27 Million Dollars, Nobody Asked

Transcript of the published episode, checked against the episode script. Where the voice slipped on a word, the script's word is used. Figures are written as numbers. Spot an error? Email auditthismedia@gmail.com.

00:00 Cold open

Audit This.

00:15 The most boring job in government

On the 8th of December 2011, a finance officer at Queensland Health sat down to do the most boring job in government.

Monthly budget commentary. Every cost centre gets a paragraph. Here’s what we spent, here’s what we planned to spend, here’s why they’re different. Nobody reads it. It exists so that somebody can say it exists.

He had one problem, which was that his cost centre was over. Not a bit over, miles over. So he went looking for why, and he found a single payment, made three weeks earlier, for $11 million, to a vendor he’d never heard of.

The vendor was called Healthy Initiatives and Choices. So he did what you’d do. He typed the name into the Australian Business Register, which is a free government website, and takes about eight seconds.

Healthy Initiatives and Choices was not a company. It was not a charity. It was a business name, registered to a private individual, at his home address.

The individual was his boss. His boss, at that point in time, was Tahitian royalty.

Everyone at work called him Joel. On paper he was Hohepa Morehu-Barlow, a finance officer on a public service salary that, at the time, ran somewhere around $75,000 a year.

Joel Barlow told everyone at work he came from a Tahitian royal family. There was a trust fund. He signed things HRH. And he was, by arrangement, allowed to turn up late some mornings, because he had royal correspondence to get through.

01:48 The birthday party

Appreciate that for a second. Not a lie you tell once at a party. A lie with a rostered start time.

He threw himself a birthday party in Fortitude Valley that cost about $130,000, and a fair chunk of his mates from the finance branch went. He picked up the tab for the branch Christmas do. $25,000. He spent $636,000 at Louis Vuitton. $200,000 on art. $104,000 at Bang and Olufsen. $74,000 at a florist.

Which is a lot of flowers. He was forever shouting people at work things. Perfume, soap, handbags, and in one case four platinum tickets to the Rugby World Cup final. And in November 2011 he settled, in cash, on a riverfront apartment in New Farm for $5.65 million.

Nobody asked. Well. One person nearly did. A senior executive heard Barlow was off to London for the royal wedding and got a bit curious about the whole prince thing, so he asked someone on staff to look into it. The staff member came back and confirmed it. Yep. Tahitian royalty. Checks out.

He’d confirmed it by asking around the finance branch. Here’s how the money actually worked, and you’ll need it, because the same machine turns up in Perth.

Queensland Health paid grants on a form. You fill it out, attach an invoice, and someone with the right level of authority signs it. That authority is called a delegation. A junior officer’s might be $10,000. A director’s, a hundred. Big money needs bigger signatures.

Joel Barlow’s delegation was $10,000. The payments he was pushing through were $137,592.40. Over and over. 28 of the last 31. 65 fraudulent payments in all, across four years, signed off under position titles that in some cases didn’t exist anywhere in the organisation.

Nobody checked. Not the people processing them. Not the auditors. Not the anonymous complaint that landed in 2010 saying exactly what he was doing, which was filed, and not escalated.

03:54 The warning nobody read

And in June 2011, six months before that clerk typed a name into a website, the Queensland Auditor-General published a report that said this.

“Poor controls over vendor information can potentially expose departments to significant losses if there is fraudulent manipulation of this information. Although no instances of fraud were identified during the audit, the poor vendor controls provide the potential for fraudulent activity to occur.”

In other words: we found the hole. We didn’t find anyone in it. Carry on.

$16,690,000. 14 years in prison. And on the morning they arrested him, the Premier of Queensland stood in front of the cameras and abolished the department.

“No more reviews, no more task forces or committees. Queensland Health as we know it is over.”

It was, at the time, quite possibly the biggest fraud ever committed inside the Queensland public service. It was a national story. Every finance branch in the country got the memo about vendor checks and delegation limits. Western Australia’s own Auditor General published a report on fraud prevention in the public sector 18 months later.

05:02 Western Australia

So that’s the loud one. The prince, the party, the flowers, the crown. Four years, and a junior clerk with a free website brought the whole thing down.

Now. While Queensland was pulling its health department apart, and while every public servant in Australia was being reminded to check the ABN, there was a man in Perth who was already three years into doing the same thing.

