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                         PUBLIC ACCOUNTS AND ESTIMATES COMMITTEE

                                                 Audit reviews on

                                         New Ticketing System Tender

                                           Melbourne — 31 March 2008




                                                      Members

                          Mr G. Barber                                    Mr G. Rich-Phillips
                          Mr R. Dalla-Riva                                Mr R. Scott
                          Ms J. Munt                                      Mr B. Stensholt
                          Mr W. Noonan                                    Dr W. Sykes
                          Mr M. Pakula                                    Mr K. Wells


                                            Chair: Mr B. Stensholt
                                           Deputy Chair: Mr K. Wells


                                                         Staff

                                        Executive Officer: Ms V. Cheong




                                                       Witness

      Ms J. Thwaites, Probity Auditor, Transport Ticketing Authority.




                                    Necessary corrections to be notified to
                                       executive officer of committee

         The CHAIR — I declare open the Public Accounts and Estimates Committee audit review hearings on the
new ticketing tender system. On behalf of the committee I welcome Ms Josie Thwaites, who is the probity auditor
for the Transport Ticketing Authority tender. I am sure you will tell us a bit more about yourself in a minute. Also
31 March 2008                         Public Accounts and Estimates Committee                                     1
members of the public and the media are welcome. Under its functions and powers under sections 14 and 33 of the
Parliamentary Committees Act 2003, the Public Accounts and Estimates Committee systematically follows up
audit reports tabled in Parliament by the Auditor-General. The committee prioritises these reports using various
criteria, including consideration of the seriousness of impacts and implications of audit findings, public interest
risks, social impacts, criticality and unresolved disputes, materiality, and opportunities to enhance accountability.
Currently the committee is conducting a review of findings of the Auditor-General’s reports tabled in 2006 and
2007. It has prioritised three reports for review and public hearing, including the new ticketing system tender,
which was tabled in October 2007. In accordance with the guidelines for public hearings, I remind members of the
public that they cannot participate in the committee’s proceedings. Only officers of the PAEC secretariat are to
approach the table during the hearing. Members of the media are also requested to observe the guidelines for
filming or recording proceedings in the Legislative Council committee room.

All evidence taken by the committee is taken under the provisions of the Parliamentary Committees Act and is
protected from judicial review. However, any comments made outside the precincts of the hearing are not protected
by parliamentary privilege. There is no need for evidence to be sworn. All evidence given today is being recorded.
Witnesses will be provided with proof versions of the transcript, to be verified and returned within two working
days of this hearing. In accordance with past practices, the transcripts and any presentations will then be placed on
the committee’s website. Following a presentation by yourself, committee members will ask questions related to
the audit reviews. Generally the procedure followed will be that related to questions in the Legislative Assembly. I
ask that all mobile telephones be turned off. I now call on Ms Josie Thwaites to make a presentation before turning
to the committee to ask questions.

        Ms THWAITES — I have not prepared a formal presentation because I was not told that I should.

         The CHAIR — That is fine. You might wish to explain to us what your background is and what role you
play as probity auditor and adviser in regard to the Transport Ticketing Authority or the new ticketing system
tender.

        Ms THWAITES — So you want me to talk about my professional background?

         The CHAIR — I think if you could just give us a very brief picture of your current position and
professional qualifications, and then describe to us what role you play in this particular tender process.

         Ms THWAITES — Sure. I am director of the Avanti Consulting Group, which has a number of
associates that we pull together, depending on the nature of the engagement and the work that we have been asked
to do. In this case I had two associates working with me — one was a retired assistant Auditor-General by the name
of John Kehoe, with an extensive and exemplary history of public service in the audit office; and the other was a
retired director of audit, also from the Auditor-General’s office — and there was me. I spent 17 years working in
the public service. I have worked in Victorian prisons. I worked for the Auditor-General’s office in the days of
Ches Baragwanath for seven years and was performance audit manager. I have worked in employment programs. I
have worked in the then State Insurance Office. I left the public service and went to Deloitte, where I established its
Victorian probity practice. I worked there for two and a half years. I left there and I established the Avanti
Consulting Group.

The role that I was engaged to perform at the TTA was in relation to the new ticketing system tender process. There
has been a lot of talk about probity auditor and probity adviser. We always talked about ourselves and regarded
ourselves and in documentation referred to ourselves as probity auditors. We understood very clearly the role that
we had to ensure that the tender process was managed according to the requirements of government at the time. We
were obviously very conscious of public interest issues and the need to maintain the highest standards of ethical
behaviour in that process. We were appointed in May 2004, and we began working with the TTA to plan the
establishment of the probity framework. I do not know how much detail you want me to go into.

        The CHAIR — Keep going. I think it is important to understand, for our report, just exactly what your
role was and how you saw that role.

         Ms THWAITES — Sure. As I said, as I saw it I was there to provide independent advice and assurance.
The question of my independence, for me, was never a question. It never occurred to me that I should follow any
interests other than what was in the best interests of the project and the state of Victoria.

31 March 2008                          Public Accounts and Estimates Committee                                       2
As we worked through the issues things came up, and we needed to resolve those issues. Probity auditors always do
that. That is how you work through the process. You do not wait until the end and then say, ‘Guess what; I’m not
signing it off because six months ago you did something that I didn’t agree with’. We did that. We talked about
how the role would operate and move forward. I was given full access to any people, any documents and anything I
thought I needed to discharge my responsibilities. Also, I do not ever recall that I felt that I was in some way being
restricted or held back. As is the case in many of these things, you talk things through. You do not always start
from the same point where you agree on everything, and that is a matter of working it through according to
whatever the issue might be.

This was a very complex procurement. It had a number of global bidders. The way the RFT was framed, it meant
that there were going to be consortia that started looking one way and ended up looking at something else. They
shed partners and subcontractors, and then brought other people on in their place, and some moved from
consortium to consortium, so we had some fairly complex issues to consider, but we started off by doing the basics.
We established a pre-procurement phase probity plan. I felt that because the RFT would not be issued for some
time, it was important to make sure that people started working appropriately from then on. We started doing staff
training sessions. We started a program where we spoke to all TTA employees about conflict of interest. People
often say, ‘I don’t have any shares, therefore I don’t have any conflicts’. In fact there is a range of ways in which
people can find themselves conflicted and then in some difficulty. We made sure that the staff in the TTA
understood the myriad ways that you could in fact be conflicted and what they needed to do — how they needed to
assess their position, report it and sign it off — and the things that we then needed to do about that. That was a very
clear focus. I started doing those interviews in June; I was appointed in May. Then we were turning our minds to
the RFT and the way the RFT was going to be disseminated, the way the data room would operate, the way
tenderers would interact with the TTA and so on and so forth.

I provided monthly reports to the TTA board — detailed reports. I dealt with any issues that had arisen that I
thought they should know about. I did not report that through anyone at TTA. The report was given unedited to the
board as I wrote it. I made sure that they were aware of everything that I was aware of, because I felt that that was
important to have that direct avenue aware where things were not screened or edited or where emphasis maybe
changed, for example. That was every month, and then I had access to them whenever I wanted, basically. If there
was a bigger issue than one I thought should go straight into a report, then I would talk to whomever I thought I
needed to talk to.

        The CHAIR — So you reported to the board or this committee, which included people from Treasury and
Finance and the Department of Infrastructure?

        Ms THWAITES — I did not report to the evaluation committee, no. Day to day, my contact at the TTA
was Richard Parker. Basically there was an open line through the board. I reported directly to them and dealt
through them, when and as required.

         Mr WELLS — Can you just step us through how you attained the role of probity auditor with this
particular tender: was it advertised, or how did that take place? Who employed you and who obviously paid you?
You mentioned your responsibilities. Were there a set of guidelines that you had to work to? Did those guidelines
or did those responsibilities, as you viewed them, change through the process of the tender?

         Ms THWAITES — I responded to a telephone call from Richard Parker telling me the Transport
Ticketing Authority had been established, that they were planning to undertake a tender process for the new
ticketing system and that it would be a selective tender, and was I interested in lodging a proposal. And I said yes

        Mr WELLS — Who is Richard Parker?

         Ms THWAITES — Richard Parker is from the TTA. I think his title is general manager, operations, but I
am not sure exactly; that was essentially his role at the time. My understanding is that he had contacted other firms
as well and invited them to lodge tenders. As far as I understand it, we all received them at the same time, provided
a response, were asked to make presentations a couple of days, a week, later. That is what I did. They obviously
assessed my tender against the others.

        Mr WELLS — That is, Richard Parker assessed the tenders?

        Ms THWAITES — The TTA did.

31 March 2008                          Public Accounts and Estimates Committee                                         3
        Mr WELLS — The TTA board?

        Ms THWAITES — No, not the board; I do not think so. I think at that time it was Michael Pryles and
Peter Harris anyway. I cannot tell you who assessed them internally, because I have not seen the documents,
obviously. It was Richard and another staff member at the presentations.

        The CHAIR — Are you on the DTF panel for probity auditors?

        Ms THWAITES — No.

        Mr WELLS — So the first part of it we want to understand — —

        Ms THWAITES — I went through a competitive process to be selected. I did not know any people at the
TTA. I did not know anyone; they just got my name from somewhere.

        Mr WELLS — So they sent you a document, which you responded to on what was required in your
proposal to them?

        Ms THWAITES — Yes.

        Mr WELLS — Okay, so that was sent to you by Richard Parker or someone?

        Ms THWAITES — Yes.

         Mr WELLS — You submitted it, you were given the job. So who actually employed you: was it the TTA
or was it the Department of Infrastructure?

        Ms THWAITES — No, it was the TTA.

        Mr WELLS — The TTA employed you and they paid you?

        Ms THWAITES — I signed my contract with them, and they paid me, yes.

        Mr WELLS — How did you work out what your responsibilities were? Did those responsibilities change
from the start of the contract to the end of the contract?

         Ms THWAITES — There is a gamut of things that you do as a probity auditor. What I would say to you
is that emphasis changes. At certain points some things are more important than others, and it changes in that
respect. But as far as I was concerned, I was there to be the probity auditor. The government is very clear about
what the probity auditor should do. I had done it often enough before to know what needed to be done. With my
two associates we set about establishing what we thought was an appropriate framework, set of probity plans,
probity protocols et cetera.

        Mr WELLS — So you set your own framework?

        Ms THWAITES — Yes. That is what auditors do. You come in and you basically say what needs to be
done here so that we can attest that the procedures and processes have been adequate and they have been adhered
to.

