An ombudsmen’s report has detailed the dodgy practices at a state government water authority.

A report has been released following investigations by Victorian Government ombudsmen into conflict-of-interest concerns at water agency the Office of Living Victoria (OLV).

The OLV was formed by Water Minister Peter Walsh in 2012 to bring about changes in the state’s water service management.

But the office has been dogged by allegations of prior relationships between staff, including links between senior management, contractors and consultants working for the office.

The report says many of these allegations are true, detailing a culture of backroom deals and nepotism operating contrary to public benefit.

“It has seen staff engaged for significant periods of time without a formal interview process and on occasions with no referee or background checks,” the report said.

“These same staff were then offered fixed-term contracts within the VPS (Victorian Public Service), again without advertising the roles or formal interviews being conducted.

“Conflict of interest was poorly understood and badly managed by OLV.”

The ombudsman said in once instance, three companies provided quotes for events management services and OLV accepted the most expensive quote.

The ombudsmen said the Office could not explain why it made the choice.

The report also found OLV rushed its project briefs, quotations and other documents in order to appear as if it was doing things.

“In some cases they were prepared after the contract was in place, to give some semblance of credibility to the arrangement,” the ombudsman said.

The report made recommendations including a deeper audit of OLV’s financial management and a review of hiring protocols.

Investigators said they were not confident they had been given all the documents they needed for their inquiries, either due to poor record keeping or other reasons.

Victorian Water Minister acknowledged the mistakes in the management of the OLV, but it insisted it had operated effectively.

“We would acknowledge that mistakes have been made by both OLV and the Department of Environment and Primary Industries and these are being addressed,” he said, employing a classic piece of passive denial

“Good governance and effective and timely policy reform are not mutually exclusive, but having said that, OLV has delivered some significant benefits,” he said.

Victorian Labor spokesperson James Merlino said Walsh should resign.

“Jobs for mates, absolute rorting. This has been a mess,” he said.

“There’s no doubt that Peter Walsh has been on an absolute frolic at the expense of Victorian taxpayers. He should be held to account.

“It has been an unmitigated failure of Peter Walsh - the Office of Living It Up Victoria.”