Is Telstra Health’s new CEO appointment fair play?

12 minute read

If your competitor employs the head of the biggest government digital health buyer in the country, don’t bother asking that government to explain.

If the first thought that came into my head when I heard that Telstra Health had snapped up NSW Secretary of Health Elizabeth Koff was, “can Ms Koff swap out that quickly given the knowledge and contacts she’d take from her senior public service role?”, then I’m pretty sure a Telstra Health competitor, of which there are many, might have thought the same thing. 

The appointment is entirely legal. Which might make it simply a very clever move on the part of Telstra Health. 

And you can’t blame Telstra Health for having the idea. 

Their current CEO, Mary Foley, was once NSW Secretary of Health too, and her tenure at the company has seen it go over time from basket case that everyone thought was a failed experiment of a past CEO, to be sold off to the lowest bidders, to a cohesive, competent and major digital health powerhouse, operating in most sectors, with a great growth profile. 

Telstra CEO Andy Penn said he wants it to be a $500m turnover company in the next few years, which means it’s going to need a good boss to pick up from where Foley is leaving off. 

Penn also said in the press release of Koff’s appointment: 

“Elizabeth possesses a deep understanding of the nation’s health system and the need for it to be further digitised and integrated. She is well connected within the health sector at a critical time for the continued growth of Telstra Health”.

“Well connected” within the health sector stands out as something of an understatement. Koff is possibly the most connected government individual in terms of government specification and buying of digital health products and services in the country. 

Foley came to the role after many years of separation from her role as NSW Secretary of Health.  

Ms Koff will walk out of the largest digital health buying group in the country, with 6 years worth of understanding of how that buyer likes to buy, what their plans are for buying into the future, relationships with a lot of the decision makers on buying, and probably, and  a whole lot of confidential information forward contract positions on lots of vendors who compete with Telstra Health (not that she would use any of that as it would be very clear in her employment contract she wouldn’t be able to).  

And the next, she will be the boss of the biggest digital health vendor in the country, already with a lot of contracts with the department she is leaving, but with surely some intent on behalf of her new bosses, to make bigger inroads into the future on the sale of big state wide systems and services offered by Telstra Health, such as EMRs. 

The Medical Republic asked the NSW Department of Health to identify for us any current codes of conduct for senior public servants in the state that might be relevant to an appointment of this nature (very senior, highly related roles, no cooling off period) and whether they thought that, code or no code, the appointment of such a senior public servant to a role directly related to their past role represented any conflict of interest. 

A spokesperson issued us with this statement in response to our questions: 

“Ms Koff has been a passionate and committed public servant for more than 30 years, providing distinguished leadership for the last six years as Secretary of NSW Health.  

“She will continue to maintain the highest ethical standards of conduct prior to and following her forthcoming appointment to a position in the private sector.” 

From this we can take, I guess, that from the perspective of the NSW Department of Health at least, the appointment is in line with the “highest ethical standards of conduct” of a senior public servant in the NSW public service. 

So there is nothing more to see here? 

One earlier and curious communication instruction we got from the department before we got the official response was “to please ensure whatever you do reference is accurate and appropriate, and that you are not relying on a 12-year-old ICAC report as your main point of reference”. 

This came from our referencing a 12-year-old ICAC report in our questioning and asking specifically if the codes referenced in this report still existed, because we couldn’t find them, and could the department please point us to all the current codes that might be relevant. 

They didn’t point us to anything, which felt fairly unhelpful in the circumstances, so in lieu of that we are going to reference that 12-year-old ICAC report, because, 12 years old or not, it feels as relevant today as it was back then. 

The report references a code called The NSW Code of Conduct and Ethics for Senior Executives. We tried to find this code and we asked the NSW Department of Health to point us to any version that might represent an update given how old this ICAC report is (to no avail of course). It’s not anywhere to be found today, other than in references in this ICAC report. 

The NSW Code of Conduct and Ethics for Senior Executives requests executives to “abstain from working on or contributing to a matter that they had previously been responsible for or involved in”.  

That seems to tick a box fairly directly in the Telstra CEO appointment. 

But if it doesn’t exist as a code any more, does that then make everything all good?   

There is a lot of interesting discussion in the ICAC report around the situation of senior public servants moving to the public sector in roles directly related to their role in the public service, which feels relevant, but we have been advised by the NSW Department of Health, we should ignore the report as being irrelevant. 

For instance, the report points to legislation in NSW to restrict the post-separation employment of certain NSW public officials.  

Section 354 of the Local Government Act 1993 restricts former mayors or councillors from taking a role as a paid employee in the same council for six months after leaving office.  

That Law is still around today, so apparently the ICAC report isn’t entirely irrelevant to this discussion. 

Section 16(1) of the Casino, Liquor and Gaming Control Authority Act 2007 restricts “former key officials” from holding a gaming or liquor licence, from holding office as a member of the governing body of a registered club without the approval of the appropriate authority, and from seeking employment in the casino, liquor and gaming industries for a period of four years after leaving office.  

This law is also still in play today. 

