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Australian Commission for Law Enforcement Integrity-Parliamentary Joint Committee Examination of the annual report of the Integrity Commissioner 2011-12 Report, March 2013


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March 2013

Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity

Examination of the Annual Report of the Integrity Commissioner 2011-2012

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© Commonwealth of Australia

ISBN 978-1-74229-740-8

This document was prepared by the Secretariat of the Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity and printed by the Senate Printing Unit, Parliament House, Canberra

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The Committee

Members

Mr Darren Cheeseman MP ALP, VIC (Chair) *

Senator Michaelia Cash LP, WA (Deputy Chair)

Senator Doug Cameron ALP, NSW

Senator Christine Milne AG, TAS

Senator the Hon Lisa Singh ALP, TAS

Mr Chris Hayes MP ALP, NSW

Mr Russell Matheson MP LP, NSW

Mr Luke Simpkins MP LP, WA

Mr Tony Zappia MP ALP, SA

*Ms Melissa Parke MP, LP, WA, was replaced by Mr Darren Cheeseman MP as Chair on 7 February 2013

Secretariat

Ms Fiona Bowring-Greer, Secretary

Ms Jane Thomson, Acting Secretary (3 December to 24 December)

Ms Rosalind McMahon, Administrative Officer

PO Box 6100 Parliament House CANBERRA

Telephone: (02) 6277 3419 Facsimile: (02) 6277 5809 Email: aclei.committee@aph.gov.au Internet: http://www.aph.gov.au/Senate/committee/aclei_ctte

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Table of Contents

The Committee .................................................................................................. iii

Acronyms and abbreviations list .....................................................................vii

CHAPTER 1 .............................................................................................................. 1

Introduction .............................................................................................................. 1

Requirements for the examination of the annual reports ....................................... 1

Requirements for annual reports under the LEIC Act ............................................ 1

Conduct of the inquiry ............................................................................................ 2

Committee membership .......................................................................................... 2

Acknowledgement .................................................................................................. 3

CHAPTER 2 .............................................................................................................. 5

Strategy and performance of the Australian Commission for Law Enforcement Integrity ..................................................................................................................... 5

ACLEI's jurisdiction ............................................................................................... 5

Strengthening Australia's common integrity platform ........................................... 6

Strategy and direction ............................................................................................. 7

Structure, governance and resourcing .................................................................... 9

Planned outcomes and performance ..................................................................... 11

CHAPTER 3 ............................................................................................................ 19

Key issues................................................................................................................. 19

Inclusion of ACBPS under ACLEI's jurisdiction ................................................. 19

Further expansion of ACLEI's jurisdiction .......................................................... 22

Coercive information-gathering powers ............................................................... 23

Workload .............................................................................................................. 25

Five years of operation ......................................................................................... 29

Committee view .................................................................................................... 29

Appendix 1 ......................................................................................................... 31

Compliance with reporting requirements ............................................................ 31

Appendix 2 ......................................................................................................... 35

Witnesses who appeared before the committee ................................................... 35

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Acronyms and abbreviations list

ACC Australian Crime Commission

ACLEI Australian Commission for Law Enforcement Integrity

AFP Australian Federal Police

ACBPS Australian Customs and Border Protection Service

ANAO Australian National Audit Office

ATO Australian Taxation Office

AUSTRAC Australian Transaction and Reporting Analysis Centre

DAFF Biosecurity Biosecurity staff of the Department of Agriculture, Fisheries and Forestry

CEO Chief Executive Officer

Hamburger Review of the Australian Commission for Law Enforcement Review Integrity's Capabilities, Operating Arrangements and Resources

KPIs Key Performance Indicators

LEIC Act Law Enforcement Integrity Commissioner Act 2006

LEIC Regulations Law Enforcement Integrity Commissioner Regulations 2006

PJC-ACLEI Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity

the Minister Minister for Home Affairs and Justice

the committee Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity

the report Annual Report of the Integrity Commissioner 2011-12

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CHAPTER 1 Introduction

1.1 The Australian Commission for Law Enforcement Integrity (ACLEI) was established by the Law Enforcement Integrity Commissioner Act 2006 (LEIC Act). The LEIC Act commenced operation on 30 December 2006.

1.2 The LEIC Act established a new Office of Integrity Commissioner, supported by a statutory agency, ACLEI.

1.3 The 2011-12 Annual Report of the Integrity Commissioner (annual report) was presented to the Minister on 9 October 2012 and tabled in the House of Representatives and in the Senate on 29 October 2012. It is the sixth annual report of the Integrity Commissioner and covers ACLEI's fifth year of operation.

Requirements for the examination of the annual reports 1.4 Subsection 215(1)(c) of the LEIC Act requires the Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity (the committee) to examine:

(i) each annual report prepared by the Integrity Commissioner under section 201;

(ii) any special report prepared by the Integrity Commissioner under section 204;

and report to the Parliament on any matter appearing in, or arising out of, any such annual report or special report.

Requirements for annual reports under the LEIC Act

Section 201 of the LEIC Act

1.5 Section 201 of the LEIC Act sets out the requirements for ACLEI annual reports. The annual report must provide details of:

• corruption issues notified to the Integrity Commissioner, dealt with by the

Integrity Commissioner or referred to a government agency for investigation. Reports must include corruption issues investigated over the year and certificates issued under section 149 during the year;1

• investigations conducted that 'raise significant issues or developments in law enforcement' and the extent to which ACLEI investigations have resulted in prosecutions or confiscation proceedings;

1 Section 149 provides that the Attorney-General may certify that disclosure of information about a matter specified in the certificate or the contents of a document specified in a certificate 'would be contrary to the public interest' on the grounds that the disclosure would prejudice the conduct of an investigation or inquiry in crime or criminal activity or for other reasons as set out in subsection 149(2) of the LEIC Act.

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• trends and patterns including the nature and scope of corruption in law

enforcement and other Commonwealth agencies that have law enforcement functions; and

• recommendations for changes to Commonwealth laws or administrative

practices of Commonwealth government agencies.

1.6 The 2011-12 ACLEI annual report includes a compliance index provided at pages 178-180 which provides a guide to the report's compliance with the requirements for annual reports under the LEIC Act. The committee is satisfied that ACLEI has fulfilled its annual report obligations under the LEIC Act and other requirements as set out in the compliance index of the annual report. These requirements are set out in Appendix 1.

Section 204 of the LEIC Act

1.7 Under section 204 of the LEIC Act, the Integrity Commissioner may prepare special reports which relate to the operations of the Integrity Commissioner or any matter in connection with the performance of the Integrity Commissioner's powers or functions under the LEIC Act.

1.8 In its report on ACLEI's 2010-11 annual report, the committee suggested that future ACLEI annual reports 'clearly state whether any special reports have been provided to the Minister and make an appropriate reference in the compliance index'.2 ACLEI adhered to this suggestion. It is stated in the 2011-12 annual report that the Integrity Commissioner gave no special reports under section 204 of the LEIC Act to the Minister during the review period.3

Conduct of the inquiry 1.9 The committee held a public hearing to examine the annual report at the Parliament of Victoria on 5 December 2012. During the hearing, the committee heard evidence from the Integrity Commissioner, Mr Philip Moss and ACLEI officers. The list of witnesses is provided as Appendix 2.

Committee membership 1.10 Senator Stephen Parry was appointed to the committee following a resolution of both houses on 23 March 2007. On 4 July 2011 Senator Parry was appointed Deputy President of the Senate at which time, by operation of subsection 213(4)(b) of the LEIC Act, due to his appointment to this position, Senator Parry ceased to be eligible for membership of the committee. The committee was unaware of this legislative restriction at this time.