        Mr WELLS — Did your responsibilities change from the start of the tender process to the finish of it?
Were there any directives given to you by the board or others at TTA that altered your responsibilities, or did they
remain the same from day one to the end?

          Ms THWAITES — No, I think what you are getting at is the meetings issue — the overseas site visits.
When the probity plans were developed, the TTA had not actually received its tender responses. Until you actually
have all the responses and you know who is tendering and who is in their consortium and where they are based and
what they are offering, there are quite a few things you do not know that you will need to know. Those things will
influence how you go forward. That is why we had a pre-procurement phase probity plan and a probity plan, and
that is why we asked the board to review it. They had approved it in July. We asked them to reconsider the plan in
the light of what we knew after the tenders were received. That is what we did in November.


31 March 2008                         Public Accounts and Estimates Committee                                          4
        Mr SCOTT — Could you advise us of your functions performed in the role of probity adviser? There has
been a bit of discussion around the adviser in the Auditor-General’s report, and auditor. Could you clarify for the
committee and provide some information as to your adviser role as probity adviser?

         Ms THWAITES — The thing is an adviser, technically, does not have the ability and the standing to sign
off a process. The VGPB guidelines are very clear about this. The probity auditor has the sign-off role. In that role,
though, you are providing advice. In the guidelines that define the auditor’s role, the first dot point actually says,
‘To provide advice to government during a tendering process’. Even in that respect there is acknowledgement that
even as an auditor you are, as you go, providing advice so that the process can continue and can be run in a
defensible way. The adviser is more hands on. They might do more work actually writing documents and doing
things like that. Some of those things we did do as well. The auditor is much more, in a sense, stepping away from
the process and saying, ‘Have they done all the right things?’. I have to say to you that it never occurred to me that I
was doing anything other than that.

          Mr DALLA-RIVA — I note in your discussion about the probity plan, as it were, that it was very fluid at
the initial stage. The Auditor-General in his report on page 65 spoke about the management of communications and
information flows in the NTS tender, and in it he states that ‘the NTS probity plan required’, et cetera. So clearly
there was some form of a probity plan that must have been in place?

        Ms THWAITES — Yes, there was.

        Mr DALLA-RIVA — There was?

        Ms THWAITES — Yes, there was.

        Mr DALLA-RIVA — How detailed was that plan because I got the impression earlier on it was as though
there was a plan but it was very fluid.

          Ms THWAITES — The plans are fluid to the extent that you need to review them at key milestones in a
tender process. One of the biggest milestones is when you actually receive the responses, because then you know
who the tenderers are, you know where they are and you get a better idea of the evaluation work that is going to be
involved. At that point you have actually set, or the organisation has set, the evaluation process, so they have talked
about committees, subcommittees, who is going to be there, who the advisers will be, so these are all generally
centred around the closing date, and it is good practice to make sure that your probity plan takes into account the
fact that you have new information and that you need to take into account that you might need to put something
into the plan or take something out of it because of the way things have panned out. I can say to you, interestingly
enough, that other probity plans have been changed in other projects and the Auditor-General has seen fit not to
highlight that as being an issue. It is an accepted part of your process: you have a plan; people work to the plan; you
audit them according to the plan. Audit plans can change.

         Mr DALLA-RIVA — So that being said, it sort of does not fit with what this auditor has suggested in the
report at page 65, and again I refer you to it where it says:
  The NTS probity plan required meetings, conversations and decisions materially affecting the project’s management to be minuted and
  filed. In most ... communications between the authority and tenderers were controlled according to the procedures set out in the
  authority’s probity plan and protocols, evaluation plans and procedures.

I guess in that case where you are expected to minute and file meetings, conversations and decisions, that would not
be something that you would consider to be fluid; it would be fairly straightforward at the outset that that would be
a requirement?

        Ms THWAITES — But what you do is if meetings are being recorded you do not need to take minutes
because you have the record of the meeting, for example.

        Mr DALLA-RIVA — Correct.

         Ms THWAITES — If you are attending the evaluation committee meetings, for example, they have a
secretariat officer, I suppose you would have called him, who took all the notes and wrote up all the minutes and
distributed those things, so that is how it is done and that is how the committee operated.


31 March 2008                               Public Accounts and Estimates Committee                                                     5
        Mr DALLA-RIVA — How do you explain what the auditor has said, and I again refer to page 65:
  However, audit identified a number of activities, and individual instances, where communications with tenderers did not comply with
  the predetermined controls and protocols.

And he goes on to say:
       28 meetings between the TTA and tenderers, from a total of around 180 meetings with tenderers —

not including international sites —
       were not sound-recorded and the matters discussed were not documented.

       a small number of meetings with tenderers had only one authority staff member present.

       during the tender there were more than 170 telephone conversations ...

And he goes on:
       in January 2005, one foreign site visit, at which a tenderer was present, was attended by only one authority staff member (the
       probity plan required at least two authority staff members to be present at all meetings with tenderers).

  These examples of non-compliance with the tender plans and protocols increased the risk that control breakdowns would occur.

So I guess in one instance you are saying that there was no real plan in the sense because it is fluid?

        Ms THWAITES — I never said that was no plan.

        Mr DALLA-RIVA — If there was no plan — —

        Ms THWAITES — I said to you there were two plans and a series of protocols. There was a
pre-procurement probity plan and then there was the full probity plan. That is what I said before. There were both.
They are fluid in the sense that they are reviewed at key milestone points to ensure that they remain relevant and
appropriate. That does not mean they are fluid documents just thrown together on a piece of paper.

        Mr DALLA-RIVA — So how big would the probity plan be for this — —

        Ms THWAITES — About 80 pages. It was a very significant document.

         Mr DALLA-RIVA — I know that the auditor presented a transcript in terms of one of the meetings held.
Would it be feasible that there would have been other meetings held where there were no transcripts, or it would
have been from memory of people of those meetings, given that the auditor has said that there were not recordings
of those particular meetings that should have been recorded?

        Ms THWAITES — I know that sometimes there were. I think there were three or four rooms that were
set up with recording facilities, and it was my understanding that meetings would always be channelled through
those rooms, but towards the end, when you have got five evaluation subcommittees going and quite of lot of work
being done to try and bring it to a conclusion, sometimes you had more meetings than you did meeting rooms, so
there were sometimes meetings that were not recorded. Sometimes the equipment did not work, and you
unfortunately did not know that until you requested transcripts and were told that, ‘No, for some reason that did not
work on the day’. I am certainly not equipped from a technical point of view to know whether the machinery is
working. It looked switched on and it was running, so from my point of view it was not my job to test the
equipment.

         Mr DALLA-RIVA — But it is clear — just a final question, Chair — that the NTS probity plan which
was initially established to ensure meetings, et cetera, were minuted and filed was not done properly if you review
the Auditor-General’s report — —

        Ms THWAITES — But you need to also consider things from a materiality and relevance point of view.
There are some things that did not necessarily need to be minuted. As far as I was aware, everything of material
importance was recorded, was documented.



31 March 2008                                Public Accounts and Estimates Committee                                                    6
         Mr DALLA-RIVA — We have had evidence to suggest that some of those meetings were not material,
and yet our view was that some of those meetings were material. How do you actually determine what is material
and what is not? How did you as probity auditor determine that conversation was not material and yet another
conversation was material? We have evidence produced by the Auditor-General himself where he said this was not
material to the issue, yet there are other conversations which we believe were recorded on other dates which we
believe is material that was not admitted. So how do you determine materiality — —

        Ms THWAITES — I think you need to be specific with me about some examples of things that you
consider — —

        Mr DALLA-RIVA — There was a conversation between members of TTA — —

        The CHAIR — I hope you are not quoting from papers which should not be in your possession.

         Mr DALLA-RIVA — I have no papers in my possession and as an MP I should not be held to any
particular threat if I am carrying papers as an MP.

        The CHAIR — The Auditor-General is covered by certain acts.

        Mr DALLA-RIVA — I am a member of Parliament conducting my duties as required as a member of
Parliament.

        Ms THWAITES — I think it is very important that you do that. It is very good.

        The CHAIR — Yes, but you are required not to be in possession of stolen documents.

          Mr DALLA-RIVA — This is a continued veiled threat against members of the opposition, I must say,
Chair, that really relates to our capacity to function as members of Parliament to conduct an open and transparent
process. I take offence to that in the sense that there are no documents that I have. I feel threatened and offended by
this statement.

        Mr PAKULA — Richard!

      Mr DALLA-RIVA — And I think it is out of whack with the responsibility that we have as members of
PAEC and members of Parliament. I find it very offensive that we cannot get to the facts of this issue.

        Mr PAKULA — On a point of order, Chair.

        The CHAIR — Yes, Mr Pakula.

        Mr DALLA-RIVA — Who made the decision basically on materiality of those — —

        Mr PAKULA — On a point of order, Chair.

        The CHAIR — Just a moment. Mr Pakula.

        Mr PAKULA — Is it not appropriate when Mr Dalla-Riva is referring to evidence given by the
Auditor-General to actually refer to the relevant Hansard transcript rather than just assert that the Auditor-General
said something? If he could refer to the Hansard transcript that would be useful.

        The CHAIR — Just a moment, let me deal with this please. We can refer to the Hansard transcript when
we are actually making our report.

          Mr PAKULA — Yes, I understand that, Chair. I am just wanting to be sure that when Mr Dalla-Riva
asserts that the Auditor-General said something in evidence that he actually said it.

        The CHAIR — Okay. I will try to deal with that.

         Mr DALLA-RIVA — The Auditor-General has produced a transcript and you know there is a draft
transcript, Chair, that we cannot refer to because it has not authorised yet, but we were here when the evidence was
being given.

31 March 2008                          Public Accounts and Estimates Committee                                          7
        The CHAIR — That is what I just said.

         Mr DALLA-RIVA — And the Auditor-General actually produced a transcript which relates to the very
issue of materiality, and I was asking specifically, without the threats, without the innuendo about my operation as
an MP and a member of PAEC — —

        Mr PAKULA —Richard.

      The CHAIR — I hope it is one of full integrity, Mr Dalla-Riva. If you could answer the question, please,
Ms Thwaites.

         Mr DALLA-RIVA — We are continually being threatened with documents that we do not have — I do
not have — which really puts pressure on me as an MP and what I am allowed to do. I am finding it very offensive
that you are continually threatening me — —

        Mr PAKULA — I know we are in the middle of comedy week, Richard.

