• Tue. Nov 29th, 2022

Public and private sectors, beware – a powerful national anti-corruption commission is coming – Know

ByChad J. Johnson

Sep 30, 2022

It’s not just the federal public sector that should prepare for the National Anti-Corruption Commission (NACC); its wide scope and retroactive powers mean that the NACC will also have major ramifications for the private sector.

For the public sector, the risk of being investigated is obvious; for the private sector, the scope of an investigation could be broad enough to include organizations which deal with the Commonwealth public sector and which risk reputational damage and the financial costs of compliance. As we await passage of the National Anti-Corruption Bill 2022, the public and private sectors should take steps to strengthen their own internal safeguards against corrupt behavior and responses.

The powers of the ANCC

The NACC will be empowered to investigate serious or systemic acts of corruption throughout the Commonwealth public sector, including “any person” who negatively influences a public official.

Like other state and territory corruption commissions across Australia, the proposed NACC is expected to possess extraordinary powers similar to those of a royal commission. The proposed powers would include:

  • investigate public and private sector targetsincluding ministers, parliamentarians, staff, statutory office holders and employees of all government entities, as well as third parties such as businesses and their employees;
  • investigate any conduct that affects (or could affect) the honesty or impartiality of the conduct of a public official, even if the conduct does not constitute a criminal offence, so long as it is considered to involve “serious or systemic”;
  • operate independent of government with the discretion to initiate investigations on its own initiative or in response to referrals (including anonymous referrals from whistleblowers and the public);
  • at force production of documents and information, obtaining warrants to search premises and seize evidence, entering certain Commonwealth premises without a search warrant, using surveillance devices, intercepting telecommunications and coerce witnesses attend hearings to answer questions under oath if necessary; and
  • to investigate allegations that have occurred before his establishment.

Hearings, findings and referrals

Prior to the introduction of the legislation, concerns had been raised about the NACC’s ability to hold public hearings or ‘show trials’, which could significantly damage its reputation.

Under the draft bill, the NACC will have the power to hold public hearings in “exceptional circumstances” and when it is in the “public interest” to do so. These questions will be left to the discretion of the commissioner who may take into account any relevant factors in making a decision. In this regard, the bill proposes a different mechanism from its counterpart in New South Wales, the Independent Commission Against Corruption, which requires the agreement of the Chief Commissioner and at least one other commissioner before of a public hearing.

The NACC will have the power to make findings of fact, including findings of corrupt conduct, and to refer findings that may constitute criminal conduct to the Australian Federal Police or the Commonwealth Director of Public Prosecutions. It will operate with procedural fairness and its findings will be subject to judicial review and oversight by a statutory joint parliamentary committee.

Although the NACC operates with procedural fairness, it is axiomatic that the procedures used by corruption commissions are radically different from court proceedings. For instance:

The accused has the right to remain silent

Defendants and witnesses can claim privilege against self-incrimination

No right to withhold self-incriminating information – refusing to answer questions may result in sanctioning a witness for contempt

The prosecution must prove the offense beyond a reasonable doubt

No such standard of proof – commissioner will issue ‘findings’ and ‘opinions’

Evidence provided is publicly available (except in rare cases) and a witness can tell others what evidence has been provided, except to someone who has not yet testified

Witnesses can be ordered not to tell anyone they have been questioned

Corrupt conduct and corruption issues

The statement of reasons (EM) states that the definition of “corrupt conduct” is not intended to establish a new standard of conduct for public officials or to alter the relationship between such officials and the public as reflected in the Australian system of representative and responsible government.

Under section 8 of the bill, “corrupt conduct” is defined as including:

“(a) any conduct of any person (whether or not a public official) which affects or could affect, directly or indirectly:

  1. the honest or impartial exercise of the powers of any public official as a public official; Where
  2. the honest or impartial exercise of a public official’s functions or duties as a public official”.

Under section 8 of the bill, “corrupt conduct” would also include any conduct by a public official that:

  • constitutes or implies a breach of public trust;
  • constitutes, involves or is engaged for the purpose of abusing the person’s function as a public official;
  • constitutes or involves the misuse of information or documents acquired in his capacity as a public official;
  • constitutes, involves or engages in corrupt purposes of any other nature.

Some examples of behavior by public officials that do not meet these definitions are presented in the MI, including:

  • “the awarding of grants for the purpose of obtaining a political advantage or providing an advantage to a political donor may be considered partial and fall within the definition of an act of corruption”; Where
  • a senior official “may commit an abuse of authority if he uses his seniority to influence a decision-making committee composed of junior officials to make a decision that benefits a friend or family member”, even if the senior official does not directly benefit from this result.

Anyone in the public and private sectors can make an anonymous disclosure of the NACC as a whistleblower and is protected from retaliation under the bill, as well as immunity from civil, administrative and criminal liability. Private sector organizations may be exposed to legal and reputational risks where any disclosures made relate to their activities, or the conduct of those engaged in their activities, in connection with their dealings with the Commonwealth. There are also limits to any action a private sector organization can take against a whistleblower in this context, for example in relation to disclosing confidential information.

Four steps that public or private sector actors can follow

Most organizations will have some form of internal governance or probity to prevent corruption, but these should never be treated as ‘set and forget’. With the increased focus on probity and anti-corruption measures, and now the creation of the NACC and its broad powers, the risk is growing, and it is crucial that the public and private sectors are proactive in this space. Four steps you can take now to protect yourself are:

1. Ensure anti-bribery and anti-corruption policies are up-to-date and implemented: Good governance means having the best possible practices and systems in place to proactively identify, monitor, assess and respond to these risks, supported by regular and ongoing training of all members of the relevant government function or organization , from top to bottom.

Public sector organizations should also be aware that the range of public officials the NACC can investigate is extremely wide. The NACC’s scope of inquiry will extend to any staff of a Commonwealth agency, including Parliamentary offices, Commonwealth entities, Commonwealth businesses and their subsidiaries. This makes education, training and awareness of the obligations of public officials in terms of anti-corruption practices, probity requirements and management of conflicts of interest particularly important.

Start by making sure you have a clear and clearly articulated anti-bribery and corruption policy that sets out examples of what constitutes fraud and corruption, as well as steps for reporting any concerns.

2. Conduct a due diligence audit: Given the retroactive powers of the ANCC, consider a review of any past conduct such as any gifts given or received. This may result in the need to create and communicate a separate precaution regarding the introduction of NACC to all staff dealing with public officials, or a register of gifts and hospitality to ensure ongoing due diligence and transparency.

3. Encourage reporting of issues through internal whistleblower channels: Organizations providing services to the Commonwealth should ensure they have a strong whistleblower policy and program and support a ‘safe to speak out’ culture to encourage reporting. internal of any problem of corruption. This allows an organization to be at the forefront of taking steps to investigate and address any inappropriate conduct, including implementing legal or public relations strategies in response.

4. Have a response plan if your organization is compelled to provide information: Organizations should consider preparing a response plan that can be followed if they are required to provide information to the CNLS. This plan should include an organization-wide response, including key contacts and media strategies. In particular, public sector organizations should consider the need to prepare for scenarios in which the NACC will provide limited notice when seeking information from Commonwealth departments and agencies.

Organizations should also be aware that the Bill does not currently exempt organizations from providing information to the ANCC on grounds of legal professional secrecy, unless the document relates to advice or communications arising from advice, instructions or hearings of the ANCC. Protections also exist for legal advice given to journalists.