1.11 The committee and Senator Parry became aware of this legislative restriction on 7 February 2013, at which time Senator Parry ceased work on the committee. The Minister for Home Affairs and Justice has recently noted that there is merit in progressing amendments which will bring membership eligibility for the committee in

2 PJC-ACLEI, Examination of the Annual Report of the Integrity Commissioner 2010-11, p. 2.

3 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 81.

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line with the Parliamentary Joint Committee on Law Enforcement and the Parliamentary Joint Committee on Intelligence and Security, in which the Senator appointed as Deputy President of the Senate is eligible for membership.

Acknowledgement

1.12 The committee congratulates the Integrity Commissioner and ACLEI officers for the quality and readability of the 2011-12 annual report. The committee also recognises that January 2012 marked ACLEI's fifth year of operation. The committee acknowledges this major milestone and the substantial contribution that ACLEI has made to identifying, combating and pursuing corruption over this five year period.

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CHAPTER 2

Strategy and performance of the Australian Commission for Law Enforcement Integrity 2.1 The primary purpose of ACLEI is to 'enhance the integrity of Commonwealth law enforcement agencies by providing independent and effective external investigation of possible instances of corruption' in those agencies.1 The vision of ACLEI is for an 'Australian Government law enforcement culture that resists corruption'. Its mission is to 'support the Integrity Commissioner to detect, disrupt and deter corrupt conduct' and its responsibilities are to:

• detect, investigate and prevent corrupt conduct;

• maintain and improve the integrity of law enforcement staff, through

awareness-raising and making recommendations for reform of practices and laws;

• collect and analyse information about corruption, and inform the Australian

Parliament about patterns and trends.2

ACLEI's jurisdiction

2.2 The Commonwealth agencies currently within ACLEI's jurisdiction include the Australian Crime Commission (ACC), the Australian Federal Police (AFP) and as of 1 January 2011, the Australian Customs and Border Protection Service (ACBPS).

2.3 In its interim inquiry report into the Operation of the Law Enforcement Integrity Commissioner Act 2006 of February 2010, the committee had recommended an extension of the Integrity Commissioner's jurisdiction to include the ACBPS.3 Furthermore, the committee's final report in relation to its inquiry into the Operation of the Law Enforcement Integrity Commissioner Act 2006 tabled in July 2011 recommended that ACLEI's jurisdiction be further expanded to include all staff of the Australian Transaction and Reporting Analysis Centre (AUSTRAC), CrimTrac and Biosecurity staff of the Department of Agriculture, Fisheries and Forestry (DAFF Biosecurity). The committee identified these agency staff as subject to a higher potential risk of infiltration by organised crime because of the nature of their work. This recommendation was realised when the Minister for Home Affairs and Justice introduced the Law Enforcement Integrity Legislation Amendment Bill 2012 which was passed by Parliament on 27 November 2012. The three new agencies will come under ACLEI's jurisdiction from 1 July 2013.

1 Explanatory Memorandum, Law Enforcement Integrity Commissioner Bill 2006, p. 1.

2 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 20.

3 PJC-ACLEI, Inquiry into the Operation of the Law Enforcement Integrity Commissioner Act 2006 - Interim Report, February 2010, Recommendations 2 and 3, p. vii, http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=aclei_ctt e/integrity_com_act/interim_report/index.htm (accessed 22 November 2012).

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Strengthening Australia's common integrity platform 2.4 In its 2011 inquiry into the Operation of the Law Enforcement Integrity Commissioner Act 2006, the committee made 21 recommendations focused on strengthening the operations of the Act or improving Australia's anti-corruption arrangements more generally. During 2011-12, the government introduced a number of key measures to strengthen the LEIC Act which implemented the committee's recommendations. By highlighting these measures, the Integrity Commissioner, Mr Philip Moss noted in the annual report that these developments had made 2012 a 'landmark year for Australia's integrity framework and for ACLEI's development'.4 Such measures include the:

• Crimes Legislation Amendment Act (No. 2) of 2011 which amended the LEIC Act to include the ACBPS within the Integrity Commissioner's jurisdiction.5

• Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012 which gives effect to recommendations made by the committee in its interim report into the Operation of the Law Enforcement Integrity Commissioner Act 2006. The Integrity Commissioner noted the following regarding the legislation:

Principal among these changes is the addition of a preventive function to complement the Integrity Commissioner's existing investigation responsibilities, which clarifies ACLEI's role in this important area. I note that the committee first recommended a form of preventive function for ACLEI in 2009 in its report into law enforcement integrity models.6

• Amendment to the Customs Administration Act 1985 to provide for the authorisation of the disclosure of protected information for the purposes of the LEIC Act.7

• Crimes Legislation Amendment (Powers and Offences) Act 2012 which

amends the LEIC Act to extend the maximum term of appointment of an Integrity Commissioner from five to seven years.8 The Act received Royal Assent on 4 April 2012.

4 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 1.

5 This measure responds to the committee's recommendation 3 in its inquiry interim report into the LEIC Act. PJC-ACLEI, Operation of the Law Enforcement Integrity Commissioner Act 2006 - Interim Report, February 2010. The Crimes Legislation Amendment Act (No.2) 2011 received Royal Assent on 5 December 2011 and commenced the following day.

6 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 2.

7 Responding to the committee's third recommendation in its interim report, this amendment makes it clear that it is lawful for Customs and Border Protection staff to report suspected corrupt conduct to the Integrity Commissioner. PJC-ACLEI, Inquiry into the Operation of the Law Enforcement Integrity Commissioner Act 2006 - Interim Report, February 2010.

8 This measure responds to recommendation 5 of the committee's Inquiry into the Operation of the Law Enforcement Integrity Commissioner Act 2006 - Final Report, July 2011.

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• Law Enforcement Integrity Legislation Amendment Bill 2012 which was

passed by Parliament on 27 November 2012. The bill introduces targeted integrity testing for staff of the AFP, ACC and ACBPS as recommended by the committee and extends the Integrity Commissioner's jurisdiction to include all staff of AUSTRAC, CrimTrac and Biosecurity staff of DAFF (formerly Australian Quarantine and Inspection Service). The Integrity Commissioner informed the committee that these measures will help 'build a common integrity platform that has the LEIC Act at its core'.9

2.1 The Integrity Commissioner noted that the combined effect of the legislation introduced over the review period contributes to a 'common integrity platform' by minimalising the differences or variations in standards between the agencies under ACLEI's jurisdiction.10 Mr Moss explained that the three agencies currently under its purview:

work together so closely they now have, through their CEOs, powers to deal with situations of high vulnerability for their staff. Should misconduct of a serious nature leading to corrupt conduct occur, there are enhanced powers now for the ACC. As you would remember, it was an earlier recommendation of this committee that loss-of-confidence power be given to the ACC CEO; now that has been given also to the CEO of Customs and Border Protection. The other elements in the common platform for Customs include integrity testing across all three agencies, the requirement to report on a mandatory basis and drug testing. All these measures add up to a common approach for the agencies within my jurisdiction and for those that come into the jurisdiction in July next year.11

Strategy and direction 2.5 ACLEI assists the ACC, ACBPS and AFP to maintain the integrity of their staff in the face of risks associated with law enforcement activities that may give rise to corrupt conduct. Under the LEIC Act, the Integrity Commissioner is required to give priority to serious or systemic corruption in those agencies and focuses therefore on corruption issues that may:

• involve a suspected link between law enforcement and organised crime;

• bring into doubt the integrity of senior law enforcement managers;

• relate to law enforcement activities that have a higher inherent corruption risk;

• warrant the use of the Integrity Commissioner's information-gathering

powers, including hearings; or

• would otherwise benefit from independent investigation. 12

9 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 2.

10 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 2.

11 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 3.

