Electronic transfers

WA Housing Authority management style contributed to corruption: investigation

The culture and management style of WA’s former housing department contributed to an environment that allowed a senior official to defraud the state of millions of dollars, an investigation has found.

Lorne O’Mara testifies before the Commission Against Corruption and Crime on May 23, 2022

Paul Ronald Whyte was acting CEO of the housing authority at the time and was later appointed deputy chief executive when it became the Department for Communities.

He was also “a gambler who stole a significant amount of money from the state,” assistant attorney Anthony Willing said Monday during the state’s Corruption and Crime Commission hearing.

Whyte, who is the subject of a 2021 CCC report, is currently serving a 12-year prison sentence for defrauding the state of millions of dollars he used to fund an extravagant lifestyle and habit of game.

“From 2009 to 2019, he used his company credit card and electronic funds transfers to make payments to businesses that did not provide services to the department,” Willing said. “In all, he stole more than $22 million from the state.”

Open hearings

The CCC opened public hearings Monday into the governance of the department during the Whyte era.

Commissioner John McKechnie said the inquiry would examine how Whyte’s “depredations” may have occurred.

“One has to wonder how come his behavior went undetected for so long,” he said.

Giving evidence, Lorne O’Mara, who was chief financial officer of housing at the time of Mr Whyte’s crimes, told the commission there was a cultural shift within the department when Grahame Searle took over as chief executive in 2009.

He said Mr Searle had an ‘aloof’ management style and liked to delegate decision-making down the line, including to Whyte, who ‘seemed to make a lot of the decisions’. Mr O’Mara said that as chief financial officer he had less contact with the new chief executive than under his predecessor and did not regularly attend management meetings.

From 2009 to 2019, he used his company credit card and electronic funds transfers to make payments to businesses that did not provide services to the department,” Willing said. “In all, he stole more than $22 million from the state.

Assistant Counsel Anthony Willing

Financial and accounting systems have also changed, so there have been fewer budget checks and controls, and reliance on contractors has increased, O’Mara said.

Mr O’Mara said Mr Searle, who knew Whyte previously and was involved in his employment, signed the receipts on Whyte’s company credit card.

He said Whyte had incurred payments for his own company’s benefits – in one case for a project that was no longer operational – and kept the payments under limits so they wouldn’t attract attention.

“He would have known how the system worked and how the controls worked and so he was able to circumvent those controls by reducing the amount of dollar payments … so everything seemed above board,” he said.

A $2 million “slush fund”

Mr O’Mara said Whyte had a discretionary budget, likely approved by himself, of around $2 million. He also oversaw financial and business operations.

“The fact that he was doing both financial accounting and business development as one job…it should have been separated,” he said.

“And the budget process, he should never have been given a slush fund … a $2 million discretionary fund to spend money on.”

When asked if the department’s culture while Mr. Searle was chief executive contributed to Mr. Whyte’s ability to defraud the department and the state, Mr. O’Mara said yes.

“Delegation and process were pushed to other people and it gave them the ability to make decisions for themselves and make payments for themselves,” he said.

Questions need to be asked as to how come his behavior went undetected for so long

Corruption and Crime Commissioner John McKechnie

He also said he believed Mr Searle’s management style as managing director and his approval of Whyte’s credit card acquittals contributed to Whyte’s ability to break the system.

Mr. Willing asked Mr. O’Mara what could have been done differently at the time of the Whyte crimes.

Mr. O’Mara replied: “First, the CFO should have been higher in the levels of the organization, he should have been part of the management team of the company.

“That person would have had full control over any new system or process and having a greater knowledge of what happened in the organization could have instilled that those rules were being followed more closely, but also taking care of the budget process.

“They would have asked questions about why these particular people have these discretionary funds to spend and why do they need them. These kinds of questions could have been asked at an executive level.

Mr. Searle is due to testify before the Commission on Friday.

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