Two NSW Fire Brigades managers responsible for upgrading stations used shelf companies to rort almost $2.5 million from the service, an inquiry has heard.
The Independent Commission Against Corruption (ICAC) is investigating the allocation of $6 million between mid-2005 and 2007 in contracts by former project managers Christian Sanhueza and Clive Taylor.
The inquiry heard the pair used fake counter tenders to orchestrate the awarding of maintenance and capital works contracts to shelf companies controlled by Mr Sanhueza.
These contracts would then be sub-let to legitimate building firms at a cheaper price, with Mr Taylor and Mr Sanhueza allegedly pocketing the difference.
Counsel assisting the commission Chris Ronalds, SC, said the pair oversaw 18 major projects and numerous other maintenance jobs in fire stations across NSW.
In one case, at the Dee Why fire station on Sydney's northern beaches, NSW Fire Brigades approved and paid for a $489,000 refurbishment, but the involvement of Mr Sanhueza and Mr Taylor saw just $161,000 actually spent on the work.
The remaining $328,000 was split between the pair, Ms Ronalds told the commission in her opening address today.
"It was like winning the lottery without having to buy a lottery ticket," Ms Ronalds said.
It was a "surprisingly simple scheme which produced great rewards for minimal efforts", Ms Ronalds said, and the pair's activities amounted to "large scale flouting of procurement requirements".
Mr Taylor appeared before the commission today, admitting to receiving payments under a scheme which he said was hatched with Mr Sanhueza over a coffee.
He agreed it provided the pair with secret payments.
But Mr Taylor claimed it was an improvement on past processes when he said NSW Fire Brigades' major projects routinely ran over budget.
"There was work carried out and anything that was left over, I kept some of that money," Mr Taylor told the commission.
"(But) it wasn't for no work. It was for using my expertise to make the jobs happen, and get done, because they were never done under budget before.
"In hindsight, it was wrong."
Mr Taylor agreed he received about $985,000 over 20 months before the scheme came to light and he resigned from his position.
He spent the money to pay off a mortgage on a home in Sydney's south-went, and also bought a farm at Merriwa in NSW's Hunter region.
Mr Sanhueza, who is also to be called to give evidence before ICAC, is alleged to have received $1.5 million before he also resigned.
The hearing heard secretly recorded phone conversations between the pair and between Mr Taylor and his wife on the day ICAC officers launched home raids to recover documents.
Mr Taylor is heard asking Mr Sanhueza if he had "shifted everything off your property like I told you to do?".
He then called his wife and told her to remove documents from their home and put them in a hired storage compartment.
"So this is a criminal offence now?" his wife is heard asking Mr Taylor.
"If they find evidence," he responded.
The hearing is set down for 12 days before ICAC commissioner Jerrold Cripps, QC.
