Failure to escalate: Victorian government officials never formally reported $6 million metro lift scam

Victorian government officials failed to formally alert the police taskforce investigating Big Build corruption that employees of a Swiss corporate behemoth were busted stealing millions of dollars from the Metro Tunnel project.

The revelations involve the Schindler Group and an audacious plot to plunder $6 million from the taxpayer-funded $13.48 billion project and undermine Premier Jacinta Allan’s insistence that her government referred criminal allegations swiftly to Victoria Police’s specialist Taskforce Hawk.

The alleged fraud, which was discovered after CCTV was reviewed after a major flooding event prompted internal investigations, does not involve the CFMEU and was also never reported to the union’s administrator Mark Irving, KC, or CFMEU corruption buster Geoffrey Watson, SC.

It did not form part of Watson’s estimation that Big Build rorts had cost taxpayers $15 billion, causing a political firestorm.

But Schindler’s alleged Big Build corporate corruption was known to the Metro Tunnel consortium and state Labor government officials working for the Victorian Infrastructure Delivery Authority and The Age can also reveal other criminal allegations, detailed in internal government correspondence, were never forwarded to police.

The revelations come as the government is under mounting pressure over the CFMEU scandal with Allan cutting short a press conference on Thursday after challenging a journalist to “retract” a comment that she appeared disinterested.

During the press appearance she repeatedly insisted that anyone with information about misconduct that should “be immediately referred to Victoria Police”.

The latest revelation will also heap fresh pressure on the government to give the Independent Broad-based Anti-corruption Commission “follow the money” powers to allow to probe companies who receive public money.

The allegedly criminal plot involving the Australian arm of Swiss giant Schindler Group – which was hired to supply around 200 escalators and elevators to the Metro Tunnel – occurred after a major flooding event on the mega rail project in October 2024.

Schindler claimed to the project consortium that the floods had damaged escalators and it would need an extra $6 million for replacement machinery and labour for installation. After the money was paid, CCTV was reviewed, revealing no damaged equipment was ever replaced.

The fraud was confirmed in two subsequent internal investigations: one by Schindler and the other by the Labor government’s Cross Yarra Partnership Metro Tunnel consortium, with the latter also alerting the public servants overseeing the new rail line about the scandal.

Schindler ultimately admitted the fraud, removed three employees and repaid the funds, but the police’s Taskforce Hawk was never told about the alleged conspiracy to steal the money.

Obtaining a financial advantage by deception is a serious criminal offence in Victoria carrying a maximum penalty of 10 years’ imprisonment.

Victoria Police said it was advised of the incident in November last year but no “formal report” had been made at any point.

“Any further information provided to Victoria Police about the matter will be thoroughly assessed to determine if any criminal or other offences are identified,” a police statement said.

Schindler’s Australian headquarters did not explain why it did not formally alert police but confirmed it had become aware of concerns from the Metro Tunnel consortium.

“Schindler conducted an internal investigation in conjunction with our customer, which identified misconduct by a small number of Schindler employees. This was an isolated incident. The relevant employees involved were dealt with in accordance with Schindler’s internal procedures,” it said.

When The Age asked the Victorian Infrastructure Delivery Authority why it had not formally reported the alleged Schindler swindle for criminal investigation, it referred the matter to the government.

A government spokesperson said the matter had indeed been referred to police by VIDA, but did not provide further details of how or when the disclosure was made.

“We have zero tolerance for any sort of illegal behaviour and urge anyone with knowledge of unacceptable or unlawful behaviour to report it,” the spokesperson said.

However, an official source unable to speak publicly, said that VIDA only raised with police issues to do with invoicing anomalies and no formal report of a crime was ever made.

The revelation of the alleged fraud, along with the government’s failure to formally refer it to Taskforce Hawk, highlights gaps in Labor’s response to the rolling Big Build and CFMEU scandal.

In circumstances in which the union has played no part in wrongdoing and it is a company accused of a crime, the CFMEU administrator is powerless to investigate.

Evidence also suggests the government has repeatedly failed to alert Hawk’s specialist detectives to other potential serious crimes on Big Build sites.

Internal documents from a second Big Build consortium, the Southern Project Alliance, contains detailed allegations of potential serious criminal wrongdoing and were also never referred to police.

One file, from 2023, describes a scaffolding company relying on conduct potentially amounting to the criminal offence of a “demand with menace” when seeking a payment that Victorian rail officials believed was unwarranted.

The files separately describe how two labour hire companies were, with the backing of a corrupt union faction, demanding a total payment of $2 million in taxpayer funds for shifts that were never worked.

Project records show that those seeking payments included multiple members of the Rebels bikie gang.

Ten Big Build subcontractors or project managers, who have briefed The Age on the condition of anonymity for fear of repercussions, have also described how the Labor government administered the signature infrastructure program in a way that sometimes led to the most expensive subcontractors being selected.

Their accounts match some of Watson’s conclusions, whose devastating report into CFMEU corruption on the Big Build has been attacked by state Labor MPs and gangland figure Mick Gatto.

Prospective subcontractors were effectively informally banned by Big Build project superintendents and upper management if they did not have CFMEU support, even if they were vastly cheaper and more efficient.

“Client and project superintendents don’t want to risk rocking the boat with the union and want to award to CFMEU subcontractors,” one source said.

Another source said the bureaucrats overseeing rail level crossing removal projects supported the hiring of labour hire firms suspected to be aligned with now former corrupt union bosses, despite the companies charging for workers that were not needed.

A key example is a Bandido bikie who worked as a union health official for three Big Build labour hire firms facing state or federal police investigations. Leaked payslips show they were earning up to $350,000 a year in 2022 and 2023.

“This has been happening for years. The ones who really know about it are the management team of government agencies such as the LXRA (level crossing removal authority) and SRLA (suburban rail loop authority), NELA (north east link authority), etc.”

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