Victoria's corruption watchdog is investigating allegations that senior staff within the transport bureaucracy corruptly set up private companies that later won profitable government contracts to deliver goods and services, in the first test of the Napthine government's maligned integrity regime.  

The "alleged serious corrupt conduct’’ the Independent Broad-Based Anti-Corruption Commission is investigating is said to have occurred over several years at the hands of an officer or officers of the state’s Transport Department and Public Transport Victoria. The commission will probe the alleged establishment by, or on behalf of, department staff "of businesses and companies that later secured contracts with DOT or PTV in the period 2007 to 2013".  

The investigation, dubbed Operation Fitzroy, relates to contracts for the supply and installation of bus infrastructure, the construction of railway carparks and related infrastructure projects, IBAC said in a statement. 

The watchdog will investigate whether any government employees obtained financial gain from the contracts under question, in public hearings that will begin on July 21 and conclude by no later than August 8. Examinations will continue at a later date if necessary.

The examinations, to be held at the Victorian County Court, ‘‘will focus on one or more current and former employees, as well as the businesses contracts were awarded to’’.

The IBAC will investigate the adequacy of systems and controls concerning procurement, ‘‘including by detecting instances of officers of the Department of Transport and Public Transport Victoria providing benefits to themselves, their family, friends or associates and other conflicts of interest’’.

At issue is whether staff selected companies that would be given the opportunity to tender for department work and then awarded those companies contracts, as well as "any actual and potential financial benefits obtained by any such employees and members of their respective families and their associates".

Terry Mulder, the Minister for Roads and Public Transport, would not comment but said the Napthine government created the IBAC "to independently and appropriately deal with these matters".

A spokeswoman for the Department of Transport, Planning and Local Infrastructure said it would "fully co-operate with the commission’s investigations". 

"We recognise the gravity of the allegations and would be extremely concerned about any behaviour or activities not consistent with public sector standards. We will not be commenting further until the hearings have concluded and the commission has detailed its findings," she said.

Public Transport Victoria chief executive Mark Wild said: "We take these allegations very seriously and we are continuing to fully co-operate with the commission." 

Commissioner, Stephen O’Bryan, QC, will preside at the investigation. The IBAC was set up by former premier Ted Baillieu to investigate potential corruption committed by public sector employees, MPs, judges, police, local government and contractors.

Operation Fitzroy marks its first investigation since its establishment in 2011, which has drawn accusations from the opposition that the commission is a ‘‘toothless tiger’’ that must be overhauled and given ‘‘real powers’’.

The corruption watchdog must find prima facie evidence of an indictable offence before it can investigate corruption allegations.

Further details of the examination will be announced in mid-July, IBAC said.

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