Public and private sectors beware – a powerful National Anti-Corruption Commission is coming

It’s not only the Federal public sector that should be getting ready for the National Anti-Corruption Commission (NACC); its wide reach and retrospective powers mean the NACC will have major ramifications for the private sector too.

For the public sector, the risk of being investigated is obvious; for the private sector, the scope of an investigation could be wide enough to include organisations who deal with the Commonwealth public sector and who are at risk of reputational damage and the financial costs of compliance. As we await the passage of the National Anti-Corruption Bill 2022, both public and private sectors should be taking action to strengthen their own internal protections against, and responses to, corrupt behaviour.

The NACC’s powers

The NACC will be empowered to investigate serious or systemic corrupt conduct across the entire Commonwealth public sector, including “any person” who adversely influences a public official.

Like other State and Territory corruption commissions across Australia, the proposed NACC is set to possess extraordinary powers similar to those of a royal commission. The proposed powers would include:

• to investigate both public and private sector targets, including ministers, parliamentarians, staffers, statutory officer holders and employees of all government entities, as well as third parties such as businesses and their employees;
• to investigate any conduct that adversely affects (or could adversely affect) the honesty or impartiality of a public official’s conduct, even if the conduct does not amount to any criminal offence, as long as it is considered to involve “serious or systemic” conduct;
• to operate independently of Government with a discretion to start investigations on its own initiative or in response to referrals (including anonymous referrals from whistleblowers and the public);
• to compel the production of documents and information, obtain warrants to search premises and seize evidence, enter certain Commonwealth premises without a search warrant, use surveillance devices, intercept telecommunications, and compel witnesses to attend hearings to answer questions under oath if necessary; and
• to investigate allegations which occurred before its establishment.

Hearings, findings and referrals

Ahead of the introduction of the legislation, concerns had been raised about the NACC’s ability to hold public hearings or “show trials”, giving rise to the risk of significant damage to reputation.

Under the draft Bill, the NACC will have the power to hold public hearings in “exceptional circumstances” and where it is in the “public interest” to do so. These matters will be left to the discretion of the Commissioner who may consider any factor that is relevant to reaching a decision. In this regard, the draft Bill proposes a mechanism that is different to its counterpart in New South Wales, the Independent Commission Against Corruption, which requires the agreement of the Chief Commissioner and at least one other Commissioner before a public hearing is held.

The NACC will be empowered to make findings of fact, including findings of corrupt conduct, and refer findings which could constitute criminal conduct to the Australian Federal Police or the Commonwealth Director of Public Prosecutions. It will operate with procedural fairness and its findings will be subject to judicial review, and oversight by a statutory Parliamentary Joint Committee.

Although the NACC will operate with procedural fairness, it is axiomatic that the procedures used by corruption commissions are starkly different to court processes. For example:

Corrupt conduct and corruption issues

The Explanatory Memorandum (EM) states that the definition of “corrupt conduct” is not intended to establish a new standard of conduct by public officials or alter the relationship between those officials and the public as reflected in Australia’s system of representative and responsible government.

Under section 8 of the Bill, “corrupt conduct” is defined to include:

“(a) any conduct of any person (whether or not a public official) that adversely affects, or could adversely affect, either directly or indirectly:

1. the honest or impartial exercise of any public official’s powers as a public official; or
2. the honest or impartial performance of any public official’s functions or duties as a public official.”

Under section 8 of the Bill, “Corrupt conduct” would also include any conduct of a public official that:

• constitutes or involves a breach of public trust;
• constitutes, involves, or is engaged in for the purpose of abuse of the person’s office as a public official;
• constitutes or involves the misuse of information or documents acquired in the person’s capacity as a public official;
• constitutes, involves or is engaged in for the purpose of corruption of any other kind.

Some examples of conduct by public officials that fall foul of these definitions are set out in the EM, including:

• “an allocation of grants for the purpose of gaining political advantage, or to provide a benefit to a political donor may be considered partial and within the definition of corrupt conduct”; or
• a senior public servant “may engage in an abuse of office if they use their seniority to influence a decision-making panel comprised of more junior public servants to make a decision that benefits a friend or family member” even if the senior public servant does not directly benefit from that outcome.

Any person in both the public and private sector can make an anonymous NACC disclosure as a whistleblower and is protected from reprisal action under the draft Bill, as well as having immunity from civil, administrative and criminal liability. Private sector organisations may be exposed to legal and reputational risks where any disclosures made relate to their business, or the conduct of those who are engaged in their business, in the course of their dealings with the Commonwealth. There are also limitations on any action a private sector organisation can take against a whistleblower in this context, for example in respect of the disclosure of confidential information.