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Select Committee on a National Integrity Commission
17/05/2017
Adequacy of the Australian government's framework for addressing corruption and misconduct

CHARLES, Mr Stephen, QC, Board Member, Accountability Round Table

WHEALY, Mr Anthony, QC, Board Chair, Transparency International Australia

[11:41]

CHAIR: Welcome. Thank you both for talking with us today. The committee has received a submission from Transparency International Australia as submission No. 21 and from the Accountability Round Table as submission No. 20. The committee also notes your submissions to the 2016 select committee. Would you like to add anything about the capacity in which you appear?

Mr Whealy : I am a former assistant commissioner of ICAC, although I only held office for the purpose of one particular inquiry, the Obeid inquiry. I am also currently an assistant commissioner in the Police Integrity Commission in New South Wales. However, my appearance here is primarily to put the views of Transparency International, although my views and its views are, to a degree, helped by my experience in those bodies I mentioned.

Mr Charles : I was a judge in the Court of Appeal. I am a board member of the Accountability Round Table, which is a strictly nonpartisan body of retired professionals who are interested in transparency and accountability in government. For my sins, I was the chair of the panel which advised the Baillieu government on how to set up an anticorruption commission.

CHAIR: Thank you. Have you worked out between you who will commence with an opening statement?

Mr Whealy : I am happy to give a three-minute statement.

CHAIR: Three minutes? I am sure we have time for more than that!

Mr Whealy : I saw the rules and I was reminded of appearances before the High Court of Australia, where if you went over 20 minutes you were certainly in considerable trouble!

In any event, we have put in a written submission and I hope that it is of assistance to the committee. The main points that are made in it are these. We believe there is a need for a broad based federal anticorruption agency which would not only have investigative powers but also carry out an educational and preventive role. We believe that the case for such a body is really overwhelming, and in our submission we point to the multiagency approach that currently prevails and the gaps and shortcomings that we believe are inherent in that multiagency approach. So we believe that it is necessary to cover the whole sphere of federal institutions, including parliamentarians, politicians and bureaucrats. We do not specifically focus on those people, but we need to have a comprehensive approach all the way across the system.

The primary point I make in support of that is that there is a very strong public demand for such an agency. It seems extraordinary that in all the states around Australia, politicians, for example, are subject to legislation which enables anti-corruption agencies to examine whether there has been any wilful misconduct in public office, and yet at a federal level, there is no investigative body other than, I suppose, the Australian Federal Police to do that. The role of the Australian Federal Police, as it should be, is focused very much on the broad aspects of foreign bribery, terrorism and serious money laundering. One doubts whether they really would have the capacity to handle all this as well. The experience in the other states has been that the police and prosecution bodies are assisted by the efforts of investigative agencies.

If I may then pass to what we would say are the important matters for consideration by the committee once that first threshold is passed: what sort of structure should such a body have; what should be its jurisdiction; importantly, what should be the definition of corrupt conduct; and, importantly, what should its powers be and what limitations, if any, should be placed on those powers. Members of the Senate will have very recently heard from the inspectorate here in Victoria, and so one knows that an important curtailment on the powers of an agency like this is the ability of an inspectorate to examine its conduct. In New South Wales, we have had, perhaps, an unfortunate situation where there has been quite a vehement difference of opinion between the New South Wales Independent Commission Against Corruption and its inspector. Now, I understand that Mr Nicholson is currently an inspector, or has been an inspector, of ICAC. I am not too sure whether he will continue in that role—

CHAIR: No, he will not.

Mr Whealy : I do not think he is. But, speaking for our organisation, I would very much like the opportunity of seeing what he has had to say, to see whether we can be of assistance to the committee, and I would certainly like the opportunity to put in a brief written submission on that. The point that was being raised—if I may go off my main point— is the one that suggests that there is a confusion in the public's mind between, on the one hand, a public finding that somebody is guilty of corrupt conduct, or of conduct that would amount to corrupt conduct, and, on the other, a court's determination that an offence has been committed. I would simply say that that confusion is one that is born of ignorance, and it is possibly ignorance that is fanned by certain sections of the media in the way they report these matters. One has only to read the legislation to realise that ICAC in New South Wales is purely an investigative body. It cannot make a finding—it is prohibited from making a finding—that any criminal offence has been committed. But it does have the power to make a public finding that certain conduct has occurred; in other words, that certain facts have occurred. The only debate that really arises is whether it should spell out that those facts, or that conduct, constitute a finding of corrupt conduct or improper or inappropriate behaviour, or whatever.

The view of the Gleeson-McClintock report in New South Wales, which is a most valuable document—if it has not been brought to your attention prior to this, and you want to get a very clear analysis of what an investigative agency should be, that report by the former Chief Justice of the High Court of Australia and Mr Bruce McClintock is very instructive, I would respectfully submit. We are happy to arrange for a copy to be sent if you have not got one already. But the point they made was that there is this fundamental consideration: should all be hearings be in private, or should some, but only appropriate ones, be in public.

Bear in mind that the way that ICACs operate is that a complaint is made; investigators go out; they look at situations, and then they decide to hold what are called private examinations. These are very private. No-one knows about them. The witnesses do not know what other witnesses are going to be examined. After those private examinations have been held, a coherent picture often emerges. It may be one where three or four people are, on the face of it, deliberately contradicting one another in important respects.

