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Victoria’s auditor-general has delivered a scathing report into a failed government joint venture selling bridge safety monitors that did not work as expected and cost the state $20 million.
The collapse of government-backed enterprise Eloque was first revealed by The Age in 2022. It was a partnership between the state and US printing giant Xerox that started in 2021 and aimed to sell sensors that could monitor bridges for signs that they needed repair.
Eloque was set up by the Victorian government and Xerox to remotely monitor the safety of bridges, but the joint venture collapsed 16 months later.Credit: Getty
But the technology was not yet proven, and this masthead revealed Eloque installed the devices across Victoria despite internal warnings they could not do their job accurately. The Queensland government also rejected a proposal to buy them after an independent review questioned their viability.
For 10 months, Campbell Rose was the chief executive of both Eloque and the state’s rail authority VicTrack, their only paying customer. He has denied the report’s findings which were critical of him and alleged they were fundamentally flawed.
The Victorian government committed $82.5 million to the project, but it was wound up before this was spent, with total costs of $20.4 million.
An independent report into the scheme released on Wednesday by the Victorian Auditor-General’s Office (VAGO) criticised the advice VicTrack gave to the government about the sensor technology, named FiBridge, and the governance of the joint venture, including decisions made by Rose.
Eloque was set up in 2021 to remotely monitor bridges but contracts were not put out to open tender.Credit: Justin McManus
“VicTrack’s advice to the government about commercialising FiBridge and setting up the joint venture was inaccurate and incomplete,” VAGO said.
“It gave an over-optimistic view of FiBridge as market-ready, and did not transparently outline how the commercial aspects of the venture would work.
“As Eloque’s first customer, DoT [Department of Transport] did not conduct sufficient due diligence before investing.”
The auditor-general found that FiBridge sensors placed on 23 state-owned bridges did not provide consistent and reliable data. Eloque paused installation to focus on developing the technology and later decided the installed sensors would need to be replaced.
The company revised their timelines and expected a “minimum viable product” could be ready by the second half of 2023, but this would fall short of the Department of Transport’s expectations to reduce costs.
The auditor-general said VicTrack had sold the FiBridge technology as proven and ready to roll out, which the report found was not accurate. The report also found the department did not complete its own due diligence.
The department set up another company, named HoldCo, to look after the government’s interest in the arrangement.
Another criticism of the joint venture was how the arrangement was managed while Rose held both chief executive roles.
“This created a lack of transparency around his governance and management responsibilities and led to conflicts of interest,” VAGO said.
“VicTrack, DoT and HoldCo’s board did not effectively oversee the joint venture. They were late to identify problems with FiBridge’s performance and the interim CEO’s conduct.”
When Rose was appointed as interim chief executive of Eloque, Premier Jacinta Allan was transport infrastructure minister and approved the arrangement on the condition of certain safeguards, including changes to his responsibilities and access to avoid conflicts.
But the auditor-general found VicTrack and HoldCo’s board did not manage conflicts of interest and transparency issues that arose from Rose holding both positions. The report also found they did not have enough oversight to know when decisions were later made against the public interest.
Former VicTrack CEO Campbell Rose, who also ran the Eloque joint venture.Credit: Andrew De la Rue
Auditors said that during his time in both roles Rose made key decisions that “went against the code of conduct, the requirements of his employment contract and the terms of his secondment to Eloque”.
The report found Rose put forward a proposal for an equity and employment benefit scheme that would have benefited him without declaring a potential conflict.
On the same day, he told the Eloque board he should receive a salary from both agencies, even though this went against his contract, the code of conduct, and he had not informed VicTrack, VAGO found.
“Mr Rose advised us that the Victorian government representatives on Eloque’s board were aware of these discussions,” the report said.
“However, there is no documented evidence that Mr Rose or the other representatives communicated this information back to HoldCo, VicTrack and the Victorian government.”
Responding to the auditor-general in a written statement, Rose said a number of findings in the report were “objectively wrong, and it is fundamentally flawed”.
Rose said he provided a detailed response before the report was finalised but was told it could not be published because the office believed it contained factual inaccuracies and could not find a range of documents he urged them to locate.
“The findings in the report do not reflect an accurate understanding of what was decided (which was to develop a product with commercial partners in the field from proof of concept over a four-year period), by whom it was decided or the risks that were taken into account in making each decision,” he said.
Rose also said the findings about him were inconsistent with legal advice provided to VicTrack and Eloque, and an independent investigation by a senior lawyer, who found he had engaged in no wrongdoing.
“The report fails to explain how it has considered those matters or how it reached different conclusions. This is manifestly unfair and wrong,” he said.
Rose, who was previously chief executive of the Western Bulldogs, announced his departure from VicTrack in February after a year of extended leave.
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