        Mr DALLA-RIVA — Materiality. That is all I ask.

        The CHAIR — Who made the decision or determination — —

        Mr DALLA-RIVA — Who made a determination on materiality? This was what I asking before those on
my right interjected.

         The CHAIR — To talk about materiality and the way it was handled by yourself as the probity auditor
during this tender.

         Ms THWAITES — You have to bear in mind a couple of things. There is no government requirement
that probity auditors have to attend all meetings and in fact the guidelines say that they do not have to. The VGBP
guidance is very clear about this. That is the first thing that I think you need to understand.

        Mr DALLA-RIVA — I understand.

        Ms THWAITES — Okay. Good. Materiality changes — —

        Mr WELLS — I guess the question is who decides which meetings to go to and which ones not to go to.

        The CHAIR — Let her answer the question, please.

          Ms THWAITES — I was basically told what meetings were happening every day so I was part of the
NTS admin, which was the system for letting everybody know what was going on. I got a list every day, or the
night before, or whenever the things were scheduled, and I would look at the list and think about whether there
were things that I thought I needed to be there for. Now what you do when you start is you go to a lot of meetings.
You are trying to get to know the organisation. You are trying to get to know the people who you are dealing with,
understand how they think, get a feel for in a sense how their probity behaviour might be and you are also trying to
establish some relationships with the tenderers, too. You are obviously much more visible, much more involved
and also those processes are very important at the start. They are trying to understand the RFT. They are having
clarification sessions. You need to make sure that people are being dealt with fairly. You are doing a bit of a
learning transfer, in a sense, with your clients, particularly those that may not have worked in the public sector
before.

Materiality changes, I guess, according to who you are dealing with, what the topic of the meeting will be, where
you are in the process, for example. I think once an organisation says to people, ‘This is the figure that you are
working towards’, so in other words they were all told the magic number — they were told that I think in the
February. Once the organisation has been given the number then basically that is a pretty important piece of
information and really people are going to be focused on the number. They are all going to be driving towards that
number, so of course the bids will start to look similar because they are all working towards the same thing.
Materiality, as I said, depends where you are in the process and it depends on who is going to be there, how big is
the meeting, will it be recorded, what is the substance of the discussion going to be. Who is going to be there? Is it
key decision-makers? Is it people with lots of information on either side, et cetera?

31 March 2008                          Public Accounts and Estimates Committee                                           8
        Mr NOONAN — Ms Thwaites, I think you started your introduction by talking about being appointed in
May and having sessions with staff in June, which for my benefit and hopefully for the benefit of the committee
can you just take that a step back? I am interested in the framework that you are talking about. Can you explain to
the committee that probity framework in some more detail and perhaps step it out a little bit for us as well?

          Ms THWAITES — Sure. If you like, the probity framework basically is the agreed method for how you
are going to manage the tendering process and all the activities that are associated with it. You start by developing,
as I did, a probity risk assessment: how big is it; where is it going to happen; who is going to be involved; how long
will the process be; will they do EOI-RFT; will they do just one document; will they do a revised offers, et cetera?
You start trying to understand what actually is happening. Sorry, it just looks like my paperwork.

         Mr NOONAN — Just to get you back on your train of thought. How long does the risk assessment take
for a project of this size?

         Ms THWAITES — You do the risk assessment for about a week, maybe two. You interview people and
you start to plan what you think is required. You start to plan the people side of things: the learning transfer, the
training around probity. You get a feel for how many people have worked in government before, for example.
There are things that come, in a sense, naturally to people that have worked in government, and they understand
how the process works. Then there are other people that have not worked in government and they do not really
necessarily have a firm grip on these things.

As I said, in that time they were establishing the data room, the NTS admin communication email tool, so you were
involved in providing advice on what you think are acceptable measures to maintain safety and confidentiality of
information, security — a whole range of things; access: who gets access, when do they get access, how do they get
access, are they all going to get access at the same time et cetera. The fairness and equity thing is very important, so
you are looking at everything, making sure that people have fair access and that nobody gets, in a sense, first go
before someone else. When the TTA said, ‘We would like to allow people to register early’, I said, ‘Okay, but you
are going to have to advertise that and make sure that it is known out there that anyone can register early, if they
want to’, for example, and that it is dealt with first in, best dressed. So whoever lodges their request for registration
first is chosen.

        The CHAIR — So this interactive tender approach, did that create special challenges for you?

        Ms THWAITES — Yes, it does, but I think it is a long time since we have seen those tender processes
where you put a tender out and say, ‘Can I have 1000 pens?’, and someone says, ‘Here are the pens, and they are
going to cost you $1 each’, and you say, ‘Okay — no, hang on. This guy said he’ll do them for 90 cents’. Things
have changed dramatically, and in big projects they are always interactive. They have to be so that the government
can derive best value.

       The CHAIR — Can you tell us a bit more? What you are looking for is more the interactive in this
framework?

           Ms THWAITES — Yes. The interactive process by its nature promotes interaction and discussion. As I
said, it is done so that you can more efficiently and effectively clarify the bids in the first instance and make sure
that if there is information that you do not understand or more information you require, you make sure the tenderer
has the opportunity to present that information. It means you have more meetings, and obviously the bigger the
process and the more complex the procurement, then the more of that you are going to have, because, as I said, for
the NTS there were five subcommittees and they each looked at different things. So they are all off doing their
thing, doing their evaluations, framing their questions. There were times when there were, like, 500 questions
outstanding to each tenderer on their bids. So there is a lot of work that is done and a lot of backwards and forwards
stuff to make things happen. Then you have the meetings, and obviously at the meetings there is contact, there is
talking, and there has to be. You cannot possibly procure a system for half a billion dollars without talking to the
tenderers. The thing that is important here is that the interactive aspect applied to everybody who was involved, so
all the tenderers were given the opportunity to interact, to speak, to contribute, to present, to clarify, to come back,
to revise. This was as it was for all tenderers that were active at whatever point in the process we are talking about.

       Mr NOONAN — You talk about a reporting process to the board on a monthly basis. What sorts of things
then make it into your report with that level of detail?

31 March 2008                          Public Accounts and Estimates Committee                                          9
         Ms THWAITES — Lots of things. I have got a list of some of the issues I reported on. There were, for
example, issues that arose when some of the tenderers felt that they needed more time to prepare their responses, so
they started to write letters and talk about, ‘We need more time’. So those sorts of things were reported. We had
requests for access to the RFT by interested parties in the government, so people who had a role and had some kind
of advisory role or policy interest in it. They were saying, ‘We would like to have a look at this’. We had to talk
about: who are they, why do they need access, why would we let them take the document from the building, for
example? So we set up a set of rules that said where you establish that someone is entitled to see the RFT, for
example, they had to come to the TTA to do it. They were not just going to be sent a copy on the email and then,
‘Off you go’. So there were things like that.

We talked about preparing protocols for providing information to ministers and MPs. We had requests by one
tenderer, for example, that wanted to issue a press release and start recruiting people, and we had to talk about some
of the issues around confidentiality of the process, what they could and could not tell people and what was
appropriate for a press release at that point in time, for example. Things like the elimination of tenderers at certain
points in time — although that was fully minuted and dealt with in another forum, I still would say this is how I
saw the process, and I thought it was appropriate to do this or that.

With organisations that were going to attend conferences, people from Metlink, for example, were going to attend a
conference where they knew some of the tenderers would be, so they contacted me and said, ‘Look, what do we
do? How do we operate? We are going to be there in the same place’. So I talked with them about hospitality and
socialising, for example. I put that in the report as well. It is just really as things came up that I wanted to be sure
they knew and that they understood what the implications might be, or even just to, in a sense, confirm that this is
the action that was taken, and so this is where it is at now. As I said, there was a monthly report — every month.
The level of detail varied according to the issues and what was going on.

        Mr NOONAN — Of course this was all part of your framework?

          Ms THWAITES — Yes. Part of the framework was the reporting. The other thing that we had in place
was we made ourselves very accessible to the tenderers, so they had many opportunities to contact me or the others
and raise any issues they might have had. Basically, over that time there were four times that issues were raised
with me. They had access to me any time they wanted. I would accept phone calls from them late if they were
overseas and this was the best time for them to ring me, et cetera. They had open access to me, and I was at the
TTA when they were there. I would regularly say in meetings, ‘How are you going? How is the process from your
point of view? Do you have any probity issues? You don’t have to talk about them now, but if you have them,
please talk to me. Give me a call’. Basically, ‘You don’t need to raise it now, but please raise it if you have any
issues’, and there were four issues that were formally dealt with and raised by tenderers.

         Mr BARBER — I just want to ask a little bit about Mr Miners’s shareholding in Headstrong and the
issues that that raised.

        Ms THWAITES — Yes.

        Mr BARBER — In assessing whether or not he had a conflict of interest there, what guidelines would
you apply?

         Ms THWAITES — For a start you refer to the general government requirements in relation to these
things. There was a Victorian public sector code of conduct, which tells officers what they should or should not do.
There were VGPB guidelines about conflict of interest, and basically we acknowledged those. The TTA was not
required to comply with the VGPB guidelines, which has been a point of contention, but the fact is that they did not
have to. They in fact, I think, did comply with those guidelines anyway, because they understood that this was
important. In relation to the shareholding, when I became aware that he had shares I advised him that he should
dispose of them. You have to remember things happen quickly. These are not environments where you spend a lot
of time navel gazing — —

It moves quickly. The bids are in, you work out who has put in for these things, who is in the consortium, and there
is a difference between who is in the consortium and who is a contractor, and often we did not know who the
contractors were, for example. There were sometimes three tiers of contractors below the consortium members. So
when I interviewed Viv in June or July of 2004 and we talked about his previous employment, he told me he had
been at James Martin & Co., which was the previous incarnation of Headstrong, and I said, ‘Fine’, so I wrote it
31 March 2008                          Public Accounts and Estimates Committee                                       10
down and talked about that. They were never registered. In the lead-up to the release of the RFT, or then when the
RFTs were first lodged, to that point they had never actually registered in their own right, so as far as we knew at
that point they were not in the process. So they are not in at that point.

When they were in and they were a subcontractor, then we talked a little bit more and I said, ‘Look, from a
perception point of view there is a shareholding there. I understand it is not actually of any great value; nevertheless
it is a good idea to dispose of those shares’. Now he took that advice and he acted on that advice. I think during that
day or the next day he sent an email off to everyone and said, ‘I have got these shares. I need to dispose of them.
Can you let me know what I need to do?’.