12 ACLEI, Annual Report of the Integrity Commissioner 2011-12, pp 21-22.

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2.6 The 'Integrity Commissioner's Review' contained within the 2011-12 annual report details some of the ongoing and emerging strategies employed by ACLEI over the review period including development of:

• capabilities that support covert investigation including greater use of

telecommunications interception methods;

• specialisation in corruption prevention which will be 'an important strategic

engagement tool to raise awareness in agencies about ACLEI and about corruption risks generally' and ensure the alignment across agencies, including those new to the LEIC Act framework, with a common integrity platform;13 and

• a well-directed detection function. To this end, an 'Emerging Issues Team'

was created to examine whether corruption indicators observed in one operational environment are present in other similar environments.14

2.7 During the period of review, the 'ACLEI corruption risk approach framework and corruption probability model' were developed which 'offer a framework to aid the identification of corruption risk and how corruption may happen in practice, and to interpret patterns and trends'.15

2.8 In previous annual reports, ACLEI has highlighted its two-level approach to corruption whereby corruption investigations and organised crime investigations operate in partnership to counter organised crime activities. In the 2011-12 report, ACLEI made the following observations about this approach:

Law enforcement agencies and ACLEI investigate the 'corruption handshake' from complementary perspectives. Law enforcement agencies lead the collection of intelligence about organised crime, and this information can provide insights about corrupt conduct and corruption risk. Likewise, integrity investigations, by examining the conduct of possibly corrupt law enforcement officers, can yield new information about the activities and methods of criminal groups.

Accordingly, ACLEI engages with the operational 'core business' areas of the agencies in the Integrity Commissioner’s jurisdiction, as well as with their professional standards units, to share information about organised crime operations and to work together to counter threats to law enforcement integrity.16

2.2 Mr Stephen Hayward, ACLEI's Executive Director Operations, informed the committee that the legislation providing for drug testing was a good example of an initiative emanating from ACLEI operations where operational and preventive strategies move in tandem:

13 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 8.

14 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 8.

15 ACLEI, Annual Report of the Integrity Commissioner 2011-12, pp 19 and 85.

16 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 26.

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It is about matching what we see in our investigations and allowing the agencies through, for instance, the customs integrity implementation project to move along with us to strengthen their integrity framework. Sometimes that is a delicate dance, for operational reasons. But on these occasions we have been able to move both the operational side and the preventive side along the road together, which enables the agency to manage its risks and match their measures against the risks as we see them rather than at the end of the day…We are not adopting a linear approach. It is about how we do this in that partnership arrangement.17

2.9 In addition to its normal activities, ACLEI gave priority during 2011-12 to six key projects, namely:

• investigating a number of serious corruption issues, some of which involved

the extensive use of covert investigation methods;

• working with partner agencies to develop legislative proposals and administrative arrangements to establish a common integrity platform in the law enforcement environment;

• providing administrative support to the Hamburger Review into ACLEI's

oversight of ACBPS and the Carnell Scoping Study on resource requirements for further expansion of ACLEI's jurisdiction;18

• extending ACLEI's Canberra premises;

• negotiating a replacement Enterprise Agreement and updating staff policies and procedures to strengthen ACLEI's governance arrangements;

• upgrading ACLEI's information technology platform and operations support software to improve capability and effectiveness.19

Structure, governance and resourcing 2.10 ACLEI ended 2011-12 with an annual budget of $5.1 million and funding for 25 staff. When it first commenced operations in 2007, ACLEI had a budget of $2 million and a staff of nine. In 2012-13, ACLEI expects to raise its average staffing level through recruitment or secondment to 30 positions from the current 25.20

2.11 During the reporting period, ACLEI sought approval to record an operating loss of up to $0.531 million to provide one-off costs for operational reasons and accommodate movement in leave provisions as a result of the decreased government bond rate. The Minister for Finance and Deregulation approved these requests in April

17 Mr Stephen Hayward, Executive Director Operations, ACLEI, Committee Hansard, 5 December 2012, p. 5.

18 Mr Peter Hamburger PSM conducted a second review in 2012 focused on the extension of ACLEI's jurisdiction to include ACBPS. The first review conducted in 2011 was titled '2011 Review of ACLEI's capabilities, operating arrangements and resources'. This report and the ACLEI 2011-12 annual report focus on the 2012 Hamburger Review.

19 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 30.

20 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 5.

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2012.21 Noting that it has applied for approval for an operating loss in four of six operating years, ACLEI highlighted the difficulties in achieving accurate budget forecasting which is 'due to the relatively small size of ACLEI's budget and the relatively high proportion allocated to salaries and the unpredictability of variable costs associated with some investigations'. These include:

the prospect for legal challenge, costs associated with interstate deployments, the need for access to computer forensic services, and expenses related to obtaining short-term surveillance capabilities.22

2.12 The actual amount spent over appropriation in 2011-12 was $0.427 million. The annual report noted that taking into account other factors, 'including depreciation, amortisation and internal efficiencies, ACLEI closed the year with an operating surplus of $0.100 million'. The total actual cost of ACLEI to government through appropriations in 2011-12 was $5.979 million.23

2.13 ACLEI received an unmodified audit opinion from the Australian National Audit Office for its accounts.24

2.14 A restructure was undertaken to support the refinements to ACLEI's strategic orientation including the creation of a two-branch structure. An experienced Senior Executive Officer has been seconded from the Attorney-General's Department to establish a Strategic and Secretariat Branch. The two-branch structure will enable the new Operations Branch to focus on the significant and highly technical investigation and detection work that now characterises ACLEI's operations. Such changes are also expected to enable ACLEI to focus on improving its ability to complete investigation reports and related procedural fairness processes.25

2.15 ACLEI's governance arrangements were strengthened with the addition of an external member to ACLEI's Audit Committee and a review of Standard Operating Procedures.26

Additional funding 2011-12

2.16 In May 2012, the government announced the provision of an additional $0.75 million a year through a reallocation of resources within the Attorney-General's portfolio. These funds were transferred from ACBPS and made available to ACLEI from 1 July 2012.27 The funding will be directed into fulfilling the Hamburger Review recommendations which are expected to add to ACLEI's critical mass, flexibility and effectiveness as an agency. One such recommendation was that ACLEI conduct a

21 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 44.

22 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 45.

23 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 44.

24 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 46.

25 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 8.

26 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 18.

27 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 30.

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scoping study in advance of any future expansion of its jurisdiction or functions. This recommendation led to the appointment of Mr Ian Carnell AM to conduct a scoping study on the inclusion of the three additional agencies under ACLEI's jurisdiction which will come into effect on 1 July 2013.28 The government accepted the findings of the Carnell Scoping Study and agreed to provide additional resources to accommodate the expansion of ACLEI's jurisdiction. The Minister has since indicated that an additional appropriation of $1.3 million over two years will be made available from the start of the 2013-14 financial year, with further review to take place following implementation.29

2.17 During the year, ACLEI was allocated $2.56 million over two years from the Australian Government grant scheme established under the Proceeds of Crime Act 2002 to facilitate the agency's 'Surveillance Capability Enhancement Pilot Project'.30 Under the project's Memorandum of Understanding (MOU) with the ACC, ACLEI is given priority to draw on the ACC's surveillance capability.31

Planned outcomes and performance 2.18 In 2011-12, ACLEI's 2011-12 outcome and output structure (set out in the following table) remain unchanged from 2010-11.

Table 1: Outcome and reporting framework

Outcome—Independent assurance to the Australian Government that Commonwealth law enforcement agencies and their staff act with integrity, by detecting, investigating and preventing corruption.

Outcome strategy—Ensure that corruption issues brought to the attention of the Integrity Commissioner are assessed in a timely manner and, where appropriate, investigated. ACLEI will also assist law enforcement agencies to maintain the integrity of their staff by contributing to corruption detection and prevention initiatives.

