$300,000 on coffee: Yarra Trams’ contracts and conflicts spur whistleblower alarm

Yarra Trams executives face accusations from senior staff of financial mismanagement and inappropriate handling of conflicts of interest, amid a raft of job losses at the public transport operator.

A whistleblower report submitted to the company’s management in April by Yarra Trams’ head of procurement operations alleges millions of dollars in unusual advance payments to vendors, in a late financial-year scramble to avoid penalties for missing social procurement targets.

An internal investigation into the allegations was launched immediately by the company’s senior lawyer – only for the lawyer, the whistleblower and four other procurement staff to be made redundant before it was completed.

The Age can also reveal that the Independent Broad-based Anti-corruption Commission interviewed at least one other former employee, separate from the whistleblower, regarding the same allegations.

The two separate interventions come amid a tumultuous round of job losses at the company just two years into its nine-year, $7 billion state government contract to run Melbourne’s tram network.

Since taking over in December 2024, a joint venture between global transport giant Transdev and big builder John Holland has made 36 employees redundant – most from Yarra Trams’ Bourke Street head office.

Yarra Trams’ contract includes a requirement to spend a proportion of its budget with firms providing social benefits, including Aboriginal employment, disability employment, and gender equality initiatives. The operator faces penalties of up to $1.5 million a year if it misses the contractual benchmarks.

The Age has spoken with 13 current and former Yarra Trams staff about the matters contained in the whistleblower complaint and report to IBAC. Though unwilling to speak publicly about the confidential material, all asserted the matters raised were legitimate.

The whistleblower alleges, in a 34-page report, that millions of dollars of contracts were inappropriately fast-tracked last June to avoid financial penalties.

The arrangements include large advance payments for security services, espresso machines and barista training, and personal protective equipment.

The whistleblower was concerned the process meant appropriate services were potentially not procured. “Obligations relating to social procurement are designed to deliver outcomes for disadvantaged Victorians through the channelling of public expenditure into enterprises that deliver jobs and development,” the report stated. “Proper process would have been to set evaluation criteria for the required service and give favourable weighting to suppliers who can show social outcomes.”

Instead, emails, invoices and payment receipts show a last-minute effort by Yarra Trams management to hit strict social procurement spending targets before the financial year ended. To avoid fines in its contract, called “abatements”, senior executives authorised a rush of advance payments to social vendors before June 30 – logging the spending on paper to clear contractual benchmarks.

Internal correspondence reveals executives authorising payments – including $500,000 to a security provider, $300,000 for the “design, development and manufacture of [a] custom uniform”, and a $300,000 coffee deal for espresso machines to be installed in offices.

A June 2025 invoice shows Yarra Trams issuing a $500,000 advance payment to a “social outcomes security group”. The security company asked for questions to be directed to Yarra Trams.

A $300,000 purchase order shows money being paid to a uniform company that had not even developed the product at the time of purchase; a spokeswoman said the company had since delivered 2000 high-visibility vests, “with work undertaken at our North Melbourne manufacturing facility” that provided “employment opportunities for refugee and asylum seeker women”.

Yarra Trams also entered into a deal with a coffee supplier that donates a share of it profits to charity. It supplied the tram operator’s offices with espresso machines, beans, and maintenance. Internal records show an overall contract value of $300,000, with more than $10,000 dedicated to “barista training”. The coffee company declined to respond to questions.

In a May 2025 email chain discussing the strategy, Yarra Trams’ chief financial and commercial officer Marc Walter approved the initiative, writing in response: “This is approved to proceed. No further approvals required to commence.” It is not suggested that Walter endorsed any inappropriate spending to hit the target – only that he told staff they could proceed with the contracts.

The whistleblower report questions whether using public franchise funds to prepay for coffee machines and undeveloped products represented genuine value for money or was simply complying with state government social procurement rules to avoid fines.

It also details the January appointment of a Brisbane-based consultant for $2000 a day. The Age has seen the contract confirming the wage, plus flights to and from his Queensland base.

The executive who hired the consultant also submitted a conflict-of-interest form acknowledging the consultant previously reported to him at mining company BHP. The form’s proposed conflict-of-interest management plan was left blank, but CFO Marc Walter countersigned the document.

Responding to the allegations, a Yarra Trams spokeswoman said that all procurement processes were subject to strict probity requirements.

“We have reviewed these matters and are satisfied the procurement and workforce-related decisions were subject to the relevant approval and oversight processes,” she said.

She said Commonwealth legislation prevented Yarra Trams from commenting on “potential whistleblower matters”.

On corporate job cuts, the company stated that while 36 roles were made redundant, its total workforce had expanded by approximately 120 roles since December 2024.

Addressing specific vendor contracts, the operator said procurement decisions were made “based on operational requirements, value for money and contractual obligations”.

The company defended the coffee contract as “a trial of a managed coffee-service model, including coffee machines, coffee supplies, maintenance and training services. The coffee machines have been installed and are operational”.

On the engagement of its Queensland consultant, the operator said the hire was approved through internal governance processes for “specialist procurement transformation” work.

The two annual reports filed with financial regulators since Transdev and John Holland took over Melbourne’s tram operations show the joint venture has so far made profits of $38.5 million, receiving payments from the state government of $1.254 billion – a 3 per cent return.

Asked about Yarra Trams and its contract management practices, a spokesman for the Victorian government said: “This is a matter for Yarra Trams. All of our transport operators must adhere to strict probity and procurement processes consistent with their contractual obligations.”