On the question of those shares, the issue is he could not just go and sell them the way you can go and sell some
other shares. In an organisation such as the TTA, where a number of people were employed directly because they
had that experience in the ticketing industry, you are going to have this issue of connections and who knew whom
and who worked for whom and with whom. Most of these people had been on one side together, in organisations
together working side by side as contractors themselves — whatever — so the connections were there. What you
then have to do is make sure there is a process put in place for evaluation purposes that basically mitigates the
ability of individuals to drive the evaluation process to suit their own purposes.

I think the other thing that is very important to understand about conflict of interest is that the mere existence of a
conflict of interest does not suggest criminality. It does not say that a person would automatically ignore their
public duty and act inappropriately. I think that is a very important thing to know. A conflict of interest is identified
and managed. It does not mean that the person has done something wrong, and that is a very important thing when
you are looking at managing conflict of interest in organisations.

       Mr BARBER — So the State Services Authority guidelines for public servants do apply to employees of
TTA or do not?

        Ms THWAITES — I would say they do.

        Mr BARBER — The PSA itself, the Public Sector Act from which those guidelines derive their head of
power, does that apply to the TTA as an SOE, as a state-owned enterprise, or not?

        Ms THWAITES — Yes, it does.

          Mr BARBER — It does. When Mr Miners said — I am going off the Auditor-General’s appendix here
just for the time line of events — to you — —

According to this, on 3 November he met with you formally and he indicated it was valued at approximately
$150 000. Was there anything you did then or needed to do to determine the value, whether it was in fact
$150 000 — or less or more — from the point of view of materiality, I mean?

          Ms THWAITES — Yes, I did, because we had talked about this with some other people in the TTA, and
I said, ‘Oh, that is a very different number to the number that we have talked about’, which was the 1500, and that
was the number that was in my head — that it was the 1500.

        Mr BARBER — Of value?

         Ms THWAITES — So I decided that he was trying to do the right thing. He was disposing of the shares,
they were of little value, he could not sell them, he could not gain any benefit from them and I thought that there
was enough rigour in the process that he would not be able to influence the outcome, that he would not be able to
take about 60 people on a journey with him and direct them to write all those reports and make all those findings
that they made and report it to the evaluation committee. I just did not think that it would be possible.

        Mr BARBER — Was it you or the Auditor-General who took the steps to get an evaluation on the
shareholding?

        Ms THWAITES — I think it was the Auditor-General.

        Mr BARBER — It was the Auditor-General?


31 March 2008                           Public Accounts and Estimates Committee                                        11
          Ms THWAITES — Yes.

          Mr BARBER — It was not you, okay. That was on 3 November. Then on 23 November it says:
  Information in relation to Headstrong and the CEO’s shareholding was declared to the TTA board.

Why was there a 20-day gap, or was that the actual formal board meeting?

          Ms THWAITES — That was the formal — it was known from that date.

          Mr BARBER — From the 3rd?

          Ms THWAITES — Yes, that was the formal thing — —

          Mr BARBER — They knew about it immediately?

          The CHAIR — That is was the monthly meeting, I presume?

        Ms THWAITES — I think it was just the next board meeting. But there were other times when he
formally told people that he had been employed at Headstrong. He declared it — I am just going to check my notes.

          The CHAIR — He declared it in June–July 2003.

          Mr BARBER — That he had worked for them, not that he had shares.

          Ms THWAITES — No.

          The CHAIR — It was employment, she said.

          Ms THWAITES — No. I think the important thing from my point of view was that there was no secrecy
here. It was not as if he had hidden his employment with Headstrong, pretended it had never happened and
suddenly divulged it.

         Mr BARBER — But he did suddenly divulge his shareholding on 27 July. Having been through the entire
process that you started to describe at the beginning, of interviewing staff and telling them what their requirements
were, he did not twig at that point that his shareholding was important? He suddenly disclosed it — —

         Ms THWAITES — It was not in July, because they were not registered as being anything in the process.
They were not relevant to that extent. They had not registered. We did not know they were in. He was giving me
pre-information, but at that point they were not registered.

          Mr BARBER — You thought it appropriate that his course of action at that stage was to try to sell his
shares?

          The CHAIR — This is later on, obviously, in November.

         Ms THWAITES — From a perception point of view I thought, ‘Okay, then he should get rid of them, and
then that takes away the perception issue’. That is a pretty standard process. There are other projects in this state
where that is what has been done and it has been satisfactory, so as far as I was concerned that was a pretty
reasonable thing to do, if he could dispose of them.

          Mr BARBER — I guess my concern is that as things went along and as the bids were refined and were
short-listed, he was given multiple opportunities to try to dispose of his shareholding. Another way of looking at it
would be, ‘You are a director, you have got an important shareholding, you have got access to information, you
should not trade your shares while that sort of information is’ — —

         Ms THWAITES — You are damned if you do and you are damned if you don’t. If he did not sell them as
he was not able to dispose of them, people were critical of him for not being able to dispose of the shares. So you
have to take the road of: what is reasonable? How does this fit in terms of the way the process is being run? What is
the impact? I went to every evaluation committee meeting, and I can say to you that not only did he refer a number
of times to the fact that he had been employed at Headstrong, he also never, ever expressed a preference. At one of

31 March 2008                               Public Accounts and Estimates Committee                                 12
the last meetings is when he actually said, ‘This is who I think should be selected’, and he did that only after they
went around the room and everybody else said who they thought should be selected. In all the meetings before that
time he never expressed a preference for anybody.

         Mr BARBER — In terms of him attempting to dispose of those shares, he was managing his own
contacts with Headstrong?

         Ms THWAITES — Yes, but he showed me the emails he had written. It was appropriate that he should
manage those contacts. They were not my shares; that was his private business. I knew about it, he showed me the
emails, and I thought that was enough.

        Mr BARBER — Did anyone — —

        The CHAIR — Okay, we might give — —

        Mr BARBER — If I can finish up on this question, Chair. It will not take me long, and that will probably
be my lot. Did anyone at any stage suggest that he could not continue in his role as head of the evaluation
committee because of that shareholding?

         Ms THWAITES — No. I took the view that he had been hired by the government and they were well
aware of his background, and I do not think it was ever contemplated that he should step down from his role. He
also never behaved in a way that suggested that he needed to. As I said in those meetings, he was very much
directing the committee, he was giving them the benefit of his technical expertise, but he never leaned one way or
the other. But he was pointing out good and bad points of all the bids. That is his job; that is why he was there.

        Mr BARBER — But Headstrong was a member of both short-listed bidders at this stage?

        Ms THWAITES — They were contractors; they were not members of the consortia.

        Mr BARBER — Thank you for that. The final question is, then — —

        The CHAIR — This is the final, final question.

        Mr BARBER — It is the one issue. Effectively I am trying to close off the one issue.

        The CHAIR — Right.

        Ms THWAITES — Is this your final final or your best and final?

         Mr BARBER — This may sound hypothetical, but if he was attempting to negotiate a sale price for his
shares, would that not have raised some further issues in that he basically knew where they were at in the process?
If he could not sell them back to the company and he was not going to give them back for part value — he was
going to realise the value of the asset — then he would have been trying to unload them to someone based on his
knowledge of where the tenders were at?

          Ms THWAITES — But he could only unload them to Headstrong. That is the first thing. The other thing
is that the fate of tenderers through a process changes. They are up and down. Some days it looks like tenderer A is
really running ahead and is going to be the chosen one, if you like, and then other days it looks like somebody else.
It is not as if the final outcome, in a sense, is really obvious from the start. I would say that in this process it
certainly was not, and there were a number of changes to consortia and things like that. So basically you could not
have predicted how things were going to fall out, because nobody could have predicted some of the movements
that occurred between tenderers and all those sorts of things. As I said to you, though, you are damned if you do
and you are damned if you don’t. I think he tried — he tried to do the right thing, I thought that was the right thing.
He could not sell them, they would not buy them back, and so that rested there. I made a judgement that there were
ample probity arrangements in place to ensure that an individual could not influence the process single-handedly.

        Mr PAKULA — Ms Thwaites, I want to move back to the issue of your overall relationship with the
board and the organisation. But just on the Headstrong issue, when you say you saw the emails, did you see the
emails both ways — the emails from Mr Miners to Headstrong and back?


31 March 2008                          Public Accounts and Estimates Committee                                       13
        Ms THWAITES — Yes.

        Mr PAKULA — And you were satisfied that the difficulties that he was having were genuine, not
confected in any way, that he genuinely could not sell them?

         Ms THWAITES — Yes, and I had no reason to think otherwise, because, as I said, his position in relation
to Headstrong was always known. I think if you are trying to hide something, you do not come out at the very
beginning before they have even registered and say, ‘Look, these guys tend to be in this field. They did Taipei or
whatever. They might crop up. If they do, I used to work for them’. I think if a person starts with you on that
basis — actually alerts you to something — then, with conflict of interest, you cannot treat people as if they are
criminals and they are all going to do the wrong thing. People who work in the public sector are people who are
motivated. They are interested in their work; it is important to them. Their reputation is important to them. My
reputation is important to me, so to assume that someone would do the wrong thing as a starting point — for me, it
is counterintuitive to work that way.

         Mr PAKULA — Thanks for that. I want to move on to the issue of your overall interaction with the new
ticketing system tender evaluation committee. If you could just step the committee through how you worked with
it, how you interacted with it and whether or not you had full access to the board and full access to the
organisation — so, just day by day, how that relationship worked.

          Ms THWAITES — Right. We did have full access. We had passes so we could come and go in and out
of the organisation, as all the other contractors and consultants could do. We went to every evaluation committee
meeting, as I said. Basically as papers and information were prepared for the committee, we would also be included
in that round of draft material. We would review that. We actually did our own audits, making sure that all the
subcommittee reports that needed to be written were written, for example. We also did things such as review the
tender documents. Where the evaluation reports referred to tender responses or things that were contained in those
documents, we actually cross-referenced them back and made sure that the things that were being claimed to have
come out of the tender responses were there — were real. Also, in signing off certain points of the process, we were
continually checking that people had done their conflict of interests and that they had maintained that and revised it
every time there was a key milestone. We attended, as I said, all the meetings, so we were there while they were
deliberating.

