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Systemic dishonesty

Corrupt practices in government and the results of those corrupt practices become problematic enough – but when that corruption becomes systemic in more than one operation, it becomes cancer that endangers the welfare of the world's democracy.

Chapter 8

My Award

The arbitrator was due to hand down his award on 11 May 1995. Before that day, though, came the DMR/Lanes report on the technical losses and the FHCA financial report. The dire content of both these documents prepared me for a very poor final result.

Absent Justice - The Deception Continues

DMR/Lanes report

There are discrepancies between the arbitrator’s and my version of Lane prepared technical consultants report titled Resource Unit Technical Evaluation Report. Mr Alan Smith. CBHC. 30 April 1995. The second paragraph on page one consists of only one short sentence It is complete and final as it is,” (see Arbitrator File No/27). However, the second paragraph on the equivalent page (page two) of the arbitrator’s report, also dated 30 April 1993 says:

“There is, however, an addendum which we may find it necessary to add during the next few weeks on billing, i.e. possible discrepancies in Smith’s Telecom bills.” (See Arbitrator File No/28)

There is more information in the arbitrator’s version than there is in mine. The reference to my ongoing billing problems states extra weeks are required to complete the investigation. The arbitrator did NOT provide the extra weeks.

My page two of this report (see Open Letter File No/47-A to 47-Dshows no mention of my billing claim document in my version. However, page three in the arbitrator’s version notes:

“One issue in the Cape Bridgewater case remains open, and we shall attempt to resolve it in the next few weeks, namely Mr Smith’s complaints about billing problems.

“Otherwise, the Technician Report on Cape Bridgewater is complete.” (See Open Letter File No/47-A to 47-D)

How can two identical technical reports with the same 23 technical assessments, both dated 30 April 1995 and apparently both prepared by the same consultants, have one version noting that the “… case remains open, and we shall attempt to resolve it in the next few weeks”, while the other has no mention of it still being open and needing weeks to complete?

Both technical reports state: “A comprehensive log of Mr Smith’s complaints does not appear to exist.” It did exist, as did my own Bell Canada / Cape Bridgewater and Service Verification Testing (SVT-process) at Cape Bridgewater as I have shown elsewhere on this website. Had this comprehensive log of fault complaints been provided to the technical consultants to assess, they would have had to overrule the arbitrator’s decision not to allow them the extra weeks they had requested, in order to investigate my ongoing billing faults.

On 2 May I received the TIO-technical report, dated 30 April 1995, on my business's phone faults over the period of my claim. Outrageously, this report left out more than half my claim documents. Despite numerous requests, the TIO would not investigate why both the arbitrator and the TIO consultants allowed so much of my claim material to be left out or authorised a supposedly independent technical resource unit to ignore claim documents in a legal procedure.

All the incorrect charging issues had been ignored, as had the issues of lost faxes and phone faults that continued throughout the arbitration process, which were even then still losing me business. Nor had they touched the ‘lost’ incoming calls, charged for but not received.

There were some concessions in the report. The TIO consultants did acknowledge that they had not assessed all my claim documents. And they did find a number of my claims to be proven and found against Telstra on a few issues, but to nowhere near the extent that could be reasonably expected based on my claim documents. For just one example, I cite material related to my gold phone, taken from a section covering the telephone exchange, referred to as RCM 1, which my coin-operated gold phone was connected to for most of the time. (The DMR/Lanes report drew on Telstra’s own data and records.)

2.2       There were consistent problems with the RCM system. Mr Smith’s services were carried on RCM No 1 until February 1994. This system had a track record of problems, and the RCM system components were the subject of several design corrections (Work Specifications). These issues were likely to cause a range of problems (as reported) over the period August 1991 to February 1993 (a period of 18 months) when Mr Smith’s services were transferred off RCM 1 and service improved. Specific problems caused are covered in later paragraphs (ref: 2.8, 2.9, 2.21).

            ASSESSMENT – Service was less than reasonable.

2.8       RCM 1 failure due to lightning damage. Lightning damage to communications equipment would be expected from time to time in this area. Reasonable service relates to the time taken to return the service to normal. A reasonable expectation would be repair within less than the 4 days actually taken.

