National Integrity Spotlight – January 2023

The inaugural National Integrity Spotlight highlights a number of key developments in the Federal integrity landscape in what is going to be a landmark year in this space. In this edition, we consider how organisations are preparing for the impending commencement of the National Anti-Corruption Commission (NACC) with reference to the Commonwealth Integrity Maturity Framework; measures taken by Australia to implement the UN Convention Against Corruption; an update on the sanctions imposed by the Australian Government against Russia; and the establishment of a Federal Judicial Commission.

What is the Commonwealth Integrity Maturity Framework, and how does it impact you?

The Australian Commission for Law Enforcement Integrity (ACLEI) recently released the Commonwealth Integrity Maturity Framework (Framework). The Framework has drawn together numerous Commonwealth statutory obligations and policies relevant to organisational integrity and follows an extensive consultation process with the aim of providing an accurate representation of the Commonwealth integrity landscape.

The Framework provides information to support agencies and organisations to design, implement and review the effectiveness of their integrity frameworks in a way tailored to their risk profiles, size and contexts. The Framework also offers resources to public sector entities to assess and plan to improve their integrity systems, especially in preparation for the commencement of the NACC, as well as the introduction of other integrity developments across the Commonwealth.

A range of products have been created by the ACLEI to support the Framework, such as:

1. eight Integrity Principles derived from the key Commonwealth integrity laws, policies and procedures. Each principle summarises the corresponding governance obligations and controls. For example, a key principle is the prevention, detection and management of fraud and corruption;
2. a Self-Assessment Guide to assist entities when undertaking a self-assessment of their integrity maturity; and
3. the ACLEI’s report, Towards Integrity Maturity: Mapping the Commonwealth integrity landscape, which describes the roles of the Commonwealth integrity agencies as well as the broad range of integrity-related laws, policies and procedures that govern the actions of Commonwealth officials and entities. The report is a useful resource for agencies to comprehend the various aspects of the Commonwealth integrity landscape.

While it is not compulsory for an entity to assess their integrity maturity, we would strongly encourage those organisations preparing for the establishment NACC to do so and are assisting client’s already to work through this process.

Update on measures taken by Australia to implement the UN Convention Against Corruption – Impacts on Business

In 2022 the UN Office on Drugs and Crime published the ‘Second Cycle’ report reviewing Australia’s implementation of its obligations under Chapters II (Prevention) and IV (Asset Recovery) of the UN Convention against Corruption.

The report made 13 recommendations. A number have already been addressed by the Federal Government’s legislative agenda prior to the publication of the report and in 2023 we can expect that further steps will be taken to improve Australia’s anti-corruption and anti-bribery framework.

We already know that the Federal Government has committed to introducing a public register of beneficial ownership in Australia as part of its multinational tax integrity package. A phased approach has been proposed, and initially only entities regulated under the Corporations Act 2001 (Cth) will be required to maintain a register (some parts of which will be available to the public) of individuals and entities which fall within the definition of a beneficial owner. While we know that the consultation period ended on 16 December 2022, a timetable implementing these initiatives is yet to be proposed.

In addition, the Federal Government is:

• considering amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) to ensure that designated non-financial businesses and professions (for example, lawyers, accountants, real estate agents (a 2021 inquiry by the Australian Senate revealed that criminals were exploiting the country’s real estate industry to launder billions of dollars through the housing market), insurance firms and sports and betting operations) are subject to anti-money laundering and counter terrorist financing obligations in line with FATF standards;
• reviewing the application of exemptions relating to the identification of beneficial owners and politically exposed persons contained in the AML/CTF Act to ensure no loopholes;
• working with the Remuneration Tribunal, the Independent Expenses Authority, Presiding Officers and the Department of Finance to implement the recommendations made in the Parliamentary Business Resources Act 2017 (Cth) and Independent Parliamentary Expenses Authority Act 2017 (Cth) review;
• holding an inquiry into the Public Interest Disclosure Amendment (Review) Bill 2022 (Cth) Submissions closed on 20 January 2023 and the senate report is due on 14 March 2023. This Bill will ensure immediate improvements to the public sector whistle-blower scheme are in place before the NACC commences in mid-2023.

Creation of the NACC does not respond directly to the 13 recommendations contained in the UN report, however we anticipate it will play a key role in bolstering Australia’s integrity arrangements.