It is out of something like that—but subject again to the Gleeson-McClintock view that it has to be serious misconduct or systemic misconduct; it cannot just be a one-off or something that the police could look at in that small way—that a public hearing may be ordered if it appears to be in the public interest that it should be so ventilated. The test in New South Wales, which I frankly concede has been perhaps abused in the past, is that it will only be a public hearing if the public interest demands it, and there are certain stipulations that must be taken into account. Unfair harm to a person's reputation is a very important consideration. It has been sometimes said in the past that that has been overlooked in ordering a public hearing in New South Wales. Whether that is a fair criticism or not is not for me to say, but I am well aware of the criticisms.

Secondly, it must be a serious or systemic offence or offences that are being looked at, and it must be overall in the public interest that the public are aware that this matter is being investigated. One of the justifications for it being a public investigation is that members of the public then come forward with information that would not otherwise be available to the investigation if it were conducted in secret. That has proved to be of considerable benefit, particularly in investigations around local government misbehaviour. In Queensland at the moment there are public hearings going on related to misbehaviour in elections in number of electorates. The input from members of the public is extremely valuable in those areas. It would not happen if it were a private investigation.

I am sorry to have strayed from the point, but I wanted to move to it. As you will see, talking about the structure, I think Mr Charles and I are in complete agreement that a better model—whilst one could quibble over the exact phrasing—in general terms, is that all inquiries should be in private unless there is a serious public interest commitment in having them public, and then the legislation could spell out what those matters would be that should be taken into account. Victoria, I think, has a test of 'exceptional circumstances' for a public hearing. One does not quibble with those words, but, as lawyers, I think we know that they are of unknown content and sometimes they cover a multitude of sins, really. I think probably I personally would favour not having that phrase there. It certainly has not stopped the Victorian IBAC from holding a public hearing where it thought to do so.

If I may just add again a side point to what I have just been listening to from the inspectorate, I did not understand that there has been any dissatisfaction with Victoria's decision to hold a public hearing in relation to the education department matters. One would think that, if that was something that the inspectorate thought was abhorrent, there would have been some complaint about it, so it seems at least possible to recognise that it has been an acceptable decision in Victoria for that public hearing to be held.

One of the problems that we have is that no-one has ever overturned any state ICAC or IBAC in relation to its decision to hold a public hearing. The courts could intervene to do that if there were an overall error of law or a denial of procedural fairness, but it has not happened. I do not think you can draw any conclusion from that, other than that it just has not happened, and so we do not get any guidance from the courts as to the principles that might apply.

But the avenue for overturning it is there, and the inspector, of course, has a role in complaining about it if he thinks it is an inappropriate decision that has been made. In fact, I think it is public knowledge that the inspector in New South Wales did make that complaint regarding the Margaret Cunneen public hearing; however, the public hearing never took place because the High Court found that ICAC did not have jurisdiction to look at it anyway. So there was a potential position where the inspector and ICAC were in conflict with one another, but it was never resolved—it never had to be resolved.

Coming back to the question of structure, a point we would simply make is that it is important for this committee to look at the jurisdiction that such a body should have, the structure of the body, the powers it should have and the oversight that is appropriate for such a body. We have endeavoured in our submission to cover each of those fields—in a broad way, admittedly, but we hope it is of assistance to the committee.

Mr Charles : Senators, thank you for giving us the opportunity to talk to you on this matter. I agree with just about every word that Mr Whealy has just said, but can I take a short time to put the ART's viewpoint. We agree that there should be a national integrity or anticorruption commission with the full powers that are usually granted to royal commissions. There are an abundance of reasons for this but, among others, the Commonwealth is obliged by its joining the United Nations Convention against Corruption, article 36, to set up such a body and it has not done so, and also by its membership of the Open Government Partnership. The abundance of evidence of corruption and the justification for suspicions about it are set out in the submissions we have made for you. I cannot elaborate on them if you want me to do so. I would add to everything else said there that AJ Brown has recently put out a piece saying that the Commonwealth should assume that there is greater actuality of corruption than is presently believed to be the case, which one would have thought is a perfectly reasonable assumption to make.

Australia's principle excuse for doing little or nothing to comply with article 36 is ACLEI. ACLEI was set up to monitor corruption in law enforcement agencies. It has a staff of about 52. If you look at the ACLEI corporate plan for 2015-16, you will see that its staffing level is 52 right up to 2019. I think ICAC has a staffing level of over 200, IBAC has 160, and this is ACLEI with a staff of 50. If you look at its corporate plan you will see its objective for that year is to make it more difficult for corruption in law enforcement agencies to occur or remain undetected. It is a monitoring body. It has not got the staff, it has not got anywhere near the facilities or the money to carry out an anticorruption function. It is just a good excuse for not doing anything.

As to what the national integrity or anticorruption body should be, it maybe useful to contrast ICAC in New South Wales with IBAC in Victoria. Just having regard to the size of the population of the states they are the biggest—the CCC in Queensland is also a very well run body and certainly highly regarded—and both are set up with very wide, far-reaching powers. What I wanted to say was there are two important differences between them, and that is in the ability to start investigations. In the ICAC legislation in Sydney, until the Cunneen case, there was thought to be a complete discretion to start investigations, having regard to sections 12A and 13. As soon as the commissioner, or the commission, thought that there was any reason to start an investigation then that was a sufficient basis for it doing so. That was interrupted by the Cunneen problem. The Cunneen problem was, with all respect to those who embarked on it, an extraordinary mistake to make, because the suggestion was that Ms Cunneen's son's girlfriend, who was in a car accident, had somehow avoided a breath test on the basis of just saying that she had some breathing problems. She had recently had a breast enlargement, or something of that kind.

