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Govt authority had ‘no limits’ on alcohol spend: Ombudsman

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The State Government’s affordable housing lender HomeStart Finance engaged in “substantial mismanagement of public resources” by spending thousands of taxpayer dollars on alcohol without any discernible limitations, the SA Ombudsman has found.

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Ombudsman Wayne Lines says HomeStart Finance staff members were responsible for the “unauthorised” and “irregular” purchase of $2344 worth of alcohol between September 2014 and August 2015.

The Government is seeking legal advice about whether it can take action against HomeStart staff for the “unauthorised” purchases, which were among almost $8000 the statutory authority spent on alcohol between 2014 and 2016.

Lines’ report says a culture had developed at HomeStart in which there was no “clearly discernible limits” on the agency’s booze spend, and no clear policies on when alcohol may be purchased.

“It appears as though the culture of the agency has caused purchases of alcohol to be made without any predictable reasoning, resulting in what I consider to be irregular expenditure,” the report reads.

“[…] As a result of this lack of consistency of principle, I do not consider there to be any clearly discernible limitations of the agency’s policy in regard to expenditure on alcohol.”

According to the report, HomeStart had argued both that alcohol purchases were controlled by a set of guidelines, but also that the guidelines were not applicable to every purchase of alcohol.

“The agency argued that purchases were controlled by the guideline, and pointed to the fact that persons responsible for purchases were accountable to HomeStart’s Board of Management, and ultimately the Minister,” Lines’ report says.

“I do not consider these arguments to be persuasive as the agency also submitted on many occasions that the guidelines were not intended to cover all purchases of alcohol, and were not always followed.

“Therefore, it is contradictory to state that a guideline, which does not provide clear limitations, is intended to limit expenditure on alcohol.”

HomeStart Chief Executive John Oliver reported to Lines that the agency’s “policies and guidelines are not prescriptive i.e. ‘black and white’ but rather descriptive where reasonable judgement can be exercised”.

“…As a result there are no limitations in the guidelines on alcohol expenditure beyond what is considered reasonable and appropriate in the circumstances, based on historical
commercial experience and other comparable events, or the judgement of the person authorising such expenditure,” Oliver writes.

Housing and Urban Development Minister Stephen Mullighan told InDaily he was seeking legal advice on what action the Government could take against the HomeStart officers involved in the transactions.

But HomeStart has rejected the Ombudsman’s findings.

According to a statement on the agency’s website, “the organisation strongly disagrees with the findings of the Ombudsman’s Report”.

“All purchases were properly approved with appropriate delegation and transparency in line with HomeStart’s existing policies.

“Nevertheless, the organisation will review its policies in line with the report’s recommendations.”

Lines found that, among other unauthorised purchases, HomeStart staff bought alcohol to “farewell” an old building, and more alcohol to “celebrate” the move to a new one.

HomeStart spent $115 to “farewell” an office in mid-2015, and a further $1674 “to celebrate our move” to a new premises the following month.

According to the agency, the latter booze spend was made to “surprise” staff that had helped in the transition from one office to another by working extra hours.

But according to Lines, the spend “raises the question of whether [staff members] are being rewarded for performance of their ordinary duties, or being given gifts in lieu of payment for additional work outside their ordinary duties”.

“The agency insisted the additional work was voluntary, and that the relevant staff were paid overtime.

“If that were the case, I do not consider that purchasing alcohol as a gift was necessary or appropriate in addition to being paid overtime for work that was either already within their ordinary duties, or outside of their ordinary duties and therefore not within the terms of their employment.”

Lines added that “it is widely accepted that public officers should not expect to receive anything other than their salary”.

Another “unauthorised” spend was $280, for a drinks session, traditionally held each week at 4:30pm on Fridays – known as “Beer O’Clock” within the agency.

Staff reimbursed HomeStart for the spend.

However, the report reads: “The fact remains that the drinks were paid for upfront for an unauthorised purpose, and the reimbursement by staff does not change that fact.”

While the organisation argued that its alcohol spend was mainly for the purpose of rewarding staff performance, Lines writes that: “I am not satisfied that the agency has demonstrated a clear link between the purchase of alcohol and staff performance”.

And: “…public officers are held to a higher standard in relation to the receipt of gifts and benefits other than their salary, and should not be seen to be receiving additional benefits such as alcohol.”

Mullighan told InDaily that he had read the report and sought assurances from HomeStart that Lines’ recommendations – that HomeStart update its alcohol expenditure policy and its staff rewards and recognition program – are implemented.

“The findings are serious and I have sought reassurances from HomeStart Finance board that they are being acted upon,” he said.

“In particular I have asked HomeStart to update its policies on alcohol expenditure to provide clear guidelines and limitations on purchases of alcohol and to reassess its rewards and recognition program, as recommended by the Ombudsman.

“Further I have asked HomeStart to remind employees of their obligations when purchasing food, alcohol or entertainment.”

He added: “I have also sought legal advice on whether there is a basis for any action against any of HomeStart’s officers involved in the relevant transactions.”

HomeStart will be required to report back to the Ombudsman by June this year on what steps had been taken to implement his recommendations.

The corporation, owned by the State Government, provides low-cost loans to help South Australians enter the housing market.

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