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

The Public Sector and Commercial Litigation teams
30 Sep 2022
Time to read: 5 minutes

With the heightened attention on probity and anti-corruption measures, and now the creation of the NACC and its wide powers, the risk escalates, and it is crucial for both the public and private sectors to be proactive in this space.

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:


Criminal trial

NACC hearing

Defendant has a right to silence

No right to silence

Defendants and witnesses can claim privilege against self-incrimination

No right to withhold self-incriminating information - declining to answer questions can result in a witness being punished for contempt

Prosecution must prove the offence beyond a reasonable doubt

No such standard of proof – Commissioner to publish “findings” and “opinions”

The evidence given is publicly available (except in rare situations) and a witness can tell others what evidence was given except to someone who has not given their evidence yet 

Witnesses can be ordered not to tell anyone that they have been questioned


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.

Four steps which those in public or private sector can take

Most organisations will have some form of internal governance or probity to prevent corruption, but these should never be treated as “set and forget”. With the heightened attention on probity and anti-corruption measures, and now the creation of the NACC and its wide powers, the risk escalates, and it is crucial for both the public and private sectors to be proactive in this space. Four steps you can take now to protect yourself are:

1. Ensure anti-bribery and corruption policies are up to date and implemented: Good governance means having the best possible practices and systems in place to proactively identify, monitor, evaluate and respond to these risks, backed by regular and ongoing education of everyone in the relevant government function or organisation, from the top down.

Public sector organisations also need to be aware that the scope of public officials the NACC may investigate is extremely broad. The NACC’s investigative scope will extend to any staff member of a Commonwealth agency, including parliamentary offices, Commonwealth entities, Commonwealth companies and their subsidiaries. This makes education, training and awareness of public officials’ obligations with respect to anti-corruption practices, probity requirements and managing conflicts of interests especially important.

Start by ensuring you have a clear – and clearly articulated – anti-bribery and corruption policy that sets out examples of what constitutes fraud and corruption, and steps for reporting any concerns.

2. Conduct a due diligence audit: Given the NACC’s retrospective powers, consider a review into any past conduct such as any gifts given or received. This may result in the need to create and communicate a separate precaution regarding the introduction of the NACC to any personnel dealing with public officials, or a gifts and hospitality register to ensure ongoing due diligence and transparency.

3. Encourage reporting of issues through internal whistleblowing channels: Organisations that provide services to the Commonwealth should ensure they have a robust whistleblowing policy and program in place and support a “safe to speak up” culture, in order to encourage the internal reporting of any corruption issues. This allows an organisation to be on the front foot in taking steps to investigate and address any improper conduct, including to implement any legal or public relations strategies in response.

4. Have a response plan if your organisation is compelled to provide information: Organisations should consider preparing a response plan that can be followed if they are compelled to provide information to the NACC. This plan should include a whole-of-organisation response, including key contacts and media strategies. In particular, public sector organisations should consider the need to prepare for scenarios where the NACC will provide limited notice when seeking information from Commonwealth departments and agencies.

Organisations should also be aware that the Bill currently does not excuse organisations from providing information to the NACC on the grounds of legal professional privilege, unless the document relates to advice or communications arising from NACC notices, directions or hearings. Protections also exist with respect to legal advice given to journalists.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.