Housing and Public Works Minister Bruce Flegg reading a brief about alleged $492,763 fraud related to salary sacrificing arrangements for government employees.
Housing and Public Works Minister Bruce Flegg reading a brief about alleged $492,763 fraud related to salary sacrificing arrangements for government employees. Rae Wilson

Salary sacrifice 'fraud' to be probed

POLICE are investigating suspected fraudulent transactions totalling almost half a million dollars linked to the Queensland Government's salary sacrificing arrangements.

Housing and Public Works Minister Bruce Flegg said Queensland's Auditor-General would now review the salary sacrificing process because "this is not good enough, this is not acceptable".

He said he wanted to address the "cosy arrangement" where only two companies offered salary sacrificing services.

The alleged embezzlement, believed to involve many small $100 and $300 frauds, has impacted 7580 government employee accounts.

Mr Flegg said Remuneration Services (RemServ), one of two providers of salary packaging services to government, had engaged an accounting firm to investigate.

He said the allegedly fraudulent transactions had been traced to a former RemServ employee who was now being investigated by police.

Mr Flegg claimed, during a press conference on Friday, that two former government ministers knew about the alleged fraud and did not act.

He said the LNP would not be party to covering up this issue.

"Salary packaging is an arrangement where the company offers a service which deducts expenses, usually motor vehicles or superannuation, but it can be other personal expenses like school fees from people's income prior to the tax being taken," he said.

"It's commonly used in the non-government sector. The previous government made a decision that it can be used in the government sector.

"When these deductions were being made, the employee who is alleged to have made this fraud has made small extra deductions which have been diverted to himself," he alleged.

"This has happened over many, many thousands of transactions to the point where we have half a million dollars, that we know of, deducted from 7500 public servants."

Mr Flegg said the RemServ had admitted their processes for fraud checks were inadequate and indicated they would repay the financial losses.

He said they should also incur any costs in locating the thousands of public servants affected.

An Opposition spokesman said Mr Flegg needed to outline what advice he requested from his own department or the Department of Justice and Attorney-General before making his serious allegations against former ministers and public servants.

"These issues of alleged fraud involving contracts between individuals and a private firm are correctly the subject of a police investigation," he said.

"Mr Flegg himself has said this alleged fraud did not occur within the government, but within a private firm.

"The minister has made a predictable attempt to blame Labor, but by doing so has effectively guaranteed there will be no further incidents of alleged or proven fraud under the LNP or during his term as Minister even if they involve contracts to which the government is not a party.

"He will now be held to the standard he has set himself or take full responsibility if and when future incidents come to light."



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