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Over $250 million in COVID grants paid to ineligible Victorian businesses, watchdog finds
A four-year investigation into Victoria’s COVID grants has exposed serious oversight failures, with senior officials withholding suspected losses from ministers, IBAC said Thursday.
Senior Victorian public servants concealed suspected losses of hundreds of millions of dollars in COVID-19 business grants, despite warnings that thousands of businesses had received payments they were not entitled to, the state’s anti-corruption watchdog has found.
A report released on Thursday by Victoria’s Independent Broad-based Anti-corruption Commission (IBAC) found that between 2021 and 2022, the state paid approximately $257 million to more than 9,000 ineligible businesses, exposing major flaws in oversight of taxpayer-funded pandemic support.
While IBAC has identified the amount of misappropriated funds, it is unclear how much has been recovered since. It’s also worth noting that receiving a payment while ineligible does not necessarily mean a business committed fraud.
IBAC told The Money Edition that it has recouped roughly $8 million so far, with a further $5 million earmarked.
Known as Operation Harmonia, the investigation uncovered serious shortcomings in how the Victorian government administered its Business Cost Assistance Program, which was designed to help businesses struggling through COVID-19 restrictions.
Thousands of businesses backdated their GST registrations to meet eligibility requirements, even though they weren’t operating as required at the time, the watchdog said.
Even after officials identified the problem, the department responsible for distributing the grants failed to address it, allowing it to approve further potentially ineligible or fraudulent applications, IBAC added.
What did government officials know?
An earlier departmental analysis suggested suspected losses could exceed $285 million, but IBAC found senior bureaucrats withheld critical information from ministers and oversight bodies.
Details of the losses were initially included in a draft report prepared for then-Minister for Industry Support and Recovery Martin Pakula and the Victorian Auditor-General’s Office.
However, a Deputy Secretary directed that the information be removed, leaving both parties uninformed despite financial reporting obligations requiring disclosure.
The investigation also found that an Associate Secretary withheld information from the department’s Secretary, while another senior official provided false and misleading information to then-Minister Ben Carroll in 2022.
IBAC Commissioner Victoria Elliott said the conduct fell short of standards expected of senior public servants.
“While officers within the department spoke up, their leaders failed to act, meaning the government was left uninformed and unable to move quickly to address this suspected significant loss of public funds,” Elliott said.
Editor’s note: This story has been updated with a response from IBAC