Australia: Gifts, conflicts of interest, bribery and corruption - dealing with government

Last Updated: 23 December 2017
Article by Norman Donato

The corruption of public officials and the exercise of their official functions has been front page news in New South Wales consistently for at least the past 4 years. Most people in New South Wales are aware of the operations of ICAC and how that body brings to account those involved in corrupt conduct.

All levels of government must exercise the utmost care so as to ensure that they do not become part of the latest headline and avoid appearing at ICAC hearings. So how is corruption of a public official defined and what are the legal risks?

Definition and risks

The type of conduct considered actionable corrupt behaviour1 is set out in Division 142 of the Criminal Code Act 1995 (Cth) (Code)2 as follows:

Offences relating to bribery
142.1 Corrupting benefits given to, or received by, a Commonwealth public official
Giving a corrupting benefit

  1. A person commits an offence if:
    1. the person dishonestly:
      1. provides a benefit to another person; or
      2. causes a benefit to be provided to another person; or
      3. offers to provide, or promises to provide, a benefit to another person; or
      4. causes an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and
    2. the receipt, or expectation of the receipt, of the benefit would tend to influence a public official (who may be the other person) in the exercise ofthe official's duties as a public official;
    3. the public official is a Commonwealth public official; and
    4. the duties are duties as a Commonwealth public official.
    Penalty: Imprisonment for 5 years.
  2. In a prosecution for an offence against subsection
    1. , it is not necessary to prove that the defendant knew:
      1. that the official was a Commonwealth public official; or
      2. that the duties were duties as a Commonwealth public official.
    Receiving a corrupting benefit
  3. A Commonwealth public official commits an offence if:
    1. the official dishonestly:
      1. asks for a benefit for himself, herself or another person; or
      2. receives or obtains a benefit for himself, herself or another person; or
      3. agrees to receive or obtain a benefit for himself, herself or another person; and
    2. the receipt, or expectation of the receipt, of the benefit would tend to influence a Commonwealth public official (who may be the first-mentioned official) in the exercise of the official's duties as a Commonwealth public official.
    Penalty: Imprisonment for 5 years.
    Benefit in the nature of a reward
  4. For the purposes of subsections (1) and (3), it is immaterial whether the benefit is in the nature of a reward.

The penalties are intimidating, as they need to be.

"Certainly we see today that most government contracts include anticorruption clauses as an additional step in seeking to prevent corrupt conduct."

Compliance - where to start

There is a useful first step for local government officials in Australia in establishing compliance programmes. This step is the "Anti-Corruption Ethics and Compliance Handbook for Business" (the Handbook) developed in cooperation by two United Nations bodies, the World Bank and various corporations.

The Handbook makes a number of recommendations in establishing a sturdy and workable compliance program with the undertaking of a risk assessment being a primary course of action. The risk assessment, according to the Handbook, should include:

  • establishment of the risk assessment process;
  • identification and rating of risks;
  • identifying and rating controls;
  • calculating residual risk; and
  • development of an action plan.

Additional steps recommended by the Handbook include:

  • documenting results;
  • developing and implementing anti-corruption ethics program;
  • establishing internal control and record keeping;
  • communication and training;
  • promotion and rewarding of compliance;
  • addressing violations; and
  • periodic reviews.

While the Handbook offers a comprehensive toolkit for anyone seeking to achieve high levels of compliance, as with all compliance programmes there is not a one size fits all solution. Consequently the approach to a strong solution must look at additional sources for advice.

A further step in a compliance program for Local Councils is the Model Code of Conduct (MCC) for Local Council in NSW. The MCC was created for the purposes of section 440 of the Local Government Act 1993 (NSW) (LGA). It requires compliance with the code by councillors, administrators, members of staff, independent conduct reviewers, members of council committees and delegates of the council.

Any failure to comply with the standards of the MCC constitutes misconduct for the purpose of the LGA. This has important implications in relation to whether the conduct could fall within the definition of "corrupt conduct" under the ICAC Act3.

Part 5 of the MCC deals specifically with personal benefits and defines "personal benefit" as:

  1. seeking or accepting a bribe or other improper inducement;
  2. seeking gifts or benefits of any kind;
  3. accepting any gift or benefit that may create a sense of obligation on one's part or may be perceived to be intended or likely to influence one in carrying out their public duty;
  4. accepting any gift or benefit of more than a token value; and
  5. accepting an offer of cash or a cash-like gift, regardless of the amount." 4

Certainly we see today that most government contracts include anti-corruption clauses as an additional step in seeking to prevent corrupt conduct.

Breaches of these anti-corruption clauses carry significant punishment including the consequences of criminal sanctions outlined above. In addition, the contract itself may be terminated and payment of damages may be imposed.

Where to next?

Notwithstanding various views expressed by, among others, the High Court, on the powers and actions of ICAC, it must be remembered that ICAC still retains significant scope to explore conduct that may fall within the meaning of corrupt conduct.

If any entity, particularly Local Councils, wish to avoid an investigation by ICAC into possible corrupt behaviour, they must attend to a comprehensive compliance program.

This program must incorporate appropriate risk assessment processes in order to address potential corruption risks. The penalties of large fines and possible imprisonment should be enough to nudge any organisations who have not moved on establishing a compliance programme to do so rapidly. Potential corrupt conduct may be a difficult topic to raise amongst Local Government Councillors, however, surely the attraction of not becoming a press headline and appearing before ICAC in relation to corruption is incentive enough to begin the discussion.

Footnotes

1 What constitutes corrupt conduct from a moral, ethical and legal perspective does not always synchronise. The differing opinions of the judges that considered the issue in Cunneen's Case, from the Supreme Court to the High Court demonstrates synchronisation is even hard to achieve solely from a legal perspective.

2 Note also Part 4A of Crimes Act 1900 (NSW)

3 Section 9 of Independent Commission Against Corruption Act 1988 (NSW) (ICAC Act)

4 Section 5.5 of MCC

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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