What does National Anti Corruption Commission mean for Australian companies and government entities
04 October 2022
04 October 2022
There are three pathways for corruption issues to come to the NACC:
a) Commonwealth agency: an agency head will be obliged to refer a corruption issue to the NACC once they become aware of an issue concerning the conduct of a previous and/or existing staff member which could involve serious or systemic corrupt conduct.
b) Any other person or entity: any person or entity can voluntarily refer a corruption issue, or provide any other relevant information, to the NACC. These referrals are covered by the whistle-blower protection provisions in the Bill, discussed below.
c) Own motion investigations: the Commission will have the power to commence investigations on its own motion (i.e. without having received a referral or tip off from anyone). For example, it could commence investigations on matters that come to its attention through media reporting or in the course of investigations into other topics.
The NACC will have discretion to commence an investigation into issues that the NACC considers could involve serious or systemic corrupt conduct. This includes any serious or systemic corrupt conduct that occurred before the NACC's commencement.
The scope of 'corrupt conduct' is broad. It includes, but is not limited to:
a) criminal corrupt conduct (e.g bribery and criminal offences contained in Part 7.6 of the Criminal Code 1995 (Cth));
b) the conduct of any person that adversely affects (or could adversely affect) a public official from honestly or impartially exercising or performing their powers, functions or duties; and/or
c) the conduct of a public official that constitutes or involves: a breach of public trust; an abuse of the person's office as a public official; the misuse of information or documents acquired in the person's capacity as a public official; and/or corruption of any other kind.
The NACC will have preliminary investigation powers to enable it to confirm the existence or nature of the corruption issue and/or to assist the NACC determine how to deal with the corruption issue.
The Bill provides the NACC with three central information gathering powers.
Notice to produce: The NACC may issue a notice to produce if there are reasonable grounds to suspect that a person has information, a document, or anything else that is relevant to a corruption investigation. Notices to produce may be issued to both government entities as well as individuals (including employees and whistle-blowers), and private sector entities.
Search powers: Subject to some limited exceptions, the NACC may enter any premises occupied by a Commonwealth agency to: inspect, copy, or take any extracts of documents relevant to the corruption investigation; or seize documents or anything that the NACC believes on reasonable grounds is relevant to an indictable offence and the seizure of the document is necessary to prevent its concealment, loss, or destruction. The NACC will also have the power to seek and execute search warrants in respect of non-government premises.
Public and private hearings: Most notably, the NACC may hold public or private hearings (or a combination of both).
As a default, hearings about alleged corrupt conduct must be conducted in private unless the NACC decides to hold the hearing (or part of the hearing) in public. The NACC may hold the hearing, or part of the hearing, in public only if the NACC is satisfied that there are exceptional circumstances that justify the public hearing, and that it is in the public interest to do so.
While not exhaustive, the NACC will take into account: the extent to which the evidence is of a confidential nature; whether a public hearing is unfairly prejudicial to a person's reputation, privacy or safety; whether a person giving evidence has a particular vulnerability; the overall benefit of exposing corrupt conduct to the public; and if there are any circumstances suggesting evidence must be given in private (e.g the giving of evidence would breach a secrecy provision, or the evidence discloses legal advice or any other information that the NACC is satisfied is sensitive).
This 'default' to private hearings for alleged corrupt conduct, and the high bar for conducting public hearings, has received criticism from various quarters following release of the Bill, with commentators arguing that the 'exceptional circumstances' requirement for public hearings is too onerous a standard.
The NACC must prepare an investigation report once an investigation is complete. The report must set out the NACC's finding or opinion on the corruption issue; summarise the relevant evidence and information on which that finding or opinion is based; and provide any recommendation that the NACC thinks fit to make, along with the associated reasons for the recommendation. If the NACC forms a view that no corrupt conduct has occurred, that must be stated in its report.
While the Bill enables the NACC to make findings of fact and express opinions in the report, these will not involve a determination of criminal liability. The NACC should refer the evidence of alleged criminal conduct to the relevant agency (for example, the Australian Federal Police) for further consideration.