On any view, that was misbehaviour; it is difficult to regard that as corruption at all. Although she was a senior prosecutor, there was no allegation that this was part of her prosecutorial functions. Plainly, it is not systemic and it would be very difficult to regard it as serious. As a matter of discretion, they should not have investigated it at all—if they had had any sense. And as for having a public hearing about it, that was barmy.

It spooked the High Court, with the result that we got a majority judgement which a very large proportion of the legal community disagrees with completely. Most of us accept that the dissenting judgement of Justice Stephen Gageler was quite obviously the correct judgement. That is by the way; it was a decision of the High Court, and we are stuck with it.

Then IBAC was set up in 2011 by a government which had made an election promise to do so, to set up an IBAC based on the ICAC model. But what happened was that the ministerial advisors became nervous when the body was on the point of being set up at what it might do to the public servants and, for that matter, to the government. The result was that they set up a body which did not have complete freedom to start an investigation but for which there were a variety of obstacles set up before an investigation could commence. What it did, in effect, what was to say that the IBAC had to be able to articulate the facts amounting to an indictable offence which it wanted to investigate before it could investigate it. And, I might add, misconduct in public office was not even included at that stage in the offences that it could investigate. That made it very difficult at the outset for it to begin its investigations when it began its operations in 2013.

To your question, Senator Kakoschke-Moore: that is one reason why its investigations at the start were low in number. They did not really gather force until after Operation Ord, in which there was an investigation into the education department which was extremely successful. Suddenly, people became aware of what the IBAC was able to do. A little later, the Andrews government made amendments to the legislation, which reduced somewhat—but not completely—the obstacles which were preventing the starting of an investigation by IBAC. So that is not an ideal model. We say that the model of the ICAC in Sydney is a much better one as to how to start investigations. It is much similar to the Queensland commission.

The next matter I wanted to mention was public hearings. The ICAC legislation, by section 31, provides that it can hold a public if it is satisfied that it is in the public interest, after considering full matters. But that leaves it pretty much at large. It only has to say that it has considered these things. While it would be possible to start proceedings in a court by saying 'Well, you've just not passed the basis on which you can begin a public hearing,' in the IBAC legislation in section 117 there is a much stricter test: it is not entitled to conduct a public hearing unless it considers, on reasonable grounds, the three matters that then follow, which include 'exceptional circumstances'. That is capable of being tested in court, and has been tested in court in a matter relating to the police hearing in Ballarat. I think the case is called R & M v IBAC; I can give you, if you wish it, the reference to the decision of the Court of Appeal, which was that IBAC had established that it had those grounds, one of the three bases to start a public hearing. The difference between the two is that ICAC has relied very heavily on public hearings. It has a rule of thumb to have at least one public hearing a month. That has led to an unfortunately large number of public hearings, which culminated in the Cunneen public hearing, with all the disaster that followed from that. By contrast, IBAC, in slightly less than four years of work, has completed about 50 separate corruption investigations and has had, in that time, only four public hearings and, with the exception of the police matter in Ballarat, there has been little or no complaint, either about the fact that a public hearing was taking place or about the way in which it was conducted.

It is perfectly clear that IBAC believes, ICAC believes, and the High Court supports the view that public hearings are an important investigatory tool. The argument is that a public hearing gathers evidence and information from witnesses and, because it is public, other people come forward to give evidence about it. It informs the public sector about the detrimental impact of corrupt conduct. It highlights how corruption can be prevented. It deters further wrongdoing. It prompts immediate public service response, to change the conduct, and it leads to a spike in public allegations of corruption. There has recently been an investigation by the Victorian government of the way in which the IBAC conducts its hearings, and submissions were made—including by the ART—in relation to that. But the support that was given to public hearings was in the judgement of Sir Anthony Mason in the BLF case—and again, if you want it, I can give you the reference to that case. As Mr Whealy has said, in the very valuable report of the former Chief Justice of the High Court—the report is dated 30 July 2015, and the passage is in paragraph 9.4.6 on page 59—those two eminent advisers say:

… the Panel accepts that public inquiries, properly controlled, serve an important role in the disclosure of corrupt conduct. They also have an important role in disclosing the ICAC’s investigative processes. The Panel is not attracted to the idea that the powers of the ICAC should all be exercised in private.

If, when you are speaking with the IBAC inspector, you ask him about Operation Ord and he produces the report into Operation Ord of the investigation department, you will see in paragraph 14 a very well-argued rationale for public hearings, and a statement of the likely impact of public examinations. The fact that section 117 plainly enables a suspect to seek court assistance to prevent a public hearing is dealt with in R & M v IBAC [2015] VSCA 271.

There is no question that enormous powers are given to the ICAC and IBAC, and basic civil liberties are, yes, very much at risk. We accept that. They are legitimate concerns. But similar powers are given to coroners, to the chief examiner under major crimes legislation to nearly all royal commissions. I am sure you will recall the royal commission into the wheat board and the way in which in public witnesses were derided, abused and made fun of at great length. And that was happening in a royal commission. The question for parliament is really how to balance the community's need to expose and eradicate corruption against the damage which is done to basic civil liberties. In addition to the parliamentary committee, there is an inspector there at all time to oversee, and the existence of the independent monitor when an application is being made for the right to bug a telephone here in Victoria.

CHAIR: Thank you very much, Mr Charles. Those references will all be very useful. Perhaps you can ensure that the secretariat and/or Hansard have the correct references. That would be helpful to us.

Mr Charles : Sure.

CHAIR: Another way of paraphrasing your last point there is to dwell on the term 'properly controlled'. I see that as a significant task for this committee.