            ASSESSMENT – Service was less than reasonable.

 2.9      Evidence of problems with services on RCM 1 had been sufficient to cause Telecom to move the CBHC services away from RCM 1 to RCM 2 and 3. Later when the RCM equipment was examined by Melbourne staff, evidence of severe error levels had accumulated on the counters in the transmission equipment (particularly RCM1). After corrective action these severe error levels were no longer accumulating.

            ASSESSMENT – Service was less than reasonable.

So far, so good. But then the report summarises the situation:

Intermittent effects on the gold phone resulted in it being removed from RCM 1 11 days after potential cause (lightning strike damage to RCM 1). At the time of removal the actual equipment fault had not been found, although testing was continuing. This seems to have been a reasonable action and timescale under the circumstances.

ASSESSMENT – A reasonable level of service was provided

So, while at 2.8, four days was deemed an unreasonable time-frame for repair, in the summing up they find eleven days was reasonable. Moreover, the ‘11 days’ is itself in error. The lightning strike occurred in November 1992 and the fault wasn’t rectified until late January 1993, which amounts to almost three months out of service, not 11 days.

But these are just details. In total, there were four paragraphs dealing with the gold phone, and in each one service was assessed as less than reasonable. And yet the summary assessment was positive. This is not even logical, let alone fair. It is incomprehensible that they gave the gold phone a positive assessment, since they acknowledge at 2.2 that RCM 1 ‘had a track record of problems’. My claim documented more than six years of continuous customer complaints about the gold phone, in diary notes and letters. Ah yes, these were among the documents they did not assess.

I challenged DMR/Lane’s assessment of my gold phone and supplied both Telstra and the TIO’s office with conclusive evidence, including Telstra’s own documentation, of continuing problems with the gold phone. To no avail. In December 1995, I had finally had enough, and I refused to pay the gold phone account until its faults had been acknowledged. Telstra’s response was to cut the phone off.

Corrupt practices that was systemic in my government-endoreed arbitration resulted in becoming the cancer that festered my arbitration where the arbitrator who allowed this festering to continue unlanced (not addressed) was the worst possible outcome for me and my busines.

FHCA (the arbitration financial consultants) submitted a doctored report

Absent Justice - The Godfather

FHCA’s financial report was even more of a nightmare. It was incomplete; it did not show the workings, which resulted in their findings to downgrade my true losses by as much as 300 per cent in some areas. It was so incomplete, it was difficult to challenge it, for there was nothing substantial to grasp. The errors of logic were painfully elemental.

For instance, although the FHCA report acknowledged that my business accommodated social clubs as well as school groups —

 ‘An analysis of the clientele of Cape Bridgewater Holiday Camp shows that only 53% were in fact schools’

….(sic) it based its calculations of business losses on the lower end of my revenue base, the $30 per two overnight rates for school groups, compared to the $120 to $160 charged for the 47% that were fully catered social club patrons. Given an approximately fifty-fifty split of school and other groups, this downgraded my losses by a minimum of at least 300 per cent.

Derek Ryan, my forensic accountant, was shocked at its handling of the arbitration procedure and wrote a 39-page report to the arbitrator detailing the failings he had found in it, including actual errors. For a couple of instances:

1.         The FHCA report does not include any detailed workings so we have endeavoured to recalculate the FHCA figures given their assumptions and the base figures which were included in our report dated 21 June 1994.

            Our recalculated figures are still higher than the FHCA figures and we are unable to determine the reason for this.

2.         We believe that the FHCA report contains many inaccuracies and in the main area of loss quantification is simply wrong. The main calculation of loss has been considerably understated by an error logic.

            The error of logic appears to arise from the fact that FHCA reduce the total bed capacity by the night utilisation of 48% (to give available bed capacity) and FHCA then apply the bed occupancy rates to the available bed capacity. It is incorrect to reduce the total bed capacity by both of these factors

Derek received no response from the arbitrator, so he contacted the project manager of my claim at FHCA, to ask how he had arrived at his findings. The project manager explained that he had instructions from the arbitrator to exclude a large amount of information from his final report. This meant the so-called independent arbitrator had forced the so-called independent financial assessors to ‘doctor’ their report. Derek wrote to Senator Richard Alston, Minister for Communications and the new TIO, to express his professional disappointment with FHCA. He considered their conduct detrimental to my claim because, since their report was incomplete, he had no firm base on which to formulate his response or, indeed, to challenge the report.