Program—Detect, investigate and prevent corruption in prescribed law enforcement agencies; assist law enforcement agencies to maintain and improve the integrity of staff members.

Program objective—ACLEI's program objective is to ensure that instances of corruption are identified and addressed, and that law enforcement agencies have appropriate measures in place to control corruption risks. In this way, ACLEI can provide independent assurance to the Australian Government about the integrity of prescribed law enforcement agencies.32

28 The Attorney-General's Department was reimbursed the cost of the study which amounted to $29,964.

29 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 33.

30 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 44.

31 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 10.

32 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 31.

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2.19 The Portfolio Budget Statements establish a set of 'deliverables' for the program administered. ACLEI's 2011-12 program includes a new deliverable which provides:

Where appropriate, the Integrity Commissioner uses statutory intrusive and coercive information-gathering powers to assist investigations.33

2.20 The only other amendment to the program deliverables is a change in wording of one 2010-11 deliverable with the replacement of the words 'contributes to' with 'enhances'. This 2011-12 deliverable now states:

ACLEI enhances corruption prevention initiatives, such as the assessment of corruption risk and raising awareness about corruption deterrence, thereby helping to build corruption-resistant work cultures.34

2.21 There are seven 2011-12 ACLEI deliverables for the program:

• Corruption issues are promptly brought to the attention of the Integrity

Commissioner for independent assessment and decision on how each issue should be dealt with (either by ACLEI, the agency to which the issue relates, or another agency).

• Where appropriate, ACLEI independently investigates corruption issues, giving priority to conduct that constitutes serious corruption or systemic corruption.

• Where appropriate, the Integrity Commissioner uses statutory intrusive and

coercive information-gathering powers to assist investigations.

• ACLEI analyses and reports on patterns and trends in law enforcement corruption.

• ACLEI recommends changes to laws and to agency practices and procedures to improve integrity in law enforcement, and to detect and prevent corruption more effectively.

• ACLEI enhances corruption prevention initiatives, such as the assessment of

corruption risk and raising awareness about corruption deterrence, thereby helping to build corruption-resistant work cultures.

• Staff members of law enforcement agencies are made aware that information

about corruption can be referred with confidence to the Integrity Commissioner.35

2.22 Seven Key Performance Indicators (KPIs) are linked to the program objective and deliverables. In comparison to previous years, ACLEI 'achieved the same standard, or exceeded its performance, against most KPIs'. However, the annual report also notes that attention given to various priority investigations and agency-building

33 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 31.

34 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 31.

35 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 31.

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projects over the year in review 'meant that not all KPIs were met to the same level, or in the same way, as previous years'.36

2.23 While ACLEI highlights that the practice of allocating resources flexibly to take account of priorities is a responsible use of its resources, it notes that 'some key outcomes—such as bringing investigations to finality when a person has already been suspended from duty or dismissed—were not adequately met in 2011-12'.37

KPI 1: The corruption notification and referral system is effective

Measure 1:

Law enforcement agencies notify ACLEI of corruption issues in a timely way

Performance against measure 1:

In 2011-12 there were 73 notifications compared to 46 in the previous year (amounting to an increase of 58 per cent in the volume of notifications).38

Measure 2:

Other agencies provide information about corruption issues to ACLEI

Performance against measure 2:

18 referrals were received from other government agencies compared to 10 in 2010-11 and 2 in 2009-10.39

Measure 3:

ACLEI is seen as viable for reporting information about corruption

Performance against measure 3:

Whistleblowers, human resources and members of the public provided information directly to ACLEI during the year. The annual report notes that ACLEI no longer publishes this statistical information for operational security reasons.

36 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 33.

37 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 33.

38 The alternative figure is 66 notifications net of duplicates or information about a corruption issue provided by more than one source.

39 ACLEI, Annual Report of the Integrity Commissioner 2011-12, pp 34-35.

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KPI 2: ACLEI assesses all notifications and referrals of corruption issues in a timely way

Measure 1:

Upon receipt, ACLEI assesses information about corruption to determine how each issue should be dealt with. Credible information about corruption is prioritised

Performance against measure 1:40

In 2011-12, 111 corruption issues were notified or referred with a further 11 issues from the previous year subject to assessment. All notifications and referrals were subject to

an initial assessment upon receipt.

Assessments completed for 65 of 97 notifications and referrals received in 2011-12 within 90 days of receipt (or 63 per cent all notifications and referrals).41

As 63 per cent of assessments were completed within the 90 day period, the 75 per cent target for completing assessments within 90 days was not achieved. In comparison, in 2010-11, ACLEI met the 75 per cent benchmark, achieving a result of 76 per cent.42

At the end of the year, 17 assessments were in progress of which 13 were more than 90 days old.43

The number of assessments (97) exceeded previous years of 80 in 2010-11 and 71 in 2009-10.44

ACLEI response to performance:

Recognising that some assessments are time-critical because target identification and opportunities for real-time evidence collection may rely on a prompt response from ACLEI, in 2012-13, it intends to examine methods to streamline assessment procedures which were developed in previous years.45

40 In describing its performance in relation to this measure, ACLEI highlighted that the assessments and prioritisation process 'includes factors such as: reliability of information; susceptibility of the issue to investigation; opportunity for real-time evidence collection; and seriousness and impact of the issue'. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 36.

41 Sixty-five of 97 completed assessments amounts to 63 per cent completed within the 90 day timeframe compared to 76 per cent in 2010-11 and 60 per cent in 2009-10.

42 The 2010-11 result had been an improvement on previous years. In 2009-10, ACLEI achieved 60 per cent and in 2008-09, 26 per cent. PJC-ACLEI, Examination of the Annual Report of the Integrity Commissioner 2010-11, March 2012, p. 5.

43 The annual report also notes that there were 32 corruption issues in the assessment phase (up from 11 in 2010-11) at the close of the reporting period. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 75.

44 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 36.

45 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 36.

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KPI 3: ACLEI's investigations are conducted professionally and efficiently, and add value to the integrity system

Measure 1:

Investigations adhere to the Integrity Commissioner's Investigation Guidelines

Performance against measure 1:

While the report does not explicitly state that the Integrity Commissioner's Investigation Guidelines were adhered to, it provided the following indicators of performance:

• review of Standard Operating Procedures commenced to ensure they remain appropriate in context of taskforce operations and major investigations.

• temporary position established to coordinate use of intrusive powers and warrant-based activity to improve operational effectiveness as the use of covert methods increase.

• specialised training to operations staff conducted to ensure compliance with ACLEI guidelines and legal requirements concerning the use of powers.46

Measure 2:

ACLEI investigations are properly managed

Performance against measure 2:

As part of a regular review process of the deployment of investigative resources measured against strategic priorities, five investigations (of a total of 28 investigations active during the year) were reconsidered and discontinued. The five investigations compare to 15 in 2010-11 and one in 2009-10.47

Measure 3:

Investigation reports provided to the Minister are of high quality

Performance against measure 3:

One investigation report about two related corruption issues was provided to the Minister.

Positive feedback on the report received from the Chief Police Officer of ACT Policing.

Measure 4:

Advice is provided to the Minister in a timely way

Performance against measure 4:

A need to prioritise other investigations contributed to delays in finalising three investigation reports to the Minister. All three reports related to matters in which a person had been dismissed or suspended from duty.48

46 Staff trained included secondees and 'authorised officers'. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 38.

47 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 38.

48 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 39.

16

KPI 4: ACLEI monitors corruption investigations conducted by law enforcement agencies 49

Measure 1:

All agency corruption investigation reports provided to ACLEI for review are assessed for intelligence value and completeness

Performance against measure 1:

Twenty-five agency internal investigation reports were received and reviewed (compared to 18 in 2010-11) and all report conclusions were accepted with no comments or recommendations necessary.

