
Great change needs good leadership
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By Matthew Schulz, journalist, Institute of Community Directors Australia
A detailed study into the corruption risks faced by government-funded community organisations has uncovered several weaknesses that leaders should be aware of.
At the last count, Victoria’s Independent Broad-based Anti-corruption Commission (IBAC) examination had investigated eight cases of alleged corruption in NFPs between 2013 and 2020 in response to 109 allegations.
As part of its examination of the corruption threat, IBAC highlighted investigations by the Victorian Ombudsman in 2017 which found significant deficiencies in out-of-home care and disability servicescare. About the same time, the Ombudsman received a string of complaints about NFPs, such as allegations of:
The study also referenced NSW Independent Commission Against Corruption (ICAC) studies in 2012 and 2018, and an investigation into relations between government departments and not-for-profits in Queensland. The NSW studies uncovered instances of CSOs or their staff:
Several in-depth case studies in the report – mostly Victorian and NSW cases – highlight the challenges for NFPs.
In September 2018, the NSW ICAC released its report into Operation Tarlo, an investigation that illustrates corruption risks arising from government funding of CSOs delivering human services.
Ms Eman Sharobeem was CEO of the Immigrant Women’s Health Service (IWHS) and the former chair of the Non-English Speaking Housing Women’s Scheme Inc (NESH). These two organisations were funded by the NSW Department of Family and Community Services and the South West Sydney Local Health District. The IWHS also received funds from the Smith Family to conduct multicultural parenting and employment projects. The Smith Family is funded for this program by the Commonwealth Government.
The investigation identified theft, fraudulent invoicing, favouritism (nepotism) and misuse of resources by Ms Sharobeem. Specifically, Ms Sharobeem improperly used funds through reimbursement, bank transfers, and misuse of credit cards for personal goods and services. Further, Ms Sharobeem’s sons worked under various aliases to claim as facilitators of non-existent programs and group activities. ICAC found Ms Sharobeem misused up to $773,000 of public funds.
IWHS operated from a property in Fairfield, NSW, which it leased from 2004. In 2011, Ms Sharobeem purchased that property for $660,000, and between 2011 and 2016, she leased it back to IWHS. She claimed $60,000 of work and repairs to the property despite being legally responsible for these costs. Further, in 2014, Ms Sharobeem fraudulently obtained a $60,000 NSW Community Building Partnership grant to renovate the property. She sold the property in 2016 for $1.3 million.
Ms Sharobeem also falsely represented herself as a psychologist and provided psychological treatment to clients, arranged for her son to be employed by NESH, and submitted falsified academic qualifications to be appointed to paid roles at the Community Relations Commission (CRC).
The NSW ICAC found that Ms Sharobeem falsified statistics and arranged for false information to be provided to funding bodies when reporting on the activities for which the IWHS was funded by the NSW and Commonwealth (via the Smith Family) governments. Ms Sharobeem did this by creating ghost identities within reporting systems, and instructing and manipulating staff responsible for preparing reports.
Red flags identified through this investigation included:
(Source: Corruption risks associated with government-funded human services delivered by community service organisations, IBAC report, September 2021, Creative Commons Attribution 4.0 licence)
While the IBAC study did not focus on the extent of corruption involving Victorian community service organisations, the research and analysis found:
The research found that risks arose as a result of the nature of the NFP sector, complex regulatory and funding arrangements, and outsourcing processes for service delivery.
The study suggested community organisations needed to better understand corruption risks and their drivers, “to develop tailored strategies to detect and prevent corruption”.
The IBAC study drew on talks with public sector agencies, sector experts and a review of existing intelligence, investigations and complaints.
The study highlighted the following prevention measures that community organisations and their leaders should implement:
A spokesperson for IBAC said that since the release of the research report in late 2021, “IBAC has been engaging with the [Victorian] Department of Families, Fairness and Housing (DFFH) and the [Victorian] Department of Health (DH) to work on ways to mitigate corruption risks and implement prevention activities.”
Both IBAC and DFFH were continuing to develop prevention resources for Victorian community service organisations, the spokesperson said.
The report also highlighted existing resources such as government service agreement requirements and the Community Services Quality Governance Framework, which give advice to funded agencies on addressing vulnerabilities and risks.
ICDA tools and resources: Insurance and risk
IBAC: Corruption risks associated with government-funded community organisations | Corruption risks associated with public sector boards
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