National Integrity Spotlight – August 2024

In the latest edition of the National Integrity Spotlight, we consider the most recent updates from the NACC, new
foreign-bribery guidance for corporations, and updated statistics on Commonwealth fraud, as well as updates from the various state integrity bodies.

NACC Update

Referral and Assessment Update

The NACC continues to provide regular updates on the number of referrals received, the assessment process, and investigations underway.

Key data from 1 July 2024 through to 15 September 2024 indicates that:

• 513 referrals were received;

• 410 referrals were excluded at the triage stage of assessment as they did not involve a Commonwealth public official or did not raise a corruption issue; and

• one joint investigation was closed, with a determination that no corrupt conduct was likely to be found.

The NACC has also indicated that:

• it is currently conducting 32 preliminary investigations;

• it has 480 referrals pending assessment;

• six matters are currently before the courts; and

• 28 corruption investigations, including seven joint investigations, are being conducted.

Further sentencing in Operation Barker 

On 19 August 2024, an individual was sentenced to three years and 14 days imprisonment for paying a bribe to a former ATO employee to reduce millions of personal and business debt. This conviction, for contraventions of sections 141.1(1) and 142.1(1) of the Criminal Code (Cth) for bribing a Commonwealth public official and giving corrupting benefits to a Commonwealth public official, follows the sentencing of the former ATO employee in March 2024 (which we covered in the March 2024 edition of the National Integrity Spotlight).

This conviction is the second stemming from Operation Barker.

Commonwealth Integrity Survey

On 19 August 2024, the NACC commenced its Commonwealth Integrity Survey, which is set to run until 20 September 2024.

The purpose of the survey is to allow the NACC to identify and measure various trends relating to corruption and integrity within the Commonwealth public sector.

2024-25 Strategic Corruption Priorities

On 6 August 2024, the NACC published the 2024-25 strategic corruption priorities. The NACC considers that focusing on these areas will have the greatest potential impact on corruption in the Commonwealth public sector. The NACC’s priorities stem from its intelligence gathering and analysis of data, as well as from its engagement with stakeholders.

The NACC indicates that this:

• allows for cohesion and consistency in relation to the NACC’s activities;

• assists with prioritisation; and

• provides direction to proactive efforts.

The priorities for 2024-25 are:

• corruption that affects vulnerable people, including those with disability and Aboriginal and Torres Strait Islander people, as this impacts the availability and quality of government support for these people, and amplifies systemic disadvantages;

• corruption at the border that exposes Australia to serious harms, including threats to national security and criminal activities;

• corruption in senior public officials’ decision-making that can have economic and social impacts, including perceived corruption, and reduce the public’s trust in government;

• corruption relating to contractors of and consultants to government, particularly given their access to sensitive information, and the risk of misuse of information for their own benefit;

• corruption in complex procurements that can result in substantial financial loss and waste, decreased service quality and reduced confidence in government, stemming from the high value of the government procurement industry, limited pool of groups who possess niche expertise, and complexity of funding and governance arrangements; and

• corruption in the environmental sector, which is an area of risk due to the tension between economic and environmental interests.

The NACC is expected to expand further on the corruption priorities in its 2024-28 Corporate Plan.

Operation Meda conviction

On 10 September 2024, a former Serco officer was sentenced to two years and six months in jail for the offence of abuse of public office related to his role in assisting a detention centre detainee to access drugs. In exchange for his assistance, the former officer received payments totalling $11,150.

It was determined that the officer and detainee exchanged more than 1,800 messages relating to the purchase and supply of methamphetamines, cannabis, as well as other contraband goods over the course of four months. Various attempts to deliver the goods, such as the use of a drone, throwing over a fence, or use of a courier, were considered. Of particular note was the significant volume of communication between the parties, as this was determined to demonstrate ‘a serious breach of public trust afforded to Commonwealth public officials in performing their official duties.’

This conviction results from Operation Meda, which was commenced by the former Australian Commission for Law Enforcement Integrity, and the Department of Home Affairs.

