Former Labor right powerbroker Robert Ray has quit as chairman of multi-billion dollar state government insurer the Victorian Managed Insurance Authority just hours after handing down a damning report into bullying and harassment at the organisation.

At a tense all-staff meeting on Friday, Ray revealed that his tenure at the helm of the VMIA had come to an end effective immediately, only 13 months after his appointment by former-staffer Tim Holding to the prized $64,000-a-year sinecure.

Ray denied his resignation had anything to do with the excoriating bullying inquiry conducted by InSync surveys and submitted to the Board last week.

The report, the key details of which have been obtained by Crikey, found that 20% of staff had been bullied and that 20% had witnessed bullying behaviour, with the blame sheeted firmly home to senior management. The probe was prompted by a series of Crikey reports detailing the grievances of staffers who had slammed the semi-private body as a “workplace from hell” in vitriolic letters to the incoming state government.

Ray told Crikey this morning that although the report stopped short of identifying a culture of bullying, this didn’t mean that the problem didn’t exist. But the former-Senator rejected suggestions he had quit in response, claiming that he “couldn’t help it if people drew that cynical conclusion.” As a political appointment of the former Labor government, he said his days were always going to be numbered.

Ray said his decision to jump ship was made two days after the Baillieu government swept to power in November. He informed finance minister Robert Clark of his intentions at their first meeting in January, but was asked to stay put and oversee the probe while the Liberal government scoured the state for a successor.

“I made up my mind on the 29th of November but I wanted to do the right thing. There was no pressure on me to go but there was no demur when I said I was going,” he said.

In March, Crikey revealed that 71 staff members had fled or been forced out of the organisation in the last four years, from a floating headcount of about 140. Staff turnover was 67% in the two years to 2009.

VMIA staff believe that the bullying report — which will not be released publicly — is sharply critical of the internal management at the organisation, with controversial CEO Steve Marshall said to be disappointed and surprised at the results.

Staff said this morning that Ray told them during Friday’s farewell that “we haven’t got a culture of fear but we have got a culture of bullying”. According to the survey, the organisation is in the bottom 25% of comparable organisations on the harassment scale. InSync interviewed 117 out of 122 staff at the VMIA alongside 27 former employees, 17 of whom had left within the last 12 months.

In a departing missive, Ray wrote that substantial management changes would be delayed until the August board meeting as the results are digested and a new HR manager is appointed.

Community and Public Sector Union state secretary Karen Batt told Crikey that Fair Work Australia was preparing to hear a fresh unfair dismissal claiming relating to inappropriate behaviour at the VMIA. Another employee had resigned last week following an unsuccessful WorkCover claim.

Batt said that there appeared to be an burgeoning bullying problem in many semi-corporate state government authorities: “there’s not enough scrutiny and there’s increasingly poor behaviour that wouldn’t be acceptable in the mainstream public sector,” she said.

A spokesperson for finance minister Robert Clark said the new chairman must act immediately on the findings and recommendations in the report:

“When the incoming Government raised the situation with the VMIA Board, the Board reacted appropriately by appointing experienced and independent experts to review all aspects of what was happening.

“Now the report has been received, the Board has committed to act on the report’s recommendations to ensure the problems that have been identified are tackled so that bullying is eliminated and a range of workplace improvements are made.

“The Government expects the Board to ensure that this is done, and will support the Board in doing so.”

In a series of exclusive reports this year, Crikey has examined the fall-out inside the VMIA over the bullying claims, which first surfaced in late 2009 in State Parliament. In a letter to staff announcing the probe on February 15, Ray made mention of the adverse media attention, claiming he was “concerned about the nature of these allegations and the impact on the VMIA’s reputation”.

Last month, internal public service regulator the State Services Authority released its own government-wide report into workplace bullying, finding that Victorian mandarins are 25% more likely to be harassed and intimidated than their interstate counterparts.

Deputy VMIA chairman Ian Gaudion has been appointed as acting chair until a replacement is announced. He and his successor will be charged with deciding on a contract extension for CEO Steve Marshall, whose 5-year term lapses in September.

UPDATE: Four hours after Crikey‘s deadline, the VMIA released a media statement denying there was a continuing culture of fear and intimidation at the organisation. Click here to read it.

Peter Fray

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