Measure 2:

ACLEI liaises regularly with the agencies' professional standards units

Performance against measure 2:

ACLEI investigation managers met regularly with the professional standards unit of the ACC, ACBPS and AFP to consider progress on corruption issues that the Integrity Commissioner had referred for internal investigation. This liaison led the AFP to reconsider and discontinue three internal investigations on the basis that no evidence of corrupt conduct was apparent.50

KPI 5: ACLEI contributes to policy development and law reform in accountability and corruption prevention relating to law enforcement

Measure 1:

Each investigation addresses corruption risk and, where warranted, makes recommendations for improvement in corruption prevention or detection measures

Performance against measure 1:

• investigation report provided to the Minister considered how law enforcement environments could be

strengthened against corruption risk.

• 'Community of Practice for Corruption Prevention' initiated by ACLEI in June 2011 bringing together practitioners from the ACC, ACBPS, and AFP to discuss lessons from investigations met three times.

• corruption prevention lessons from other ongoing investigations contributed to the design of forthcoming legislative arrangements including integrity testing.51

Measure 2:

Submissions that relate to

Performance against measure 2:

Submissions to five government and parliamentary

49 ACLEI may refer corruption issues for internal investigation by the ACC, ACBPS or the AFP, or ask the AFP to investigate corruption issues relating to the two other agencies. At the completion of an investigation, the agency head provides a report to the Integrity Commissioner who may make recommendations and comments in relation to the investigation or outcome. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 39.

50 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 40.

51 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 41.

17

corruption prevention or enhancing integrity may be made to government or in other relevant forums

inquiries and policy input into other initiatives including consultations concerning the National Anti-Corruption Plan.

KPI 6: Staff members of law enforcement agencies are made aware of ACLEI's role

Measure 1:

Marketing and other awareness-raising activities are in place, including joint initiatives with other agencies

Performance against measure 1:

• additional security features added to ACLEI website with a view to giving confidence to online reporting of corruption issues.

• three awareness-raising presentations about integrity issues made to ACBPS and nine to the AFP.

Measure 2:

Targeted presentations about integrity are made to diverse audiences

Performance against measure 2:

Eight presentations to public or special interest audiences.52

KPI 7: ACLEI handles personal information appropriately

Measure 1:

Regular privacy audits are undertaken to ensure compliance with legal obligations and better practice policy for information-handling

Performance against measure 1:

• implementation of Australian Government 'Protective Security Policy Framework' which introduces a new classification system for controlling storage and access to official information and documents.

• no reported security incidents involving the unauthorised release of personal information during the year.53

52 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 43.

53 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 44.

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CHAPTER 3 Key issues

3.1 This chapter considers the key issues of concern to the committee, namely the addition of ACBPS within ACLEI's jurisdiction and future inclusion of the three other agencies in 2013. This chapter also considers the impact of ACLEI's widened jurisdiction on its prioritised workload and the timeliness of its assessment and investigative functions.

Inclusion of ACBPS under ACLEI's jurisdiction 3.2 The law enforcement aspects of ACBPS came under ACLEI's jurisdiction from 1 January 2011 after the government responded to the committee's recommendation to include the ACBPS under ACLEI's purview.

3.3 In evidence regarding the 2010-11 annual report, the Integrity Commissioner had informed the committee that the 'devolution of resources at the moment is clearly towards corruption issues that have been notified or referred to ACLEI in relation to the Customs and Border Protection Service'. Mr Moss also noted at the time that the major operations underway with ACBPS involved 'considerable dedication of ACLEI staff and resourcing' which was supplemented by resources provided by ACBPS and the AFP.1

3.4 In 2011-12, ACLEI's focus and 'the greater part' of its resources remained with ACBPS and will remain so for the foreseeable future according to the Integrity Commissioner. Mr Moss explained that the vulnerabilities at the border are 'so high that it is not surprising that since January 2011 we have had to put a considerable focus on Customs'.2 While ACBPS had made what the Integrity Commissioner considered to be 'considerable progress in establishing enhanced integrity measures' when it came under ACLEI's purview, ACLEI contributed to the integrity arrangements of ACBPS as part of an 'integrity partnership' which continues to develop.3

3.5 While ACLEI's focus remains with the ACPBS, the Integrity Commissioner pointed out that this sustained focus had not compromised its vigilance in relation to the other agencies under its purview. Mr Moss explained that an incremental increase in ACLEI's resources since its establishment had enabled him to recruit a critical mass of people who can be deployed to various corruption issues by way of operations or task forces.4 At the same time, he recognised that some issues had been 'pushed back' because of ACLEI's focus on ACBPS and that those issues 'are getting a little long

1 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 25 November 2011, p. 2.

2 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 4.

3 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 4.

4 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 8.

20

because of that'. Mr Moss concluded, however, that 'I have not lost sight of them and I hope to return to them before too long'.5

3.6 The impact of the inclusion of ACBPS on ACLEI's workload is reflected in the number of notifications and referrals of possible corruption issues, many of which emanated from the ACBPS. During 2011-12, 103 corruption issues were notified or referred to the Integrity Commissioner for assessment. Three more issues were identified by ACLEI and dealt with on an 'own initiative' basis. The 106 issues represent an increase of 16 issues from 90 in 2010-11.6 ACLEI noted that the rise over the year in review is 'largely explained' by the inclusion of ACBPS in the Integrity Commissioner's jurisdiction.7

Sources of information about corruption issues 2011-12 (2010-11 figures)8

ACC ACBPS AFP TOTAL

Notifications Notification by law enforcement agency heads

8 (5) 29 (20) 36 (21) 73 (46)

Referrals Minister

0 (0) 0 (0) 0 (0) 0 (0)

Other people or government agencies

1 (9) 14 (3) 23 (32) 38 (44)

Own initiative ACLEI intelligence/ own initiative identifications

0 (0) 0 (0) 3 (0) 3 (0)

Sub total

9 (14) 43 (23) 62 (53) 114 (90)

Less duplicates

0 (0) 8 (0) 0 (0) 8 (0)

TOTAL 9 (14) 35 (23) 62 (53) 106 (90)

5 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 8.

6 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 67.

7 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 65.

8 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 65.

21

3.7 In April 2012, Mr Peter Hamburger PSM reviewed the implementation of ACLEI's jurisdiction to deal with corruption issues within the ACBPS. The review examined the first twelve months of ACLEI's extended jurisdiction. Mr Hamburger concluded in his review that implementation of ACLEI's jurisdiction within ACBPS had been 'successful in terms of the development and investigation of important cases'.9 The Integrity Commissioner informed the committee that Mr Hamburger had observed that ACLEI's 'investigation case work has moved up the scale of importance and is now concentrated in areas where the use of the Integrity Commissioner's powers and/or high-end investigative capabilities offer real benefit'.10 However, Mr Hamburger had also observed that the pressure of this casework, 'added to the legacy of under-resourcing in ACLEI's earlier years, has severely limited the extent to which some strategic priorities have been able to be addressed'.11 The review recognised the fulfilment of three strategic priorities as necessary to strengthen ACLEI's development including:

• contributing more to developing and acting on lessons from its initial

casework in the ACBPS jurisdiction;

• embedding a new staffing model that reflects ACLEI's model of operating in an 'integrity partnership';

• driving to completion a project to 'establish and embed in normal operations a range of foundation systems in the broad area of information management'.12

3.8 Mr Hamburger made a number of recommendations in the review which were agreed to by the government. As part of implementing the recommendations, ACLEI commenced a restructure, including the establishment of a new Strategic and Secretariat Branch.13

3.9 The committee asked the Integrity Commissioner about the impact of its widened jurisdiction on its workload. The Integrity Commissioner emphasised initiatives such as Taskforce Natio, which examines the influences of organised crime and corruption risk at Australia's border, and ACLEI's ongoing investigation workload is engaging its 'resources and capabilities fully'. However, the investigations have produced and 'promise to continue to produce' results that will enable ACLEI and its Taskforce Natio partners (including the ACBPS, ACC and AFP) to 'contribute to the government's efforts to strengthen the integrity arrangements at Australia's borders'.14

9 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 32.

