Australia: Corruption, investigation and prevention

Government Bulletin summer edition – year in review
Last Updated: 17 January 2016
Article by Christine Jones and Jack O’Donnell

The more things changed, the more they stayed the same – ICAC, the year in review

2015 was billed as the year that could define the future of corruption investigations and findings in NSW. The High Court's decision in Independent Commission Against Corruption v Cunneen [2015] HCA 14 (Cunneen) was on the horizon, and the Independent Commission Against Corruption (the Commission) had already foreshadowed that it would likely cast doubt on the validity of previous and ongoing Commission investigations and findings. Legislative amendments to the Independent Commission Against Corruption Act 1988 (NSW) (ICAC Act) were therefore seen as a strong possibility.

The stage was set for a turbulent year for a Commission that has been no stranger to controversy in its 27 year history.

Cunneen

The High Court handed down its much anticipated decision in Cunneen on 15 April 2015, the majority dismissing the Commission's appeal from the decision of the NSW Court of Appeal.

The principal question for determination by the High Court was what is meant by the words "adversely affects, or that could adversely affect ... the exercise of official functions by any public official" in the definition of "corrupt conduct" in s8(2) of the ICAC Act.

The majority, compromising their Honours French CJ, Hayne, Kieffel and Nettle JJ preferred the meaning: adversely affect or could adversely affect the probity of the exercise of an official function by a public official

over the competing meaning preferred by his Honour Gageler J in dissent: adversely affect or could adversely affect the efficacy of the exercise of an official function by a public official in the sense that the official could exercise the function in a different manner or make a different decision from that which would otherwise be the case.

The High Court effectively narrowed the scope of the Commission's power in investigating the conduct of persons who are not public officials. It also cast doubt on the validity of numerous previous and ongoing Commission investigations and findings.

It soon became clear that the NSW Legislature had some important decisions to make.

Validation Act

The NSW legislature responded by enacting the retrospective, validating legislation known as the Independent Commission Against Corruption Amendment Corruption, investigation and prevention (Validation) Act 2015 (NSW) (Validation Act). The Validation Act commenced operation on 6 May 2015 and added Part 13 (clauses 34 and 35) to Schedule 4 of the ICAC Act.

The effect of Part 13 was to retrospectively validate findings and activities of the Commission of the very type the High Court had found in Cunneen to be outside its powers. Specifically, it validated actions taken by the Commission before 15 April 2015 that would otherwise have been valid if section 8(2) of the ICAC Act extended to "conduct that adversely affects, or could adversely affect, the efficacy (but not the probity) of the exercise of official functions".

Duncan

Mr Travers Duncan had been one of the beneficiaries of the Cunneen decision, which potentially invalidated many of the Commission's investigations, including one involving Mr Duncan, former Minister Ian Macdonald, Obeid family members and others. In response to the Validation Act, Mr Duncan brought a constitutional challenge to that Act in Duncan v Independent Commission Against Corruption [2015] HCA 32 in May 2015.

In a report titled "Investigation into the Conduct of Ian Macdonald, Edward Obeid Senior, Moses Obeid and Others", the Commission had previously made a finding that Mr Duncan had engaged in corrupt conduct within the meaning of the ICAC Act. Mr Duncan argued that the Report was affected by jurisdictional error having regard to the decision in Cunneen. Mr Duncan also sought a declaration that the Validation Act was invalid on constitutional grounds as Part 13 "directs courts to treat as valid acts that were, and remain, invalid". Mr Duncan's challenge was removed from the NSW Court of Appeal to the High Court.

In September 2015, the High Court handed down its decision, unanimously dismissing Mr Duncan's application. It held that clauses 34 and 35 of Part 13 of Schedule 4 of the ICAC Act properly deem the Commission's acts completed before 15 April 2015 to be valid. It was held that the clauses 34 and 35 operate to effect an alteration in the substantive law as to what constitutes corrupt conduct, rather than merely direct the Court to treat invalid acts in a particular way.

The High Court also unanimously held that the clauses retrospectively confer jurisdiction upon the Commission.

ICAC Amendment Act

In September the Independent Commission Against Corruption Amendment Act 2015 (NSW) (Amendment Act) came into effect, which was introduced to implement the recommendations of a report made on 30 July 2015 by an Independent Panel appointed by the Premier and established to review the Commission's jurisdiction following the Cunneen decision.

The Amendment Act broadens the Commission's power by enabling it to investigate and make findings of corruption in relation to the conduct of any person (as opposed to just government officials) that impairs, or that could impair, public confidence in public administration and which could involve:

  • collusive tendering ??
  • fraud in or in relation to certain applications for licences, permits or clearances under statutes designed to facilitate the management and commercial exploitation of resources or designed to protect health and safety
  • dishonestly obtaining or assisting or benefiting from the payment or application of public funds or the disposition of public assets for private advantage
  • defrauding the public revenue
  • ??fraudulently obtaining or retaining employment as a public official.

NuCoal

NuCoal Resources Limited (NuCoal) had a busy year attempting to overturn the NSW Government's decision to revoke NuCoal's Doyles Creek mining licence, as well as Cascade Coal's Mount Penny and Glendon Brook licences in the Hunter Valley.

Following a separate unsuccessful High Court challenge earlier in the year, the Supreme Court of NSW handed down its decision in NuCoal Resources Limited v ICAC [2015] NSWSC 1400 in September. NuCoal had sought judicial review of the Commission's recommendations that the government revoke all licences and leases associated with the Doyles Creek mining area and that an exploration licence owned by Doyles Creek Mining Pty Ltd (DCM) be revoked. NuCoal owns all of the shares in DCM.

NuCoal's principal argument was that the Commission, in making the recommendation that the exploration licence be revoked, failed to exercise its duty to investigate fully under section 73(2) of the Act. NuCoal submitted that section 73(2) of the ICAC Act imposed an obligation to address, consider or otherwise meaningfully engage with NuCoal's arguments.

The Court dismissed NuCoal's arguments, stating that a Court or Tribunal need not address every argument that is the subject of submissions. By extension, the duty to investigate fully under section 73(2) of the ICAC Act does not require express comment on every argument made. In any event, the Court held that the Commission had in fact engaged with NuCoal's submissions, even if it did not expressly reference each subtle submission.

The future

The Commission has extensive powers in order to expose corruption. With that, the stakes are high for the individuals and corporations involved as reputations and fortunes can and have been lost. Is it any wonder then that those involved are increasingly turning to the Courts for clarification and redress? Equally we can expect that any perceived curtailment of the Commission's reach will be swiftly corrected by the legislature.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Authors
Christine Jones
 
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