennon. This was the exit meeting—the meeting, again, where Kate Lennon said, 'I told him about it.' The Attorney-General now says that he did not even know it existed; therefore, he said he did not know about it, although, as I said, in The Australian article he changes his story again. So, his story is all over the place.

We then asked the question of the Auditor-General, 'Did you ask the Attorney-General for a copy of the notes he made at the meeting?' and the Auditor-General said no. How extraordinary is that? You have a conflict that ends the public career of one particular senior officer. In the case of the Attorney-General, there is a difference of opinion. The audit officer, Mr Marsh, said that Mr Atkinson referred to the notes he had at a meeting, yet they did not ask the Attorney-General for a copy of the notes to which he had referred. How one can accept that as an appropriate audit practice for an investigation is beyond my comprehension.

But there is more. It is a bit like the Demtel advertisement, when one talks about what I believe to be audit failure in relation to some of the practices that were involved. The damning claims that have been made by the Attorney-General about a second set of books were arm in arm with the position that the Auditor-General and his staff had been presenting to the parliamentary inquiries. The same words were not used, but let me refer to the evidence and then make the point. The transcript of the Economic and Finance Committee states:

Mr MARSH: The transactions into in the Crown Solicitor's Trust Account were processed as payments from the departmental operating account, and the vouchers which supported the payments reflected them as payments and expenses. They were not described in any of the documentation as transfers to the Crown Solicitor's Trust Account.

Mr RAU: Those vouchers were inaccurate.

Mr MARSH: They were not explicit, and they certainly did not describe what happened.

That is the claim from the audit staff. These documents are called AR20s, and they are documents with which all audit and accounting staff within the public sector would be very familiar. If you are depositing something into an account such as the Crown Solicitor's Trust Account, you have to fill out an AR20. You list on it what the deposit is about and the amount of money and the fact that it is being debited to the Crown Solicitor's Trust Account. This is what Mr Marsh and Mr Rau were talking about at the Economic and Finance Committee. As I have said, Mr Marsh said that the documents were not explicit and they certainly did not describe what happened.

After many months of trawling through boxes and boxes of documents—all of these vouchers and dockets—received by the Legislative Council select committee, we then started putting some questions to the audit staff about these documents. I pulled out these AR20 documents, and I showed Mr Marsh and Mr MacPherson these AR20 documents—and this was at the committee hearing of 6 September 2006. I showed one particular document, which was for $350,000 and which indicated explicitly that it was money relating to the crime prevention program being deposited into the Crown Solicitor's Trust Account.

Mr Marsh and Mr MacPherson were shown this document at the select committee hearing, and they admitted that it explicitly did indicate the nature of the funds that were being deposited in the Crown Solicitor's Trust Account. From the auditor-general's viewpoint, because it explicitly referred to it, it would have made it clear to them that, in their view, it was not appropriately being deposited into the Crown Solicitor's Trust Account.

Mr Marsh agreed that it was absolutely clear that $350,000 was being deposited in the Crown Solicitor's Trust Account. So, I said to Mr Marsh:

Well, you now see this document. Your evidence to the Economic and Finance Committee was clearly wrong. In your evidence to the Economic and Finance Committee, you said that none of these documents were clear. They didn't indicate what was being deposited in the Crown Solicitor's Trust Account or that they were being deposited there as well.

When I put that to Mr Marsh, he said:

My evidence to the Economic and Finance Committee would have been given without seeing this document.

That is an extraordinary admission. He then goes on to further say:

The evidence I gave to the Economic and Finance Committee would not have been given if I had seen that document and had it in my mind at the time.

So, a member of the audit staff was saying—and this is before an upper house select committee—all of these documents were not hidden. They were all available, and he admitted that they were available to audit staff. He said:

If I had seen that document at the time, I would not have made that particular statement that I made to the Economic and Finance Committee.

