‘Oh no’: $285m COVID cover-up exposed by whistleblowers

Two senior bureaucrats tried to cover up a suspected $285 million bungle that saw COVID-19 payments made to ineligible businesses by withholding information from their boss and government ministers.

A report by the Independent Broad-based Anti-corruption Commission (IBAC) released on Thursday revealed that “false and misleading information” was provided to then-minister Martin Pakula in November 2021 in a bid to hide the fact that almost one quarter of the state’s program grants had been paid in error.

The corruption watchdog’s investigation focused on the $4.5 billion Business Costs Assistance Program, which delivered up to $97,200 to businesses affected by state’s pandemic lockdown measures in 2020 and 2021.

IBAC found that in November 2021, public servants in the Department of Jobs, Precincts and Regions identified that more than 9000 ineligible businesses had claimed an estimated $285 million worth of grants by backdating their GST registrations.

GST registration was a key criterion for eligibility, but the department did not appreciate the risk that businesses could legally backdate this by up to four years.

At the time of assessing businesses, the department checked eligibility using a live database that updated as people backdated their GST registrations, rather than a static dataset that would have reflected eligibility at the time each grant was announced, IBAC found.

Though the department initially estimated the total amount to be $285 million, the commission’s own analysis found that approximately $257 million was paid to ineligible businesses, with $108 million going to businesses that reported no activity in the six months leading up to the pandemic.

To date, recipients who incorrectly received the grants have repaid about $8 million to the state government. Another $5 million is being returned through repayment plans, IBAC said.

The report says the department’s acting director of COVID-19 grants policy exclaimed “oh no” upon realising that almost one-fifth of the program’s funds had gone to ineligible applicants, and later remarked that it was “astonishing to realise how many snuck through”.

In November 2021, a figure for “backdated GST registration … paid in error” losses was included in a draft Standing Directions report intended for the department’s secretary, Simon Phemister, and Pakula, then the minister for industry support and recovery.

The initial figure was listed as $8.92 million, but was revised to $251.9 million following further analysis by the department’s Integrity Services Unit.

However, on November 30, 2021, the item was deleted from the report entirely at the request of a deputy secretary, the report says.

The deputy secretary told IBAC that the deletion followed “discussion and a decision that was reached above me”, noting that the department’s associate secretary was the most immediate person involved in those discussions.

The associate secretary told IBAC they did not draft or amend the report, or tell anyone to amend it. At the time, they believed the analysis leading to the overpayment figure was flawed, they said.

A text message provided to IBAC showed the associate secretary telling the deputy secretary on December 3, 2025, that “I don’t think that problem re GST backdating overpayments is a problem. Phew”.

However, IBAC said the associate secretary should have reported the analysis to the secretary, even if he disagreed with it.

IBAC said that “misleading information was subsequently created and disseminated over an extended period of time” as part of the cover-up, including to now-premier Ben Carroll in 2022 after he replaced Pakula as the relevant minister.

The associate secretary also withheld key information from the Victorian Ombudsman, IBAC found.

IBAC Commissioner Victoria Elliott said the investigation, named Operation Harmonia, uncovered behaviour contrary to the Victorian Public Sector code of conduct and “a clear failure to act in line with the high integrity standards expected of Victoria’s public officers”.

“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,” he said.

Elliott applauded whistleblowers from within the Victorian public service who alerted IBAC to the cover-up and triggered its investigation.

“Your bravery is critical in ensuring this conduct is not only exposed but that Victoria’s public sector can take these findings and apply the learnings to their own organisations,” he said.

IBAC said it believed Phemister, the secretary, was not informed about the suspected loss, and that he was therefore unable to inform the minister about it. Pakula also told IBAC he was never informed of the issue.

The report does not name the deputy secretary or associate secretary involved.

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