Mr Charles : Of course.

CHAIR: What controls have been put in place, what has worked, what has not worked. Would either of you care to reflect on the changes that have been made to the ICAC. Indeed, we understand that procedural fairness guidelines are in the process of being produced as well. Are those changes adequate, or is there further that—

Mr Whealy : I think they are. I would not say that there had been an abuse of procedural fairness provisions. The idea was there. It is the same really with the Police Integrity Commission in New South Wales, the same sort of structure. The Police Integrity Commission hardly ever holds public hearings, but the same when point applies; a witness needs to know the case that may be put against him or her. That is the fundamental point. So a witness is apprised—in a public hearing they would be apprised publicly really—of evidence that would be against him or her and also of any submission that might in the end be made against that person, thus enabling them to put of course a right of response, both to the evidence and to any submission that they have been guilty of some corrupt conduct. That is the fundamental point that any guidelines should embrace, and, as I understand it, that has been well and truly taken care of.

As I said, I think if you have a look at the Gleeson report, it goes into that in some detail to make sure that fairness is at all times applied. It is much fairer than, for example, a police investigation, because witnesses are often just interrogated and not necessarily told what the case is going to be against them—in fact, the police would seldom, if ever, do that. But in a public hearing conducted by ICAC in New South Wales that now is required very specifically.

Can I just add one other thing that I perhaps did not highlight enough in my opening remarks. If you are looking at structure, there were three particular points made in our submissions to try and ease the task of a federal body that was going to look at integrity issues in this way. First of all the Gleeson report suggested a change to the ICAC legislation, which has now been carried out, under which looking at illegalities of donations by members of parliament be a matter that can only be looked at by ICAC if it is referred to it by the Electoral Commission. In other words, another agency decides whether ICAC should be involved. It cannot do it off its own bat. That means that only matters of importance would come down to ICAC or matters where the resources of Electoral Commission would be insufficient to mount an investigation. We think that is pretty good because this issue of irregularities and illegalities in political donations is a bit of a hot potato and has been for some years. So one way in which the burden can be eased on an agency is that the act can require it to investigate those matters but only if it is referred to by another agency that is more specialised in considering donation issues and electoral donation issues.

The second one is we know that the Prime Minister set up the independent professional entitlements body and we do think that it is probably does really have the necessary power to operate effectively—for example, it cannot compel production of documents with any sanction as a normal investigation from an agency can do. That is just one example of it. There, we think that you certainly would not want to burden this agency with looking at every instance where an entitlement may have been abused—you could do that if you wished, but it you would have to have a separate commissioner appointed to deal with something like that almost all the time.

So our suggestion was that the federal agency would not necessarily be the first port of call. You could have something like a parliamentary integrity commissioner who would in the first instance scrutinise those matters and resolve them if they could be resolved and only if a matter was serious and perhaps raising the spectre of the commission of a criminal offence. Only then would that matter then be referred to the federal agency. The argument is—we would call it—not the first port of call for minor non-criminal breaches of entitlement rules, which could in turn be dealt with separately by a parliamentary integrity commissioner who could give advice to people as well as adjudicate on minor disputes and who would have the power to refer major possible criminal matters off to the federal agency.

CHAIR: Just while you are on this point, the question we have been canvassing—or at least I in particular have—through this process is the one about parallel process in relation to the parliament, rather than the issues in relation to the judiciary. Can you dwell on that for a moment?

Mr Whealy : I cannot see any reason why you cannot have parallel processes as long as their role is defined. There might be some potential overlap but clearly the sort of model I have suggested there would be one where non-criminal minor breaches of entitlements could be dealt with at a parliamentary level and only where it was apparent that there may be criminal offences involved. Then the matter would be referred to the agency which would have the task of investigating to determine whether a criminal offence has been committed. So I cannot see that in theory there is any problem between having agencies—of course they are not truly parallel in one sense; they are each performing a separate function.

CHAIR: No. If it is simply investigative, that is the case indeed—

Mr Whealy : As opposed to a court determining if someone has committed an offence.

CHAIR: In fact if the investigators are more specialised than, for instance, currently the AFP, there may be some advantages—

Mr Whealy : Yes, that is experience.

CHAIR: in terms of working with things such as parliamentary privilege.

Mr Whealy : Yes. Experience and expertise become very important then in resolving those. The third point was the role of ACLEI. We also believe that ACLEI is doing a very good job but under almost impossible circumstances, with no resources. They now have the task of looking after border control as well. That has—again, to use a colloquial expression—always been a hot potato for corruption. Yet ACLEI, I do not think, has had its resources clearly much improved since it took on—I do not know how many people are involved in what used to be immigration but it would be thousands I would think of employees; any one of whom could be involved in some aspect of criminal conduct, and I do not see that ACLEI can do it. What we would say is that ACLEI could become at the core of a federal investigative body. It could be incorporated into it, and its experience would no doubt be invaluable. It would not be a parallel body operating, but it would be part of the newly formed anticorruption agency, with specific tasks no doubt, so that its valuable employees and inspectors, although there are not many of them, would be able to perform a useful role, one would think. They are just suggestions for a model which would make it not such an awesome project to contemplate forming.

Mr Charles : The problems of parliamentary privilege were dealt with in the Western Australian case of Halden v Marks, which occurred just before Premier Court—this was in the 1990s—came back into power and when he had been preceded by a Labor premier, a women, whose name I cannot recall at the moment. There was a lot going on at that time, and Halden v Marks was the name of the case in which parliamentary privilege was discussed. Also, if parliament sets up a commission and expressly concedes to that body the ability to investigate members of parliament, I would have thought that problems of parliamentary privilege recede.

