On November 28 last year, InDaily revealed that SA Health Chief Executive Dr Chris McGowan was registered as the director of a private company during the first two months of his public tenure.
The company, Silver Chain Corporate Services, was a subsidiary of McGowan’s long-time former employer, Silver Chain Group.
That same day, McGowan referred his conduct to Public Sector Commissioner Erma Ranieri, who subsequently referred it to independent investigator Emeritus Professor John McMillan AO.
But McGowan stressed at the time, through an SA Health spokesperson, that he received no money from the company during his time at the department and that the company was “dormant”.
Over the subsequent months, revelations emerged that McGowan had repeatedly involved himself in assessing the merits of a Silver Chain aged care program when the company was asking SA Health to fund it in South Australia – and met with a Deloitte partner in circumstances in which “partnerships” between Silver Chain and SA Health had been flagged as a topic of discussion.
On Saturday, The Advertiser published a story entitled: “‘No evidence’ SA Health boss Dr Chris McGowan had conflict of interest with old job”.
The article quotes Premier Steven Marshall as saying there is “no evidence whatsoever” that McGowan “sought to personally benefit from his previous association with the Silver Chain group or to advance the interests of the Silver Chain group in its dealings with the South Australian Government”.
“However, as Dr McGowan has conceded, his approach to conflict of interest matters could have been better handled and I welcome his acceptance of the need to secure further professional guidance on this matter of fundamental importance to the governance and accountability of our public services.”
The article states that: “Mr McMillan’s report has not been made public, but based on Ranieri’s assessment of his findings, Mr Marshall said Dr McGowan would continue in his role heading up the $6 billion department”.
McMillan’s report was released the same day.
Here, we summarise its findings.
McGowan acknowledged that he failed to address his conflicts of interest properly.
McMillan finds that McGowan failed to put appropriate conflict of interest arrangements in place in relation to his former employer.
“Dr McGowan acknowledges this failure,” the report says.
“Those arrangements could have included better record keeping of contacts with Silver Chain officials, and direct written and oral engagement with SA Health officials on probity risks.”
McGowan met with a Deloitte official, contrary to Department probity advice.
Freedom of Information documents released to the Opposition last year showed that McGowan initially accepted a meeting with a representative from Deloitte to discuss “partnerships” involving SA Health and Silver Chain.
The meeting was scheduled during the period McGowan was registered as both company director and department CEO.
His office cancelled the appointment on McGowan’s behalf “as it could be perceived as a probity issue” but an extract from his diary suggests he nonetheless attended the meeting.
McMillan’s report says McGowan did attend the meeting and should not have.
“In evidence Dr McGowan advised that he privately reinstated the meeting, but Silver Chain was not discussed,” the report reads.
“The meeting was a surprise to at least one of the SA Health officials to whom I spoke.
“Subsequent meetings are also recorded in Dr McGowan’s diary with a Deloitte partner.”
McMillan writes that McGowan was “ill-advised to go ahead with a meeting with a Deloitte Consulting partner in July 2018 after he was advised not to by senior SA Health officials for the reason that a SA Health/Silver Chain partnership had been foreshadowed as the focus of discussion”.
“If Dr McGowan felt that such a meeting was unexceptional he should have made a brief record of where the meeting was held, who attended and what was discussed.”
Nonetheless, McGowan and SA Health managed conflict “appropriately” – and contact with Silver Chain was part of his job.
McMillan finds that McGowan was required to take an interest in Silver Chain programs as Chief Executive of SA Health, and did so “appropriately”.
“Dr McGowan as Chief Executive of SA Health took an appropriate interest in programs administered by the Department, including programs involving Silver Chain,” the report reads.
“Dr McGowan could appropriately maintain some contact with former Silver Chain colleagues after his appointment as Chief Executive.”
And he finds that both McGowan and SA Health handled procurement in relation to Silver Chain appropriately.
“SA Health procurement decisions relating to Silver Chain were properly handled by the Department and Dr McGowan,” the report says.
“Proper governance arrangements were in place to eliminate actual, potential and perceived conflict of interest concerns.”
McGowan breached a requirement of the Public Sector (Honesty and Accountability) Act.
The Act requires that senior public servants disclose their interests within one month of beginning an executive-level job.
McMillan’s report finds that McGowan completed a Pre-Employment Declaration but failed to complete another standard interests declaration form upon commencing as SA Health Chief Executive in May 2018 – his Statement of Pecuniary Interests.