If the NACC proposes including in an investigation report an opinion, finding or recommendation that is critical (either expressly or impliedly) of an individual or agency, the NACC is obliged to provide a reasonable opportunity for the person or agency to respond to the opinion, finding or recommendation before publishing the report, and must include in the report a summary of the response if requested.
Once the report is finalised (including incorporating the person or agency's response, if applicable), the report must be provided to the appropriate Minister and, if one or more public hearings were held during the course of the NACC's investigation, tabled in Parliament.
The Bill provides certain protections for participants in a NACC investigation.
The Bill provides that a witness is entitled to make submissions as to why evidence should be given in private. Where a public hearing is held, the Commissioner may invite submissions on matters that are the subject of the inquiry.
Witnesses giving evidence to the NACC may be legally represented.
Legal professional privilege is not an excuse for failing to give an answer or information or produce a document to the NACC. However, the Bill provides that the advice or communication does not cease to be the subject of legal professional privilege merely because it is disclosed to the NACC.
Similarly, the Bill provides that a person is not excused from providing an answer or information at a hearing, or producing documents or material required under a notice to produce, on the grounds that it may incriminate them and/or expose the person to a penalty. However, any information given, or any document produced, will not be admissible in evidence against the individual in any subsequent criminal proceeding, proceeding for the imposition or recovery of a penalty, and/or a confiscation proceeding.
The Bill provides whistle-blower protections for all persons who refers allegations or provide information concerning corruption issues to the NACC (a NACC disclosure). If a person makes a NACC disclosure, they will not be subject to any civil, criminal or administrative liability (including disciplinary action) for making the NACC disclosure. These protections are complementary to the existing whistle-blower protections already available for public officials making disclosures, under the Public Interest Disclosure Act 2013 (Cth).
The Bill also prohibits a person taking, or threatening to take, a reprisal action against another person in circumstances where the person believes that the person (or any other person) has made, may have made, or proposes to make, a NACC disclosure. 'Reprisal action' means any disadvantage including, but not limited to, the dismissal of an employee, the injury of an employee in their employment, and the alteration of the employee's position. Engaging in a reprisal action will be a criminal offence and can incur a penalty of up to two years' imprisonment.
A person subject to adverse findings by the NACC will be able to apply for judicial review. This right is not provided for in the NACC Bill, but arises separately under Commonwealth law.
While the NACC is largely aimed at the conduct of the Commonwealth public sector, Australian companies (and their employees) can also be impacted by the NACC if they have interacted with a Commonwealth agency. Most notably:
a) the conduct of any person that adversely affects the honest or impartial exercise or performance of a public official's powers or duty, may become the focus of an NACC investigation. 'Public official' is defined broadly and includes parliamentarians and staff members of a Commonwealth agency.
b) Companies may be issued with a 'notice to produce' in circumstances where the NACC has reasonable grounds to suspect that the company has information, a document or a thing, that is relevant to a corruption investigation.
c) Employees may be summoned to appear at a public or private hearing if the NACC has reasonable grounds to suspect that the person has particular information, or a particular document or thing, that is relevant to a corruption investigation.
The Bill proposes to establish extensive oversight mechanisms to demonstrate to the Government, Parliament, and the public at large, that the NACC is operating fairly. This includes oversight by a Parliamentary Joint Committee and an independent Inspector.
The Inspector will primarily be in charge of investigating complaints about the NACC, and referring issues to Commonwealth agencies and state or territory government entities. The Parliamentary Joint Committee will have a wide role, including monitoring and reviewing the performance of the NACC; reporting to Parliament with any comments the Committee thinks fit and are connected with the performance of the NACC's functions; and reporting to Parliament on any suggested changes regarding the NACC's functions or powers.
The Government is aiming to pass the Bill this year. The Bill has been referred to the Joint Select Committee on National Anti-Corruption Commission Legislation. The Committee's report on the bill is due on 10 November 2022. Once the report is issued, the Bill may be amended before final passage. At this stage there appears to us to be sufficient time for the Bill to pass this year. If passed, the Bill will commence on a day fixed by Proclamation, which is intended to be in mid-2023.
Authors: Rani John, Partner; James Clarke, Partner; and Luke Thiagarajah, Lawyer