NACC makes statement on outcome of referral of former ASIC Deputy Chair

On 12 September 2024, the NACC made a statement relating to the referral of the former ASIC Deputy Chair, Ms Karen Chester. The NACC received a referral from a member of the public in August 2023 related to allegations that the then Deputy Chair of ASIC, Ms Karen Chester, had shared market-sensitive information with Mr John Hempton, and that this conduct ultimately led to unfair market advantages and undue financial benefits for some individuals and companies, and losses for others. It was also alleged that Ms Chester deleted the relevant messages and acted improperly in doing so. These allegations received media attention in February 2024 as a result of an FOI application from the individual who initially referred to the matter.

The NACC’s statement set out that the NACC had, at no time, commenced an investigation into Ms Chester, but noted that a preliminary investigation was undertaken in relation to the referral. Through the course of the preliminary investigation, it was determined that there was no evidence that Ms Chester had shared market-sensitive information, or that she improperly deleted messages or other information. As a result, the NACC determined that no further information should be taken in relation to the referral.

Attorney-General releases guidance for corporations relating to foreign bribery prevention

On 28 August 2024, the Attorney-General published its ‘Guidance on adequate procedures to prevent the commission of foreign bribery’, which follows the introduction of the new corporate offence of failing to prevent foreign bribery. The guidance, which is principles-based, incorporates feedback from a public consultation process, and is principles based, outlining steps that corporations can take to ensure they have an effective anti-bribery compliance program.

The guidance sets out six elements to assist corporations to establish adequate procedures:

1. Fostering a control environment to prevent foreign bribery;
2. Responsibilities of top-level management;
3. Risk assessment;
4. Communication and training;
5. Reporting foreign bribery; and
6. Monitoring and review.

Victorian Independent Broad-based Anti-Corruption Commission (IBAC)

Individuals charged relating to Operation Perseus 

On 7 August 2024, the IBAC conducted searches of several premises under warrant as part of the ongoing Operation Perseus investigation, which aims to uncover and address corruption within the Victorian Building Authority (VBA). These searches led to two VBA employees being charged with offences relating to accepting financial benefits relating to the assessment of builder registrations. The IBAC noted that the investigation remains ongoing.

New South Wales Independent Commission Against Corruption (NSW ICAC) 

NSW ICAC guidance regarding conflicts of interest 

On 31 July 2024, Chief Commissioner the Honourable John Hatzistergos AM delivered a speech at Australian Public Sector Anti-Corruption Conference, focused on relationships that may give rise to a conflict of interest within NSW and based on NSW ICAC’s position.

Through his presentation, the Chief Commissioner referred to various previous NSW ICAC matters where conflicts of interest and conflicts of duties were central, and the key learnings that resulted, including:

• the specific challenges in rural and regional locations, where tight-knit communities can easily create conflicts of interests;

• whether a social media connection indicates the existence of a personal relationship or not;

• the way in which relationships involving frequent personal contact can result in conflicts of interest and corrupt conduct;

• the risk that unmanaged conflicts of interests and conflicts of duties can have on the integrity of public authorities; and

• the key distinction between conflicts of interest and conflicts of duties.

The Chief Commissioner ended his presentation with the following key messages

• conflicts of interest need to be avoided where possible and disclosed and managed where they are unavoidable;

• the trigger for disclosure of a conflict of interest or duties is the reasonable person’s perception of possible influence;

• management is essential to protect the public interest and public trust in government, but other prevention and detection measures need to be in place for when people choose to favour their personal interests; and

• there are a wide range of relationships that can amount to a personal interest and a conflict of interest, and it is the nature, intensity and duration of the relationship that need to be considered.