10 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 1.

11 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 32.

12 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 32.

13 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 32.

14 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 1.

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Further expansion of ACLEI's jurisdiction 3.10 The committee questioned the Integrity Commissioner about preparations for ACLEI's expanded jurisdiction which will take effect from 1 July 2013. He informed the committee that while ACLEI is 'fully extended in its operations':

I have made it a priority to ensure that ACLEI's governance and management systems are robust and ready to meet the challenges of the increased jurisdiction in 2013. Mr Hamburger, in his report, also noted that ACLEI should invest in giving its systems and business practices a solid foundation.

In my annual report I detailed a number of important advances in ACLEI's governance arrangements. Since then I have introduced a new, two-branch structure which will allow ACLEI to continue to manage its increasingly high-tempo and technical investigations and more sophisticated task force arrangements, while still making real progress in those areas which, until now, have been forced into second place by operational priorities.15

3.11 Mr Moss further emphasised that ACLEI could draw on its experience with ACBPS having come within its jurisdiction after ACLEI's establishment. In terms of preparation, the Integrity Commissioner contacted the CEOs of the respective agencies as soon as the initiative was formally announced, while contact was made at the operational level to initiate discussion about arrangements for notifications of corruption to the Integrity Commissioner. Furthermore, the three new agencies will engage in the Community of Practice for Prevention, attending the first meeting of 2013 in January with the ACC, AFP and ACBPS.16 Informed by the process previously undertaken with the ACBPS and the Carnell Scoping Study, discussions in relation to funding were initiated with the respective agencies and funding arrangements have now been agreed to.17

3.12 The recruitment of five extra officers will be made possible by additional funding available from July 2013 to coincide with the widening of ACLEI's jurisdiction. When questioned about recruitment of officials with specialised technical skills given AUSTRAC's highly specialised financial operations, the Integrity Commissioner informed the committee that negotiations were to begin with the CEO of AUSTRAC. However, the Integrity Commissioner also emphasised that once AUSTRAC and the other two agencies were within ACLEI's jurisdiction, their respective CEOs were required to notify ACLEI of any corruption issues.18 As Mr Moss noted, once arrangements start coming into effect and notifications start to flow, 'it will become clearer then as to what staffing and staffing skill sets I will need'. The resourcing of ACLEI is fluid and responsive as Mr Moss explained:

15 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 2.

16 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 4.

17 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 4.

18 Integrity Commissioner, Committee Hansard, 5 December 2012, p. 7.

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Hamburger, in his second review, talked about the concertina model: you have an issue, the concertina expands and staff come in.

I am very reliant upon the goodwill and cooperativeness of the heads of agencies to give me staff, to assist… If I found I needed particular skill sets in a matter involving AUSTRAC I might go to a joint investigation with the AFP or, as provided for under the legislation, I might ask the AFP to investigate on my behalf. The array of skill sets in the AFP is considerable, and I am sure we will find someone who could meet that need. If not, I have in the past had experience of going to other agencies such as the ATO, speaking with the Commissioner of Taxation and getting people who can assist seconded to ACLEI for a time. In that particular case it was a question of getting a financial analyst on board. The skill does not have to be in-house, it can be imported, and it is being imported. Hamburger coined that nice phrase 'the concertina model' and we are going to use it, and are using it.19

Coercive information-gathering powers 3.13 Part 9 of the LEIC Act sets out the Integrity Commissioner's information-gathering powers. These powers require a person to produce documentary evidence or appear as a witness and answer questions truthfully at a hearing. A 'notice to produce' or a summons to attend a hearing can be issued only in relation to ACLEI investigations or joint operations.

3.14 During 2011-12, the Integrity Commissioner exercised information-gathering powers in six investigations and held nine hearings. The Integrity Commissioner also issued 15 notices to produce information, documents or things, in relation to four investigations (including two investigations that also included hearings). In contrast, there were 19 such notices issued in 2010-11.20

3.15 The number of summonses issued to witnesses to attend hearings in order to provide information, documents or things under section 83 of the LEIC Act increased to 13 instances in 2011-12 from 10 instances in 2010-11.21 The Integrity Commissioner informed the committee that a coercive power hearing will usually take half a day and that:

A lot of work goes into preparing for them. The ACLEI model is that we provide in-house counsel assisting for the hearings. Another agency we are aware of uses external counsel. We tried that but it did not go very well at all. We are now reliant on our three lawyers in our legal practice to provide that. They are all very competent. They have all been prosecutors in one form or another and it really is working well from that point of view.22

19 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 7.

20 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 76.

21 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 76.

22 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 11.

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Intrusive information-gathering powers

3.16 The Integrity Commissioner has intrusive and covert powers for the purpose of investigating possible corrupt conduct. During the year, these powers were used 17 times as part of investigation strategies relating to three investigations.23

3.17 Covert investigation methods provide an 'important tool for investigating corruption offences in a law enforcement context'.24 During 2011-12, ACLEI's investigations warranted the use of telecommunications intercepts on nine occasions and a surveillance devices warrant was obtained for the first time.

3.18 The context in which intrusive and covert powers were used 17 times during the review period include:

• One search warrant under Part 9, Division 4 of the LEIC Act compared to

seven in 2010-11;

• Nine telecommunications (interception and access) warrants compared to four

in 2010-11;

• Seven surveillance device warrants (may include multiple devices) compared

to zero in 2010-11.25

Emerging strategy—Telecommunications intercepts

3.19 ACLEI identified a number of emerging trends in relation to its corruption investigations including:

the formation of complex networks; new evidence of infiltration; and the increasing use of sophisticated counter-surveillance measures by officials under investigative scrutiny.26

3.20 In responding to these trends, ACLEI made greater use of telecommunications interception methods over the review period. In November 2011, ACLEI was allocated $2.56 million in funding to conduct a two-year pilot evaluation of a dedicated physical surveillance capability for integrity investigations.27 These developments reflect ACLEI's 'strategic orientation towards investigating serious and systematic corruption, particularly any issues that may involve connections with organised crime'.28 They also require of ACLEI an ability to maintain up-to-date major investigation experience and expertise if it is to contribute to inter-agency investigations of organised crime linked to law enforcement agencies. The Integrity Commissioner's strategy to meet this challenge is to second 'suitably experienced staff

23 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 77.

24 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 77.

25 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 77.

26 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 19.

27 The initiative is funded from criminal assets confiscated under the Proceeds of Crime Act 2002. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 17.

28 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 8.

25

from law enforcement agencies'. He argued that such an approach will further 'reinforce the integrity partnership approach that remains at the core of the ACLEI model'.29

3.21 Reflecting on the surveillance capability available to ACLEI under its MOU with the ACC, the Integrity Commissioner noted that ACLEI was now able to draw on its full suite of investigative powers provided under the legislative framework:

It has always been there, but having the resources and capability to exercise it has been the challenge. Now at this point as we approach the end of the sixth year it is there and we are using it. We are using it in a coordinated way and are working closely with other agencies in the way we deploy those powers. Particularly in a joint situation where I am investigating, to have the ability to introduce the coercive hearing power in that suite of powers is really proving to be useful.30

Workload 3.22 In 2011-12, the totality of ACLEI's assessment and investigation workload amounted to 185 corruption issues.31 These issues comprised 106 notifications and referrals (including three own initiative investigations) and 79 other corruption issues carried forward from previous years. In comparison, the total number of corruption issues before ACLEI in 2010-11 was 177.