That has been the basis of a series of allegations about unlawful transactions. They are not the sole basis—I readily concede that—but they are a significant part of the Attorney-General's case and the case of Mr O'Brien, Mr Rau and others who made accusations in the Economic and Finance Committee. They said that these vouchers did not describe in any way that they were transfers into the account—that they were unlawful—but it was clear that that was untrue: the evidence that had been given was untrue. Again, on page 619, Mr Marsh said:

I am telling you that, if I had seen this before, I would not have given that answer.

Then I put a series of questions to the former auditor-general, Mr MacPherson, who I think by then realised that their case was suffering some difficulty and some embarrassment. He sought to put some solidity and support behind Mr Marsh. However, I put the question to Mr MacPherson:

I can understand that. But the reason that we, or I, requested all of the invoices and vouchers was in order to investigate this. I think the proposition I put to you is that you might not have had them, but as audit staff you should have asked for them.

Mr MacPHERSON: I do not accept that.

He was saying that he did not think he should have asked for them. I then said:

Well, that is my contention. Before your senior auditor gave evidence to a parliamentary committee—which leads media, Labor members, government members and others, to the second set of books, concealment and things like that, by saying that the vouchers did not describe that they were transfers to the Crown Solicitor's Trust Account—which he has now recanted, he should have investigated it. If we had not requested all of those invoices—and we have boxes and boxes of them which we have all been through—and audit staff clearly had not, in terms of the evidence, no-one ever would have looked at them.

As I said, in my view that is damning evidence of the failure of audit to conduct a proper and appropriate audit of this issue, and we saw the extraordinary, inaccurate, damaging and defamatory claims made by the Attorney-General in the House of Assembly about this second set of books. I have four or five other issues before concluding, hopefully before the dinner break.

Earlier I briefly referred to the fact that there was a wide variety of evidence taken about the performance of the Attorney-General in relation to a range of issues. I think evidence that you will remember, Mr President, is that of the Attorney-General attending a meeting with the Chief Justice of the state, asking for a copy of The Advertiser and having the Chief Justice get a copy of The Advertiser. The Attorney-General then pulled out the racing form guide section of the paper and sat down and read that form guide while his chief executive conducted the meeting with the Chief Justice. That is an extraordinary example of the arrogance of the state Attorney-General.

The PRESIDENT: It is so long ago that I do not remember it.

The Hon. R.I. LUCAS: Well, let me get you a copy; I am happy to provide a copy of that section of the transcript of evidence, Mr President. That is a damning indictment of the state Attorney-General. Whatever one thinks of the Chief Justice, most in the community would acknowledge that he is a good person and ought to be respected; his position ought to be respected. Having the state Attorney-General reading a racing form guide instead of engaging in a meeting is, frankly, beneath contempt.

There is one area that I am sure you will remember, Mr President, because you feature in this particular part of the evidence. On 3 December 2004, you put a question to Mr Mike Walter, the former crown solicitor. You will remember that the former crown solicitor had given evidence which was supportive of Kate Lennon, the former chief executive. I will not go into it, but in part Kate Lennon's defence had been that she took legal advice from the Crown Solicitor which indicated that what they were doing was okay. Mike Walter gave evidence to that committee, and this is the extraordinary question that the Hon. Mr Sneath put to him:

I have a few questions. Do you have anything other than a professional relationship with Kate Lennon?

This is a senior member of the government party asking, 'Do you have anything other than a professional relationship with Kate Lennon?' I will refer to Kate Lennon's evidence later on, but Mr Walter replied:

Yes; I think it is fair to say that we probably meet socially no more than half a dozen times a year. So I know her quite well. I have worked with her for a number of years, and I have mixed with her socially, say, half a dozen times a year.

There was a series of further questions from the Hon. Mr Sneath, such as, 'Have you had any contact with Kate Lennon since her resignation?', etc.

At about the same time the Rann government's dirty tricks unit—headed by Jill Bottrall and others—was, together with the Hon. Mr Sneath, who had obviously agreed to ask the question, busily stirring up the media and spreading stories about a relationship between Kate Lennon and Mike Walter, seeking to downplay the significance of the evidence Mike Walter had given that indicated support for Kate Lennon's position based on the legal advice that he had given. So, clearly it was important to the Rann government and the Attorney-General to in some way muddy the waters and besmirch the reputation of these people. The Hon. Mr Sneath was a willing participant in this exercise.