As to the prior question, IBAC has, in relation to public examination, a set of standard directions which you will get from them this afternoon when you speak to them. The question was raised in the recent government inquiry in Victoria into how IBAC was conducting examinations and public examinations, and it included questions like, 'Should witnesses be given prior notice of anything that was particularly damaging that was likely to be put to them?' There was a very strong response to that saying, 'No'. It would be like telling someone who you were examining for forgery that you had all the documents which were going to show that they had been guilty of forgery beforehand. IBAC had a strong response to that part of the government's questions for inquiry, which in our submission we supported. It is difficult enough to discover corruption, which is hidden and secret and hard to discover and expose, without making these investigations more difficult.

Mr Whealy : The corollary to that is that once an offence is charged and you have a criminal prosecution launched, then of course the prosecution has to disclose all matters of relevance to the accused person including those who would help them and those who would not help them. So it is a different kettle of fish because it is no longer an investigation. If a policeman was integrating me about whether I had been driving my car—let's hope I would never do this—under the influence of whisky last night, he would no doubt not tell me, 'Look, I am going to ask you some questions which will be designed to see whether you were out drinking last night.' He would not say that to me, nor should he, because that is not the way a policeman would investigate. ICAC and IBAC are investigative bodies. They are not a court of law. You can hamstring their operations if you confuse, with respect, procedural fairness. There must be procedural fairness but it is of a different kind to what you get in a court proceeding. And that must be so. All the cases support that argument.

CHAIR: I will also ask your thoughts on the issue of scope. We have talked about building an agency out of ACLEI. The other consideration we have is the government's current focus on the AFP's Fraud and Anti-Corruption Centre, which I think it is fair to describe as a response to the last ombudsman's report they had raising concerns about the incidents of public agency corrupt behaviour. The scope of the AFP's centre is much broader than just public office corruption, and all of the state agencies are focused solely on public office corruption. I am wondering if you have a view about how broad our scope should be federally.

Mr Whealy : I would have thought that the first answer is that the AFP are totally stressed out trying to deal with the matters they are concerned with, and I just do not see how they could do other than relegate these matters of private corruption or public administration corruption down the ladder of the matters that they have to regard as important. They are probably totally justified in taking that view, because they are looking at investigations into foreign bribery at the moment. I understand there are some 14 on foot, and each is thought to take something like four or five years to bring to conclusion just at the investigation stage. Even though generous resources have been given to the AFP in recent times, anecdotal evidence suggests that they are totally stressed and stretched to deal with the particular matters of money laundering, terrorism and all these things. I do not see that they are really going to be able to focus on the particular matters here. Is that one answer?

CHAIR: No. The suggestion is that, for example, you build a new overarching agency—perhaps up out of ACLEI—and you take out of the AFP the relevant areas. At the moment some of the relevant areas in their fraud and anticorruption agency are private, not public. Do you leave the private behind? Do you bring the private with you? Is there a reason why we might be concerned about major systemic corruption within banking, for instance? Should we maintain the distinction that currently exists in state ICACs? Should we guarantee that we are picking up, from the Victorian experience, the public office element that was more recently adopted? Should we address corruption in publicly funded agencies? These are the types of questions of scope we have been considering.

Mr Whealy : I suppose that fundamentally, at least historically, what these agencies are concerned with is the effect of impairing public confidence in public administration. That has been the focus, leading to offences like abuse of office or trust or other corrupt behaviour, as ACLEI's definition now is. It seems to be unwise to move away from that scope into some of the areas you have mentioned, which are really the province of the investigative agencies or people like the AFP. Fraud and corruption in banking, for example, is a very different creature from the public administration issues that these agencies generally look at. I do not know what Mr Charles thinks.

Mr Charles : I think, with respect, that to attempt to start with ACLEI or any other body and to arrive at any successful integrity commission would be a bit like taking a Lego model of some sort—let's say a shopping centre—taking the pieces out and then trying to create a palace out of a lot of different pieces which will not fit together terribly well. It does not make best use of the individual parts. I would have thought, for what it is worth, that you need to start with a new body and properly defined lines of jurisdiction. Then, by all means, take the people out of ACLEI, who, as Mr Whealy has said, are very fine people doing their best but in a quite different job: monitoring the activities. ACLEI acts on the basis that one body will have set up inside it some sort of anticorruption set. The head of the agency then, on discovering something likely to involve corruption, makes a report to the integrity commissioner, and at that point ACLEI then starts to investigate this. It is a monitoring body; it is not in any real sense an anticorruption body.

Mr Whealy said, and I agree, that the AFP in the past have been totally stressed about this without getting around to corruption matters. It started in 1983 out of Frank Costigan's painters and dockers royal commission and the conference that took place in Canberra in 1983, at which the discussion was: should we be setting up a national crime authority? There was heated objection, led by Ron Sackville on the Federal Court, saying, 'You're going to trample all over basic civil liberties.' The conference fought to and fro about this, and it has been going on ever since.

What was ultimately arrived at was, in effect, a settlement that you set up these things with the guarding elements in it, like an inspector, and you cannot use evidence that has been given against the person who is the witness but also you set the bodies apart from the police, who are likely to charge, so you do not have too much power in one body. One of the consequences of that has been—and this why it has been so difficult to find prosecutions being made successfully—that inadequate information is being given by anticorruption bodies to the police and the police, who are not accustomed to dealing with these things, want to get on with aggravated burglaries, rape and murder, and they put this all down to the bottom of the pile and nothing gets done in the prosecutions. That has been a continuing problem with how to do this.

