The ACT taxpayer has not come out of the VITAB affair very well. The report by Richard Burbidge QC into the payment of $3.3 million to the principals of VITAB by ACTTAB and the subsequent underwriting of that payment by the ACT Government makes sorry reading. The further $2 million or more lost in subsequent inquiries adds to the loss.
Essentially ACTTAB and the then Minister for Sport, Wayne Berry, and his Government were deceived into allowing the Vanuatu-based VITAB access to large pools of Australian gambling money on the basis that Asian punters would be gambling through Vanuatu. In fact, the scheme was really for Australian punters to bet through Vanuatu in a way that would yield them higher winnings that Australian punters because a cut of their winnings would not be paid to Australian racing clubs or state and territory treasuries, as happens with all bets that go through normal Australian TABs.
At the time ACTTAB bets were pooled through Victoria. The Victorian TAB very quickly saw the possibility of Australian punters betting through Vanuatu and threatened to sever its link with ACTTAB unless ACTTAB withdrew from the Vanuatu arrangement.
That left ACTTAB in a difficult position. If it lost the link with Victoria, the remaining ACT-only operation would not be so small that single large bets could erode the returns to winning punters. It meant big punters would desert the ACT. But severing the VITAB link meant leaving the ACT vulnerable to an action for breach of contract by VITAB.
The new Minister for Sport, David Lamont, felt he had no choice but to preserve the business of ACTTAB and severe the Vanuatu link. His legal advice was that it was better to settle with VITAB than fight a court action.
Mr Burbidge questioned the soundness of that legal advice. He advised that there are no grounds to seek to retrieve some of that money.
The trouble is, the report says, that those against whom a case for retrieval was legally strongest had gone to ground and the case against the others would be difficult or not on.
Whatever the legal position, there are questions of judgment. It is apparent that with hindsight Mr Lamont would have been better not settling with VITAB but making them sue for breach of contract. At the time that course was unpalatable because it might have resulted in large legal costs and the ACT would have thrown good money after bad. But it was also unpalatable because it would have meant a court hearing and a lot of further bad publicity over the folly of the original VITAB deal sanctioned by his predecessor, Mr Berry.
It is apparent that four of the VITAB principals should not have received any money as compensation for breach of contract. With hindsight, if probity checks had been made on those four people and if the whole scheme had been viewed with a little less gullibility, the then ACT Government and ACTTAB could have canvassed the possibility of telling VITAB to sue for breach of contract. If that had happened either VITAB’s bluff would have been called or the whole sordid business would have come out in court in the same way it came out before Mr Burbidge. Either way, the ACT taxpayer would have been at least $3.3 million better off. Instead of the taxpayer paying damages and costs of the inquiry, VITAB would have had to pay its own legal bills.
It is apparent that both ACTTAB and the then Labor Government were too naive and not careful enough in dealing with the VITAB principals.
But what is now to be done. Mr Burbidge says some of the money could be tracked down but warns of the costs and difficulty of doing so.
One thing stands out, however. Mr Burbidge found that former Prime Minister Bob Hawke was an unwitting agent of the VITAB principals who had acted in a way that amounted to fraud. Mr Hawke, at the very least, was unfortunate in his choice of acquaintances. As a man of integrity, however, one would expect him to repay his $300,000 share of the payout, perhaps less expenses.
A quick reading of the report by Mr Hawke would make it clear to him that the payment is now morally unwarranted, however legally justifiable. Mr Hawke lent his good name earned as prime minister to give the VITAB venture respectability, public and media credibility and valuable links to Asia. Clearly, with the hindsight of Mr Burbidge’s finding that the whole scheme had no respectability and was nothing to do with Asian punters, Mr Hawke’s role is a nullity.
Another reason for Mr Hawke to repay the money is that it would enhance the position of all former prime ministers. At present former prime ministers are paid significant benefits in the form of superannuation and office, travel and staff expenses. These are paid because former prime ministers, to a significant extent, continue a public role after office. Taxpayers willingly support that role precisely because they do not want former prime ministers engaging in business arrangements, especially arrangements that involve use of their reputation gained because they had been prime minister.
If former prime ministers are to pursue business careers (which they are entitled to), part of the rationale for paying travel, staff and other expenses falls away. Obviously, Mr Hawke and other former prime ministers pay their own expenses when on business engagements, but once a former prime minister engages in significant business activity, it seems difficult to justify the level of financial support they get from the taxpayer. And Mr Hawke apparently does have significant other business as Mr Burbidge found that his VITAB venture (worth some $300,000) may not have loomed large in his priorities.
The arrangements for former prime ministers should be reviewed.
Yeah, we remember the silver budgie.