Spotlight on the corporate sector 8 min read
New anti-corruption watchdog, the National Anti-Corruption Commission (the NACC), has now been operating for 100 days, and has already received more than 1200 referrals and opened three investigations.1
With its far-reaching investigatory powers, the NACC has significant implications for the corporate sector. Companies that interact with the Federal Government as contracted service providers, including consultants, are likely to be the Commission's immediate focus.
In this Insight, we unpack which businesses are at risk of being investigated, the implications for them and how they can best prepare.
- A wide range of companies are at risk of being investigated by the NACC, including contracted service providers to the Federal Government, companies that engage with staff members of federal agencies, and companies that engage with federal parliamentarians and their staff.
- Based on comments by the NACC's inaugural Commissioner, we anticipate that the NACC will have a particular focus on matters involving external consultants or contracted service providers to the Federal Government.
- If the NACC decides to investigate your company, it has very broad coercive powers, including the power to search your premises, compel the production of documents, compel officers and employees to attend a hearing to give evidence, and use covert investigation methods.
- Now is a good time to review the adequacy of your policies and procedures to test whether they meet legal requirements and are robust enough in light of the NACC's jurisdictional reach.
As we previously reported, the NACC has powers to investigate private companies if serious or systemic corrupt conduct is alleged involving:
- that company, its officers, directors or employees; and
- a 'Commonwealth public official'.
It is clear that the NACC's focus extends far beyond federal parliamentarians and those who might conventionally be considered to be staff members of federal agencies:
- First, the definition of a 'public official' is broad and includes individuals 'engaged in assisting' any federal agency and also a service provider under a Commonwealth contract. As such, any corrupt conduct by individuals in organisations providing services to the Federal Government can be captured.
- Second, the NACC has the power to investigate any person who acts in a way that might cause a public official to carry out their role in a dishonest or biased way, or conspires with another person to engage in such conduct.
The below table sets out the kinds of companies we consider are at risk of being investigated by the NACC.
Companies that engage with federal parliamentarians and their staff
This includes companies that engage with:
Companies that engage with staff members of federal agencies
Generally, this includes companies that engage with agency heads, officials, officers and employees of, and secondees to:
Contracted service providers to the Federal Government, and their subcontractors
The NACC's investigative powers extend to:
We expect that contracted service providers to the Federal Government will be considered by the NACC to include:
It is important to recognise that you could be investigated by the NACC as a result of the corrupt conduct of your subcontractors. For example, if an infrastructure company enters into a contract with the Federal Government to build a new road and subcontracts independent contractors to help with construction of that road, and it is alleged that a subcontractor has engaged in corrupt conduct involving a public official, the NACC may investigate both the subcontractor and the infrastructure company.
The NACC's inaugural Commissioner, the Honourable Paul Brereton AM RFD, recently provided insight into the Commission's primary areas of focus in a keynote address.3 Based on the Commissioner's comments, we expect the NACC to prioritise:
- High-profile matters with current practical relevance: we expect issues that have occurred recently or that are receiving significant media attention to be investigated first. The NACC might investigate such matters to 'clear the air', even if there does not appear to be a significant prospect of uncovering corrupt conduct.
- Matters involving external consultants or contracted service providers: the Commissioner highlighted the NACC's 'considerable interest' in these types of engagements, given the prevalence of outsourcing of government services to external consultants.
- 'Grey corruption': that is, questionable behaviour and decision-making that breaches integrity standards without amounting to criminal conduct. The Commissioner said the NACC's work may be particularly beneficial in investigating and exposing corrupt conduct that cannot be prosecuted in a criminal court. He also noted that 'corrupt conduct' extends beyond the conduct of public officials to the conduct of any person that adversely affects a public official's honest and impartial exercise of powers or performance of duties. It therefore captures conduct by individuals dealing with the Federal Government who endeavour to improperly influence government decisions.