Six years later, and too late to make any difference, I received from the TIO’s office a copy of a letter dated 13 February 1996, from the Project Manager of FHCA to Mr the TIO, written evidence that the FHCA financial report was incomplete: ...I did advise Mr Ryan that the final report did not cover all material and working notes." I very much doubt that the TIO informed Senator Alston of this admission by FHCA.

Instead of the TIO Mr Pinnock providing this letter to me, within the statute of limitations period so I could use it in an appeal against the arbitrators’ award, Mr Pinnock concealed it until 2002 – outside the statute of limitations.

However, between 18 October 1995 and 4 October 1997, with the assistance of Mr John Wynack, director of investigations on behalf of the Commonwealth Ombudsman, I sought, under FOI, from Telstra a copy of their arbitration file on my matters. Home Page File No/82 confirms Mr Wynack did not believe Telstra’s claim that it destroyed the file. I also tried to access a copy of the same arbitration file held by the TIO office, which, as the administrator of my arbitration – under law – had to retain a copy for at least six years: until 2002. Mr Pinnock (the administrator) of my arbitration in his letter, of 10 January 1997, in response to my request, states:

I refer to your letter of 31 December 1996 in which you seek to access to [sic] various correspondence held by the TIO concerning the Fast Track Arbitration Procedure. …

I do not propose to provide you with copies of any documents held by this office. (See Open Letter File No 57-C)

It became obvious by this time of the February 1996 letter, that the TIO arbitration resource unit and the arbitrator had collaborated with Telstra in ensuring my singles club (my second business) would not be assessed as a separate business loss and did not take into account the higher revenue loss of my single club dollar, but only valued my losses at the lower tariff I charged for school groups. However, I wanted something more substantial – perhaps the actual working notes, which were removed from the FHCA report under instruction by Dr Hughes (see Open letter File No/45-E), and would have detailed my singles club information that I provided FHCA in February 1995. This single club material was never returned to me after my arbitration was finalised. The losses associated with my singles club patronage (which were never taken into account by the arbitrator) are also discussed in the Front Page Part Two page.

The Award, May 1995

On 11 May 1995, the arbitrator handed down his award. He found in my favour on a number of instances, but these were based only on old fault reports; he didn’t address the ongoing problems which I had constantly advised him of and which he was obliged by the terms of Austel’s COT Cases Report to address. The award seemed to presuppose that I no longer had any problems with my phone service and that all had been addressed and made up to standard. How he could have come to this conclusion is incomprehensible to me.

The award gave me little over ten per cent of my claim. After I had taken into account all the expenses, I accumulated just to bring the phone problems to the attention of Austel and the Senate and submitting my claim to the arbitrator, I was left with about four per cent.

It was not the case that my claim was inflated. Another accountant, Barry O’Sullivan from Freemans, once treasurer of the LNP in Queensland and now a senator, valued my claim at an almost identical amount.

I am not allowed to speak of the amount of the award, but there are things I can mention. In his award, the arbitrator said he ‘had to take into account the decrease in tourism’ in my area as one of the factors possibly contributing to lost business at the camp. This was outrageous; he was trying to explain my business losses in terms of a decrease in tourism, when all the objective evidence was pointing to an increase in tourism in my area.

Even the FHCA Report recorded an increase in numbers of tourists visiting the Portland region (from 1,396,000 in 1991/92 to 1,565,000 in 1993/94). This increase (which I referred to in my claim documents) was supported by figures supplied by the Department of Conservation and the Environment and by the Victorian Tourism Domestic Monitor. So on what conceivable grounds had the arbitrator decided there had been a decrease in tourism in the area?

Speaking of the FHCA Report, the losses as calculated were taken on board. The arbitrator made his award based on those faulty calculations.