This legislation is very specific, but it does seem to address the situations like that which Koff might experience – taking intimate knowledge and understanding of a key government regulatory group and using it in the short term to help a private sector group. 

Overall, the ICAC report (irrelevant as we are told it might be) “supported the introduction of employment restrictions or cooling-off periods for ministers and parliamentary secretaries, members of parliament, ministerial staff, senior public servants, and local government councillors and staff”.  

The report found that it “was not so much whether such restrictions should apply but rather the period for which they should apply”.  

Witnesses interviewed for the report agreed that the length of the restriction should be calibrated according to the breadth of knowledge and contacts that an affected individual might be likely to possess.  

Specific periods of time mentioned in the report ranged between 12 months and two years.  

In Queensland, the Integrity Act 2009 prohibit (also a law still in play) former senior government representatives, including senior public servants, from lobbying relating to the former official’s dealings as a public official for two years.  

At the federal level, in conjunction with supposed ministerial standards, people at adviser level and above employed in ministerial or parliamentary secretaries’ offices are meant not to engage in any lobbying activities relating to any matter that they had official dealings with for at least 12 months. 

The 2010 ICAC report recommended that NSW adopt the restrictions which were at the time contained in the Australian Government Lobbying Code of Conduct. 

That didn’t happen.  

Another code referred to in the ICAC report is the Model Code for Conduct for NSW Public Agencies. 

We can’t find this code in any current NSW government website.  It too seems to have disappeared over time. The last it seems to be in play is around 2014 when it was being reviewed by the Department of Premier and Cabinet. The link to the code in this communication is dead, and we can’t find it past this point anywhere, nor any reference to why it has disappeared. 

The only current relevant code of some relevance we can find is The Code of Ethics and Conduct for NSW Sector Employees.  

The purpose of this document, according to the document itself is “to identify mandatory requirements and best practice conduct for all government sector employees which is consistent with Part 2 of the GSE Act (the Ethical framework for the government sector)”. 

But it’s a short, watered down and pithy document. It does not reference potential post public sector employment issues that the ICAC report was attempting to address. 

The closest you get to being able to even ask a question regarding post employment conflict is probably in this statement:  

“Where a conflict of interests occurs it should always be resolved in favour of the public interest, rather than your own.” 

But if you don’t think being employed by your previous biggest supplier is any form of conflict, then I guess this part of the code doesn’t apply. 

The federal version of this NSW code is included in the Public Service Act of 1999. It outlines the conduct expected of a senior public servant, but it too, does not address post employment conflict. 

How have we ended up with codes of ethics for public sector employees which fail to address conflict in post employment when clearly the potential exists, and clearly we have been grappling seriously with the issue in the past, per the ICAC report, and many other reports in other states and federally? 

At the federal level, there are fairly well articulated guidelines regarding ministers jumping ship to the private sector.  

Federal ministerial standards are designed to prevent ex ministers from lobbying or holding business meetings with members of the government, parliament, or public service, for any matter they held ministerial responsibility, for 18 months after leaving parliament.  

The standards also require ex ministers not to use information they have obtained during the course of their employment with government, for private gain. 

If we can warn off ministers, why not senior public servants? Aren’t senior public servants people with a lot more intimate working knowledge of government departments and therefore  even more in play for taking more care in the public interest? 

The most recent poster children for ignoring guidelines on working for government and then parachuting into a closely related private sector jobs at the federal level are two ex senior ministers, Christopher Pyne and Julie Bishop.  

Bishop, foreign affairs minister until her resignation, accepted a job with Palladium, one of the biggest foreign aid contractors in Australia. 

Pyne, a former defence minister, accepted a job with consulting firm EY to help it capture a bigger slice of Australia’s growing expenditure on defence. 

That such guidelines are mostly ignored, you might argue, has set the tone for how the private sector views such appointments at both the state and federal level, i.e. it doesn’t care because the government doesn’t seem to care. If the government did care, it’d put a lot more teeth into their codes of conduct. 

In end, the statement from the NSW Department of Health appears to be technically correct.  

Their Secretary of Health appears genuinely to have upheld the “highest ethical standards of conduct prior to and following her forthcoming appointment”. 

Certainly there are no codes she has not upheld and definitely everything is legal and above board in this appointment. 

The operative words in this statement of course are “standards of conduct”.  

Standards that the NSW government appears to have changed quite dramatically over time  to the point of them no longer trying to address any potential conflict that their senior public servants might have in jumping from government to the private sector. 

In end Koff hasn’t done anything wrong and neither has Telstra. You could hardly expect either party to put their hand up and say, “no, while there are no guidelines, codes or regulations we have cross a line on, we think it’s wrong, so we aren’t doing it”. Business does not work that way.

But the event does seem to expose from very serious issues for the NSW government and public service in terms of why it seems to have expunged any possibility of review of situations which obviously have potential for conflict and obviously might not be in the public interest.

The optics for the NSW government on this event are atrocious.

Are we really to believe that no conflict exists and there is no potential for any market issues in allowing stuff like this to happen without any questions asked or review at all? 

The Medical Republic asked the Medical Software Industry Association for comment but we were not able to get a comment before we went to press.

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