The full impact on Australian businesses from the Federal Governments’ actions is yet to be determined. In the meantime, companies should:

• monitor the upcoming changes to Australia’s anti-bribery and anti-corruption framework with the knowledge that potentially significant changes are on the horizon; and
• be prepared to review internal policies and procedures in response to new laws and regulations.

Sanctions imposed by the Australia Government on Russia

In response to Russia’s invasion of Ukraine, the Australian Government has imposed targeted sanctions against Russia. These sanctions were first imposed in 2014 and extended in 2015 and 2022.

Currently, Australia imposes the following autonomous sanction measures against Russia on the following:

1. restrictions on the export or supply of certain goods – prohibiting the direct or indirect supply, sale or transfer to Russia of certain arms or luxury goods;
2. restrictions on the import, purchase or transport of certain goods – prohibiting the import, purchase or transport of goods relating to arms or energy products if they originate in or have been exported from Russia;
3. restrictions on certain commercial activities – prohibiting dealing with financial instruments issued by, or providing loans or credit to, certain Russian banks and companies;
4. restrictions on the provision of certain services – prohibiting services with relate to sanctioned goods or activities;
5. restrictions on providing assets to designated persons or entities – prohibiting providing any kind of assets to person or entities outlined in the DFAT website;
6. restrictions on dealing with the assets of designated persons or entities – the Minister for Foreign Affairs may designate a person or entity for targeted financial sanctions (i.e. freezing of assets) under certain circumstances; and
7. travel bans on designated persons – the Minister for Foreign Affairs may declare a person for a travel ban if they meet the above criteria for the freezing of assets.

Australian citizens or entities engaging in activities prohibited by the sanctions measures must either stop their activities or apply to the Minister for Foreign affairs and Trade for a sanctions permit. A sanctions permit, if granted, may be subject to further conditions.

The establishment of a Federal Judicial Commission

In August 2022, the federal Attorney-General tabled the Australian Law Reform Commission (ALRC) report, Without Fear or Favour: Judicial Impartiality and the Law on Bias (ALRC Report 138).

The report made 14 recommendations including the establishment a Federal Judicial Commission as an oversight mechanism to assist litigant and public confidence in judicial impartiality. On 29 September 2022, the Government provided its response to the ALRC’s report and agreed in-principle with the establishment of a Federal Judicial Commission.

On 17 January 2023, the Government released a discussion paper inviting submissions on the merits and design of a Federal Judicial Commission. Submissions in response to the discussion paper are asked to consider the following:

• the composition of a federal judicial commission, including ex officio appointments
• a decision making processes for circumstances where the members of a federal judicial commission cannot unanimously agree
• whether the scope of a federal judicial commission’s examination powers should include federal judges, justices of the High Court and former judicial officers
• the grounds for considering complaints and avenues to make complaints
• actions a Federal Judicial Commission may take when considering complaints
• the composition of an investigatory panel
• how a Federal Judicial Commission would complement or support the role of existing judicial education bodies

Submissions are due by 21 February 2023.

Are you ready for the NACC?

The long-awaited NACC is set to commence in mid-2023 and will have broad jurisdiction to investigate public sector corruption at the Federal level in Australia. With the establishment date fast approaching, we have a number of pieces of work available to assist your entity or organisation with preparedness.

Additional reading

Our Perth partner firm, Lavan Legal, are publishing a series of articles on the NACC. The first part can be found here.

Webinar on 6 March 2023

Join Daniel Maroske, Director and Anna Fanelli, associate, as they run through:

• the background to the NACC
• the powers and remit of the NACC
• why its introduction will help the national integrity landscape
• how to best prepare your agency or organisation for the onset of the NACC.

This webinar is aimed at all those working in, or closely with, federal government agencies, as well as those who have a strong interest in issues of integrity and corruption.

Register for the webinar here.

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Authored by:

Cinzia Lee Donald, Partner (Lavan)
Kathy Merrick, Partner
Kelly Griffiths, Partner
Daniel Maroske, Director
Anna Famelli, Associate
Kasia Jaruzelska, Associate
Sarah Maneckshana, Associate
Sophia Liu, Lawyer
Stefani Giangregorio, Lawyer