Corruption issues carried forward

3.23 In 2011-12, there were 89 corruption issues carried forward from the previous year of which 10 were concluded after assessments determined that they did not raise a corruption issues within the meaning of the LEIC Act.32 Of the remaining 79 corruption investigations carried over from previous years, the annual report notes that:

• 3 matters were carried over from 2007-08 (down from 14 in 2010-11);

• 12 matters were carried over from 2008-09 (down from 20 in 2010-11);

• 22 matters were carried over from 2009-10 (down from 52 in 2010-11); and

• 42 matters were carried over from 2010-11. 33

3.24 In 2009-10, 90 issues were carried forward and in 2010-11, 80 issues were been carried forward.34 In its previous reports, the committee expressed concerns

29 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 8.

30 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 11.

31 In these 10 instances, ACLEI determined that the issue did not amount to corrupt conduct or did not involve members of the agencies within ACLEI's jurisdiction. In relation to a further 14 instances, the Integrity Commissioner decided after assessment that investigation was not warranted for reasons including dated information, lack of corroboration or no realistic line of inquiry. ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 75.

32 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 2.

33 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 67.

26

about the increasing number of issues carried over from one year to the next and ACLEI's ability to manage the volume of work within existing resources. During the last review period, the Integrity Commissioner reported that several initiatives together with an overall increase in the budget and staffing had enabled ACLEI to manage its assessment and review function.35 In its report on the 2010-11 ACLEI annual report, the committee had noted its satisfaction that the number of issues carried forward had not grown.36 While the number of issues carried forward over the review period has remained consistent with the previous year, the committee intends to continue to monitor these issues in the future.

Rise in notifications

3.25 Under KPI 1 concerning notifications by agency heads, there were 73 notifications of corruption issues in 2011-12 compared to 46 in the previous year (amounting to an increase of 58 per cent in the volume of notifications).37 When asked about the rise in the number of notifications, the Integrity Commissioner informed the committee that the increase over the review period was down to:

Nothing in particular, but I think there is a growing awareness now in the agencies, after almost six years of ACLEI's operation, of what a corruption issue looks like and a preparedness to bring it forward. I do not mean that it has been held back in any sense, but I am talking about the understanding of supervisors. Supervisors at all levels in these agencies are in the front line of combating corruption. Through programs introduced by their agency, senior management is becoming more and more aware of the importance of their role as supervisors and their role in being alert to misconduct which may lead to corrupt conduct or indeed be corrupt conduct from the outset. That is reflected in awareness and issues being notified to me.38

Assessment process

3.26 The Integrity Commissioner is responsible for assessing a notification or referral in the first instance to establish whether the matter is in his jurisdiction and to assess how the issue is best handled. While ACLEI can investigate the manner on its own or jointly with the agency concerned, the Integrity Commissioner noted that the great majority of matters are referred back for investigation by the agency itself which will then provide a report to him. This option enables the Integrity Commissioner to

34 PJC-ACLEI, Examination of the Annual Report of the Integrity Commissioner 2010-11, March 2012, p. 11.

35 PJC-ACLEI, Examination of the Annual Report of the Integrity Commissioner 2010-11, March 2012, p. 11.

36 PJC-ACLEI, Examination of the Annual Report of the Integrity Commissioner 2010-11, March 2012, p. 13.

37 ACLEI, Annual Report of the Integrity Commissioner 2011-12, pp 34-35.

38 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 8.

27

'shift the workload back and I can equalise the workload with the resources I have'. Moreover:

The LEIC Act itself requires me to focus on the most serious systemic corruption. That is important because I am not then going to be caught up in the so-called minor issues, the lesser issues, but you never know. It can be that a matter on its face value is referred back but then on investigation it becomes clear that something quite large and serious is behind it, in which case the agency head will usually tell me and I can then reassess what I do. On the other hand, if I decide to go into a matter and it proves to be nothing, I can decide to do something else with it. So there are these points of decision along the way.39

3.27 In response to questions regarding ACLEI's performance in relation to assessments whereby 63 per cent were completed within the 90-day period and the 75 per cent target for completing assessments within 90 days was not met, the Integrity Commissioner drew a parallel between the timeliness of assessments and ACLEI's developing expertise:

I dream of an ACLEI that can deal very quickly with information. We want to be based on intelligence—to be intelligence led. Our sources are the notification arrangements, or the referral arrangements. There are two words used in a particular sense in the act: a 'notification' is from a head of an agency and a 'referral' is from anyone else, such as the ombudsman or an individual. It is about dealing quickly with information and trying to pick from our experience. As ACLEI develops and the years pass, this becomes more and more feasible. We know what we are looking for, we have a database that we can then apply new information to and we are starting to pick trends and patterns. This is what I hope we can continue to work towards as an agency—a greater facility to deal quickly with information.40

3.28 Notwithstanding this point, Mr Hayward explained that the high-risk matters are turned over extremely quickly in comparison to the lower risk matters. He noted that it was the low risk matters that had contributed to ACLEI not meeting its target of 75 per cent under KP1 which requires ACLEI to assess all notifications and referrals of corruption issues in a timely way. Mr Hayward emphasised that in relation to:

the high-risk things, through the informal mechanism of a phone call we can quickly escalate that to the Integrity Commissioner, have a decision and back out to allow the agency to continue to investigate to minimise the risk, take the investigation over or work jointly.41

39 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 9.

40 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 10.

41 Mr Stephen Hayward, ACLEI, Committee Hansard, 5 December 2012, p. 10.

28

Issues carried forward to 2012-13

3.29 At the close of the reporting year, 126 ongoing issues were carried forward to 2012-13 which is an increase from 79 in 2010-11. The 126 issues include:

• 21 investigations by ACLEI including 41 investigations conducted jointly

with other agencies;

• 71 internal investigations conducted by LEIC Act agencies, without ACLEI

supervision (ACC -1; ACBPS - 28 and AFP - 42);

• 1 ACBPS internal investigation with ACLEI oversight;

• 1 AFP internal investigation with ACLEI oversight;

• 32 notifications and referrals under assessment. 42

3.30 On 30 June 2012, over 63 per cent of these 126 corruption issues were less than one year old and a further 25 per cent were aged between one and two years. Of these matters, ACLEI noted in the annual report that:

While this outcome is comparable with the previous year's result, the larger number of corruption issues carried forward from the 2011-12 year poses a workload management risk and will be monitored carefully.43

Monitoring and addressing workload challenges

3.31 When questioned about the number of corruption issues carried forward, the Integrity Commissioner emphasised to the committee that never before had so many matters been carried over from one year to another. As part of monitoring the matter, he noted that there was a need for constant vigilance.44 The Integrity Commissioner further noted that particular attention was being paid to 'developing systems to improve ACLEI's timeliness in assessments and reporting on investigations'.45 In addition, Mr Moss highlighted the fact that he can shift ACLEI's workload by referring matters back to the agencies and that he 'will be taking a very strict approach as to what ACLEI itself deals with'.46 Notwithstanding this ability, even when matters are referred to the relevant agency, ACLEI must undertake the initial assessment and this has an impact on its workload.

3.32 ACLEI is also responsible for undertaking a review process when provided with a report under section 66 of the LEIC Act where the agency has conducted an investigation and reports back to the Integrity Commissioner. However, the Integrity Commissioner emphasised that he has lessened his focus on the review as he takes the approach that the agencies involved are 'very mature' in the referral and committed to

42 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 75.

43 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 75.

44 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 9.

45 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 2.

46 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 9.

