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Funds misuse public servant offered $1 million grant

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A former public servant previously found to have acted improperly in the expenditure of public funds is the owner of a business approved for a $1 million Government business assistance grant.

The grant, announced in February 2009 as part of a $30 million fund to assist businesses “fill the gap when Mitsubishi pulled out of local manufacturing” was approved for Intex Holdings Pty Ltd, a company owned and run by former Health Department employee Roger Davies.

The project promised to create 45 full-time jobs and appears to have so far delivered none.

It’s not clear just how much of the $1 million has been paid to date, with the State Government saying its share of the joint State-Federal grant ($83,000) was never paid to the company.

Davies, a radiologist, was the subject of an extensive Auditor-General’s inquiry in 2003 after Liberal MP Dean Brown raised concerns in parliament about  Davies’ purchase of a $2.7 million magnetic resonance imaging (MRI) machine for the Queen Elizabeth Hospital where he worked as Director of Imaging.

Brown also tabled a letter alleging Davies undertook travel to Japan paid for by Toshiba and had filled out his pay sheet indicating he had attended his normal hospital duties during his absence.

The Auditor-General’s report into the MRI purchase concluded that the transaction was conducted unlawfully by Davies, “who was acting contrary to his duties”.

It also criticised the political activities of Davies who “was at various times in contact with opposition members of Parliament such as the Shadow Minister for Health (Honourable Lea Stevens), and advisers such as Mr Randall Ashbourne, with whom he was acquainted”.

“In my opinion, Dr Davies engaged with the political process…,” the Auditor-General said.

“To frustrate the implementation of a lawful decision entered into by the Government of the day, in anticipation of the outcome of an election, in my opinion, is at least, to act  properly, if not unlawfully. Conduct that knowingly and intentionally, and without justification, interferes with the contractual rights of an employer, resulting in damage to that employer is unlawful.”

On 16 July 2003 then-Health Minister Lea Stevens told parliament; “The government will act on all recommendations of Auditor General and the matter will be referred to Dr Davies’ employer … the NorthWestern Adelaide Health Service for consideration.

“I want to assure the house that unlawful and unauthorised behaviour cannot and will not be tolerated.

“South Australians have a right to expect that precious taxpayers’ dollars are spent wisely and in the public interest.”

In September 2003 parliament was told the QEH’s chief executive officer had referred “allegations of improper practices within the Imaging Department at the hospital to the Crown Solicitor’s Office for investigation by the Government Investigators in the Crown Solicitors Office”.

“The Minister and the Chief Executive of the Department of Human Services have limited power over matters relating to staff,” the Legislative Council was told.

“The investigation was commenced but was brought to a close when Dr Davies resigned (in May 2003)”.

Davies now runs a string of medical clinics offering bulk-billed MRI scans to members of the public who are referred by a GP.

In 2008 his company Intex Holdings applied for a grant from the SA Innovation and Investment Fund (SAIIF).

In February 2009 he was announced as one of the big winners with a promise of $1 million from the fund.

In a joint statement by then-Federal Industry Minister Kim Carr and State Treasurer Kevin Foley, the company’s project was highlighted as one that would “create sustainable, full-time jobs that grow local industry”.

Foley said the project would “go some way in filling the gap created when Mitsubishi pulled out of local manufacturing”.

As InDaily revealed yesterday, Intex’s 2009 promise to develop world-leading “bolt-on turbine technology designed to dramatically reduce fuel consumption in new and used cars” appears to have faded.

Davies told InDaily Thursday that the funding is now being used to develop a technology to successfully store  solar energy.

“It’s very very exciting,” Davies said.

“We’ll be able to deliver energy to people all over the world.

“We have solved the pressing issue in solar energy and that’s how to store it for long periods.

“If you’re acquainted with the concept of solar towers such as those planned for Spain and California, that’s how we’ll be able to use it – to store the energy generated by those massive towers.

“We are waiting for extensive international patents to be approved and we’re very close to a launch.”

InDaily asked Davies if the State Government was aware of the Auditor-General’s findings when they processed his application, or if he had declared it in his application.

“I’d have to check the paperwork,” he said.

“But I’m sure they would have been aware, after all it’s a matter that’s on the public record.”

Davies said that as far as he was concerned, he not engaged in any wrongdoing at the QEH.

“There was no substance to any of it.

“I’m very proud of what we achieved by buying the machine.”

One of his former colleagues, Dr Ruben Sebben, disagreed.

“He had bought a machine that was way above the cost that had been approved – that was the issue,” Sebben said.

“As the report says, he altered a purchase order.

“It’s cost our department dearly.

“The difference between what was approved and what he procured had to be paid out of our private practice funds. It took us seven long years to do that and it’s been very costly.”

Just how much of the $1 million government’s business assistance grant has been paid remains unclear.

Davies said yesterday he had received all the money, “along with a substantial amount of other investor’s funds”.

Late Thursday a Department of Manufacturing Innovation and Trade spokesman said: “The grants were announced in February 2009, but  a signed agreement was not entered into by the State  Government with Intex Holdings because the project did not fully proceed.

“The State Government’s  share of the grant was never paid to the company.”

The lion’s share of the innovation fund came from the Federal Government.

“Under the grant scheme, there were separate contracts between applicants and the Commonwealth Government and  State Governments,” the spokesman said.

“If we had proceeded, our part of the  grant would have been around $83,000 with the rest provided by the Commonwealth. ie about $917,000.

“If Dr Davies said he got the money, then it would have come from them.”

The spokesman said there is “no record of  our department in SA being aware of any unlawful use of public funds by Dr Davies.”

The Fund was established in late 2008 by the Australian and South Australian Governments following the decision by Mitsubishi  to cease its manufacturing operation in Tonsley Park, Adelaide.

The $30 million fund provided grants for “innovative-job-creation projects to strengthen South Australia’s manufacturing and technology base”.

The final round of grants was announced at the end of 2010.

 

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