CHAIR: Sorry, I think you misunderstood in part my earlier comments. For example, if we were to set up a new overriding body, would it not make sense to simply absorb the existing functions of ACLEI into it?

Mr Charles : I am sorry, yes.

CHAIR: So you would not continue just having ACLEI doing monitoring; you would incorporate that into the broader functions of a new body?

Mr Charles : Certainly, by using as many of the personnel in it and their acquired expertise, yes.

CHAIR: Similarly, with the fraud and anticorruption centre—and there have been criticisms that they have been focused more on foreign bribery—would you not absorb their existing functions, whatever scope you determine, into such a new body? One of the other main areas of Commonwealth corruption that the AFP and others have been looking at is the interface between large Commonwealth departments and those organisations they fund, which is where we need to consider the extent to which we allow the scope to cover organisations funded by the Commonwealth. I understand your view about whether we take that further step, which is around public interest in those bodies that the Commonwealth government might regulate but are ostensibly private organisations.

Mr Charles : Senator, as I follow what you are putting, it is the sort of procurement fraud that was first exposed strongly in Victoria in the Ord inquiry into the education department, which involved large amounts of money being given to a particular school, becoming a banker school, which was then supposed to fund the money out to a number of schools in its area. Instead, it was lavish hospitality, holidays and things of that kind to the tune of millions of dollars and which, for the first time, made Victorians aware of corruption in that area and how well the IBAC was doing. If I can quickly answer the question that Robin Brett was a little nervous about answering, I think the Victorian community is getting tremendous value out of the IBAC and the 50 investigations it has concluded. I think it is doing it very well.

CHAIR: The other end of that Victorian example though is the recent Commonwealth example of the family day care case. There you have got not so much fraudulent behaviour occurring within the department per se, but fraudulent behaviour and often evolving behaviour—

Mr Whealy : And that case is another example of it, I think.

Senator JACINTA COLLINS: Yes—and the more we adjust the system to prevent those types of issues the more other people will find ways to work around that. Do you think that is a corruption agency type issue or a police issue?

Mr Whealy : It is a corruption agency investigation issue, and if serious criminality is uncovered then it is handed over to the police to prosecute. The agency should never prosecute; it is not their task. Their task is to find facts and make recommendations. They then gain expertise in looking at that—and there might be some ex-AFP fraud officers who come and work for the new agency; that would definitely happen—so you get a build-up of experience. They uncover corruption in those sort of procurement issues or government policy issues, not necessarily by people who are part of the government but by people who are taking advantage of policies of the government, and then those matters are referred to the police. The police then look at it from a prosecution point of view, the director of public prosecutions is brought in, and the director then makes the decision as to whether or not to prosecute.

Senator KAKOSCHKE-MOORE: Mr Whealy, you made the comment earlier about barriers to the IBAC launching investigations and how some of those barriers have been removed but some still remain. I wonder if you could provide a little bit more detail about that.

Mr Whealy : That might have been Mr Charles.

Mr Charles : I think that was me.

Senator KAKOSCHKE-MOORE: Sorry, Mr Charles.

Mr Charles : Not at all.

Mr Whealy : He knows IBAC better than I do!

Mr Charles : What had happened was that the legislation originally had a definition of a 'relevant offence' which did not include misconduct in public office. The definition of 'corrupt conduct' was in section 4(1), and you had to read it with section 60, which said that IBAC must not conduct an investigation unless it is reasonably satisfied that the conduct is serious corrupt conduct—'serious' was not defined either. In other words, it had to be reasonably satisfied that it was corrupt conduct. 'Corrupt conduct' was then defined as being conduct that would, if the facts were found proved beyond reasonable doubt at a trial, constitute a relevant offence, and that sent you back to the definition of 'relevant offence'. That, in effect, meant that you had to find an indictable offence against an act. There was no entitlement to conduct preliminary investigations in the act.

What the amending legislation has done is introduce a right to conduct preliminary investigations. That was actually quite an unnecessary provision because, as long ago as the parliamentary commission into Justice Lionel Murphy, the High Court said in relation to that parliamentary commission that it did not have to have any authorisation to conduct a preliminary investigation; anyone can make a preliminary investigation, as long as you are not using important powers. What this meant was that, at that stage, you had to be able to articulate the stated facts you wanted to investigate before you could start the investigation. What it now says is that you can do preliminary investigations, and then there comes a point at which you have to be able to say that—and they have changed the wording of section 60(2) to mean it must not conduct an investigation unless it suspects on reasonable grounds that the conduct constitutes corrupt conduct. And it has also changed the wording of section 4, the definition of corrupt conduct, to lessen that particular burden, so that they can say if they have a reasonable basis for it. It is just an easing of the burden before which they are not allowed to start an investigation using their grounds.

If it were to help I can leave with the committee both the legislation and the table of provisions, which was passed last year which was the second stage at which IBAC's ability to investigate was made easier and part of the process by which they were starting to do more and more work.

Senator KAKOSCHKE-MOORE: In regard to the new wording that is in place in order for the IBAC to launch an investigation, would you suggest that similar wording be adopted by a federal ICAC if one were to exist?