Soon after that, on 23 December (a hard-working committee this, because it was two days before Christmas in 2004), Kate Lennon attended the committee, and Mr Sneath was at it again—

The PRESIDENT: The Hon. Mr Sneath.

The Hon. R.I. LUCAS: Well, in some respects I would not put that title before you, Mr Sneath, in relation to this issue—

The PRESIDENT: Order! It is the Hon. Mr Sneath. I remind the honourable member that—

The Hon. I.K. HUNTER: I have a point of order. It is my understanding of standing orders that members, whilst on their feet, shall not reflect improperly on the chair or the President.

The PRESIDENT: It has not always worried the Hon. Mr Lucas.

The Hon. R.I. LUCAS: I am referring to the evidence given before a committee, Mr Hunter. The Hon. Mr Sneath asked:

At any time before giving evidence today have you discussed with any member of the opposition or non-government member of parliament the issues relating to the terms of reference of this select committee?

MS LENNON: No.

THE HON. R.K. SNEATH: Have you ever attended any meetings or had any discussions with Mr Lucas or his staff in the Parliament House building about any matters concerning the use of the Crown Solicitor's Trust Fund?

MS LENNON: I think you should answer that, Mr Lucas.

The HON. R.K. SNEATH: I did not ask Mr Lucas.

THE HON. R.I. LUCAS: You answer first.

MS LENNON: No, I got rung last night at quarter to 11 to be told two things; first, that I was seen sneaking out of your office late one night from parliament; and the other was that you and I have been dining out and around town. Given that I have already had put to me that I have been having an affair with Mike Walter, I had said to my husband this morning that clearly I am the Mrs Blunkett of the South Australian public sector. My husband is sitting here: we have been married for 32 years; I have not had an affair with anybody, and that is no offence to anyone sitting in this room.

The Hon. R.K. SNEATH: I don't think I asked you that question.

We all knew what the question was, the Hon. Mr Sneath.

Ms LENNON: No, but it was put. I want to address this issue.

The Hon. R.K. SNEATH: Where was that question put?

Ms LENNON: In one of the houses—upper or lower.

The CHAIRMAN: The question asked related to the nature of the relationship, in other words, whether you met socially.

Ms LENNON: It was seen by everyone that I was having an affair. I must have had at least 60 phone calls. It upset my family and the people at the church. His partner rang me in no uncertain words, and it was taken universally.

The Hon. R.K. SNEATH: I think the question relating to Mr Walters was whether there was any other relationship outside work, meaning, 'Do you have a friendship?' and Mr Walter answered the question and said, 'Yes, we are friends and often meet together.' Anybody who would think I was suggesting anything else has a funny sort of mind.

Ms LENNON: Everyone did, and I am sorry, but that was how it was translated. No offence to you.

The Hon. Mr LUCAS: I can support your claim that you were not sneaking out of my office late in the evening with lights on or off. However, I can also indicate that Jill Bottrall from the Premier's office has been spreading the story that you have been seen leaving my office at all sorts of hours. I can give you the source of the story in terms of the discussions.

Ms LENNON: For the record, the last time I formally saw Mr Lucas was at the bilaterals in 2001.

I think that is an extraordinarily sleazy attempt by you in your former position and the Rann government in the dirty tricks unit to besmirch the reputation of a former chief executive of a department and a former crown solicitor just because they were giving evidence that was deemed incompatible or embarrassing to the state Attorney-General and the Rann government.

Given recent accusations being made by the Premier about dirty tricks, I think that, when one starts talking about dirty tricks and these sorts of issues, the Rann government is a past master of the dirty tricks campaigns, and the questions asked by the Hon. Mr Sneath in this committee were beneath contempt and are a sad blot on the record of the Hon. Mr Sneath in this chamber.

