National Integrity Spotlight – August 2023

This edition of the National Integrity Spotlight considers the latest updates from the National Anti-Corruption Commission (NACC), former DPP Shane Drumgold’s proceeding against the Board of Inquiry, use of ChatGPT and generative AI within the Department of Defence, and recent Australian Federal Police operations. We also consider the South Australian Independent Commission Against Corruption (SA ICAC) report relating to governance within SA Health and the Independent Broad-based Anti-corruption Commission’s (IBAC) Corruption Perception Survey.

NACC Update

Referrals, assessment, and investigations

The NACC continues to report on referral, assessment, and investigation statistics on a weekly basis on its website. The NACC has reported that it received 908 referrals from 1 July to close of business on Monday 11 September 2023.

Since 1 July 2023, the NACC has made the following assessments:

• 310 referrals have been excluded at the triage stage (being the assessment of whether a referral is within the jurisdiction of the NACC and raises a corruption issue);
• 198 referrals are pending triage;
• 150 referrals are in active triage; and
• 145 referrals are under the second stage of investigation.

The NACC has also commenced a number of investigations. This includes the opening of 5 preliminary investigations, designed to assist the NACC in determining whether a corruption issue ought to be investigated further, with some investigatory powers available in the preliminary investigation stage. A further two investigations have been opened, one being a joint investigation with a state agency, and the NACC continues to work on 6 investigations commenced by the former Australian Commission for Law Enforcement Integrity.

Corporate Plan 2023-27

The NACC has published its inaugural Corporate Plan for the 2023-2027 period.

The Corporate Plan details that the priority for 2023-24 will be the establishment and refinement of the NACC’s processes associated with its key activities, developing increased understanding of its operating context and evolving its performance measures.

The five key activities of the NACC are:

• providing corruption prevention education and information;
• detecting corruption;
• receiving and assessing referrals of alleged corrupt conduct;
• conducting investigations into corruption issues that could involve serious or systemic corrupt conduct; and
• referring allegations of corrupt conduct back to Commonwealth agencies for investigation.

The Plan details the NACC’s strategies to create the capability it needs to undertake its key activities and achieve its purpose. It recognises that the number, capability, skills and experience of the NACC staff is critical to its ability to perform its key functions and fulfil its purposes.

The NACC has specified performance measures to enable its performance to be measured and assessed. The KPIs for 2023-27 include the average time for assessment of referrals and the average duration of finalised investigations – with baseline figures to be established in 2023-24.

Under the National Anti-Corruption Commission Regulations 2023 (Cth), the NACC must publish an annual report which provides a count of the NACC’s activity and output, including:

• the number of voluntary and mandatory referrals of corruption to the Commissioner;
• the total number of corruption issues dealt with by the Commissioner; and
• the number of corruption issues where the Commissioner decided to take no action.

A full list of the NACC’s reporting obligations can be found in the performance measures section of the Plan.

Shane Drumgold launches proceedings against ACT board of inquiry

On 21 December 2022, a Board of Inquiry into the Criminal Justice System in the Australian Capital Territory was announced. The Inquiry was established following the prosecution in R v Lehrmann to ensure that the framework for progressing criminal investigations and prosecutions is robust, fair and respects the rights of those involved. It was conducted by Mr Walter Sofronoff KC, who delivered the Final Report on 31 July 2023.

The Final Report contains several findings of misconduct against Shane Drumgold in his role as the ACT Director of Public Prosecutions, including that it amounted to an abuse of his position, that he lost all objectivity and that he deliberately advanced a false claim of legal professional privilege.

Mr Drumgold, who resigned following the release of the Final Report, has stated that he disputes many of the findings and has now commenced legal proceedings against the Board of Inquiry. The case is next listed for 21 September 2023 in the ACT Supreme Court.

Government use of Chat GPT

The Department of Defence recently responded to a Freedom of Information (FOI) request dated 17 July 2023 relating to use of artificial intelligence services on Defence networks and devices. The FOI request, made under the Freedom of Information Act 1982 (Cth), relates to the Defence’s use of OpenAI.com, including ChatGPT, in the period from 1 December 2022 to 30 June 2023. The request revealed that the total number of connections to OpenAI.com on Defence devices was 5,630. The decision maker indicated that Defence had not approved the use of OpenAI.com, ChatGPT, or similar services ‘to prevent a loss of control of classified or privacy information‘ and that ‘Defence uses security controls to restrict access to various internet sites, unless a legitimate business or operational requirement exists.’

There is currently no formal advice applicable across the Federal Government for the use of generative AI tools. Home Affairs Secretary, Michael Pezzullo, stated in the May Senate estimates hearing that such technology was ‘barred and suspended‘ within the Home Affairs department and advocated for a ‘whole-of-government approach’ to AI technology.

AFP Activities

Joint Policing Cybercrime Coordination Centre 

The Joint Policing Cybercrime Coordination Centre (JPC3), established in March 2022, is a partnership between the AFP, Australian State policing agencies, foreign law enforcement, government and the private sector. The JPC3 focuses on combatting the risk of cybercrime in Australia.