Mr Charles : No, indeed not. That is the remaining defect in the IBAC legislation. The IBAC ought to have given the commissioner who has a reasonable view that there is corruption there the entitlement to start an investigation without any further barrier. What setting up the barrier does is that it gives a suspect the opportunity to leap in and seek a court injunction to stop an investigation going ahead as soon as he, she or it becomes aware that the investigation is going, which then enables evidence to be destroyed and things to be hidden. The IBAC, at that stage, would have to be putting all its cards on the table before the judge, showing why it is thinking about starting an investigation, and still setting up the time at which your ability to make preliminary investigations moves into your ability to use the later extreme powers, which starts that crossover period where there is another ability for a suspect to seek a court injunction.

Mr Whealy : Those barriers do not exist in the New South Wales legislation. On one issue we have the nod on Victoria! It is much easier to get things started and get straight into an investigation without any barriers or statutory blockages.

Senator SMITH: Does the pursuit of corruption and the possibility of finding corruption compensate for the diminution of one man's civil liberties?

Mr Whealy : Well, it is an interesting philosophical question, I agree.

Senator SMITH: It is powerful. When we look at the operation of ICACs across various jurisdictions, there are different experiences and some of them, from a Western Australian perspective, are alarming.

Mr Whealy : I would have perhaps asked a slightly different philosophical question, which is not so much whether it warranted the diminution of civil liberties but whether it warranted the diminution of his reputation in the case of a public hearing. That is perhaps a more concrete worry.

Senator SMITH: More precise.

Mr Whealy : Not precise but it is more likely to arise. I do not know that the civil liberties of an individual are necessarily threatened by an ICAC to such an extent that you may fear, for example—let us try and put it in a concrete way. It is true that a person summonsed before ICAC must answer questions that are put to him. He has no right to refuse to answer those questions. However, he gains a protection by a declaration from the investigating body that that evidence cannot be used against him in any civil or criminal proceedings, save for perjury. So if he is telling lies he can be prosecuted, but the evidence cannot be used against him. So that is a protection of his civil liberties, even though his civil liberties are disturbed by his being forced to answer something. Similarly, with documents, when you are asked to produce documents you cannot refuse to produce them, but they cannot be used against you in the same way. So the particular legislations around Australia do seek to trade off intrusion into civil liberties by offering that type of compensation. Would you think so, Mr Charles?

Mr Charles : Yes. I would like to add that when they started the public hearing into the issuing of mining licences for the Bylong Valley, they said in opening, 'We still don't know whether what happened here was simply bad government or corruption.' There had been multiple changes in name and three-dollar companies and the like and trust documents and the like. And by examining those they discovered that a whole area, which was about to be given out for mining licences, was held by the Obeid family. When we were first looking at the Victorian legislation, we came to the conclusion that you could not start an investigation of that kind in Victoria with the level of knowledge that the ICAC had in Sydney when it started. That was because we would not know the facts and we would not be able to articulate the offence that was involved. It is because of the trading off of those civil liberties that we have got the investigation succeeding in the Obeid case. It is likewise in the education department case and likewise in Operation Fitzroy, the transport department case. In Operation Ord, you have a school being given large amounts of money. There is nothing wrong with a school getting large much money: you assume it is going to be used for education. But it is interesting once you follow the number of hits and leads and clues through. And it is the same with the transport department in Fitzroy. They found that contracts were being given by transport department officers to members of their family, who were doing the job badly, at excessive costs. In each case, it cost millions of dollars to the community. That could only happen because you have this sort of trade-off of civil liberties.

Senator SMITH: Turning to the comment about loss of reputation, do you think that the Victorian regime better protects against the loss of reputation, Mr Charles?

Mr Charles : Better than ICAC?

Senator SMITH: Yes.

Mr Charles : Oh yes.

Mr Whealy : And I would agree that both Victoria and Queensland are more protective of reputation. It is not a 100 per cent guarantee, because there will be a case where somebody is shown not to have been involved in corruption at all. But they will have had to endure the humiliation of a public hearing.

Senator SMITH: I am reminded of Justice Ian Callinan's comments that 'lawyers and television cameras do not mix well'.

Mr Whealy : In New South Wales, the problem was that the media had—I do not wish to criticise the media, because they do the job very well and help expose corruption. But in New South Wales, the practice of marching potential witnesses before cameras before and after their hearings and shouting questions at them was very unpleasant to watch. I think that could have been avoided. People could have been brought to the inquiry through private entrances and taken away the same way, and you would have avoided in New South Wales that type of thing. That has given it a bad reputation.

Senator SMITH: Yes—the show trialling. Turning to the issue of public hearings, if I have heard you correctly, there are some mechanisms that can be built in to ensure that a public hearing is held and goes through a rigorous process. One is that there should be a legislative requirement against what the measurement or the test is. Then, if I have heard you correctly, that should be publicly contestable. That is, you should be able to take that to a court and have it disputed.

Another one would be not only someone disputing it in a court but, like the Victorian inspectorate, someone being free to provide another level of commentary or contestability about whether or not those tests were suitably applied. Are there any other tests that you think would be necessary, or which should be included, before a public hearing is held?

Mr Charles : When the police sought to prevent the public hearing in the Ballarat police matter, the IBAC commissioner, Mr O'Brien, had to produce an affidavit which was sufficient to establish to the court that IBAC considered on reasonable grounds that there were exceptional circumstances, that it was in the public interest to hold it and that the public examination could be held without causing unreasonable damage to a person's reputation, safety or wellbeing. It was only because the court was satisfied—and if you read the judgement, you will see why—that it was allowed to go ahead. If he had not satisfied the court they would have stopped it.

Senator SMITH: Your submissions talk about the merits of public hearings, but they are heavily caveated—'improper situations', to quote your submissions:

However, public hearings must not occur as a matter of course, …

So, it is having proper tests before public hearings are allowed.

