A Herald An investigation in June revealed that TAHE was created in 2015 to allow the government to hide the costs of the rail system by shifting spending from the state budget to the new company.
The survey found that over the next few years the government could withdraw billions of dollars from the budget. But changes to accounting standards in 2018 put this so-called “accounting trick” at risk.
In an attempt to pursue what former NSW Auditor General Tony Harris described as a rort, the government hired various consultants to write reports on TAHE that helped stack it up.
Treasury officials confirmed at a parliamentary hearing on Friday that one of the reports, written by KPMG partner Heather Watson, was appointed without a tender and the partner was handpicked by the Treasury .
Ms Watson was hired to provide advice on TAHE based on a set of Treasury assumptions that would contradict the findings of a separate report by another KPMG partner, Brendan Lyon, which concluded that the company could end up costing the state more than it saved.
A whistleblower close to TAHE said it was easier to shell out millions to consulting firms than to admit the Treasury was wrong, and that “the budget will be hit by billions of dollars.” .
TAHE also paid consulting fees for staff such as its Secretary General Andrew Alam. He was paid $ 465,814 over a year – more than double that of a secretary at a publicly traded company – through his consulting firm, without going through a tender.
Confidential e-mails released to Parliament show that Mr. Alam was instrumental in connecting BCG to the management of TAHE.
Days after becoming company secretary last year, he wrote to Anne Hayes, then CEO of TAHE, and Andrew Newsome, BCG partner. “We previously worked together on TAHE in 2017, where Andrew led a review of the operating model and company definition,” wrote Alam.
BCG then emailed Ms Hayes to tell her that they would normally charge the government $ 800,982 for the work, but would reduce the total fee to $ 500,000 because it was a “customer to long term”. Figures exclude GST.
“We have a detailed understanding of how to market government assets, having worked with NSW Treasury on a number of highly sensitive asset marketing agreements including land registry, energy transactions and other confidential agreements “, they wrote.
Further emails to the TAHE chief show that Mr Alam’s role in BCG is earning a two-week work extension for TAHE. “We have just discussed with Andrew Alam how we might extend our support for another two weeks,” wrote the BCG.
The Herald can reveal that the six-week contract with BCG, concluded last July, has been extended for two weeks and cost $ 736,851. It cost TAHE an additional $ 1.375 million for a second job.
In selecting BCG, TAHE did not follow procurement practices by not obtaining three quotes.
Mr Mookhey said that by not doing this TAHE has virtually guaranteed that the public will pay the big dollar for BCG. “TAHE’s judgment was appalling,” he said.
TAHE said in a statement that because it was a crown corporation, it was not required to adhere to the NSW government procurement framework, although it “may choose to do so if she wishes ”.
“All contract details and values are disclosed in an appropriate manner in accordance with NSW government reporting requirements and guidelines,” he said.
Transport for NSW said it and the Treasury had considered a range of advice in developing and implementing TAHE. “Transport for NSW complies with all government regulations and requirements when entering into contracts with the private sector,” he said.
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