Following a report from the United States Secret Service, the JPC3 commenced an investigation into an organised cybercrime syndicate that resulted in losses of more than US$100 million worldwide. Six foreign nationals have been arrested in connection with the scam, which is alleged to have involved manipulation of electronic trading platforms designed for foreign exchange brokers. While the scam was predominantly based in the United States, investigations uncovered that alleged syndicate members were operating out of Brisbane and Sydney in August 2022. The investigation highlights the importance of collaboration, both nationally and internationally, in addressing transnational organised criminal groups’ use of cybercrime, and provides an example of the use of social engineering techniques in the manipulation of cybercrime victims.

Australian mining company investigated over alleged foreign bribery

In May 2023, the AFP-Led Criminal Assets Confiscation Taskforce (CACT) was granted consent orders by the Supreme Court of Victoria. The consent order provides for the following:

• a payment of a pecuniary penalty for $3.65 million;
• forfeiture of $5.71 million pursuant to the settlement agreement dated 28 April 2023, which represents agreement that the benefits that may have been derived from the conduct in question should be confiscated; and
• forfeiture of all future rights and entitlements to all ongoing payments pursuant to the settlement agreement.

The orders concern an Australian mining company, Oz Minerals Ltd, that self-reported to the AFP that employees of a foreign subsidiary may have bribed foreign officials to obtain mining rights. The company identified the alleged foreign bribery when it changed its personnel and governance systems, and actively engaged with the AFP to ensure the investigation proceeded and to remediate the alleged conduct.

Following the investigation, the Commonwealth Director of Public Prosecutions (CDPP) chose not to initiate criminal proceedings on public interest grounds. The CDPP made its decision with the reference to the AFP and CDPP’s Best Practice Guideline on Self-Reporting of Foreign Bribery and Related Offending by Corporations (Best Practice Guideline).

SA ICAC tables update to SA Health Governance report

On 29 August 2023, the South Australian Independent Commission Against Corruption (SA ICAC) report, Integrity Trade-off: An update on troubling Ambiguity: Governance in SA Health, was tabled in Parliament. This report is an update on the 2019 Troubling Ambiguity: Governance in SA Health report which was prepared in response to a corruption investigation undertaken into the conduct of a SA Health employee which was compromised due to maladministration of the agency to such an extent that criminal prosecution was not possible.

As a result of the Troubling Ambiguity report, SA ICAC investigated a number of clinicians that were alleged to have abused their entitlements. SA Health were not permitted to pursue disciplinary actions as it was highlighted that the relevant local health network ‘does not have an adequate framework in place to prevent misconduct and maladministration by its consultants nor is it able to by the development and implementation of local policies and procedures without changes to the Rights of Private Practice Agreement, the Memorandum of Understanding (MOU) and applicable enterprise agreements’.

In the Integrity Trade-off report, SA ICAC have recommended that SA Health:

• implement a policy that requires all staff, including clinicians, to complete their timesheets in a manner that accurately reflects their working hours;
• implement a policy governing clinicians’ rights of private practice so that it can accurately monitor when and where those rights are exercised, the income generated and the public resources used; and
• prepare a strategy to address deficiencies in the industrial arrangements relevant to clinicians’ time and attendance and rights of private practice and ensure that those matters are specifically addressed in advance of or at the time the enterprise agreements are next reviewed.

IBAC Corruption Perception Survey

On 29 August 2023, the Independent Broad-based Anti-corruption Commission (IBAC) published the findings of the 2023 Perceptions of Corruption Survey undertaken by Victorian Local Government Councillors (Councillors) and Victorian Members of Parliament (MPs). The key results of the IBAC Corruption Perception Survey indicating that:

• Councillors have a better understanding of how to report corruption than MPs, with only 61% of MPs indicating they know how to report corruption compared to 88% of Councillors;
• Councillors would be more inclined to report observed corruption than MPs, with only 64% of MPs stating they strongly agree that they would report corrupt behaviour compared to 82% of Councillors;
• a higher percentage of MPs consider corruption to be a problem among elected officials than Councillors, with 29% of MPs stating they strongly agree that corruption is a problem among elected officials compared to only 21% of Councillors; and
• some Councillors and MPs were unclear as to when inappropriate behaviour became corruption.

The results of the IBAC Corruption Perception Survey emphasised the importance of the recommendations made in IBAC’s Operation Sandon report, such as the need for improved training on governance, leadership, and integrity, and the implementation of a model Councillor Code of Conduct.

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Authored by:

Cinzia Donald, Partner (Lavan)
Kelly Griffiths, Partner
Daniel Maroske, Partner
Kathy Merrick, Partner
Anna Fanelli, Senior Associate
Kasia Jaruzelska, Senior Associate
Jethro Schoeman, Solicitor (Lavan)
Monica Baur, Paralegal
Max Drummond, Paralegal
Anastasia Tyshing, Paralegal