Denham Sadler
August 15, 2017

Opposition knives out for LaunchVic

500 Debacle

Opposition knives out for LaunchVic

Question time: Victorian opposition says there is more than meets the eye in LaunchVic's problems

The Opposition has sharpened its attacks on the Victorian government over its handling of the recent 500 Startups debacle and raised questions over the independence of LaunchVic.

The issue head late last Wednesday, when Victorian innovation minister Philip Dalidakis was repeatedly queried during question time in Parliament.

The following day, the government’s $60 million innovation funding vehicle LaunchVic terminated its $2.9 million contract with 500 Startups, after the resignation of local director Rachael Neumann.

The Liberal opposition has attacked the Andrews Government on several fronts, including the transparency of the LaunchVic grants, the appointment of former LaunchVic director Rachael Neumann to 500 Startups Melbourne, the independence of LaunchVic processes, and the role of Mr Dalidakis in funding decisions.

But LaunchVic chief executive Kate Cornick has hit back at the suggestions, saying the organisation has “nothing to hide” and defending its transparency and independence.

LaunchVic’s decision to pull funding came more than a month after it was revealed that 500 Startups and public figurehead Dave McClure had been stood down from the organisation’s day-to-day operations earlier this year following his “inappropriate interactions with women in the tech industry”. Despite this, Mr McClure was a guest of the Victorian government in June for the launch of the 500 Melbourne program.

The Victorian government and LaunchVic both said they were not informed of this until it was published in the media.

It took the resignation of Ms Neumann last week to convince LaunchVic to terminate its funding contract with 500 Startups on Thursday.

Victorian shadow minister for investment, jobs and trade Craig Ondarchie questioned Mr Dalidakis in Parliament last week.

“There’s more to this than we’re being told. The Minister in his inevitable style dodges and weaves from questions,” Mr Ondarchie told InnovationAus.com.

“Dalidakis leaps from one stuff-up to another, from the failed StartCon conference, to his worldwide travel bill and now this. I just have a sense that he does not have a handle of what his portfolio is about.”

In Parliament last week, Mr Dalidakis was repeatedly questioned over Ms Neumann’s appointment. Ms Neumann had previously served as the director of the LaunchVic board at the time when the decision was made to award 500 Startups its’ near-$3 million contract.

In response to Mr Ondarchie’s questions, Mr Dalidakis said Ms Neumann resigned from her position at LaunchVic in April this year. But documents obtained from ASIC show that she didn’t stand down until 5 May. By mid-June, she had been appointed to lead the 500 Startups program in Melbourne.

“I’d like him to come clean to us. He’s had a real difficulty explaining how at the time the grant was decided she was a member of the board, then she was at the head of the Australian arm,” Mr Ondarchie said.

But Ms Cornick said there was no conflict of interest with the appointment.

“If Rachael Neumann had been on the LaunchVic board and applied for a job at 500 Startups, there would have been a conflict of interest. This did not happen,” Ms Cornick told InnovationAus.com.

“She served on the board on a voluntary capacity, and resigned effective at the beginning of May. She was exploring job opportunities and she knew she would encounter conflicts of interest, so she stood down.”

“I don’t think it’s fair of anybody to require a citizen that’s not getting paid for board decision to abstain from seeking jobs in the sector that their expertise is in.”

The Opposition has made it clear that its issues and planned areas of inquiry stretch far beyond just the 500 Startups funding debacle, with multiple MPs also raising concern over the independence of LaunchVic and the transparency of its operations and investment decisions.

Mr Dalidakis was questioned in Parliament over his involvement with the funding decisions made by LaunchVic.

“The process requires that LaunchVic recommends the proposals that we invest in. This is what LaunchVic does. I then choose to either accept or reject those recommendations,” Mr Dalidakis responded.

“LaunchVic asks for applications, applications are made, and LaunchVic reviews the applications. They then, through their board, make recommendations, and as a minister I either accept or reject those recommendations.”

But the Opposition still isn’t convinced.

“He said in March this year that the decision about grants were made by LaunchVic because they’re an independent organisation, but he then said in Parliament that he approved the grants. He has a bet each way, this fellow,” Mr Ondarchie said.

The Opposition will also be continuing to raise questions over the transparency of LaunchVic’s operations, and how it conducts due diligence on each investment following the 500 Startups debacle, Mr Ondarchie said.

“I think there’s a transparency issue. I think that what we’re not seeing in Dalidakis’ endeavours to promote himself is transparency through LaunchVic,” he said.

“I asked him questions about probity last week, and he gave assurance to Parliament that he has every confidence that the department undertook appropriate probity checks. If he has confidence in this stuffed up process then there’s something wrong with him.

“My concern is that Dalidakis flies off the handle, makes announcements, stands there and gets great photo-opps but hasn’t thought them through.”

Ms Cornick defended LaunchVic’s internal processes and independence. She said that the organisation’s “very clear process of assessment” involves its board and a department member reviewing and assessing grant applications. A shortlist is then created, which is referred to the department to undertake full due diligence.

“We bring expertise around which applications meet the grant guidelines, then the department supports the due diligence,” she said.

Once the final list is approved, she said, this is then sent to Minister Dalidakis.

LaunchVic has pledged to review its internal processes in light of recent events.

“We have learnt from the lessons in the context of what’s happening with 500. One of the things that we had not done previously was ask grant recipients if they were involved in bullying or harassment claims in any form,” Ms Cornick said.

“Very many organisations, including government, do not ask these questions of potential grant recipients, but we’re exploring how we can build this into our grant process,” she said.

It’s understood that the Victorian Opposition will be pushing further on the issue, with further announcements expected to be made in the coming weeks.

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