Mr Whealy : Yes.

Senator SMITH: It is interesting that only now the New South Wales ICAC is moving to a situation where the three commissioners have to agree on the merits of a public hearing.

Mr Whealy : Or a majority of them.

Senator SMITH: Or a majority of them—you are quite right. That is right.

It is also important that what these independent corruption commissions find should not be allowed to be interpreted as judgements, because there is a separate judicial process. Would you agree that, perhaps, in New South Wales there has been a poor level of understanding that what ICAC is is not a judicial proceeding—that it is not actually a court?

Mr Whealy : I think that the Gleeson report suggested that that was so. Whether rightly or wrongly, in a number of people's minds—including not just the public but the media as well—it was seen as more or less the equivalent of that. What was necessary was to have a public education program, and stipulations in the legislation itself, that made it clear that these findings were not findings of the commission of a criminal offence at all. I think that is the way go, really.

Senator SMITH: In Victoria, thus far, it looks like that public perception has not occurred—or am I wrong?

Mr Charles : No, I think that you are right, partly because there have been so few public hearings and that the commissioner and his staff have been so careful in examining that there was a real and proper basis for doing it.

Senator SMITH: It strikes me then that the issue of public hearings and how you get to a public hearing is actually quite central to the trust and the public confidence that gets built or diminished into an anticorruption agency.

One thing that we have sort of tested during the last few hearings is a national integrity commission as opposed to an anticorruption agency. Is there any difference in the words? Do we need to be conscious of that, or is it really just about structure and process?

Mr Charles : I think I would be slightly less twitchy about an integrity commission than to have a body called an anticorruption commission. As you have already said before, people are tainted by virtue of the fact that they even have to surface as a witness or are mentioned in a hearing before an anticorruption body. If it has been heard that they have been called to appear before an integrity body, people might think that is terrific: they have to give evidence about their integrity.

Mr Whealy : The other point is that with an integrity commission, the very phrase highlights the fact that there is an educational and preventative role to be carried out. This is just as important, if not more important, than investigating and finding facts that might lead to a prosecution for corruption.

Senator SMITH: Finally, one of the defences that have been made in supporting ICAC-type functions is the importance of public awareness and the public benefit that arises from people knowing about corruption and reporting corruption. Are there not other mechanisms that can be improved to do that rather than these anticorruption-type bodies? Are there other ways to achieve that same end?

Mr Whealy : I cannot think of any. These bodies were brought in to fill what was perceived to be a gap around Australia. They have filled the gap. I cannot think what else could have been done other than just prosecuting bodies with police doing it. They proved in some respects inadequate to cope with this different way of thinking that is the maintenance of confidence in public administration, which is so different from stopping people committing crimes on the street and so on. Police just do not think that way. One does not criticise them for that—what they do is wonderful—but I cannot think of any other form of agency, body or way in which we can ask people as a community to talk about reducing corruption. These bodies are intended to do that, to make the community aware of corruption and aware of the evils of corruption and in their own little communities to seek to eradicate it as far as possible.

Mr Charles : Just before Christmas the IBAC put into the newspapers a quiz indicating a number of different fact situations and asking people which of them, if any, amounted to a criminal offence or could be described as corruption, and it got people talking tremendously about this: 'Wait, which one is real?' They had it on Jon Faine's program, and someone rang me up and asked my view because I was supposed to know something about it. Fortunately, I had had word beforehand and rang IBAC, saying, 'What on earth do you mean by this?' so I had the answers!

Senator SMITH: Thank you very much.

CHAIR: Mr Charles, you spoke quite powerfully before about what you saw as the successes of IBAC. Are you convinced that, without IBAC, those matters would not have been, for want of a better word, resolved?

Mr Charles : That is very difficult to answer. Somehow, they had succeeded in getting away with these things for quite some time. They might never have surfaced. And there are all the other 46 investigations they have completed without public hearings and which I do not know the answers to. One of the things that doing the Ord hearing in public produced was immediate action in the education department to change dramatically its procedures so that that could never happen again. There was an immediate spike in the making of allegations to IBAC in relation to that and in relation to a lot of other things. I must say I think they entirely justified the use of public hearing in relation to these matters, and four out of 50 completed investigations show you how very rarely they have used that power.

CHAIR: Yes. Sorry; I am not asking this question with respect to public or private hearings as the issue. This is not my argument either in particular, but some might argue that a change in the secretary-general of a department can have equally as significant an effect on the culture or behaviour that is occurring within a department. The AFP exposing fraudulent behaviour does occur. The AFP exposing corrupt politicians has occurred. The question in part being asked is: would not existing processes have exposed and resolved those issues?

Mr Charles : Take the foreign currency allegations, which started to occur in about 1999 or thereabouts and which lasted for years, notwithstanding that there were reports produced, particularly by Fairfax journalists. It went all the way up to the board of the Reserve Bank and still nothing was done about it over a full decade. That is repeated in all sorts of ways. That was scandalous, and the Reserve Bank board knew about it and did nothing.

Mr Whealy : So the answer is: these things might be discovered, but you need to have a system in place that is working away at it all the time. If you do not have that sort of system, then it is ad hockery—you might uncover it or you might not.

CHAIR: Or you might only uncover a very small proportion.

Mr Whealy : A bit of it, yes.

Mr Charles : I should add that not only did the board do nothing about these things in relation to note printing and Securency but the whistleblower inside got terribly treated.

CHAIR: Thank you both very much for a very useful panel session.

Proceedings suspended from 13:01 to 13:41