The Victorian Managed Insurance Authority will conduct an internal probe into disturbing allegations of bullying raised by Crikey last week, after a 3pm all-staff crisis meeting was called yesterday to respond to the claims.

Sources inside the troubled state government insurer told Crikey that chief operating officer Claudio Battilana announced a “process” to investigate the public revelations, the result of which will be tabled at the next VMIA board meeting on February 10. The fresh scrutiny follows another inquiry — launched on Friday by Baillieu government finance minister Robert Clark — to look into the organisation’s alleged “culture of fear”.

This morning Crikey sent the VMIA a series of questions over the revelations and received the following response attributed to Battilana: “The VMIA is assessing these allegations fully. When this process is complete, the VMIA will take any action if required.” The organisation’s CEO, Steve Marshall, is currently on leave.

Last week, Crikey exposed the VMIA’s poisonous climate that has led to a massive staff turnover of 67% in the two years to 2009, with well over 70 staff leaving the body in the four years since 2007.

Staff were urged yesterday to talk to their manager or the general manager of the VMIA if they had any bullying issues and to utilise the authority’s employee benefits program to consult an external psychologist. They were also instructed not to respond personally to media attention and to instead refer all queries on to the VMIA communications area. However, queries would then apparently be passed on to the responsible minister Robert Clark — effectively insulating the VMIA from direct scrutiny.

Last week, three letters — two sent by a former senior staff member to Clark and one sent to then opposition finance spokesman Gordon Rich-Phillips late last year — were obtained by Crikey that spelled out a sordid history of intimidation and redundancies, presided over by a well-paid executive team. Widespread backing for that point of view has been received before and since from a total of 14 current and former staff.

“The allegations made to Gordon Rich–Phillips are not exaggerated and in my opinion are very accurate,” one said. “I agree with everything in your article and the contents of the letter sent to Tim Holding late last year.”

Another questioned the qualifications of many of the senior appointees, with many not possessing specific underwriting or insurance experience. They alleged that special consideration was given to the hiring of ex-staffers of the Victorian Transport Accident Commission, following that body’s relocation to Geelong in 2009.

VMIA chairman Robert Ray, a former ALP senator appointed by his former staffer Tim Holding to head up the organisation in March last year, denied there was a specific culture of bullying at the VMIA, but said the organisation had a “duty of pastoral care” to its employees.

“[These allegations] will be the number one item at the next board meeting,” he said.

Ray strenuously defended his record, saying VMIA had outperformed financially since he took over the post from former chairman Adrian Nye 10 months ago and noted the body had posted an operating surplus of $51.8 million in 2009-10 and exceeded set budgets.

But the media spotlight could be trained on VMIA for some time yet. Channel 7 has lodged several Freedom of Information requests with the VMIA, with the aim of producing a patented Today Tonight “workplace from hell” exposé in the very near future.