I also spoke separately to particularly the DTF and the Department of Infrastructure representatives and specifically
asked them, ‘Do you have enough information? Do you understand what’s happening, as you’re not here all the
time? Is there information you want that you do not have? Do you need to have separate meetings with some of
these subcommittees so that you can understand the issues? Do you feel comfortable?’ et cetera. I made sure — or
tried to make sure — that people had the information they needed and that the two external members in particular
were basically not running behind the people who were there, for example. We would read through the reports, and
we would provide input — as everybody else did, for example. When they were proposing to eliminate someone or
take a new step, we would — in conjunction with the TTA’s legal advisers — also provide our opinion about
whether that was valid, whether that was a valid interpretation of the RFT, whether it contemplated those things,
what the evaluation process documents said would happen and whether it was happening in line with that and the
probity plan, for example.

        Mr RICH-PHILLIPS — Ms Thwaites, I would like to ask you about the conflict of interest assessment
you did on Keane in September 2004. Can you tell the committee, firstly, why you did that?

        Ms THWAITES — I did it because I became aware that somebody, who was a contractor, was now
involved in the Keane consortium.

        Mr RICH-PHILLIPS — How did you become aware of that?

        Ms THWAITES — They told me.

        Mr RICH-PHILLIPS — They being?

          Ms THWAITES — Keane — Keane told me. The name on its own did not mean anything to me, so the
fact that that person had been there did not mean anything in particular. I looked at that — and I looked at it twice. I
tried to consider, ‘Okay, what were they here to do? What access did they have? What information were they a

31 March 2008                          Public Accounts and Estimates Committee                                       14
party to? What influence did they have, if any, on the process? How long were they there and when did they go?’.
To put it in simple terms, that is what you do. There is no science to it. They are the basic steps that you work
through when you are trying to sort out something like that.

As far as I was concerned, yes, they had been there and they had provided some input, but the ticketing system is,
as I said before, a very complex undertaking. The whole issue of systems integration and producing a whole new
system means that there is going to be a lot of input to the RFT and there are going to be a number of people who
provide suggestions and then a number of review points, and that document was reviewed to within an inch of its
life right up until it was made available to the tenderers. I felt, again, that these two people had — yes — been
working there and they had gone. I cannot remember the exact details now, because we are talking about nearly
four years ago — or three years, three and a half years. In a sense there were six incarnations of the RFT. My
understanding was that they had pretty much worked on the first couple and that then after that the RFT was
extensively changed. There were a number of developments in promulgating Australian standards and bringing
them into line with the American standard, which was the RIS, and basically that meant that some of what had
originally been part of the process was not going to be included and was going to be different.

Also, I considered what other people knew about what was happening in the TTA and the sorts of things that were
going to happen in that procurement. The TTA had had two market sounding meetings — one in January 2004, one
in May 2004. Incidentally Keane was not part of those market soundings, but all the other tenderers were. In those
market soundings, it spoke about the open architecture approach, contact lists et cetera. There was a very high level
of knowledge in that tendering community about what the TTA was planning to do and how it would go about it.
As part of the market sounding it actually sought their feedback in relation to a number of things such as
commercial terms, performance indicators: for example, ‘Once you have done the contract, how do we assess your
performance? What are the things that are going to give you an incentive to perform well? What are the things that
are going to, in a sense, distract you from that?’. Taking all those things into consideration, I did not think that it
had sufficient advantage at that point to say that there had been, in a sense, unfair advantage to them and
disadvantage to others. I also draw your attention to, I think, section 7.17 of the RFT.

        Mr BARBER — Where do I get a copy of that RFT?

        Ms THWAITES — I do not know.

        Mr BARBER — I have not been able to find one.

       Ms THWAITES — You did not register and pay your $25 000, and I cannot give you one. So I suppose
you would have to make a request.

        Mr BARBER — I have got one for the big lotto licence we had. I have seen the one for EastLink.

        Ms THWAITES — They are not my decisions.

        Mr BARBER — They are online.

        Ms THWAITES — I think you have got a process for how you might get those. Obviously from my point
of view you just need to ask someone.

        Mr BARBER — I did not know what the rules were.

        Mr PAKULA — I am not sure you would have the expertise to run a ticketing system, Greg.

        Mr BARBER — I am pretty good, mate.

        Mr PAKULA — Your MBA will only take you so far.

        Mr BARBER — You never know how far.

        Ms THWAITES — Section 7.17 of the of the RFT — —

        Mr BARBER — I will take your word for it.


31 March 2008                          Public Accounts and Estimates Committee                                       15
         Ms THWAITES — It actually, in a sense, announced to tenderers what they already knew, which is this
is an industry where there is a small pool of individuals with relevant ticketing experience and expertise. It states:
   ... it can be expected that there may be persons engaged to assist in the evaluation by the TTA who have previously been employed by,
   or provided services to, entities invited to lodge offers in response to this RFT or who have acted in similar projects in other places. A
   list of persons who may be involved ... will be made available on request on a strictly confidential basis to entities invited to lodge an
   offer.

That was really important because that actually said, ‘Hey, there could be issues here’. There could be a problem.
You might feel that someone is heavily conflicted. You have the opportunity, the right, to request a list of people
who are going to be involved. You have the right then to make whatever submissions you think you need to make
in relation to that. Again, those are important provisions because what they say is, ‘We are acknowledging the
situation. We are managing it’. That is what you do: you identify and you manage.

        Mr RICH-PHILLIPS — How did you identify specifically what information Keane had access to as a
contractor during that earlier stage?

          Ms THWAITES — I asked what it worked on. The thing that you also need to bear in mind is that there
were 15 key selection criteria for this process. One of them was around the open architecture nature of the system.
The work it did was a small part of that particular selection criteria, and there were 15 others, which it did not
actually provide any services in relation to. It had no access to financial information, it had no idea what the
evaluation criteria would be. I have to say to you that if you go to the ticketing industry and you say, ‘We are going
to do a ticketing system. It has got to be open architecture. The products all have to be COTS,’ and everybody
knows what that means you will be looking for. There is no secret there.

          Mr RICH-PHILLIPS — Did you actually inspect the documentation yourself that was made available to
Keane?

          Ms THWAITES — I did see some of it, yes.

          Mr RICH-PHILLIPS — Some of it?

         Ms THWAITES — In all audits you do samples. You do not necessarily sift through every single piece of
paper. You always work on a sample basis. So if what you see confirms what you have come to understand is the
situation, unless you have got reason to believe otherwise, you can accept that on the basis of sampling. It is a
perfectly acceptable methodology.

       Mr RICH-PHILLIPS — Even when you are investigating a specific matter, as in this case as to whether
Keane had access to documentation?

        Ms THWAITES — Yes. I just did what any other probity auditor would have done, what was standard
process and what I had seen as standard process both when I was in government on the other side of the table and
in my work since I had left the government.

         Mr RICH-PHILLIPS — In the conclusion in your report you state that, based on the information
available to you at the time, you were not aware of any evidence to suggest that Keane had extracted any unfair
advantage over other NTS tenderers resulting from its engagement as a contract. Earlier you said you had no
evidence that it had sufficient advantage to warrant it being an issue. Can you say it had no advantage?

         Ms THWAITES — I do not believe it did. I think when it lodged its response it was clear that it did not
have the inside running by the nature of its response and the quality of its response. If it had had the sort of in-house
running that people had suggested it might have had — and by the way, it was all suggested — then you would
have thought it would lodge a tender that would be absolutely perfect and spot-on in every way. But indeed it was
not, because technical specifications are one thing; providing an offer to develop and deliver a fully integrated
ticketing system is entirely another. Yes, it is part of it, but it is not a big part of it. There were other issues: what
equipment? Where would it be? How would it work when it was mobile? Inter-modality in terms of data? Back
office operations? There were a number of things that were involved in the ticketing system which it had had
nothing to do with.

          The CHAIR — It was one of 18.

31 March 2008                                  Public Accounts and Estimates Committee                                                          16
        Ms THWAITES — Fifteen selection criteria.

         Mr RICH-PHILLIPS — Taking the sampling approach to investigating this matter, did the TTA give
you a full list of documentation that Keane had had access to?

         Ms THWAITES — Things were on the system and you have to accept that people are telling you
everything that you need to know. There is no probity auditor under the sun that would go to the amount of detail
that I go to. I go to a lot of detail, and I make sure that I am comfortable with my judgements. I have my reputation
to protect, and basically I do not sign things off if I honestly do not believe that this is a legitimate opinion or a
legitimate outcome.

         Mr RICH-PHILLIPS — Did this investigation involve you talking to Keane as well? After they alerted
you to the issue, did you also seek information from Keane as well as the TTA?

        Ms THWAITES — Yes.

        The CHAIR — You mentioned before that there were four issues which you followed up which were
raised with you in terms of probity. I presume this is one of them, or have I got it wrong? There were three others.

         Ms THWAITES — No, other tenderers never raised these things. They were all consistently pronouncing
themselves very happy with the system right up until some of them found out they were not successful, but until
that point they were all very happy.

         The CHAIR — Can you give us a brief summary of the sorts of issues they did raise with you,
particularly about probity matters?

          Ms THWAITES — They are big undertakings, these tender processes, and you obviously have a degree
of sympathy for people who have worked very hard, they are a long way from home, and they have not been
successful. That is why I regard what I do as extremely important. I want to be able to say to those people, ‘You did
get a fair go. You were playing in a fair game’, because I tender for work. I want to be sure that I am being dealt
with fairly and appropriately, so I know how they feel; they put a lot of effort in and they do not win, and it is very
difficult. The implications are serious. There is a lot of money involved. Nevertheless, you can only have one
selected tenderer. That is just the way it works. I am just looking up my notes so that I do not tell you the wrong
thing.

It is also important to note that in January, March and April 2005 all the tenderers provided waivers, so anyone who
was live in the process at that time signed waivers with whatever revised offers and things they might have lodged,
and they all pronounced themselves to have no probity issues. Manta, in fact, separately pronounced itself happy
and to have no probity issues in another letter, and they raised some issues at the end of April. Tenderers had
contacted me and said they were feeling that they needed more time to respond to the RFT. It was universal. They
all said, ‘Look, we need more time. It is really complex, you know. We have got consortiums with partners all over
the world and time differences and boards and all sorts are things, and we need more time. We would like more
time’. As I saw that this was becoming a fairly consistent message, I took that back to the TTA and said, ‘Look,
you need to think about this. You have to be fair to these people. You have to give them the opportunity to work
this out. Obviously if they have the ability to work it out more to their satisfaction, you will probably get a better
result so you will get more solid consortium arrangements, for example. You will get board-level approval of
certain arrangements’. That can only be better for the government. Based on that and based on their own
considerations, the TTA extended the time.