The arbitrator appears to have based his award on the assumption that Telstra’s defence claims were undisputed fact. He says, under the heading ‘Faults Caused By Claimant’:

(c)     Telstra nevertheless maintains that most reported faults were attributable to mis-operation by the claimant or by his callers or to normal wear and tear on the equipment they were using.

(d)     In this regard I have noted for example, the Statutory Declaration by ——, a senior technical officer (grade 1) who concluded that specific fault allegations involving the claimant’s answering machine, cordless phone, and facsimile machine could only be attributable to operator error. I have also noted a statement by ——, senior Telstra technician officer grade 2, to the effect that reported facsimile machine faults were attributable to customer error. 

My claim documents clearly indicated that the faults which plagued my business right through my arbitration (1994–95) and for years afterwards were NOT due to operator error. The arbitrator was treating my assertions and Telstra’s assertions completely differently. Of course, the arbitrator could not know when one of us was not telling the truth, and he could only deal with the material placed before him; but he should not have assumed, without investigation, that it was I who was the unreliable party. I find this all the more reprehensible given that I was so often forced to complain of Telstra’s deceptive or underhanded behaviour.

I knew Telstra was lying. Many of the documents cited in this book are evidence of the fact that Telstra knowingly lied in its defence of my arbitration, but at the time I needed it, I did not have the hard evidence. And even when the evidence started coming to hand, it was not accepted — not by the arbitrator, nor by the TIO, and sometimes not even by Austel. They didn’t want to know. But it was their job to want to know.

Just for the record, Telstra’s own archival material contradicts the assertions of the technical officer made under Statutory Declaration in point (d) above. The following internal fault record, in relation to my fax line (the name of the technician has been blanked due to an FOI stipulation) notes:

… rang to advise me had found several problems with the RCM system Mr Smith was previously connected to. The major problem was caused by faulty termination of resistors on the bearer block protection another problem was caused by non modified channel cards, a full report will be submitted by Len in the next week.

Both the engineer the memo was addressed to, and the National Facsimile Support Centre, experienced fax problems when attempting to send faxes to my business. As far as I can tell, the technical officer committed an act of perjury in a legal arbitration process.

Whether the TIO believed this perjured information or not is irrelevant. As administrator to my arbitration, he had a duty of care to give equal attention to my claims and concerns, and this I believe he did not do. While I mainly did not have evidence to hand in the course of my arbitration, once it did come to hand (months or years afterwards through delayed FOI documents), I brought it to the attention of the TIO and urged him to investigate. He therefore has no excuse for not being aware of the unlawful way in which this procedure was conducted and should have convened his own investigations into the matters raised.

I felt completely shattered, but I had to keep going, I had customers to deal with. Six days later, however, nature took over. In front of a group of campers, some sixty children and staff, I collapsed. An ambulance delivered me to hospital and, at first, it was suspected that I had suffered a heart attack. Five days in hospital followed and the final diagnosis was stress.

On my first day home I received a call from the FHCA project manager. He wanted me to know that he was aware things had not turned out quite as I had hoped. He believed I now had to put it all behind me, get on with my life and show ‘them’ what I could do.

I am still wondering who ‘them’ was. And why, really, he had rung. By this point, my appeal time had elapsed. Had he heard about my collapse and had an attack of conscience? During this conversation, he also informed me that the executive manager of my case with DMR was also going to ring me; and so, he did.

The Canadian DMR manager said something like: ‘I was sorry to hear you had been ill and I hope you get better soon. This has been the worst process I have ever been a party to. This sort of situation would never have happened in North America.’

I was so stunned at this statement that I later forwarded a signed Statutory Declaration of my memory of it to various government ministers. I wrote to DMR in Canada for clarification but received no response. Tantalising possibilities that went nowhere. I was clutching at straws. After so many years and such a high cost, it was hard to let go in the face of such a disappointing and unjust result.

On 23 May 1995, another 700 or so FOI discovery documents arrived. Why now? What was Telstra playing at? I could have used the material twelve months ago to support my claim. Ten days ago, I could have used them to support an appeal against the award. Now, the only way I could use them was if I took the matter to the Supreme Court of Victoria, an alternative that was entirely beyond my financial means, as Telstra well knew.

