Australian Security Corruption Scandal

By: John Honovich, Published on Jul 01, 2012

A major scandal is rocking the Australian security industry. The government alleges corrupt awards [link no longer available] for multi-million dollar surveillance contracts. The case is now before the Commission Against Corruption and the transcripts are amazing [link no longer available] presenting a rare glimpse into the underbelly of security contracting. While it is still ongoing, the commission's key allegations identify fundamental risks that all security professionals globally should keep in mind. As of June 1, 2013, this investigation is still ongoing. Full update here

Perhaps the best quote from the transcripts is this:

"The agencies failed to recognise the security consultants were not independent in the security industry."

Obviously, this comes as zero surprise to us as it is an issue we have examined repeatedly. However, amazingly this is an issue that many security vendors deny or downplay.

Here are more risks identified:

Sharing Confidential Details

Beware of consultants sharing confidential details, like the available budget or rival's bids, to 'friends' of the consultant. The more friendly and connected the consultant is to the bidders/integrators, the more likely this is to happen.

Free Trips

The complaint repeatedly cites a concern with an integrator paying for trips to consultants and/or users to ISC West (viva las vegas!). Of course, it is simply defended as networking but the government is understandably concerned about the influence bidders can have over supposedly independent individuals when taken on free vacations (e.g., crusies).

Fabricating Qualifications

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

The complaint alleges that a preferred integrator's qualifications were fabricated to show significantly more certified technicians than they had. Even if it is not fabricated, biased consultants can look the other way to faked qualifications or shape qualifications to favor a preferred bidder. See our recommendations on selecting a quality integrator.

Gifts and Unrelated Payments

One of the craziest elements of the complaint is that an integrator paid an end user thousands of dollars a year to clean a boat. It is defended as an unrelated side job, but these type of financial connections can build bonds that favor one bidder over another.

The complaint notes:

"Some of the agencies have dealt with the issue of gifts poorly. And those agencies have failed to recognise the risk of gifts influencing or being seen to influencing their staff. Some agencies did not adequately manage conflicts of interest between staff and consultants."

Security manufacturers are the same way, saying inane things like 'just because I buy them gifts, doesn't mean I am guaranteed the deal'. Indeed, in the transcript, the defendant remarks at one point, "I don't go out there to say hey, I'll buy you a beer, make sure we get the contract."

Bidders can play dumb all they want but it is obvious why they do it and why most governments and large corporations have rules against gifts for employees - gifts routinely result in awards favoring bidders at the detriment of the buyer's organization.

Open vs Invitation Only Tenders

The use of invitation only tenders is cited as a corruption risk:

"An open tender [may] have been adopted rather than a tender by invitation in order to increase the prospects of competition and reduce the opportunity for collusion between tenderers."

While invitations may help select the 'best' bidders, it may also be misused to select those the consultant is biased towards. This equally and regularly happens with product specifications. See our review of low quality RFPs.

End User Lax Management

The complaint emphasizes that the government agencies were naive:

"Most agencies responded to the challenges of undertaking a specialised project by hiring an external security consultant to provide advice. These agencies failed to put in place any safeguards to verify the advice they received. Instead there was a general view that the external security consultants provided a layer of probity as their independence safeguarded the process."

Anywhere in the world, simply assuming your consultant is independent is a fast way to get screwed.

The complaint concludes:

"In many ways the consultants were handed end to end control over the security projects as public sector managers effectively outsourced accountability."

While it may be hard work and require more resources, end users need to exert more control and more skepticism over the actions of their consultants. Otherwise, they risk falling into a similar situation to what is happening in Australia. 

[UPDATE June 5, 2013]: The government's inquiry was originally supposed to take about three weeks, but still no final report or additional information has been released. We checked in with the New South Wales Independent Commission Against Corruption to see the status of this case and it released this statement:

The Commission extended the scope of this inquiry, which meant it did proceed for more than three weeks. At this point, the Commission is in the process of preparing its report into the investigation, which will contain any findings and recommendations that the Commission deems appropriate. The report will be furnished to the New South Wales Parliament in due course, which then makes the report public.