It is disappointing that the Leader of the Government, the Hon. Mr Holloway, would defend such a demeaning, sleazy attempt by the Rann government on this issue, and it is frankly beneath contempt for the Leader of the Government, the Hon. Mr Holloway, to demean his office as Leader of the Government in this way by endorsing and supporting the approach of the Hon. Mr Sneath and the Rann government. It is a fair indication of the sensitivity of the Rann government on this issue, and it is a fair indication of how low the Hon. Mr Holloway and the Hon. Mr Sneath will go. They will go as low as they want to in relation to some of these sleazy accusations that you and your dirty tricks unit will make. You have been doing it for years, and you try to adopt—

The PRESIDENT: The Hon. Mr Lucas should get back on track; keep having a crack at the Hon. Mr Sneath would be a good idea.

The Hon. R.I. LUCAS: Thank you, Mr President; I cannot hear myself think over the squealing of the Leader of the Government on this issue. He does not have a very good track record, I might say, in relation to these issues.

The PRESIDENT: The Hon. Mr Holloway would not ring witnesses, I would have thought.

The Hon. R.I. LUCAS: The Hon. Mr Holloway has done a lot worse than that, let me assure you, Mr President, as indeed you did, in your performance on this committee, if I might speak frankly. I read onto the record the question that you raised and the disgraceful impact it had on a hard working former chief executive. Whatever you think about that chief executive's actions—and a court of law will determine that aspect ultimately one way or another, and I will not comment—and whatever you think of that chief executive, she was a loyal, hard working servant of the government of South Australia and did not deserve that sort of approach from you in your former position and obviously supported by the Hon. Mr Holloway and others as part of this strategy. I seek leave to conclude my remarks.

The Hon. P. HOLLOWAY: No; we are not putting up with this rubbish. Keep going.

The PRESIDENT: Leave is not granted.

The Hon. R.I. LUCAS: That was a dummy spit from the Leader of the Government.

The PRESIDENT: Order! The Hon. Mr Lucas will stick to the report.

The Hon. R.I. LUCAS: I am very happy to stick to the report, Mr President. Two other issues I want to place on the record; I was nearing the end of my contribution. One of the statements that was made by Kate Lennon to the committee on 23 December—it was a formal statement presented to the committee—I place on the record, because it is indicative of the government's approach on some of these issues. She stated:

The Premier, Mike Rann, has frequently emphasised that public servants should be less risk averse and more 'can do', encouraging public servants to not have a 'silo mentality'. His expectations for quick results and risk taking was dramatically emphasised in March 2004 when I and two other chief executives, Jim Birch and Steve Marshall, were officially rebuked by the Premier. On that occasion Monsignor Cappo had complained to the Premier that the public service was falling behind in providing housing for the homeless. The Premier said we would be 'sacked by Christmas' if we did not reduce homelessness by half.

This was a meeting—

The Hon. P. HOLLOWAY: On a point of order, Mr President: this comment of Mr Lucas has no relevance whatsoever to the report, and I would ask that you bring him to order.

The PRESIDENT: The Hon. Mr Lucas will stick to the report.

The Hon. R.I. LUCAS: It is evidence from the report.

The PRESIDENT: No; I have the report here that has been tabled, and it has three pages to it.

The Hon. R.I. LUCAS: I am reading from it; I have just read it. That is the exact statement.

The PRESIDENT: It is not the report I have.

The Hon. R.I. LUCAS: 'We will be sacked by Christmas if we do not reduce homelessness by half.' I think that is a fair indication of the approach by this Premier and this government, supported by the Hon. Mr Holloway, relating to chief executives. That was a promise made by the Premier—

The Hon. P. Holloway: No, it wasn't.

The Hon. R.I. LUCAS: Yes, it was.

The Hon. P. Holloway: It is an unfounded allegation. That is what it is; it is an unfounded allegation, like everything else you say.

The Hon. R.I. LUCAS: No. It was a promise made by the Premier to reduce homelessness by half. The Hon. Mr Holloway says it was an unfounded allegation. That was actually an election commitment given by his own Premier that he would reduce homelessness by half—

Members interjecting:

The PRESIDENT: Order!