Mr Benjamin’s letter to me re late-released FOI documents again confirm that the COT Cases had no chance of ever receiving the justice the government assured us we would have if we went into arbitration with Telstra. This letter from Telstra’s Ted Benjamin, who was also Telstra’s arbitration defence liaison officer, held the position as a TIO Council member. I did not uncover this until the Senate exposed this conflict-of-interest issue during an official COT case FOI investigation conducted by the Senate between September 1997 and March 1999. In fact, the official Senate Hansard available on my website shows Mr Benjamin admitting he had never disclosed his conflict of interest as Telstra's official arbitration officer when the TIO office discussed COT arbitration matters at their monthly meetings.

Mr Benjamin failed to advise the same 26 September 1997 Senate FOI investigation that he had waited in my case twelve months before releasing the FOI documents that would have supported many unaddressed issues raised in my arbitration. On opening this evidence, I remember saying to myself, if only I could have received these most relevant documents during my arbitration or even four weeks previous during my designated arbitration appeal period, I would have been able to successfully appeal part of the arbitrators' award.

On opening this evidence, I remember saying to myself, if only I could have received these most relevant documents during my arbitration or even four weeks previous during my designated arbitration appeal period, I would have been able to successfully appeal part of the arbitrators' award.

However, this was wishful thinking. In the covering letter from Mr Benjamin dated 24 May 1995 under the heading “Your FOI the request of May 1994” includes the following: 

“Further documents have recently come to light that fall within your FOI request of May 1994.

Copies of these documents are enclosed. At this time a table has not been prepared giving decisions in relation to these documents as it was considered by Telecom more important you receive copies of the documents now.” (Refer to exhibit AS 183 File AS-CAV 181 to 233

It was clear from some of these documents that Telstra was fully aware they had a national network billing software problem. Was this the reason Telstra withheld these relevant billing documents for the whole period of my claim?

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Absent Justice Ebook

Read Alan’s book

My name is Alan Smith. This is the story of my battle with a telecommunications giant and the Australian Government, a battle that has twisted and turned, since 1992, through elected governments, government departments, regulatory bodies, the judiciary, and the Australian telecommunications giant, Telstra, or Telecom, as it was known when this story started. The quest for justice continues to this day.

Other independent business people similarly affected by poor telecommunications have joined me on my journey. We are known as the Casualties of Telstra, or the COT cases. All we wanted was for the government owned telecommunications carrier Telstra to admit there was problems, and fix them.

Worse, we had been tricked into signing a confidentiality clause that has hampered all of our efforts since to have our claims transparently investigated.

What do you think? Are we imagining it or has there really been massive corruption and collusion on the part of public servants, politicians, regulatory bodies and Telstra themselves, to protect Telstra to the detriment of it's customers?

Quote Icon

“A number of people seem to be experiencing some or all of the problems which you have outlined to me. …

“I trust that your meeting tomorrow with Senators Alston and Boswell is a profitable one.”

Hon David Hawker MP

“Only I know from personal experience that your story is true, otherwise I would find it difficult to believe. I was amazed and impressed with the thorough, detailed work you have done in your efforts to find justice”

Sister Burke

“I am writing in reference to your article in last Friday’s Herald-Sun (2nd April 1993) about phone difficulties experienced by businesses.

I wish to confirm that I have had problems trying to contact Cape Bridgewater Holiday Camp over the past 2 years.

I also experienced problems while trying to organise our family camp for September this year. On numerous occasions I have rung from both this business number 053 424 675 and also my home number and received no response – a dead line.

I rang around the end of February (1993) and twice was subjected to a piercing noise similar to a fax. I reported this incident to Telstra who got the same noise when testing.”

Cathy Lindsey

“…your persistence to bring about improvements to Telecom’s country services. I regret that it was at such a high personal cost.”

Hon David Hawker

“…the very large number of persons that had been forced into an arbitration process and have been obliged to settle as a result of the sheer weight that Telstra has brought to bear on them as a consequence where they have faced financial ruin if they did not settle…”

Senator Carr

“…your persistence to bring about improvements to Telecom’s country services. I regret that it was at such a high personal cost.”

The Hon David Hawker MP

“All that is required for evil to triumph is for good men to do nothing”

– Edmund Burke