ERG in December 2004 sought an extension of time for the preparation of their revised offer. They said, ‘It is
Christmas, and we don’t want to work over Christmas’, and I have to say my response was, ‘We are all working
over Christmas, and it is not a probity issue that you don’t want to work over Christmas. I understand it is not an
easy thing, but it is not a probity issue that you don’t want to be working at Christmas time. You can raise this with
the TTA if you like but it is not a probity issue’. I think that was a fairly legitimate interpretation, and I actually
talked to the TTA’s legal advisers and said, ‘I’m in good territory here, aren’t I?’, and they said yes. I often would
check with the legal advisers, just incidentally, to make sure that I was not just taking one position and not
considering things, making sure that if there were things I had not considered that they would bring them to my
attention. I had a fairly ongoing and very fruitful relationship with the TTA’s legal advisers.


31 March 2008                          Public Accounts and Estimates Committee                                       17
In the December report I advised that ERG — they were very busy in December; they rang me quite a few times —
wanted to have clearer feedback from the TTA in relation to feedback that the TTA had given to Manta about the
tram part of its submission, which included ERG. The TTA had said to Manta, ‘There are aspects of this offer that
we don’t like’ — not ‘don’t like’. ‘but there are things about this offer that are not appealing. They are contrary to
the requirements of the RFT, and if you want to improve your bid, you will need to consider how you might
approach that’.

Following that, my understanding is that Manta fairly unceremoniously was looking to offload ERG, and ERG felt
that they did not understand what the feedback was. They were obviously thinking about their other options in
terms of joining other consortiums and they wanted to be clear about what the issue was with their solution. They
wanted more information, so they came to me and asked me about that. I said, ‘You need to go to the TTA to get
information about how that aspect of the solution, the tram solution, was assessed, and you need to understand from
them how they see your role in that particular bid and what you are offering’.

Again, it was not a probity issue for me to give them feedback. It was really for me to say, ‘Yes, you are entitled to
go and ask for that information. You should go and ask for that information’. I put it in the board report so that the
board would realise that in fact there had been a query, there was correspondence, and therefore it should be dealt
with and they should be given that information. Again, that was appropriate for my position as probity auditor.

At the end of April 2005, the chief executive officer of Manta contacted me and raised four issues. He raised with
me at that point the Keane consultancy. He said, ‘You know I know about this’. I said, ‘Yes, it is in the annual
report. What do you need to know? I cannot talk to you in specifics about other people’s business but I know about
it. I have looked at it. I do not believe there is an advantage there.’ He made some fairly serious allegations about
connections between the TTA chief executive officer and members of the Keane team, two members in particular.
He was very adamant about these things, and he was very forthright. But when I said to him, ‘You have made an
allegation that you can prove pretty easily. You can produce the person who you say can substantiate this allegation
and make it real. Please produce these people. Tell me who they are. I would like to speak to them. If the CEO has
done something wrong, then I will make sure it is dealt with. I need you to tell me who it is that can give me this
information to verify’.

There was a lot of bluster and a lot of ‘I’m doing this’ and ‘I’m doing that’, but when it came to the crunch he did
not produce the information. He never has produced the information. The TTA chief executive officer and the two
Keane people addressed the matter by stat. dec. I said, ‘If you say this did not happen, then I want stat. decs from
you saying that’. I think signing a stat. dec. is a compelling act and if people are going to sign it and know they are
not telling the truth sometimes that can make them think twice about that. I thought, ‘Let’s get them to sign some
stat, decs’. They did. The information was never provided.

I cannot investigate something that is not substantiated. The allegation was thrown around in many quarters. I had a
meeting with ADI in July 2005, and they threw it around but they changed the location of the event. They said it
happened in Sydney. The other guy said it happened in Melbourne. Nobody ever produced any information. Until
someone could wheel out the person who said, ‘I saw this’, there was nothing I could do. I asked the question, ‘Did
you do this?’; ‘No, we did not.’ They also said, ‘Please produce the person who says they saw this. We would love
to hear from them’. That was one of the other issues that he raised. He then, as a result of this — this went on over
about three or four days — and at the end of this he sent a letter to the TTA saying, ‘I have spoken with Josie about
these allegations. She has talked to me about what is in place and I am comfortable that these are not issues and I no
longer have any probity issues’.

         Mr WELLS — Ms Thwaites, I am just fascinated by the issue of your attendance, or your staff, at
particular meetings and which you chose to attend and others that you did not. Can you confirm that you or your
staff only attended 47 per cent of the 172 clarification and negotiation meetings with tenderers, 28 per cent of the
14 communication meetings, 5 of the 21 site visit meetings, and 30 of the 64 meetings between issuing the request
for tender and the decision being made re the successful tenderer? Does that sound about right?

         Ms THWAITES — I do not know because I have never sat down and added them up. I am not being cute
with you. I am saying I have never sat down and done the numbers, because for me it is not about the numbers. It is
about my gut feeling, my instincts for how things are going, and I have not added them up. Someone obviously has,
and that is probably right.


31 March 2008                          Public Accounts and Estimates Committee                                        18
       Mr WELLS — Okay, but was there not a requirement as part of your contract or your tender to report
back which meetings you did attend and which ones you did not?

        Ms THWAITES — No. No probity auditor ever does.

       Mr WELLS — How is the TTA to know whether probity has taken place or not if you have no record of
the number of meetings that you attended?

         Ms THWAITES — I have a record of the meetings I attended. I said I never added them up and did
percentages. That is what I said to you. I did provide the Auditor-General’s office with a list of the meetings that we
did attend.

         Mr WELLS — I am just wondering why the Auditor-General then went on to say, ‘Further the probity
auditor’s rationale for attending some meetings but not others was not documented’. I am wondering why you
chose not to document the reasons that you did not attend those meetings?

        Ms THWAITES — For a start I think it was not required.

        Mr WELLS — It was not required?

         Ms THWAITES — There is no guidance that says you need to do that. The guidance says you do not
have to go to all of them anyway, and it does not say, ‘If you do not go to them you have to write a note about why
you did not go’. That is the first thing. We talked before about materiality, what was happening at the time, where
we thought the important things were. We agreed we were not going to go on the site visits. It is no surprise to me
that we did not go on any site visits, because we were not going to.

Again, using numbers is always tricky because it does not necessarily mean that we missed the important stuff. We
did not go to some of the communication meetings because they were about marketing logos and decals, colours on
brochures and things like that, and I did not think they were important. For example, if I had to choose between
going to one meeting and then going to another, I did not think we needed to be at those things and you are
conscious of providing value to your client. I do not think there was ever any idea that nobody saw that we were
providing enough probity. We were there. We had a visible presence. We were accessible to the tenderers. We
were on the job. We were doing what we were hired to do, and I think the idea of numbers does not reflect
necessarily the amount of other work that was done.

        Mr WELLS — The TTA board then has no idea of the reasons you chose to go to some meetings and the
reasons you chose not to go to other meetings? Is that a fair statement?

        Ms THWAITES — No, we had a discussion.

        Mr WELLS — A verbal discussion?

        Ms THWAITES — In November, in a board meeting, we talked about the whole notion of how this was
going to work. How do you decide? That was why we were given access to the NTS meeting list. The idea was we
would see the list and make our own judgements. The thing is that as people progress in the process and they gather
momentum, experience, understanding, proficiency, you start to form a view about the fact that these are people
who can be trusted to act in the public interest, to act in the best interests of their employer. There is a point where
you cannot go home with these people, you cannot drive in their cars with them, you cannot monitor their
telephone calls, so in reality there are a whole lot of things that no probity auditor could ever hope to deliver or
cover.

      Mr WELLS — I guess the point is, though, that the TTA board to this day still does not know the reasons
why — —

        Ms THWAITES — Yes, they do. We talked about all the things.

        Mr WELLS — Okay, I understand there were verbal discussions, but there was nothing written on the
reasons why there were some meetings that you did not attend.

        Ms THWAITES — Not as a post-mortem, no.

31 March 2008                          Public Accounts and Estimates Committee                                       19
         Mr WELLS — Can I just clarify one point in my earlier question. Did you say that you had written the
probity framework?

         Ms THWAITES — No, the probity framework belonged to the TTA. We provided advice and assistance
in some areas. Often you will have a client who says, ‘Gosh, is there a template for these things? How are these
things normally done?’, and you will provide them with templates or you will say there is this guidance, there is
that guidance, this is how they do it.

        Mr WELLS — So the TTA wrote the probity framework?

        Ms THWAITES — The probity framework belonged to the TTA, and it was my role to say whether I
thought it was robust enough for the process.

        Mr WELLS — So who wrote that?

         Ms THWAITES — But it was not written — it was kind of a living, breathing thing. The probity
framework as such consists of all the things that were done to provide probity around the tender process, so it is
everything. It is the protocols, the probity plans, it is the meetings, it is reviewing the records, it is going to the
evaluation committee meetings, it is monitoring the data room, it is auditing, as we did. We would go into the data
room and say, ‘Okay, where is copy XYZ of Manta’s proposal?’.

        Mr WELLS — So who wrote that probity framework then? Who wrote that?

        Ms THWAITES — It was not written up as — —

        The CHAIR — So you have a probity plan, and you have probity protocols — —

        Ms THWAITES — You have a probity plan, and the probity plan basically expresses, in a sense it
operationalises, what the probity of the process will be.

        Mr WELLS — So who wrote the probity plan?

        Ms THWAITES — I provided them with a template, and we wrote the probity plan.

        Mr WELLS — You wrote the probity plan?

        Ms THWAITES — It was a consultative process.

        The CHAIR — Approved by the board?

        Ms THWAITES — Yes, absolutely — twice.

       Mr WELLS — So where the Auditor-General says that the authority developed an appropriate probity
framework, what is he referring to?

        Ms THWAITES — He is referring to the gamut of things that you do when you set up a tender process.

        Mr WELLS — Which you wrote.