He would keep going for another eight. He didn’t tell anyone he was a prince. He didn’t throw a party. He didn’t buy any flowers. He was, by every available account, exactly the man he appeared to be, which was a senior public servant with an MBA, a good reputation, and a mild interest in country racing.

That was the trick. And by the time anyone worked it out, he’d taken $27 million, which is $10 million more than the prince, from a department that had a much more specific job than health.

Paul Ronald Whyte was good at his job. I want to be clear about that up front, because everything that follows depends on it.

Bachelor of Commerce. MBA. Certified practising accountant. He joined the Western Australian Housing Authority in 2009 and went up through it the way competent people do, which is steadily, and without anyone particularly noticing. Ministers respected him. He had a reputation as someone who got things done.

06:25 The committee room

By 2017 he was Acting Director General. He ran the place.

On the 19th of October that year he sat in a committee room at Parliament House and took the Legislative Council through the agency’s finances. The transcript’s public. You can read it. The witness line says, “Mr Paul Whyte, Acting Director General, examined.”

A member asked him why the Authority’s property holdings had dropped. He explained the social housing investment package. When a question got a bit too specific he offered to hand it to the chief financial officer, or take it on notice. Which is exactly what a good operator does.

He was, at that moment, eight years into it. And his responsibilities, at various points across those years, included the department’s internal governance, its standards, and its integrity.

He was, on the org chart, the smoke detector. The Commission’s summary of him, when it finally came, is one sentence long.

07:15 Below your number, you sign

“In short Mr Whyte was the ideal public servant. Except it was all a lie.”

You’ve already met the delegation. Here’s the rest of the machine, and it matters, because the whole episode turns on one assumption inside it.

Every bit of a department has a budget line called a cost centre. Somebody owns it. If you want to spend out of it, you raise an invoice against it and it goes to whoever’s allowed to approve that amount. Below your number, you sign. Above it, somebody senior signs.

That’s the whole control. A number. One line. Below it, trust. Above it, a second pair of eyes.

It works fine in 10,000 departments. It relies on one thing, which is that the person who owns the cost centre and the person the line is protecting against are not the same person.

07:59 A mare called Mossnip

Hold onto that. We’ll come back to it. Pinjarra racecourse is about an hour south of Perth. Midweek meetings, country crowds, the sort of place where the prize money for a maiden gets you most of the way to a new float.

On the 4th of July 2013, a Thursday, a mare called Mossnip won the Josephine’s Salon Maiden there over 1,200 metres. Eight to one. Won by a length.

Mossnip had come through the Magic Millions Perth yearling sale two years earlier. Lot 79. $10,000. And the sale record, which is a real published document, lists the buyer. Not initials. The name. Paul Whyte.

She raced 35 times, won three, and earned $38,953 over her whole career. Pinjarra and Bunbury, on a Wednesday and a Thursday.

This is not a man buying Group One horses. Keep that in mind.

Because since 1998, Paul Whyte had held interests in 87 racehorses, over three quarters of them bought after he joined the Housing Authority. And the prosecutor told the court that across the years of the offending it was at least 111, at a cost of around $3.7 million.

And then the Commission adds one detail I keep coming back to. The real number is higher, because syndicate shares aren’t always registered in the owner’s name. Their example: he held a share in a pacer that appeared on no document supplied by Racing WA at all.

The hidden horses had hidden horses. Now the punting, because of course there was punting. Between 2013 and 2019 he put $813,000 through the bookies and did $732,000 of it. A separate account in his partner’s name dropped another $88,500 in 2019 alone.

So sit those two things next to each other. $3.7 million of horses that earned Pinjarra money. Three quarters of a million in losing bets, a fair few of them presumably on those same horses.

He wasn’t good at this. He stole a fortune to buy horses that lost, and then backed them, and lost that as well.

Which raises the obvious question, which is what he was actually buying. And the sentencing judge answered it, because the defence had run this as a gambling addiction, and the judge wasn’t having a bar of it. This was not, he said, a mere punter. This was a man with a strong and abiding interest in racing, bloodlines and breeding. And then this.

“You enjoyed the status and admiration of horse ownership and being a prominent member of the racing industry.”

He wasn’t buying horses. He was buying a version of himself.

Joel Barlow wanted to be a prince. Paul Whyte wanted to be a bloke other blokes nodded to in the mounting yard at Pinjarra on a Thursday.

10:38 The tip

One of those is considerably cheaper to fake. And, it turns out, much harder to notice.

