Former Commonwealth Bank of Australia general manager of Infrastructure Engineering has been found guilty of accepting bribes in return for organising IT contracts with the bank.

In the NSW District Court on 8 May, Judge Phillip Mahony found Jon Gordon Waldron guilty of seven counts of corruptly receiving money as a reward for facilitating business opportunities.

Waldron was also found guilty of three counts of assisting Keith Hunter, former CBA Executive Manager in charge of Operations, IT Security, Application Development and IT Engineering, to corruptly receive money.

Hunter, who had previously pleaded guilty to the crime, and Waldron had concocted an elaborate plan to profiteer from an earnout clause outlined in the $427 million ($US282 million) sale of IT vendor ServiceMesh to Computer Sciences Corporation (CSC) in 2013.

Waldron and Hunter’s plan saw ServiceMesh supply McAfee software and Pivotal software – which was never used – to the CBA.

The agreement earned Waldron $3 million ($US1.9 million), with payments received between 16 May 2014 and 16 December 2014.

Without both the McAfee and Pivotal deals ServiceMesh would not have surpassed the earnout revenue target of $30.3 million ($US20 million).

“With the revenue from the two deals ServiceMesh became entitled to a further payment of over $US98 million [$AUD148.4 million],” the Judge said.

The landscape of the crime

In 2012 the CBA adopted under CIO Michael Harte a policy to move its IT infrastructure to a cloud-based system.

Waldron, who reported to Hunter, was responsible for procuring the software systems.

CBA implemented ServiceMesh’s Agility Platform software as a cornerstone of its cloud computing system.

The Judge found Waldron and Hunter found out about the earnout provision in the CSC deal to purchase ServiceMesh and used the information to their advantage.

“The accused [Waldron] played an integral part in progressing the negotiations and contractual arrangements for the McAfee deal notwithstanding in the short term the CBA derived little commercial benefit from it,“ the Judge concluded.

On 31 October 2013, Waldron sent a text message to ServiceMesh sales consultant Brad Twynham stating: “We have a proposal on the table already”.

Also on the same day, he sent an email to Hunter disclosing a license to supply McAfee software would increase ServiceMesh revenue by $7 million.

Waldron then also facilitated the Pivotal deal.

Both Waldron and Hunter agreed to split the deal into nine separate transactions to avoid scrutiny and to ensure the deal was finalised within the earnout period.

Hunter was also found to have discussed compensation for the two agreements with ServiceMesh founder and CEO Eric Pulier.

The lines were blurred

Hunter and Waldron had a close working relationship with Pulier and Twynham which eased the workings of their plan.

Waldron in particular had become good friends with Twynham, even organising Twynham’s buck’s party.

Pulier himself made the payments to the two CBA IT execs through ACE Inc, a corporation registered by him.

Both Waldron and Hunter had provided CBA bank account details for the transfer of funds.

On reflection, Hunter had commented: “I am so shocked. I want to vomit. I cannot believe we were this stupid”, when referring to the fact they had allowed the payments to go into accounts that were discoverable by the CBA.

The Judge found the CBA, at the time the payments were received, had no knowledge of the cash that had been exchanged and only became aware when Waldron’s account was scrutinised in November 2014.

A day after CBA investigators questioned Waldron about mystery payments into his account, he tried to resign to deflect further investigation of the payments received from ACE.

The court will hear submissions on sentencing on 14 August.