          Ms THWAITES — No. It was their probity process, it was their tender process. I did give them template
material. That is a very normal part of what you do as an auditor. There is no point playing games with them and
waiting for them to muck around with something for six weeks when you know there is a template that the
government uses all the time, for example. So you say, ‘Hey, here is a template. Have a go’. You then work with
them in your role as auditor, saying, ‘You know what? There are things in this document that I would like to see
strengthened because I want to see some rigour in the evaluation process’, or, for example, ‘I think the conflict of
interest situation is going to be complex, so we need to make sure we have got some fairly rigorous stuff in there’.
The fact that they have not put it in there only means that maybe they just not did not think about it. That is why
you are there. You have the experience and the insight, so you are making sure that those things are included. It is
perfectly appropriate as an auditor to do that. All probity auditors do that.



31 March 2008                          Public Accounts and Estimates Committee                                        20
         Mr SCOTT — In your earlier evidence, in part in response to some things Mr Dalla-Riva said, there was
a discussion around changes to the probity plan, and you explained how that responded to changing elements of the
process and certain milestones. Could you explain how the probity plan provided consistent audit standards during
the process, how the underlying principles were maintained during those changes? I think that would be useful to
the committee.

          Ms THWAITES — Yes. The probity plan — it is a fairly laborious document. It talks about: what is the
activity, who is going to do this, what documentation is going to exist? Then there is the end column, which is
about auditing. How do we know that these things were done? That is where you put all the information in. You
populate it as you go, and you refer to all the things that have happened that demonstrate that that particular thing
was adhered to. I have lost my train of thought, sorry.

        Mr SCOTT — I was asking about how consistent probity audit standards were maintained — —

        Ms THWAITES — Yes, you always referred back to that, so — —

         Mr SCOTT — But where there were changes made, how there was a consistency of standards through
that process.

         Ms THWAITES — Yes. What you would do is you would say, ‘Okay, the board has decided that it
wants to make this change to its probity plans. What do I think about that? What is my advice about that? Okay,
what does the government guidance say? It says there is no requirement to do something, so there is no reason why
the board cannot change its mind based on information that it has now got to hand, and so it is okay’. As I said to
you, there were other projects where probity plans were changed as you go along, and it was never reported as
being anything other than a normal sort of administrative part of a project.

       Mr SCOTT — In making those changes, implicitly you are saying that you would be making reference
back — this is actually you — to government standards and general accountancy standards — —

        Ms THWAITES — Yes, always.

        Mr SCOTT — And making judgements on that basis to ensure that the changes that you were
undertaking complied with those standards; is that correct?

          Ms THWAITES — Yes, and always referring back to government policy. The other thing that I suppose
you have to bear in mind is you have to stay in the jurisdiction that you are working in. You have to also stay in
accordance with the time that you are in. People can come along three years later and say, ‘We have got these
guidelines from another state, and they say you should not do this’. That is terrific, but those guidelines did not
exist in 2004–05 and did not apply to the TTA in its Victorian jurisdiction. So you also have to stick to what
applies, which is what is the government policy of the day.

        Mr DALLA-RIVA — The Auditor-General in his evidence produced a range of issues and documents,
and one in particular was in response to flights by Mr Vivian Miners, the CEO of TTA. This was in response to
some concerns about a flight that was made overseas, and in particular a flight to Washington. Documents provided
by the Auditor-General himself in respect of those flights indicated that Mr Miners had in fact arrived at
Washington on 14 March. Some view that part of that trip was to make a trip to Keane. The question is: was that
ever brought to your attention as a probity auditor? If it was, how did you handle it, or, if it was not, why was that
not brought to your attention?

        Ms THWAITES — He went to Washington, he also went to Paris, and he also went to Berne and he went
to Hyderabad, so he went to a lot of places.

        Mr DALLA-RIVA — He went to a lot of places — —

         Ms THWAITES — He did, and some of those places were places where Manta was. From my point of
view, the whole issue of the overseas site visits was they planned their flights, they decided where they would go,
we had briefings before they left, we talked about acceptable behaviours. I knew that Manta, for example, was
planning some fairly social dinners and things and I said, ‘Look, I would rather that you did not go to those things; I
would prefer it if you just did not do it’. We talked about the whole, ‘You are still in the process; just because you
are in another country does not mean you are not in the process’. I had no reason to believe that that stopover was
31 March 2008                          Public Accounts and Estimates Committee                                      21
anything other than what it was proclaimed to be. The starting point seems to be that everybody who had any
ability to do anything right always chose to do the wrong thing. I had no reason to believe that he was doing
anything other than his job as the TTA CEO. I had no reason to believe that he was going to meet with Keane. He
went to Europe over Christmas in his private capacity as well. I had no reason to believe that he was going to do
anything other than do what you do at Christmas when you go home.

The only way that you could ever be sure that those things did not happen is to have someone basically tailing you
and sitting with you, being with you day in, day out. This is a factor in all tender processes. We do not go home
with these people; we do not live with them. They do not come to our house; they do not live with us either. We do
not monitor their phones. We do not walk around stealthily putting bugs in their offices to listen who they are
talking to. There is a point where you have to apply a position of trust to people who are appointed public officials.

        Mr DALLA-RIVA — On that basis you are a fairly trusting person in terms of your process in your role,
or would you have some level of scepticism as a probity auditor?

          Ms THWAITES — The way I work is that when you say I am a fairly trusting person, I do not believe in
conspiracy theories. I do not believe in making unfounded allegations. I do not believe in spreading untrue rumours
about people to damage their reputation just for the hell of it. I work on the basis that if someone is employed by
the government they have been vetted at a high level by the government — they must have — and they are they are
there in a position of trust. It is not my decision who is in those positions and who is not. I work on the basis that if
there is no evidence to suggest to me that a person is being dishonest or disingenuous, or in some way hampering a
process, then I just assume they are doing their job, and that is what everybody does in these processes. You cannot
walk around treating people as if they are criminals until they prove to you that they are not. So I am trusting to the
extent that I have professional respect, not just for my clients but for tenderers, and there are tenderers who behave
badly and do very bad things. They are able to do those things and do it with impunity. Nobody ever questions why
they would do those things.

        Mr DALLA-RIVA — I used to in years gone by.

         Ms THWAITES — You go ahead. I have been investigated by these people. I have been followed by
investigators hired by these people, and these are the people who provided allegations to the audit office, who went
off and just did everything according to what they said. Everybody assumed that we were the ones who did
something wrong, and the tenderers were all terribly well-behaved, very honest people.

        Mr DALLA-RIVA — So how did you feel on 13 June, as reported in the auditor’s report, when you were
confronted by the journalist with a leaked report?

        The CHAIR — I am not sure this is terribly relevant.

        Mr DALLA-RIVA — Page 73, the probity auditor met — —

         Ms THWAITES — I am very happy to talk to you about how I felt. In a sense I was saddened by the fact
that the Herald Sun had chosen to take possession of a document which clearly did not belong to it and which was
a confidential document. I thought it was a shame that they had chosen to go down that pathway, and I wondered
how this would help the public interest.

        The CHAIR — I am sure no members of this committee would use such documents.

        Mr DALLA-RIVA — We are allowed to undertake our role as an MP.

        Mr NOONAN — I think — are you okay, Ms Thwaites?

        Ms THWAITES — Sorry.

        Mr NOONAN — That is all right. I think you said you were employed or contracted by the TTA?

        Ms THWAITES — Yes.

         Mr NOONAN — My question is fairly simple. It is really about whilst you are paid by the TTA, how you
protect your independence.

31 March 2008                           Public Accounts and Estimates Committee                                       22
         Ms THWAITES — Yes. It is very interesting. I pride myself on the fact that I am independent in my
work. I am professional. I am courteous. I am not disruptive in organisations. I give my absolute best in every
engagement that I undertake. I have never, ever been accused of not being clear about where my loyalties should
be, what my responsibilities are as a professional, as a probity auditor. I have been in many positions of trust. I was
deputy manager of a prison. There is absolutely — and I refute and I just cannot accept that anyone would say that I
did not show enough independence in that role. I did question things, I did talk to TTA people, I did go to the board
and say, ‘I would prefer it if things happen this way rather than that way’. I think part of the skill of being a good
probity auditor is helping a client reach a point where they do understand what you are trying to say to them and
they understand the validity of what you are saying and they respect the fact that you are willing to have these
discussions and to work through those issues.

          Mr NOONAN — So the first part of your answer is about reputation, which is fair enough, and the second
part is about the issues in terms of this probity audit’s function. I think what you are saying is, where there was
some doubt you took steps to document and ensure a process.

        Ms THWAITES — I did, and I worked independently. I was not pushed around, I was not influenced, I
was not bullied — —

I was bullied, yes, by some tenderers on the way, who tried very hard, and also afterwards, into retracting my
sign-off, for example, but I did not work at the bidding of the TTA; I did not do as I was told. I was not a puppet of
the TTA. I never was; I have never worked that way with any client.

         Mr RICH-PHILLIPS — Ms Thwaites, can you please tell the committee has Avanti undertaken any
other probity audits of a similar scale to the TTA one?

         Ms THWAITES — I have worked on a number of probity audits, some when I worked in Deloittes and
then some as Avanti. There is a whole range of them. There were things like the synchrotron, the Commonwealth
Games village, the catering for the Commonwealth Games, the host broadcasting for the Commonwealth Games,
the ticketing for the Commonwealth Games, the installation of fibre-optic cabling in regional rail, the Kew
Cottages redevelopment — I am sorry, I mean — —

        Mr RICH-PHILLIPS — Those were as Avanti?

        Ms THWAITES — They were as Avanti, yes.

        Mr RICH-PHILLIPS — Do you know the basis on which you received the invitation to tender for the
probity work on this project?

        Ms THWAITES — I think that people were casting around and saying, ‘Who should we offer a selective
tender opportunity to?’, and my name was probably put forward by others who had worked with me and knew me.

        Mr RICH-PHILLIPS — Thank you.

        Ms THWAITES — That is how it works when it is selective — word of mouth, reputation.

        The CHAIR — We have had evidence that it is a rather small field in which you are operating in.

        Mr PAKULA — Just on that, you said right at the outset that you got the call from Mr Parker, I think you
said.

Ms THWAITES nodded.

         Mr PAKULA — And you understood there were a number of others. Do you know how many others
were in that position?

         Ms THWAITES — I am not exactly sure. I think it was another two or three. But I do not know, because
in a sense — —

        Mr PAKULA — You would not know?


31 March 2008                          Public Accounts and Estimates Committee                                      23
       Ms THWAITES — You do not know, I did not know. I did not know who my competitors were. I never
knew who they were until after I was appointed.