When conducting an investigation into potentially corrupt conduct, the NACC has the power to:
- Issue notices to your company, or any of your officers or employees, requiring the production of documents: the NACC can include a 'non-disclosure notation' in these notices, which will restrict the recipient from sharing the content or even the existence of the notice with anyone (subject to limited carveouts, such as for legal advice or representation).
- Compel your officers or employees to attend a hearing to give evidence, including being examined and cross-examined. Hearings will be held in private unless the Commissioner decides there are exceptional circumstances that justify holding the hearing in public and it is in the public interest to do so. As with notices to produce, the NACC can issue non-disclosure notations in relation to summons to attend private hearings. Legal representation is permitted at these hearings.
- Search your premises: the NACC can apply for search warrants to enter and search private premises. It can also search any place occupied by a federal agency without a warrant.
- Use covert investigative powers, including intercepting telecommunications, using surveillance devices and authorising covert law enforcement operations, subject to existing thresholds for the use of those powers by law enforcement agencies.
There are criminal offences for failing to attend or obstructing NACC hearings, destroying documents, or for producing false or misleading documents or information.
The NACC's investigatory powers override protections for legal professional privilege and the privilege against self-incrimination. However, providing information to the NACC will not waive privilege, and self-incriminating information will not be admissible in evidence against a person in other proceedings.
After completing a corruption investigation, the NACC will prepare an investigation report setting out the Commissioner's findings or opinions on the corruption issue, a summary of relevant evidence and any recommendations (eg for an employee to be terminated, or for policies and procedures to be uplifted). The NACC cannot make determinations of criminal liability, but it can refer evidence of criminal corrupt conduct for prosecution, or to other regulators who could impose civil penalties.
The NACC may publicise all or part of its report if the Commissioner considers it is in the public interest to do so. However, critical opinions, findings or recommendations will not be published without the affected person or company having the opportunity to respond.
In light of the commencement of the NACC and the other corporate crime reforms as reported in our recent Insight, it is now timely to review the adequacy of your policies and procedures to test whether they meet legal requirements and are robust enough in the wake of the NACC's jurisdictional reach.
Steps businesses can take to best position themselves in relation to the NACC include:
- regularly conducting and maintaining risk assessments to develop a clear understanding of their touchpoints with the Federal Government and related agencies, and assessing whether their controls are appropriate to manage these risks;
- reviewing whistleblower channels and grievance mechanisms to ensure they are effective and adequately resourced, and ensuring the business maintains a 'speak up' culture where employees and suppliers are encouraged to raise corruption issues;
- raising awareness of the NACC reforms with officers, employees and suppliers, including refreshing bribery and corruption training;
- considering any appropriate amendments to contractual clauses, particularly for subcontractors who may engage with the Federal Government or related agencies on behalf of the business; and
- reviewing their internal policies and procedures (including for internal investigations) to account for potential NACC information requests and any investigations.
Considering the NACC's ongoing investigations, and the large number of referrals it has received, businesses should take stock of their anti-bribery and corruption controls and procedures, and understand all touchpoints with the Federal Government.
NACC Update: 100 Days of the National Anti-Corruption Commission (9 October 2023), available here. The NACC has also opened nine preliminary investigations (which help the NACC decide whether there is a corruption issue that should be further investigated) and continues to work on six active investigations inherited from the former Australian Commission for Law Enforcement Integrity.
'Commonwealth contracts' are defined as contracts, agreements, deeds, understandings, arrangements (such as procurement arrangements) and certain grants to which the Commonwealth or a Commonwealth agency is a party, and under which goods or services (or both) are to be, or were to be, provided to the Commonwealth, a Commonwealth agency or in connection with the activities of the Commonwealth or an agency: see National Anti-Corruption Commission Act 2022 (Cth) ss7 (Definition of 'Contract'), 13(2); Revised Explanatory Memorandum, National Anti-Corruption Commission Bill 2022 (Cth) p94 [2.148]–[2.150].
The Hon PLG Brereton, 'