National Integrity Spotlight – November 2023

In this month’s edition of the National Integrity Spotlight, we consider the most recent updates from the NACC, developments from various state corruption and integrity bodies, and potential amendments to the AML/CTF Rules.

NACC Update

Referral and Assessment Update

The National Anti-Corruption Commission (NACC) continues to provide regular updates on the number of referrals received, the assessment process, and investigations underway.

Key data, from 1 July until 10 December 2023, includes:

• 2,290 referrals were received;
• 1,722 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;
• 153 referrals are pending triage;
• 165 referrals are currently under assessment;
• 14 preliminary investigations have been opened;
• nine new investigations have been commenced; and
• four corruption issues have been referred to Commonwealth agencies for further investigation.

National Public Sector Governance Forum 2023

On 21 November 2023, Commissioner Paul Brereton delivered an address at the Governance Institute of Australia’s National Public Sector Governance Forum.

As part of his address, the Commissioner provided some insight into the priorities of the NACC, indicating that it is unable to investigate every corruption issue that is referred, and that priorities are directed to matters where an investigation by the NACC will add value in the public interest. Generally speaking, these will be matters that involve senior public officials, have a significant impact on public interest, or involve systemic corrupt conduct. In other instances, however, an investigation may be pursued where it has the potential to ‘clear the air’ and restore public confidence.

SA ICAC undertakes review of commercial grants

On 28 November 2023, the South Australian Independent Commission Against Corruption (SA ICAC) tabled a report into grants administration entitled ‘Evaluation of grants administration: Phase one: Commercial grants’. Grants administration is identified as an area with a high risk for corruption, with risks arising due to potential conflicts of interest between those administering grants and grant recipients, grant administrators having secondary employment or financial interests in grant recipients, the availability of post-separation employment with grant recipients, and the possibility of gifts, benefits or bribes being offered used to influence grant administrators. The SA ICAC has previously investigated allegations, and the risk of exploitation in the award of government grants is contemplated in the Code of Ethics for the South Australian Public Sector.

Overall, the SA ICAC found appropriate practices, policies, and procedures involved in the grant administration processes in the two departments the subject of its report. While there was variation in the ways in which the departments managed their grants administration, the approach between the departments was broadly consistent. The SA ICAC has issued 29 recommendations issued to encourage the departments to uplift their grants administration practices, primarily relating to the management of conflicts of interests and the protection of sensitive materials and information.

NSW ICAC Operation Tolosa

On 13 December 2023, the City of Canada Bay Council removed mayor Angelo Tsirekas from the Council following the New South Wales Independent Commission Against Corruption’s (NSW ICAC) findings that Tsirekas engaged in serious corrupt conduct. Mr Tsirekas has also been banned from holding public office for five years.

On 9 December 2023, the NSW ICAC published its report on its investigation into Mr Tsirekas’ conduct over the period from November 2015 to February 2019, entitled ‘Investigation into the conduct of the City of Canada Bay Council mayor and others (Operation Tolosa)‘. The NSW ICAC found that Tsirekas engaged in corruption by accepting benefits from a developer and its agent, amounting to at least $18,800, as inducements for using his official functions to favour the developer’s interests. The benefits included overseas flights and accommodation, as well as an interest-free loan.

In making the above corruption determinations, the NSW ICAC found that Tsirekas deliberately failed to disclose a conflict of interest related to the developer and its agent, which he knew he was required to do. The Commission recommended Tsirekas’ removal from public office, citing the gravity of the corrupt conduct.

The NSW ICAC made four corruption prevention recommendations to help the NSW Department of Planning and Environment (Department) prevent the recurrence of the conduct exposed in this investigation, including that the Department amends the Model Code of Conduct for Local Councils in NSW to specifically require councillors to disclose political donations received under electoral laws of the Commonwealth, or another state or territory, as non-pecuniary conflicts of interest.

The NSW ICAC has sought advice from the Director of Public Prosecutions for potential criminal charges against Tsirekas and the agent, among others.

Amendments to whistleblower protections in the Northern Territory

Following amendments to the Independent Commissioner Against Corruption Act 2017 (NT) (NT ICAC Act), whistleblower protections in the Northern Territory will substantially change. Among the changes is the creation of an offence for disclosing the identity of a protected person, except in particular circumstances. The new provision is targeted at protecting the identity of protected persons who may otherwise suffer retaliation or suffer unfair damage to their reputation. The maximum penalty for the offence is 400 penalty units or imprisonment for two years.

With the new changes set to commence on 2 January 2024, NT ICAC has announced it will release new directions, guidelines and training in relation to the new responsibilities. From the date of commencement, public bodies will then be given a period of 6 months to implement those directions and guidelines before NT ICAC will commence evaluations for compliance.

Western Australia CCC Review of TRELIS System

The Transport Executive and Licensing Information System (TRELIS) is a Western Australian government owned and shared database. TRELIS is used to facilitate the delivery of vehicle and driver licensing and registration services across WA.

On 9 November 2023, the Western Australian Crime and Corruption Commission (WA CCC) released a report that outlines their review of the system.

As part of this review, the WA CCC found that users were accessing the system to:

• view their own driver licence details,
• renew family member’s vehicle registrations, and
• obtain information to share with family or friends.

The WA CCC confirmed that unlawful accesses to TRELIS, was in breach of section 41 of the Corruption, Crime and Misconduct Act 2003 (WA) (CCM Act).

The WA CCC made a number of recommendations to the Department of Transport to improve its management of the serious misconduct risks associated with the access of information in TRELIS.

The report comes as a strong reminder that accessing information can be a criminal offence if the access is not in accordance with the authorisation provided, regardless of whether the user obtains a benefit, confers a benefit, or intends to obtain a benefit or cause a detriment.

Victoria to establish integrity commission to address MP misconduct

The Victorian Government is seeking to establish a Parliamentary Integrity Commission (PIC) tasked with investigating allegations of misconduct by MPs, ministers and parliamentary secretaries. The PIC will be able to investigate reports of bullying, occupational violence and aggression, harassment, sexual harassment, discrimination or victimisation by a MP that occurs in connection with a parliamentary workplace. At the moment, Parliamentary rules are largely ineffective in policing this type of behaviour.

The PIC will comprise of three commissioners serving a maximum five-year term appointed by the Governor-in-Council on the advice of the responsible minister. Individuals who have recently been a MP or a member of a political party will be ineligible to serve as PIC commissioners. Any individual will be able to make a report to the PIC which will be empowered to investigate.

The proposed Bill, still in its consultation phase, will empower the PIC with a range of sanctions to resolve parliamentary workplace misconduct matters, with serious misconduct sanctions requiring a special majority of Parliament to be imposed, with potentially more to be finalised. The PIC will also keep check on MP’s entitlements and can refer series matters to IBAC and the Police.

Proposed amendments to AML/CTF Rules

The Australian Transaction Reports and Analysis Centre (AUSTRAC) recently commenced a consultation process regarding its proposed draft amendments to the Anti-Money Laundering and Counter-Terrorism Financing Rules (Draft AML/CTF Rules) to exempt the issue or sale of securities and derivatives on certain low-risk, domestic financial markets. Specifically, AUSTRAC’s proposed changes in the Draft AML/CTF Rules provide that:

• the Australian Securities Exchange Limited (ASX) is not a ‘prescribed financial market’ under the Corporations Act 2001 (Cth); and
• that the ASX and Fex Global, an Australian Market Licence Operator for energy, environmental, and commodity derivative products, is an ‘exempt financial market’.

Some of the reasons for these proposed changes in the Draft AML/CTF Rules are that:

• the current Anti-Money Laundering and Counter-Terrorism Financing Rules provide exemptions for the issuing or selling of securities or derivatives in certain circumstances, including on certain financial markets where there is no reasonable way for the issuer/seller to know the identity of the buyer; and
• there is a low Anti-Money Laundering and Counter-Terrorism Financing risk in respect of FEX Global, as well as FEX Global’s difficultly associated with identifying a buyer.

The Draft AML/CTF Rules opened for public comment on 15 November 2023 closed on 13 December 2023.

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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
Kasia Jaruzelska, Senior Associate
Emma Bolton, Solicitor (Lavan)
Jethro Schoeman, Solicitor (Lavan)
Lachlan Clarke, Vacation Clerk