August 2018. Somebody tells the Corruption and Crime Commission something about a man’s, and this is the actual wording, “questionable behavioural and lifestyle habits.”

That’s it. That’s the tip. Not a report. Not an allegation, a remark. And the Commission is careful, in its own account, to spell out how little it was. The information contained no allegations. The matters described were, quote, “in no way criminal.” There was no link at all to the man’s role as a public officer.

The Commission gets over 7,000 of these a year. This one got a look for one reason only, which was how senior he was.

And then the bit that should make anyone who’s ever worked in government feel a bit sick. The viability of the investigation was reviewed a number of times. Each time, the decision was made to continue.

Translate that out of report language. They nearly binned it, more than once. You can picture the meeting. Someone says, are we still doing this one. Someone else says, give it another month.

Meanwhile, and this is the second time in this episode this has happened, the warning had already been written. The Commission notes that recommendations had, from time to time, drawn attention to certain financial risks in the department. Then it adds, in the flattest sentence in the whole report: “in the absence of any meaningful follow up or action, Mr Whyte’s depredations continued.”

Somebody found the hole, wrote it down, handed it in, went home.

Analysts start going through what the Commission describes as terabytes of data and mountains of files.

2nd of August 2019. They find it. Payments on a departmental corporate credit card, flowing into companies that Paul Whyte controlled. One of them called Boldline Nominees. The full investigation gets approved, and gets a name. Operation Taurus.

And then, in the middle of the report, in the flat voice of an official document, comes a sentence I’ve read maybe 40 times and still don’t entirely believe.

“It is not known how or who approved these credit card accounts as presently the records cannot be found.”

Somebody handed this man a government credit card, and the State of Western Australia has no idea who.

The paperwork is gone. Right. So at this point you’re braced for something clever. Barlow at least had a fake prince and a forged funding agreement. You’re waiting for the offshore trust. The shell inside the shell. The accountant in Zurich.

Here’s what Paul Whyte actually did. He set up three shell companies. No employees. None of them listed on Tenders WA as contractors. And he sent his own department invoices from them, and approved them himself. For 11 years.

Remember the line. One number, with trust underneath it and a second signature above it.

On his corporate card, that number was $50,000 a month. Anything under it, nobody looked at.

The first invoices the police found were each written for just under it.

Just under, not by accident. Enough of them that when the police stood up in court on the first day, that was the sentence they used. And once the cost centre was his, the invoices grew. By the end the Commission put it at $100,000 a month, from the man whose job description had the word integrity in it.

14:06 He owned the cost centre

And here’s the part the control couldn’t survive. Remember the assumption? That the person who owns the cost centre and the person the line’s protecting against aren’t the same person?

He owned the cost centre. So put that next to Brisbane. Joel Barlow needed other people to sign things. He forged a signature. He made up job titles. He shoved a $137,000 payment through a $10,000 delegation and bet that nobody would look. Eventually a junior clerk looked.

Paul Whyte built a fraud in which nobody ever had to.

He didn’t beat the system. He walked along the inside of the fence for 11 years and never once touched it.

14:51 The address on every record

You can call that clever if you want. I’d call it knowing exactly how little anyone was going to look.

On the 14th of November 2019, they went to arrest him.

Which meant, first, working out where he lived. This should have been the easy bit. Every government record in the state agreed. The electoral roll. His driver’s licence. His vehicle registration. His bank statements. The power bill. All of them pointed at the same address in Mosman Park, on the river, in Perth.

The Commission’s report deals with this in five words. “Except he did not live there.” He lived at a second house. Also Mosman Park. Also on the river. About four minutes’ drive. Bought in 2013, in his partner’s name, for $3,040,465. No mortgage. And the money that bought it didn’t pass through his account, and it didn’t pass through hers.

So for six years, every official record in Western Australia had the wrong address for one of the most senior public servants in the state. And the right one was four minutes down the road, $3 million, not a cent owing on it.

Nobody asked. I’ve been careful, for the last 20 minutes, not to tell you which department this was.

Queensland’s man took his from health. This one was housing. The Western Australian Housing Authority, later folded into the Department of Communities. The agency that exists for one reason, which is to put a roof over the people in this state who can’t get one any other way.

The Commission put it like this. “The money he obtained from the State could have been used to provide affordable housing to those in need. Instead it was frittered away supporting an extravagant lifestyle.”

So let’s do the arithmetic nobody in that building did.

$27 million, spread across 3 million Western Australians, is $8.78 each.

