Operation Hector—ICAC investigation—Tony Nguyen

Known as Operation Hector, the NSW Independent Commission Against Corruption (ICAC) investigation into procurement dealings at the Inner West Council (IWC) and Transport for NSW (TfNSW) has found (Tuesday 30 April 2024) that former IWC senior project engineer, Tony Nguyen, engaged in corrupt conduct that resulted in contracts (some worth more than $1M) being awarded to businesses with which he had undisclosed associations.

ICAC also identified multiple instances of collusion between Downer EDI Works Pty Ltd (Downer) project managers and private contractors tendering for subcontracts on TfNSW projects. Many of these projects involved Tony Nguyen. Three works packages at Wollstonecraft Station totalled $4.6M in value.

Tony Nguyen’s story

According to ICAC’s investigation, before working at IWC, Nguyen worked for the Glenfield Junction Alliance as a site engineer. There, Nguyen met TfNSW employees, Nima Abdi and Raja Sanber, and began his corrupt practices, starting with the Glenfield Transport Interchange multi-storey car park rectification work in 2014.

ICAC found that TfNSW project manager, Abdi, manipulated the tender process so that the contract was awarded to ASN Contractors Pty Ltd (a company in which Abdi was part owner with Nguyen and Sanber). The work was wholly subcontracted to another company and the cost mark-up of $125,000, divided between the three of them.

Collusive tendering

Between 2016 and 2020, Nguyen engaged in elaborate collusive tendering schemes with several IWC subcontractors to influence the award of IWC contracts. The schemes included dummy bidding, collusive tendering (also known as cartel conduct) and order splitting.

Although there were procurement procedures in place, Nguyen admitted that he ignored them. The period following the Leichardt, Ashfield and Marrickville council amalgamation to form IWC (in May 2016) was organisationally chaotic. This contributed to poor enforcement of procurement rules; deficiencies in managing building projects and personnel; and poor conflict of interest oversight.

Conflicts of interest

Nguyen was able to award IWC contracts to companies that were owned by his associates. He helped direct up to $1.4 million worth of contract to these businesses. Nguyen also awarded contracts to Sanber’s company, Sanber Group Pty Ltd (in which he was a silent partner with Abdi). Corrupt conduct findings were made against Tony Nguyen, his associate and business owner Monty Nguy, and business owner Seng Du Laphai in relation to the IWC contracts.

The ICAC investigation of TfNSW primarily involved two programs: the Transport Access Program (TAP); and the New Intercity Fleet (NIF) Program. TfNSW entered into a managing contractor framework agreement with Downer in July 2016 as proponent for some train station upgrades under the TAP and NIF programs.

Nguyen established RJS Infrastructure Group Pty Ltd with Abdi and Downer employee Abdal Aziz as silent partners (Aziz was a friend of Abdi’s, and had secured employment at Downer based on a false reference provided by Abdi). RJS Infrastructure was intended to be used to tender for Downer subcontracts on TAP and NIF projects including projects at various train stations including Victoria Street (Maitland), Central, Lithgow, Kingswood, North Strathfield, Wollstonecraft, Banksia and Birrong.

ICAC findings

When ICAC examined the managing contractor framework at TfNSW, it found three specific weaknesses:

  • total budget estimates or relevant projects were overestimated
  • confidential procurement-related information was inadequately controlled
  • TfNSW did not enforce contractual subcontracting requirements

These issues rose from project oversight weaknesses including

  • that corruption risks were inadequately captured on relevant risk registers
  • TfNSW staff lacked a sufficient understanding of the contract model

Red flags

Red flags were ignored. When a senior project manager warned TfNSW project directors of their concerns about the legitimacy of RJS Infrastructure, the concerns were dismissed and the PM was told they had “trust issues”.

ICAC recommendations

The commission  has made seperate corruption prevention recommendations to both TfNSW and IWC that include:

  • undertaking detailed risk assessments of project information security
  • implementing controls to enhance the security of project information
  • developing a tailored corruption awareness course for staff
  • reviewing management, operation and membership of supplier panels

ICAC has made corrupt conduct findings against Tony Nguyen, Abdi, Sanber, George Panagakis (TfNSW project manager), Aidan Cox of Marble Arch, Aziz (Downer project engineer), Sairam Pilli and Benjamin Vardanega (Sydney Trains). The commission is seeking the advice of the Director of Public Prosecutions (DPP) on whether prosecution should be commenced.

ICAC also has recommended that the NSW Government considers a debarment scheme to assist public authorities to identify suppliers that have had previous issues with misconduct or breaches of relevant requirements.