On Thursday morning, readers of The Sydney Morning Herald woke up to front-page fraud. The three top stories were an overhaul of the NDIS to clear out shonky providers, announced the day before by Health and Disability Minister Mark Butler; millions of dollars being laundered through poker machines by people whose occupations could not justify the possession of such large sums; and the alleged pilfering of $1.5 million in cash and purchases from billionaire Judith Neilson by her private secretary.
Side by side, each story exhibits the three points of the “fraud triangle” – a model explained to me by Paul Curby, founding partner of Curby McLintock, a boutique professional services firm specialising in fraud and corruption risk. Experts use the triangle to explain fraud risk within an organisation. The three points of the triangle are motivation, opportunity and rationalisation.
The sheer scale of the fraud represented by this front page is staggering. In his National Press Club address, Butler referred to a lack of integrity in the NDIS system that has “opened the door to the worst parts of organised crime”. He cited information provided by the Australian Criminal Intelligence Commission that “criminals are paying cash kickbacks to participants and their families, and sometimes resorting to intimidation and threats of violence towards vulnerable people”. He described the NDIS as having become “an ATM for shonks, grifters, fraudsters and crooks”, in which “large cash withdrawals, asset purchases and fraudulent financial transactions are common”.
It’s appalling enough that there are people defrauding a scheme designed to help disabled Australians. But it gets worse. Butler described reports of NDIS participants falling out of wheelchairs while a support worker was scrolling on their phone. It’s possible to imagine fraudsters could dehumanise an organisation created by the government to the point that they don’t even think about the hardworking taxpayers who pay for it or the people it is supposed to assist. It’s horrific to realise that they don’t care, even when the vulnerable they are defrauding are physically present and in need of immediate help.
Pushing scads of cash through poker machines, described in the second story, somehow seems “moral” by way of comparison. But the money comes from organised crime, which peddles in many forms of human misery. Increasingly, as the Australian Federal Police has warned, these crime syndicates aren’t just drug dealers serving human frailty, but international operations importing the agendas of hostile foreign regimes into Australia. The AFP linked some of the antisemitic graffiti and arson attacks carried out in Australia over the past couple of years to Iran’s security agency, the Islamic Revolutionary Guard Corps, ratcheting up the temperature in Australia around foreign conflicts. When they’re not terrorising suburbs with high Jewish populations at the behest of the IRGC, these gangs are making life uncomfortable and unsafe in the suburbs they dominate.
Those suburbs are in what I’ve come to think of as “shutterlands”. They are areas that seem to have a notably higher number of solid pull-down security shutters on residential windows. Suburbs where crime gangs conduct increasingly brazen wars with each other, including home invasions and shooting at houses. Where it’s reasonable to fear a stray bullet flying into the family’s front room.
Mounties, the club named in Thursday’s report as a major money-laundering factory, is at Mount Pritchard in south-west Sydney. The Australian Financial Review recently reported on suburbs in which NDIS providers outnumber patients. Liverpool and “adjoining suburbs”, which include Mount Pritchard, have the highest number.
The fraud triangle articulates what’s going on. There is motivation in the form of big pots of money. There is opportunity in the poor controls put in place to make it harder to fraudulently obtain or illegally launder the loot. And rationalisation: we’re constantly told that we’re being ripped off by faceless companies and “the rich” (anyone wealthier than you hope to be), who are making out like bandits. Why not be a bandit, too?
That eats away at interpersonal trust – the idea that we do right by strangers – which is fundamental to the viability of a generously redistributive social democracy.
Well-meaning commentators who haven’t been exposed to the soul-crushing consequences of entrenched welfare culture are prone to the belief that concerns about welfare abuse are just a way to demonise those who receive it. But those who have become trapped by welfare dependence are, as polling I recently conducted found, more sceptical. They are more likely than others to disagree with the proposition that most welfare spending ends up helping people who genuinely need it, as well as more likely to agree that welfare does more harm than good by making people too dependent on assistance.
That may seem counterintuitive, but these are the people who suffer when rip-offs, which start as seemingly victimless crimes, hurt people who depend on support. The overlap of crime and fraud in suburbs with high numbers of providers suggests that NDIS fraud hurts communities where you’ll see the most “I heart NDIS” stickers when walking down the main street.
As the third story in the Herald’s Thursday of fraud illustrates, while there may be hotspots, fraud can transcend suburb boundaries and class barriers. Judith Neilson’s private secretary had no material need to defraud her employer, but allegedly did so anyway. Since that story was first published, the private secretary has been criminally charged. She is yet to enter a plea. Some may see the allegation, yet to be tested in court, that she took a small fraction of the billionaire’s fortune as hardly even immoral. The attitude of perpetrators that fraud expert Paul Curby often comes across is that “if you’re too stupid to put controls around it, you don’t deserve to keep the money”.
Fraud is the symptom, but the bigger issue is what’s happening to trust – something Mark Butler knows all too well. He’s now battling to save the NDIS, but the bigger challenge is restoring mutual trust in a society that thought it didn’t need controls.
Parnell Palme McGuinness is an insights and advocacy strategist. She has done work for the Liberal Party and the German Greens and is a senior fellow at the Centre for Independent Studies.
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