McGowan completed the form and signed it in November 2018.
“Dr McGowan was unable to explain at interview why this form was signed in November 2018 – over six months beyond the date required by (the Act),” the report reads.
“This delay has not been explained.”
McGowan signed a form while he was SA Heath Chief Executive that effectively backdated his resignation from Silver Chain Corporate Services to before his public appointment – but it was an “unintentional” error.
As InDaily revealed last year, Silver Chain officials contacted McGowan in July 2018 – two months after he began at SA Health – informing him that he remained registered as the director of the subsidiary company.
In the emails to McGowan, the officials asked him to sign a document to the effect that he had actually resigned from the position the week before he began at SA Health.
McMillan writes that the Corporations Act and the Criminal Law Consolidation Act contain offences to “penalise ‘uttering a false document’ or making a ‘fraudulent declaration’”.
However: “It is highly improbable that prosecuting authorities would either regard all the elements of those offence provisions as being satisfied – particularly the intent element – or deem the matter worthy of prosecution.
“Dr McGowan has acknowledged that the two forms he signed should not have been pre-dated.
“He has given evidence that he was unaware of the error but accepts personal responsibility for it.”
McMillan adds: “It appears that the Corporations Act and Australian Security Investments Commission requirements relating to the resignation of a director were complied with.”
“Silver Chain officers inserted the incorrect date of resignation as 4 May.
“The actions of the Silver Chain officers has not been explained or explored in this investigation.”
McGowan failed to tell the Health Minister he had been registered as a director of a private company while Chief Executive of SA Health.
“Dr McGowan should have informed the Minister when forwarding the Statement that he (Dr McGowan) had not resigned as director of Silver Chain Corporate Services Pty Ltd until 16 July 2018,” McMillan’s report reads.
“This was more than two months after he commenced as Chief Executive of SA Health.
“Dr McGowan should also have informed the Minister in July 2018 of his delayed resignation as director.”
“The fact that Dr McGowan remained a director while he was Chief Executive of SA Health raised a potential conflict of interest issue within the terms of (the Act).”
The standard of proof was on the “balance of probabilities”.
McMillan writes that “I note for the record that I have been guided by the civil standard of proof that is ordinarily applied in administrative investigations – that is, a ‘balance of probabilities’ or ‘more probable than not’ approach”.
“It is customary in an administrative investigation that corroborative evidence is not required for witness claims or assertions that appear reasonable and credible.”
McMillan interviewed nine people over two days in December for the investigation.
The interviewees included McGowan, Health Minister Stephen Wade, Independent Commissioner Against Corruption Bruce Lander, South Australian Ombudsman Wayne Lines, Opposition Health spokesperson Chris Picton, three SA Health executives – Lynne Cowan, Don Frater and (Wellbeing SA CEO) Lyn Dean – and McGowan’s Principal Executive Officer.
Ultimately, McMillan does not recommend McGowan’s dismissal.
“Although Dr McGowan acknowledges that additional measures could have been taken to deal with some of the conflict of interest issues discussed in this report, I recommend that the findings in this report are taken up in discussion between Dr McGowan and the Commissioner for Public Sector Employment,” the report reads.
Ranieri does not recommend dismissal, either.
The Public Sector Commissioner was handed McMillan’s report earlier this month.
In a letter to the Premier last week, released along with the report, Ranieri writes that McGowan should adopt better record-keeping practices, ensure that all actual, perceived and potential conflicts of interest are reported in a timely fashion, and that he should exercise careful judgement in relation to conflicts in future.
Her letter also recommends Marshall not adopt one of the findings of McMillan’s report – namely that McGowan’s directorship of Silver Chain Corporate Services raised a potential conflict of interest within the terms of the Public Sector (Honesty and Accountability Act) – because McGowan had questioned his interpretation of the relevant section of that Act.
Ranieri has not released communications between McGowan, the Premier and her office.
In her letter to Marshall, Ranieri mentions four attachments:
- The McMillan report;
- An email from McGowan to Ranieri’s office, dated 14 January;
- A letter from Ranieri to McGowan, dated 17 January, and;
- An email from McGowan to the Commissioner, dated 20 January.
Of those, only the McMillan report has been released publicly.
“The only attachment I have released is the report,” Ranieri told InDaily in a statement today.
“This was an independent inquiry by Emeritus Professor John McMillan AO.
“The report was handed to the Premier once the process of natural justice had occurred.”
You can read the McMillan report here and Ranieri’s letter to Marshall here.
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