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Developments in Anti-Fraud and Corruption Regulation

Following the launch of Bartier Perry’s Organisational Fraud and Corruption practice, this bulletin provides an update on some new developments in the law concerning the regulation of corruption and public interest disclosures to assist our organisational and government clients with understanding their rights and obligations. 

The National Anti-Corruption Commission 

On 1 July 2023, the National Anti-Corruption Commission (NACC), an independent Commonwealth agency, was established to detect, investigate, and report on serious or systemic corrupt conduct in the Australian Government public sector. Through the National Anti-Corruption Commission Act 2022 (NACC Act), the NACC aims to address growing public distrust of the federal government and other public institutions through its investigations.

What is corrupt conduct? 

There are four types of corrupt conduct that can be investigated by the NACC. A person is considered to have engaged in corrupt conduct if: 

  1. They are a public official and they breach public trust

  2. They are a public official and they abuse their office

  3. They are a public official or former public official and they misuse information they have obtained in their capacity as a public official

  4. They do something that could cause a public official to behave dishonestly or in a biased way when carrying out their official duties.

‘Serious’ or ‘systemic’ corrupt conduct is not defined by the NACC Act and is left to the National Anti-Corruption Commissioner (Commissioner) to determine whether the matter could involve ‘serious’ or ‘systemic’ corrupt conduct. In this way, there is a high degree of discretion afforded to the Commissioner.

Who can the NACC investigate? 

The NACC can investigate any matters involving a Commonwealth public official which could raise the possibility that a person has done or could do something that amounts to both corrupt conduct under the NACC Act and also is conduct that is serious or systemic corrupt conduct as determined by the Commissioner. 

The NACC may also investigate service providers who have contracts with Commonwealth agencies for the provision of goods or services. 

Who can’t the NACC investigate? 

The NACC cannot investigate concerns relating to a ‘State or Territory government entity’. This includes local councils and any bodies established for a public purpose under a law of a State or Territory. Even if a Commonwealth agency enters into a contract with a State or Territory government entity for the provision of goods or services, they are expressly excluded from the definition of a ‘contracted service provider’ under the NACC Act and cannot be investigated. State or Territory government entities may, however, be investigated by their respective anti-corruption bodies or authorities, such as the NSW Independent Commission Against Corruption. 

Who can refer to the NACC? 

Anyone can voluntarily refer a matter or provide information about a corruption issue to the NACC, however, Commonwealth agency heads and public disclosure officers are mandatory reporters under the NACC.

Reports can be anonymous and any person who makes a referral to the NACC is exempt from civil, administrative, or criminal liability arising from the disclosure. It is a criminal offence to take any adverse action against a person who makes a referral, provides information, or gives evidence to the NACC. 

Investigative process

Once a referral is made, the NACC conducts a preliminary investigation to determine how the matter should be dealt with. If the referral concerns serious or systemic corruption, the NACC can investigate the matter alone or in conjunction with a Commonwealth agency or State or Territory government. 

In the course of conducting its investigations, the NACC can apply for search warrants, require persons to give evidence, issue directions to agencies to cease a specific action or produce information or documents. Notably, the NACC can enter any Commonwealth agency premises, without a warrant, to inspect any relevant documents and carry out an investigation on the premises.

Under the NACC Act, a person cannot rely on the privilege against self-incrimination in a NACC hearing. However, any information given during a NACC hearing that may expose a person to a penalty will not be admissible in criminal proceedings. 

Similarly, a person generally cannot rely on legal professional privilege to avoid providing information or documents to the NACC. Adequately qualified advice is best sought as early as possible by anyone the subject of NACC investigations and hearings in order to protect their interests.

More to come.. 

Having only been established on 1 July 2023, the effect and impact of the NACC on corrupt conduct and public distrust in the federal government is yet to be seen. Within three days of opening, the NACC is reported to have received 44 referrals. 

It will be interesting to see how the NACC responds to those referrals and who the referrals concern. 

Reforms to Public Interest Disclosures Legislation 

In addition to the newly formed NACC, recent reforms to New South Wales’ public interest disclosures legislation are set to come into effect on 1 October 2023. The Public Interest Disclosures Act 2022 (PID Act), which rewrites the former Public Interest Disclosures Act 1994 (PID Act 1994), was introduced in response to two separate joint Parliamentary Committee reviews which made recommendations for reform aimed at: 

a)    simplifying the disclosure process
b)    improving protections for whistle blowers
c)    preventing technicalities which resulted in unprotected disclosures.

Whilst the PID Act has the same objective of encouraging and facilitating the disclosure of wrongdoing in the public sector, the new legislation is more comprehensive, contains fewer hazards and greater protections, and imposes a duty upon agencies to deal with disclosures in an appropriate and clearly defined manner. 

What is a public interest disclosure and how does the PID Act differ? 

Public interest disclosures concern ‘serious wrongdoing’ in the public sector.

The PID Act redresses several issues in the former PID Act 1994 by:

  • Reformulating the legislation to avoid public officials being excluded from protections on technical grounds.

  • Establishing a safety net provision that confers power onto the head of an agency to deem a disclosure a “public interest disclosure” even if it does not meet all of the legislative requirements.

  • Reducing the threshold to trigger protections for public officials from detrimental action being taken against them if they are suspected to have made a public interest disclosure.

  • Aligning the protections available under each integrity agencies’ legislation, such as the legislation governing ICAC, to ensure those making relevant disclosures under those Acts receive protections that are largely equivalent to the protections provided by the PID Act.

  • Establishing an express duty on agencies to investigate or refer a public interest disclosure, provide training to employees on public interest disclosures, and to undertake risk assessments and corrective action when necessary.

  • Making agencies statutorily liable for any injury, damage or loss suffered by a person as a result of a failure to comply with their statutory risk management obligations.

  • Making it easier for public officials to make public interest disclosures without fear of losing their protections should an error in disclosure be made. 

Whilst the dust settles and the impacts of these developments continue to unfold, we recommend that our organisational, government and public sector clients familiarize themselves with the recent developments and seek advice to ensure their internal policies adequately correspond to the current state of play.

Bartier Perry’s organisational fraud and corruption practice is well positioned to act in matters concerning the NACC and public interest disclosure. Please contact us for confidential advice.  

Authors: Gavin Stuart, Darren Gardner, David de Mestre and Ellah Glynn Yosef