South Australian Independent Commission Against Corruption (SA ICAC)

On 27 August 2024, it was announced that five reports produced by the SA ICAC had been tabled in Parliament, with a sixth report tabled on 29 August 2024. The tabled reports were:

• The Inside Advantage: Managing corruption risks in recruitment processes involving internal candidates, which highlights areas for improvement and ways that the recruitment process can be uplifted when internal candidates are involved;

• The Gatekeepers: Corruption risks with ministerial advisers, which makes recommendations aimed at strengthening recruitment, induction, training, governance, and accountability as it relates to ministerial staff;

• When duty calls, who is responding? which examines the reluctance of police officers to provide affidavits and participate in SA ICAC investigations in matters that relate to the conduct of police officers;

• Grants administration: Final report, which makes various observations on grants management, and highlights potential areas of reform in the governance of public sector grants;

• A Dependent Commission Against Corruption, which highlights the difficulties associated with the SA ICAC’s inability to directly refer matters to the Director of Public Prosecutions, including that the SA ICAC is the only integrity body in Australia that is prohibited from directly briefing a prosecuting authority; and

• The Room Where it Happens: Lobbying and Influence in South Australia, which highlights limitations in the existing lobbying scheme, the way in which lobbying activity is regulated, and provides 31 recommendations directed towards addressing the various areas for improvement.

Tasmania Integrity Commission (TIC)

On 5 August 2024, the TIC commenced a public consultation relating to corruption and the misuse of resources in the election process. This consultation stems from a series of research papers relating to potential misconduct risks in parliamentary elections. The purpose of the research paper series is to communicate misconduct risks and promote discussions on potential solutions.

Western Australia Corruption and Crime Commission (WA CCC)

WA CCC release 2024-27 strategic plan

On 27 June 2024, the WA CCC published its Strategic Plan for 2024-27 which outlined its key focus areas and initiatives and underscores the WA CCC’s commitment to reducing corruption and enhancing public safety in Western Australia.

The strategic plan states its strategic focus areas and initiatives as being:

• Capable and engaged workforce, including maximising opportunities for collaboration, teamwork, and decision making, as well as strengthening retention of staff;

• Profile and impact, being that it will use opportunities to engage with both the community and the sector in a meaningful way, including the development of a stakeholder engagement approach and introduction of innovative approaches;

• Oversight of the WA police force, including reinforcement of the integrated approach for police oversight, including identification of opportunities to expand the Prevention and Education function of the WA CCC, and increase the scrutiny of the use of police powers;

• Disruption of criminal activity, being expansion of methods for disruption and reducing financial incentives for criminal activity, including fostering operational partnerships with external stakeholders and facilitating the use of organised crime powers; and

• Contemporary operating capabilities, ensuring that the WA CCC has a strong governance framework that includes contemporary capability, including the implementation of solutions to deliver on strategic intent and an integrated governance framework.

Australian Institute of Criminology report on fraud against the Commonwealth 

The Australian Institute of Criminology (AIC) has released statistics relating to fraud committed against the Commonwealth in the 2022-23 financial year. In 2022-23, the estimated cost of fraud against the Commonwealth was $161,032,745, which represented a decrease from the 2021-22 financial year, in which the estimated cost of fraud was $201.2 million.

In the 2022-23 financial year, there were 378,033 allegations of fraud received or detected by Commonwealth entities, of which 96.9% related to external fraud, which is similar to the findings of the 2021-22 census, which found 83% of fraud related to fraud committed by individuals outside of organisations.

In 2022-23, 94% of internal fraud cases were identified by automatic processes (such as software), employee detection, or internal tip-offs (52%, 28%, and 14% respectively), whilst 83% of external fraud cases were identified by employee detection, reports by fraud victims, external tip-offs, and automatic processes (35%, 19%, 15%, and 14% respectively).

Finally, following investigations, two percent of cases involving internal fraud, and 14% of external fraud cases were referred to state or federal police, or other agencies (compared to three percent and 17% in 2021-22).

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Authored by:
Cinzia Donald, Partner (Lavan)
Kelly Griffiths, Partner
Daniel Maroske, Partner
Kathy Merrick, Partner
Jack Tipple, Special Counsel
Anna Fanelli, Senior Associate
Gabrielle Shina, Associate
Ellie Pitcher-Willmott, Lawyer
India Weddin, Paralegal
Kristy Yeoh, Special Counsel (Lavan)
Freya Surma-Litchfield, Graduate (Lavan)