The Canberra Institute of Technology's chief executive has been stood down as an integrity commission investigation begins into the $8.5 million contracts awarded to a "complexity and systems thinker".
The CIT board announced late on Thursday CEO Leanne Cover "has been directed, and agreed, to take leave" while an internal audit is completed.
Outgoing board chairman Craig Sloan said Ms Cover would also be subject to a performance appraisal while the audit was conducted.
The announcement came hours after the ACT Integrity Commissioner took the extraordinary step of publicly announcing an investigation into the affair.
ACT Integrity Commissioner Michael Adams QC said recent publicity about the contracts had contributed to this decision to, for the first time, publicly confirm an investigation.
More than $8.5 million has been awarded to companies owned by Patrick Hollingworth, including Think Garden and Redrouge Nominees, over the past five years to help CIT with its organisation transformation.
CIT's board said last week it could not guarantee if the most recent $4.99 million contract was value for money. That contract has since been suspended and CIT is seeking advice about having it terminated.
Mr Adams said the commission's extraordinary step to publicly announce its investigation would give people the opportunity to put forward information relevant to the investigation.
"Commission investigations are almost always conducted covertly, particularly in their early stages," he said.
"Public announcements about investigations will only be made where there are substantial countervailing reasons for doing so. This remains the commission's policy.
"Recent public discourse in the media and in the ACT Legislative Assembly, which clearly pointed to the high likelihood that an investigation by the commission would occur, and the need to take steps to ensure the integrity of the process, has made this announcement desirable.
"It also provides an opportunity to request any person or entity with information pertaining to the commission's investigation report to provide their information to the commission as soon as possible."
Skills Minister Chris Steel had earlier confirmed the integrity commission was investigating the contracts.
"Following the ACT government inviting the Auditor-General with the support of the Assembly to look into these series of contracts that have been taken out by CIT, it's now been confirmed that there will be an independent investigation involving the Auditor-General and also the integrity commission," Mr Steel said.
"We really welcome these independent reviews into these matters, which will get to the bottom of what's occurred and whether these contracts are value for money, what they will deliver and why they were undertaken."
An independent audit commissioned by the CIT board is also under way into the procurement of this latest contract. This review is due to be completed by July 31.
The contracts have been criticised for having unclear deliverables and terms of references. It also emerged last week that CIT had ignored advice from the ACT government's procurement board about the contracts.
During the procurement for the $4.99 million contract there were several issues identified with the tender's plan, including that there were no clear deliverables, the pricing schedule was basic and there was no time to make well-considered recommendations.
After several days of refusing to comment, the CIT board issued a joint statement on Thursday from chairman Craig Sloan and his incoming replacement Kate Lundy confirming Ms Cover had been stood down.
Mr Sloan said: "The board is working with the ACT government to augment the capacity of the CIT executive to keep operations thriving as well as providing support for the independent internal audit into the Think Garden contract procurement and performances, and the governance functions of the board."
A former Labor senator, Ms Lundy said: "I look forward to working with the ACT government to review the governance frameworks around CIT and ensure CIT continues to excel as the ACT's public vocational education provider of choice."
Mr Adams indicated that witnesses had already been called to give evidence but they still had to follow secrecy obligations.
"I want to make it very clear to any persons who have received, or do receive, a summons to appear before the commission and/or provide information as part of this investigation, that they must at all times adhere to the conditions of their summons, including any confidentiality requirements," he said.
"Failure to act in accordance with the conditions of a summons is a criminal offence and may result in a period of imprisonment."
Mr Steel has been highly critical of the board and the contracts, which he said have "seriously damaged" the reputation of CIT.
The board said the procurement process for the contract had been undertaken by the CIT executive, within the financial delegation of Ms Cover. Mr Sloan said the contracts had been signed without scrutiny from the board.
Mr Steel said he had spoken with the incoming board chair, Ms Lundy, and she indicated she would take action.
"In my discussions with Kate Lundy, who will be the new board chair from July, she has indicated that she will be taking action," he said.
Opposition Leader Elizabeth Lee has slammed the appointment of Ms Lundy to the role, as the former Labor senator has been the board's deputy chair for the past two years. Mr Steel said he was confident in her appointment.
"It is really important there is some continuity going forward. Kate Lundy is a person who has considerable experience in both the cyber security and defence sectors, which is why she was appointed to the board," he said.
"I'm very confident having spoken to her about these contracts that she will strengthen the governance of the CIT board and put in place the risk controls necessary to make sure this type of thing doesn't happen in the future, and that the CIT board has much better visibility of CIT's procurements into the future."
Ms Lundy has been contacted for comment about what oversight she had over the contracts awarded to Mr Hollingworth.
Ms Lee said she welcomed the investigation from the integrity commission, as she said many Canberrans were rightly concerned about the contracts.
"A number of current and former CIT staff have come forward since this issue was exposed and just yesterday I raised serious concern about the promotion of current deputy chair to chair from next month despite the deputy chair having been on the board presiding over many of these contracts," Ms Lee said.
"I hope the integrity commission's investigation will allow a comprehensive, independent review into these serious issues and we see an outcome in the best interests of the staff, students and the CIT going forward."
Ms Lee repeated her criticism of Mr Steel and Chief Minister Andrew Barr, who she said had failed in their ministerial responsibilities. She said both had been warned about contracts prior to the $4.99 million contract signed in March.
Greens spokesman for integrity Andrew Braddock also welcomed the investigation, saying there was clearly a community interest in understanding the matter further.
"[The] findings will hopefully provide clarity on how these decisions were made," he said.
"It is really important for governments to have an independent oversight function, which is exactly why the Greens campaigned for so long for an integrity commission and it is good to see it in action."