Which sounds like nothing. It’s a coffee. But that’s not how to count it, because it didn’t come out of everyone’s pocket equally. It came out of one fund, with one purpose.

In 2023 the Commonwealth and Western Australia signed an agreement to build 265 new social housing dwellings for $159 million. That’s $600,000 a home, land and all, in a real signed funding agreement.

$27 million is 45 houses. 45 families who never got the call.

17:10 The waiting list

And here’s what the queue looked like while he was at the yearling sales. At the 30th of June 2019, the year they arrested him, 15,021 households were on the Western Australian public housing waiting list. 1,650 of them were classed as greatest need.

Today the average wait for a public home in this state is 156 weeks.

Three years. The state’s own budget papers forecast it getting longer. 11 years of invoices. Out of the fund that houses people sleeping in their cars.

In 2022 the Commission did something it doesn’t often do. It held public examinations, not into Whyte, who was by then in prison, but into the department itself. It put the former Director General in the chair, and the Chief Financial Officer, and asked them, in public, how this was possible.

The former Chief Financial Officer, on the first day, described the leadership style there as, quote, “quite aloof.”

18:05 Accountable, not responsible

The former Director General, asked what went wrong, said this. “Whilst I’m absolutely accountable, and I’ll accept that, I’m not necessarily responsible. I didn’t do it.”

Have a listen to that one again. Absolutely accountable. Not necessarily responsible. Didn’t do it. Three positions in one breath, and none of them is the one where you were the boss.

On the controls that were supposed to catch exactly this: “There were internal auditors, there were external auditors, there was an audit committee. We had all the normal accoutrements of oversight in place. Clearly, they haven’t worked in this case.”

Clearly. Counsel put it to him that the department had handed one man both the purse and the purse strings. He agreed. Yeah, he said. I agree with that.

So there it is. False invoices, on a departmental corporate card and then straight through the payment system, in an agency that had internal auditors and external auditors and a governance function, run by the man writing the invoices.

And he wasn’t the only one. Later Commission reports alleged that other officers at the same department were running their own arrangements at the same time. Allegations. They stay allegations. I’m leaving them there.

19:18 The ledger

October 2020. The Supreme Court declares a criminal benefit of just over $11 million. He doesn’t oppose the orders.

Confiscated: both Mosman Park houses. $1.4 million of government superannuation. The racehorses, sold in what his own lawyer called a fire sale. And his interest in his late father’s estate.

October 2021. The two houses sell for $4.7 million. At sentencing: $5.1 million recovered. More than $22 million outstanding, and in the prosecution’s words, unlikely to ever be recovered.

12 years. Eligible for release in 2029. And the judge noted the only reason it stopped was that he got caught.

And then the fumble. A man was charged alongside him. He pleaded not guilty. In May 2023, two months before his trial, every charge against him was dropped, after what the prosecution described as a breakdown in the understanding with WA Police about what evidence was required. Police had asked for another 18 months. The state dropped it anyway.

Three months later the Commissioner of the CCC told a parliamentary committee that in the Commission’s view, police, and perhaps the Director of Public Prosecutions, “failed in their duty to properly investigate their brief for prosecution.”

What’s been called the largest fraud ever committed by an Australian public servant. And the follow up fell over on paperwork.

20:42 Side by side

Which, if you’ve been paying attention, is how it started.

Put the two of them side by side one last time.

Queensland got the prince. $16.7 million, four years, a $130,000 birthday party, a crown, and a junior clerk who typed a name into a free website. 14 years in prison. Queensland got nearly all of it back. The permanent loss was about $5 million. And on the day they arrested him, the Premier stood up and abolished the department.

Western Australia got the accountant. $27 million, 11 years, no party, no crown, and a tip about somebody’s lifestyle that wasn’t a crime and nearly went in the bin twice. 12 years in prison. $22 million that’s never coming back.

The department’s still there. It didn’t start with an audit. It didn’t start with a control, or a system, or a red flag, or a governance framework, or any of the things that were supposed to exist and, on paper, did.

It started with a word. One person, mentioning something about another person’s lifestyle. Something that wasn’t even a crime.

The Commission’s last word on it is this. “The Commission depends on honest public officers reporting suspicious behaviour, which did not happen in this case. Reporting suspected misconduct is never easy, especially when the person under suspicion holds high office and influence. It is never easy but it is always right.”

11 years, $27 million, 45 houses. Nobody asked.