Fitzgerald Inquiry: Railway Electrification Project - Citra and E.P.T. Pty. Ltd.

Section: 2.4.1. Political Donations

Part: (b)

(i) Stage One

Between November 1983 and January 1984, Citra was either awarded or commenced to carry out three other major Government projects; an upgrading of the Bruce Highway for $3.045 million, construction work on the Western Arterial Freeway for $2.376 million, and work at the Callide “B” Power Station for $7.575 million. Later, there were other projects, including construction work in relation to the Landsborough Highway for $2.9 million and on the Gateway Arterial Road for $2.6 million.
Citra was also the successful tenderer for two stages of the Railways Electrification programme, an enormous project which was implemented between 1983 and 1986.
Tenders for Stage One of the project had been called in August 1983, and were received from companies in Australia, Britain, Canada, France and Italy.
Citra made its donations to the National Party to which reference has been made in October 1983.
Between August and December 1983, Bjelke-Petersen had discussed various investment opportunities in Queensland with Citra.
In December, before tenders closed, Lane (then the Minister for Transport), the Commissioner for Railways, other Railways Department personnel, and representatives of Citra including the person who had made the payments to Lyons had a meeting. It was understood at that time that Bjelke-Petersen wished European systems to be taken into account in determining the successful tenderer for Stage One of the project.
Tenders closed on 2 March 1984. Less than a week later the Railways Department commenced a preliminary evaluation the object of which, according to the Railway Department Chief Engineer in a report dated 9 March, was “. . . to determine whether Citra Constructions Limited could be a possible contender for the contract award”.
Citra had submitted the fourth lowest tender, but its tender was a “derived non-conforming tender”. Tenders had been called for the design, construction and supply of all materials necessary for overhead electrification, but Citra had omitted the supply of materials. Accordingly, it was necessary when the evaluation was carried out for a notional amount to be added for that purpose. The chief engineer noted:

“Under normal circumstances this tender would be ruled out of consideration as incomplete and non-conforming”.

Despite the report submitted by the Chief Engineer on 9 March, Citra’s tender continued to be given close consideration.
On 14 June, the chief engineer submitted a further report containing a detailed analysis of the various tenders, including that submitted by Citra.The favoured tender, which involved a price millions of dollars lower than that quoted by Citra, was submitted by E.P.T. Pty. Ltd., to which the contract for Stage One was eventually awarded.
According to National Party records, some days later, on 9 July 1984, E.P.T. donated $90,000 in cash to the National Party.
However, external auditors of E.P.T. can find no evidence of such a donation in the company’s books.

(ii) Stage Two

On the same day that it decided to award the contract for Stage One to E.P.T., Cabinet decided to proceed immediately to enter a contract in relation to Stage Two. It was further decided that public tenders would not be called but that the most suitable companies other than E.P.T. which had tendered for Stage One, including Citra, would be invited to tender for Stage Two.
Citra received the Stage Two contract. It suffered heavy losses, and subsequently negotiated a $5.8 million settlement of its claim with the Department of Railways.

(iii) Stages Three and Four

Stage Three involved only a small section from Blackwater to Emerald and was awarded to E.P.T. by an extension of its Stage One contract.
Cabinet decided that tenders should not be called for Stage Four, which involved a considerable length of line from Caboolture to Gladstone, but that each of E.P.T. and Citra should be engaged to carry out onehalf of the work because they were available with suitable workmen and equipment.
Each was invited to submit a price, and each quoted almost the same amount, approximately $32 million for its half of the full project.
The quotes were evaluated and it was estimated that they were too high and indeed were approximately twice the standard price per kilometre offered in Stages One and Two. It was recommended that unless they could be renegotiated “ ... to the region of $75,000 to $80,000 per standard kilometre, then the option of calling tenders would have to be considered”.
Negotiations between the Railways Department and E.P.T. and Citra ended with an agreement that each would be paid approximately $25 million.
Treasury criticized the awarding of the contracts, which occurred without its approval. The opinion was expressed that the amount of $25 million each was too high, that the Railways Department’s reasons for accepting those prices were unconvincing, and that both companies were being allowed to recover some of the losses which had been suffered in other sections of the work.