29

uncovering a corruption issue 'rather than just skim over the top of it and leave corrupt conduct undetected'.47

3.33 The committee appreciates that ACLEI's workload has increased for reasons including its jurisdiction over ACBPS. However, the committee will continue to monitor the number of issues carried forward and ACLEI's overall workload.

Five years of operation 3.34 To mark the fifth year of ACLEI operations, the annual report highlights key developments over each year of its operations. The Integrity Commissioner observed that over ACLEI's five years of operation, ACLEI and the Australian Government 'have come to understand the key corruption threats to law enforcement, particularly the threat from organised crime and in particular the vulnerabilities at the border'. This understanding has affirmed ACLEI's strategic orientation towards 'investigating serious and systemic corruption, particularly issues that may involve connection to organised crime'.48

3.35 The committee took note of the highlights and developments in relation to ACLEI's operations. It recognised these developments as part of efforts on the part of ACLEI to establish and maintain a strong common integrity framework.

Committee view 3.36 As noted in the introduction, the committee congratulates ACLEI on the quality and readability of its annual report and on another highly significant and fruitful year of operation. The committee appreciates the challenges before ACLEI in terms of expanding its jurisdiction and managing a greater workload. At the same time, the committee recognises that these challenges provide an opportunity for ACLEI to widen the integrity framework and its influence.

3.37 The committee found the highlights section in the 2011-12 annual report very useful. It provides a year by year overview of key highlights in relation to ACLEI's operations and development since establishment in 2006-07. The committee notes that this section, which is an expansion of a former 'snapshot' section, enables comparisons to be made between years and suggests that ACLEI provide a highlights section on each year of operation in future annual reports. The committee also notes the helpful information regarding changes to ACLEI’s operating environment contained in Appendix 3 of the 2011-12 annual report.

3.38 The committee congratulates the Integrity Commissioner on the extension of his appointment for two years and notes that this will provide the Commissioner with further opportunity to consolidate and enhance the important work of ACLEI at a time

when its jurisdiction and capacities are expanding significantly.

3.39 Finally, the committee commends the Integrity Commissioner and his staff for their hard work over the reporting period and for an informative annual report. The

47 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 10.

48 Mr Philip Moss, Integrity Commissioner, Committee Hansard, 5 December 2012, p. 3.

30

2011-12 annual report reflects the fact that ACLEI is now not only strongly embedded within the integrity landscape, but that its sphere of influence within the Commonwealth integrity and law enforcement environment continues to grow.

Mr Darren Cheeseman MP Chair

31

Appendix 1

Compliance with reporting requirements Each annual report must be prepared in accordance with reporting requirements set out in the organisation's founding legislation (the LEIC Act) and the relevant regulations formed under this Act—the Law Enforcement Integrity Commissioner Regulations 2006 (the LEIC Regulations). In addition, as a matter of policy, each annual report should comply with the reporting requirements set out in the Joint Committee of Public Accounts and Audit approved guidelines: Requirements for Annual Reports.

A comprehensive compliance index is included in the annual report and cross-references compliance with these requirements.1 Each requirement is described in brief below.

ACLEI's legislation

The annual reporting requirements for ACLEI are set out in section 201 of the LEIC Act and require that the Integrity Commissioner provides the Minister—for presentation to the Parliament—a report on the performance of the Integrity Commissioner's functions during each financial year.

Section 201 states that annual report must include the following:

(a) the prescribed particulars of: (i) corruption issues notified to the Integrity Commissioner under section 19 during the financial year; and (ii) corruption issues raised by allegations or information referred

to the Integrity Commissioner under sections 18 and 23 during that year; and (iii) corruption issues dealt with by the Integrity Commissioner on his or her own initiative during that year; and (iv) corruption issues investigated by the Integrity Commissioner

during that year; and (v) corruption issues that the Integrity Commissioner referred to a government agency for investigation during that year; and (vi) ACLEI corruption issues investigated during that year; and (vii) certificates issued under section 149 during that year; (b) a description of investigations conducted by the Integrity

Commissioner during the financial year that the Integrity Commissioner considers raise significant issues or developments in law enforcement; (c) a description, which may include statistics, of any patterns or trends, and the nature and scope, of corruption in:

1 ACLEI, Annual Report of the Integrity Commissioner 2011-12, pp 178-180.

32

(i) law enforcement agencies; and (ii) other Commonwealth government agencies that have law enforcement functions; that have come to the Integrity Commissioner’s attention during that year in the performance

of his or her functions;

(d) any recommendations for changes to: (i) the laws of the Commonwealth; or (ii) administrative practices of Commonwealth government agencies; that the Integrity Commissioner, as a result of

performing his or her functions during that year, considers should be made; (e) the extent to which investigations by the Integrity Commissioner have resulted in the prosecution in that year of persons for offences; (f) the extent to which investigations by the Integrity Commissioner have resulted in confiscation proceedings in that year; (g) details of the number and results of: (i) applications made to the Federal Court or the Federal

Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977 for orders of review in respect of matters arising under this Act; and (ii) other court proceedings involving the Integrity Commissioner; being applications and proceedings that were determined, or otherwise disposed of, during that year.

Law Enforcement Integrity Commissioner Regulations 2006

Regulations 17 to 23 set out the prescribed particulars of the corruption issues outlined in section 201(2) of the LEIC Act.

Joint Committee of Public Accounts and Audit approved guidelines

Each year the Department of Prime Minister and Cabinet publish Requirements for Annual Reports.2 These annual reporting requirements are approved by the Joint Committee of Public Accounts and Audits under sub-sections 63(2) and 70(2) of the Public Service Act 1999. The requirements cover a range of mandatory and suggested matters.

Financial Management and Accountability Act 1997

The Financial Management and Accountability Act 1997 (FMA Act) sets out the framework for the proper management of public money and public property by the Executive arm of the Commonwealth. Under section 49 of the FMA Act the chief executive is required to prepare annual financial statements in accordance with the Finance Minister's Orders (FMOs), including the Australian Accounting Standards.

2 Department of the Prime Minister and Cabinet, Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies, 28 June 2012, http://www.dpmc.gov.au/guidelines/ (accessed 14 November 2012).

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It was the Auditor's opinion that the financial statements were prepared in accordance with the FMOs and give a 'true and fair view' of ACLEI's financial position and as at 30 June 2012 and of its financial performance and cash flows for the year then ended'.3

Compliance with other government requirements

In addition to the above annual reporting obligations, ACLEI has fulfilled the following requirements:

• Publishing of information under Section 8 of the Freedom of Information Act

1982;

• Reporting on contracts with greater than $100 000 value in accordance with the Senate Order for Departmental and Agency Contracts;4

• Listing of file titles in accordance with the Senate Order for the Production of Indexed Lists of Departmental and Agency Files;5 and

• Recording of legal services expenditure in accordance with the Legal Services Directions 2005, issued by the Attorney-General under the Judiciary Act 1903.6

3 ACLEI, Annual Report of the Integrity Commissioner 2011-12, p. 117.

4 The Senate, Standing Orders and Other Orders of the Senate, September 2006, (20 June 2001 J.4358, amended 4 December 2003 J.2851), p. 122.

5 The Senate, Standing Orders and Other Orders of the Senate, September 2006, (30 May 1996 J.279, amended 3 December 1998 J.265), p. 121.

6 Legal Services Directions 2005, para. 11.1(ba).

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Appendix 2

Witnesses who appeared before the committee Wednesday 5 December 2012 - Melbourne VIC

Australian Commission for Law Enforcement Integrity

Mr Philip Moss, Integrity Commissioner

Mr Stephen Hayward, Executive Director Operations

Ms Tamsyn Harvey, Executive Director Strategic and Secretariat

Mr Nicholas Sellars, Director Strategic Support