The Hon. R.I. LUCAS: —and now he says that it is an unfounded allegation.

Members interjecting:

The PRESIDENT: Order!

The Hon. R.I. LUCAS: An unfounded allegation and a Rann election promise are probably the same thing. The final issue, as I said, was the $5 million loan that transpired between the Department of Water and the old DAIS department. Again, with due deference to my colleagues, I do not want to delay their dinner break any longer, the evidence on this—as I said, this does not relate to stashed cash, and it does not impact on the Attorney-General, but it is a subject of this particular inquiry—is that it was a $5 million 'friendly' loan between two departments. That is how it was portrayed.

One department said, 'Hey, we need an extra $5 million just at the end of the year to balance the books; do you have a spare $5 million?', and supposedly an officer in another department said, 'Yes, I've got a spare $5 million. I will zip it over to you,' and, hunky dory, this is the way this government conducts its business. This is one of the allegedly unlawful transactions. The extraordinary thing in this—I will contrast it quickly—is that, in the first instance, all of these things that went on with stashed cash were breaches of Treasurer's instructions, they had connotations of criminality, there were disciplinary inquiries and action was taken against officers.

This particular one was, again, found by the auditor-general to be an unlawful transaction, but the government did nothing in relation to the officers, with formal disciplinary inquiries or anything of the like. We did not have any of the public attacks that were being made on officers that were involved in these particular transactions, similar to the nature of the attacks on Kate Lennon and other officers within the Justice Department. The hypocrisy of this government, and ministers like the Hon. Mr Holloway, sadly—

The Hon. P. Holloway interjecting:

The PRESIDENT: Order!

The Hon. R.I. LUCAS: The hypocrisy of the Rann government is evident in the contrasting ways that it treated these particular transactions. The auditor-general in this particular case—and because of the hour I will not go into the detail of the failure there—said that minister Hill and the others did not know about this until almost 12 months later when audit came in to identify the particular problem. Yet, in the end, minister Hill got up in parliament and said, 'That is not accurate. I was actually told about nine months ago by my chief executive officer, but I didn't tell the Premier, I didn't tell the Treasurer, I didn't tell Treasury and I didn't tell the auditor-general.

So, minister Hill, in about September/October 2003, knew of this unlawful transaction of $5 million and chose not to tell the Treasurer, Treasury, the then auditor-general or the Premier. He kept it to himself and hoped that it would go away. Whilst the Rann government pursues people like Kate Lennon, it conveniently says to people like minister Hill, 'Don't worry about that. You tried to keep it quiet, and you got caught out later on, but we won't say anything about it.' It continues to defend people like the Attorney-General, where all the evidence, as I said, is overwhelmingly damming in relation to his performance.

I conclude by saying that the evidence is overwhelming and it is damming of this government. The evidence indicates that the Attorney-General is, again, guilty of perjury in relation to swearing a false oath before the then auditor-general and—

The Hon. P. Holloway interjecting:

The PRESIDENT: Order!

The Hon. P. HOLLOWAY: On a point of order, Mr Lucas is not entitled to make that accusation unless there is a specific motion to that effect. He cannot make that outrageous claim.

The PRESIDENT: The Hon. Mr Lucas should withdraw that remark. It is not part of the evidence given.

The Hon. R.I. LUCAS: I have made that comment about a dozen times already, so it is a bit late to withdraw it. It is on the record; it is there. It is quite clear from the evidence what this Attorney-General has done. It is quite clear from the evidence, and I challenge any member who is prepared to look at the evidence I have quoted today to come to any different conclusion than the one I have put on the record more than a dozen times today in my contribution. I stand by it and I hope that you, Mr President, and others may at least have the integrity to look at the report and come to the same judgment as the one I have come to.

The PRESIDENT: Order! I challenge the Hon. Mr Lucas to go outside and repeat his remarks.

Debate adjourned on motion of Hon. I.K. Hunter.


[Sitting suspended from 18:06 to 19:48]


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