The Commission says it does not have an estimated timeline on when this will happen. 

Comments : Members only. Login. or Join.

Related Reports

Getting Started With Your IPVM Membership on Dec 02, 2019
Here's how to get started and get the most out of your IPVM membership. Books for Members All members can download the 3 member-only books below...
ADT And 'The Defenders' Silent About Massive Complaints on Feb 14, 2019
ADT's largest dealer, "The Defenders" has been the subject of a massive number of complaints over many years and many forums, most recently a CBS...
Integrator Profitability Bonuses - Statistics on Mar 13, 2019
While winning projects typically gets the most attention, how profitable those jobs turn out to be is key to the long-term success of integrators....
NJ Law Requires Apprenticeship For Public Works Integrators on May 24, 2019
Few integrators do a formal apprenticeship program. However, now a NJ law is requiring any integrator on public works projects (such as state...
'Independent' Security Consultant Organization Sells Off Speaking Slots To Manufacturers on May 10, 2019
The International Association of Professional Security Consultants (IAPSC) have sold numerous speaking slots to manufacturers. This is part of...
Security Dealer 'Social Media Contractor' Program on Jun 25, 2019
A $20,000 video surveillance system can be yours for free if you are willing to post on social media about the security dealer. Good deal, bad...
Beware African 50,000 IP Camera Contract Scam on Jul 12, 2019
A “Nigerian Prince” scam for the video surveillance market is going around. You, or at least we, could be lucky enough to be the single bidder for...
How To Quickly Research An Unknown Company on Jul 23, 2019
There are hundreds of companies in the physical security markets, ranging from a flood of new startups to small companies that may or may not be...
"UL Has Blood On Their Hands" Alleges The Interceptor / Keith Jentoft on Oct 14, 2019
"UL has blood on their hands" alleges Keith Jentoft of "The Interceptor Project". We examined The Interceptor in-depth last year, see: The...
Alarm Veteran "Demands A Criminal Investigation" Of UL on Oct 18, 2019
The Interceptor's Project pressure against UL continues to rise. Following Keith Jentoft's allegation that "UL Has Blood On Their Hands", Jentoft...

Most Recent Industry Reports

Video Surveillance 101 Course - Last Chance on Feb 20, 2020
This is the last chance to join IPVM's first Video Surveillance 101 course, designed to help those new to the industry to quickly understand the...
Cheap Camera Problems at Night on Feb 19, 2020
Cheap cameras generally have problems at night, despite the common perception that integrated IR makes cameras mostly the same, according to new...
Milestone Launches Multiple Cloud Solutions on Feb 18, 2020
Milestone is going to the cloud, becoming one of the last prominent VMSes to do so. Milestone is clearly late but how competitive do these new...
Video Surveillance Architecture 101 on Feb 18, 2020
Video surveillance can be designed and deployed in a number of ways. This 101 examines the most common options and architectures used in...
UK Stands Behind Hikvision But Controversy Continues on Feb 18, 2020
Hikvision is exhibiting at a UK government conference for law enforcement, provoking controversy from the press, politicians, and activists due to...
IronYun AI Analytics Tested on Feb 17, 2020
Taiwan startup IronYun has raised tens of millions for its "mission to be the leading Artificial Intelligence, big data video software as a service...
Access Control ADA and Disability Laws Tutorial on Feb 17, 2020
Safe access control is paramount, especially for those with disabilities. Most countries have codes to mandate safe building access for those...
ISC West 2020 Removes China Pavilion, No Plans To Cancel Or Postpone on Feb 17, 2020
ISC West plans to go on next month, amidst concerns over coronavirus. However, the Asia / China Pavilion has been removed, show organizers...
Hanwha Wisenet X Plus PTRZ Tested on Feb 14, 2020
Hanwha has released their PTRZ camera, the Wisenet X Plus XNV-6081Z, claiming the "modular design allows for easy installation". We bought and...
PRC Warns Against China Video Surveillance Hacks, Hikvision Targeted on Feb 14, 2020
Hackers are targeting China video surveillance manufacturers and systems, according to the PRC's main cyber threat monitoring body. The hackers...