WA corruption report finds $3.6bn health program at risk of fraud

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CCC report says department lacks adequate processes to prevent fraud and corruption in its health procurement activities

Wathumullage Wickramasinghe
Former Royal Perth Hospital senior manager Wathumullage Wickramasinghe at the West Australian Corruption and Crime Commission hearing in Perth in 2010. Photograph: Lloyd Jones/AAP

The West Australian Health Department’s $3.6bn a year procurement program is at risk of fraud because of a “systematic failure” to put adequate processes in place, according to the Corruption and Crime Commission.

The CCC tabled a report in the WA parliament on Thursday warned the department did not have “adequate processes in place to prevent fraud and corruption across its multibillion dollar health procurement activities”.

The report claimed the “significance of the systematic failure cannot be overstated when billion of dollars are spent on health procurement annually”.

“It is a problem that requires immediate urgent attention from the WA health executive,” the report said.

The CCC said it was failure of the system that allowed a former facilities development manager, Wathumullage Wickramasinghe, to take $490,300 from the department over six years until 2010.

Wickramasinghe awarded contracts to engineering consultant Eddy Kalani and his company ESM Engineering.

In January this year Wickramasinghe was jailed for four years and Kalani two.

The report found projects costing more than $20m “receive strong oversight”, while those projects such as those managed by Wickramasinghe received “far less scrutiny”.

“Consequently, a figure such as $5m, which would normally be significant in other contexts, falls off the radar,” the report states.

The CCC found the circumstances surrounding Wickramasinghe’s corrupt conduct were not unique to one hospital.

“It was a symptom of a systemic failure to manage fraud and corruption risks in procurement across WA health,” it says.

The WA Labor leader, Mark McGowan, attacked the Barnett government for not addressing the issues within the health department.

“This is a damning report into the Barnett government’s handling of the health system,” he said.

“The Health Department is the biggest government agency in WA and this report says there is systemic failure within the management of $3.6bn of purchases from that department.

“And Mr Hames and Mr Barnett have abandoned the corruption and fraud management in 2009. They need to come and say why they abandoned it and how did it get to this?”

McGowan said Kim Hames should resign from his health portfolio.

Hames said the CCC did not find any widespread corruption within the health system.

He did say it was “bad” the department lacked the controls to properly monitor procurement, but said the CCC investigation was sparked by an incident that happened while Labor was in power.

“I’m comfortable that it hasn’t occurred on my watch but I’m concerned it may occur in the future before the procedures recommended are in place,” he said.