        Mr PAKULA — In terms of the new ticketing system tender, as a probity auditor would you say there
were any specific elements of the planning for that tender that contributed particularly to it being a sound tender
process? Did it have any particular elements that you noted as being — —

        Ms THWAITES — No.

        Mr PAKULA — especially likely to create a sound process?

         Ms THWAITES — They followed the normal government processes. They had a business case, which
was vetted and went to ERC; they were subject to the Gateway review, for example — Gateway is a standard
process out of DTF. There were a number of things that were, in a sense, external confirmation that they were
taking the right steps and had done all the right things on the way to having the project approved and then to
proceed. As I said, there were two Gateway reviews while I was there.

         Mr PAKULA — Finally, coming back to the issue Mr Noonan raised about whether you consider you
have any conflict by being engaged by the people you are auditing, was it the same in those other audits that you
talked about, that you were engaged by the people you were auditing?

         Ms THWAITES — Yes, and can I say the Auditor-General is paid by the state government and audits the
state government. So we were no different to — —

        The CHAIR — He is a parliamentary officer.

         Ms THWAITES — But the point is that their funding comes out of the public purse and they audit the
government. There is that. All auditors are paid by their clients. If you go and ask any of the organisations that are
external auditors of large companies, they are paid by the company for which they provide the audit service. So
there was nothing unusual or remarkable about the fact that the TTA paid my invoices.

        Mr PAKULA — No further questions.

         The CHAIR — Just following that up, the Auditor-General’s recommendation 3.4 is that — as a
professional probity auditor I am not sure whether you wish to venture an opinion, but he suggests:
  where the procurement is being undertaken by a non-departmental public entity —

an SOE —
  the probity auditor should be engaged by the portfolio department …

          Ms THWAITES — It is a procedural matter. I personally do not think it makes a difference because it is
about how you work and how you operate and how you go about your business, and the fact that the TTA paid me
directly had no bearing on the way I went about this work. If DOI had paid me I would have done exactly the same
thing. It is not as if I would have done something different. I did what I did, and it would have been the same if you
had paid the bill.

        The CHAIR — Yes. Recommendation 3.5 suggests:
  Non-departmental public entities … should be required to use the probity services panel …

Do you have an understanding of how this panel operates? Is it too limited in terms of reaching the expertise? Is it
done on a too-occasional basis because the firms keep changing their names and their partnerships et cetera?

           Ms THWAITES — Some of the provisions make it difficult because you nominate an individual and then
it is the individual who has to provide the service. If it is done only every three years or so, organisations may want
to increase their expertise and bring in other people, but in a sense there is no point because they will not be
allowed to work on the panel, for example. But I have got no comment whatsoever about the way that panel
operates or who is on it or why they are on it. If the government makes a policy decision that will direct people to
do that, then that will be the policy decision.

31 March 2008                               Public Accounts and Estimates Committee                                   24
        The CHAIR — Fair enough in that regard.

        Mr WELLS — Are we able to get a CV from you, for the committee, or is that on the website of Avanti?

        Ms THWAITES — No. I can send it to you.

        Mr WELLS — Thanks. I am still fascinated by these meetings. The Auditor-General has specified the
before-and-after probity plan, where, after May 2004, it looked like it was ‘as required’ all the way through. Did
you object to the change of the probity plan when they changed it from one thing to ‘as required’? Is it my
understanding that the TTA board did not actually approve those changes to change it from one thing to your
meetings being only ‘as required’?

          Ms THWAITES — The changes were discussed, and in a sense they were fairly minor editing changes,
so it did not approve them word for word, but we were very clear about the way these things were to be expressed.
Again, if you look at other probity plans, it is very consistent with the way other plans would express the same
thing.

         Mr WELLS — Okay. Just explain it to me: when you were employed it said, ‘The probity auditor will
attend all clarification meetings’; then it was changed to, ‘The probity auditor will attend all clarification meetings
as required’?

         Ms THWAITES — Yes, because when you then find out that there are 10 bids lodged by 6 different
consortia, then you are talking in quantum. It is not workable, and it would not be workable for any organisation. It
just becomes unmanageable, it becomes too expensive, and, as with all risks, you need to weigh up in a sense — I
think the board did this — how much extra resourcing is required and whether that gives you necessarily a
commensurate increase in benefit. Those are decisions that organisations make all the time in tendering processes.

        Mr WELLS — Did you complain to the board that that these requirements had been changed?

         Ms THWAITES — I did not complain to the board. I discussed it with them. They discussed it with me
before they actually decided what to do. We had a lengthy discussion about risk — managing risk, managing
probity risk and what I thought the probity risks were — and about the thing that I was talking about before. You
cannot be in someone’s pocket and tail them all the time, and their issue was, ‘Well then, that being the case, how
much insurance do you buy for something that you can’t necessarily fully control from a perception point of
view?’. A lot of this was about perception, and they just chose a fairly standard and pretty normal approach to these
things.

        Mr WELLS — Just to finalise it, is it true to say that you were employed under one set of — —

        Ms THWAITES — No. The requirements were not set. The requirements were not set when I was
engaged. I was engaged to be a probity auditor to do certain things, and, as we progressed, we determined what
some of those requirements would be.

        Mr WELLS — So when you were employed, you were not employed initially to attend site visits, but
then they changed it so that you would attend site visits, and then they changed it to attending site visits as
required?

        Ms THWAITES — Yes. And, again, that is normal.

        Mr WELLS — To go from one extreme to another?

         Ms THWAITES — I just want to be clear here. I was never employed by the TTA, so I was not an
employee of the TTA. I was engaged as an external adviser, or an external consultant, to the TTA, so I was not
employed. They are very different relationships. When you are employed by someone, they do have, obviously, a
degree of control over you as an employee to direct you and to talk about what they want you to do. I did not have
that employee relationship with the TTA; I was engaged by them. I was engaged to be the probity auditor. The
extent of that — how that would play out, what would happen and what the nature of the role would be — would
be determined by who responded, when the market soundings happened, who was there, what was in the RFT, how
many bids came in, who the bids came from et cetera. Six consortia and 10 different bids — that is really extensive,
so it would not be expected that you would go to everything. As I said to you, you write a probity plan, you make
31 March 2008                          Public Accounts and Estimates Committee                                        25
some estimates about what you think is going to happen, and then you get more information. As you get more
information, you revise and review the plan, and I think that is a responsible way to do things. Plans are designed to
be dynamic facilitators of management.

        The CHAIR — Behind this, you are saying you have got outstanding risk-management principles?

        Ms THWAITES — Yes.

        The CHAIR — And standard concepts of materiality?

        Ms THWAITES — Exactly. Based on those things — I did say to the board, ‘If you are wanting to
manage perception, then you would have to have basically a 24-hour guard around all the people here’. Nobody has
ever suggested that that has been required in any other tender process, and it is clearly ridiculous.

         The CHAIR — But you were certainly using evidence-based arrangements based on sampling, as you
said before?

       Ms THWAITES — And based on experience, too, about how these things work and where you look to
make sure that you understand what is going on and have some comfort around the process.

        The CHAIR — Just a final question from Mr Dalla-Riva.

         Mr DALLA-RIVA — Just some clarification: earlier on in answer to my question you said that you had
private investigators onto you?

        Ms THWAITES — Yes.

        Mr DALLA-RIVA — And you had people following you?

        Ms THWAITES — Yes.

        Mr DALLA-RIVA — As part of that process?

        Ms THWAITES — I did — after the leak; after that first document.

        Mr DALLA-RIVA — After the first leak?

        Ms THWAITES — Yes.

        Mr DALLA-RIVA — Which one was that?

        Ms THWAITES — The material that the Herald Sun had in July 2005.

        Mr DALLA-RIVA — The first leak was — —

        Ms THWAITES — It was directly after the announcement.

        Mr DALLA-RIVA — Yes, and that related to that — was it the computer thing left in Paris?

        Ms THWAITES — No, no. It was about the information relating to three bidders — the comparative
information.

        Mr DALLA-RIVA — So you had people pursuing you, private investigators tagging you?

        Ms THWAITES — They called a previous employer of mine. They identified themselves; they said who
they were. They said who they were working for, and they asked this person if he knew anything about me that he
could share with them.

          Mr DALLA-RIVA — Given that background, you would have thought that there was obviously a lot of
interest in those bidders making sure that they at least had a better chance — so they have now gone the big screen
of pursuing you to find out your background. Is that right; is that where we are at?


31 March 2008                          Public Accounts and Estimates Committee                                     26
        Ms THWAITES — That is what they did. They identified themselves to this person.

        Mr DALLA-RIVA — That behaviour, you find abnormal?

        Ms THWAITES — It has never happened to me before.

          Mr DALLA-RIVA — On that basis you had quite significant players who had a significant interest in a
half billion-dollar contract?

        Ms THWAITES — Yes.

         Mr DALLA-RIVA — I am just concerned in the probity process that we have just reviewed that the
amount of probity that should have been applied on a half billion-dollar process perhaps was not as good as it could
have been. I think maybe some of the competing bidders maybe were a bit upset with the process. Is that your
rationale as to why they pursued you, then?

        Ms THWAITES — They were upset because they were not selected.

       Mr DALLA-RIVA — But why did they not pursue you before? Why did they not check your
background before?

          Ms THWAITES — Because they were very happy until they realised or knew they were not successful. It
is not a coincidence that everybody was very happy and in fact congratulating me and saying, ‘This is the tightest
probity process we have ever worked in. We cannot believe how hard it was. You were there; you were accessible’.
They really were. They were saying to me, ‘We have never had it so tough’.

        Mr DALLA-RIVA — And the day after they have got people onto you?

          Ms THWAITES — The day after, suddenly it is, ‘I have got problems, I have got problems’. I have to be
honest with you, that really annoyed me, because I made a point of being accessible and making sure that they did
not have to talk in front of the TTA — all those other things. I gave them many opportunities. If they had issues to
raise, they could raise them. I made it very clear that if they had proof and if I could follow those allegations up,
then I would follow them up to the nth degree. I made this very clear many times. Nobody said a word. They
pronounced themselves happy many times.

         The CHAIR — Thank you very much for your evidence and your willingness to be very open, honest and
straightforward with us.

       Ms THWAITES — I have to be honest with you, I did not do anything wrong. For two and a half
years — —

        The CHAIR — We have not said that. That is not our intention. Our intention is to collect evidence and
make a report.

        Ms THWAITES — I am just saying I have tried to tell you everything I know and I have always done
that.

        The CHAIR — We thank you very much for that.

Committee adjourned.




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