Australia: National Anti-Corruption Commission Commences Operations
In Short
The Situation: While Australia has had anticorruption bodies with broad-ranging powers at the state and territory level for some years, until recently, there was no equivalent body at the federal level. This has changed with the establishment of Australia's first National Anti-Corruption Commission ("NACC"), which commenced operations on 1 July 2023.
The Result: The NACC has wide-ranging powers to investigate the broadly defined concept of "corrupt conduct" involving public officials (which includes, among others, contracted service providers to federal government agencies), and may refer any evidence of corrupt conduct for criminal prosecution by federal or state-based prosecutors.
The Outcome: The NACC has reported that, in its first few days of operation, it received 44 referrals in relation to allegedly corrupt conduct. While it is not yet known what matters the NACC initially will focus on, all corporations (and their directors, officers and employees) who deal with representatives of the federal government should be mindful of the NACC's wide remit and investigative powers and have plans and policies in place to respond to a NACC investigation, should the need arise.
The NACC has a broad jurisdiction and is empowered to investigate matters retrospectively (i.e. conduct that occurred before its commencement on 1 July 2023). Specifically, the NACC is empowered to investigate "corrupt conduct". This is defined broadly by reference to four overlapping categories of corrupt conduct which comprise (subject to certain limited exceptions):
- Any conduct of any person (whether or not a public official) which could, or does, adversely affect (directly or indirectly) the honest or impartial exercise or performance of a public official's powers, functions or duties;
- Any conduct of a public official that is or involves a breach of public trust;
- Any conduct of a public official that is, involves or is engaged in for the purpose of abuse of the person's office as a public official; or
- Any conduct of a public official or former public official that is or involves the misuse of information or documents acquired in the person's capacity as a public official.
The NACC is also empowered to investigate "corruption issues", being investigations of whether a person has or is engaged in corrupt conduct or will engage in corrupt conduct in the future. Corrupt conduct need not be for a public official's personal benefit, can involve multiple persons, and includes conspiracy or attempted corrupt conduct.
Notably for corporations operating in Australia (and their directors, officers and employees), the definition of "public official" is very broad and includes (among others): staff members of and secondees to federal government agencies; and, for agencies responsible for administering federal government contracts for goods or services, the contracted service provider (including subcontractors) and officers or employees of the service provider (or their subcontractors). The NACC has publicly stated that it considers "contractors" in this context to include consultants, independent contractors, labour-hire contractors and "others" providing contracted services to the federal government. As such, the range of private parties who may be amenable to the NACC's jurisdiction is very wide.
While the focus of the NACC is domestic corruption issues, the NACC's underlying legislation is expressly stated to apply extraterritorially and so it is possible that the NACC may investigate activity occurring outside Australia, provided the activity falls within the definition of corrupt conduct and involves a public official. Separate cross-border corruption and anti-bribery regimes remain in place (such as the Foreign Influence Transparency Scheme and Australia's existing foreign bribery laws), but these will continue to be separately administered.
One important limitation imposed by legislation is that the NACC can only formally investigate corruption issues which it considers involve corrupt conduct which is "serious or systemic". However, as the NACC has power to engage in preliminary investigations to confirm the existence or nature of any corruption issue, including to confirm whether a particular issue could be serious or systemic, there remains a possibility that private parties may be drawn into a wide variety of enquiries and activities undertaken by the NACC.
In addition, the NACC has significant coercive investigatory powers (supported by offence provisions) including the ability to hold private and public hearings, compel record production and the attendance of witnesses before it, conduct searches and employ other covert investigative techniques (e.g. phone tapping). This includes coercive investigative powers conferred by other legislation, such as the Anti-Money Laundering and Counter-Terrorism Act 2006, Crimes Act 1918, and Financial Transaction Reports Act 1988 (Cth), among several others.
Private parties are not obligated to make disclosures, but any person may make a voluntary referral to the NACC in relation to a corruption issue, and there are legislative protections available for whistleblowers. In addition, federal government agencies who become aware of a corruption issue are required to make mandatory referrals to the NACC, subject to certain limited exceptions.
In addition to investigating a corruption issue on its own, the NACC may investigate a corruption issue jointly with a federal, state or territory level agency or government entity. The NACC may also refer the corruption issue to a federal agency for investigation if the NACC is satisfied that the agency has appropriate capabilities to do so. The NACC can refer any corruption issue to another federal agency or a state or territory government entity for consideration, including for prosecution. In doing so, the NACC operates within the current statutory framework of potential offences. In other words, while the NACC has been created as a new investigative body with a new remit, the legislature has not expanded the criminal liability framework beyond that already in place (save to the extent that it creates new offences for failing to comply with a request made as part of a NACC investigation).
The NACC's inaugural commissioner is Justice Paul Brereton AM RFD. The commissioner will be supported by two deputy commissioners: Nicole Rose PSM (previously head of Australia's AML/CTF regulator, AUSTRAC), and Dr. Ben Gauntlett (previously the Australian Disability Discrimination Commissioner); as well as Jaala Hinchcliffe as acting deputy commissioner. Gail Furness SC is the inaugural inspector, which is an independent statutory office which forms one of the principal oversight mechanisms for the NACC.
Three Key Takeaways
- The NACC, Australia's first (and long-awaited) federal anti-corruption body, has begun operations. The NACC has a broad jurisdiction which could have significant implications for all corporations and persons who contract or otherwise deal with state government agencies and have done so in the past.
- The broad investigatory powers available to the NACC, coupled with the ability for any person to refer corruption issues to the NACC, potentially means many private parties who deal with federal government representatives could become directly or indirectly involved in corruption investigations and may become subject to the exercise of the NACC's compulsive powers.
- All corporations and individuals who interact with representatives of the federal government or operate in the public sector should consider reviewing or updating their compliance policies, or other probity-related practices and procedures, given these developments and the current environment.
