Two senior bureaucrats tried to cover up a $285 million bungle that saw COVID-19 payments made to ineligible applicants 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 ministers Martin Pakula and Ben Carroll in November 2021 in a bid to hide the fact that almost one quarter of the state’s program grants had gone to ineligible businesses.

The corruption watchdog’s investigation focused on the state government’s $4.5 billion Business Costs Assistance Program, which supported businesses affected by pandemic lockdowns in 2020 and 2021.

The watchdog found that in November 2021, the Department of Jobs, Precincts and Regions identified that more than 9000 ineligible businesses were able to claim grants by backdating their GST registrations, totalling $285 million.

However, rather than report the issue, a departmental deputy secretary directed that information about the loss be removed from a draft report being prepared for Pakula, who was at the time the minister for industry support and recovery, as well as the Victorian Auditor-General’s Office.

IBAC found an associate secretary also withheld information about the size of the suspected loss from their boss from the head of the department, Simon Phemister.

“Misleading information was subsequently created and disseminated over an extended period of time,” IBAC said, which prevented the secretary and ministers from responding to the issue.

“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,” IBAC Commissioner Victoria Elliott said in a statement.

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

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

More to come

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Patrick Hatch is state politics reporter at The Age. Contact him at patrick.hatch@theage.com.au, or via Signal at @pwhatch.61Connect via X or email.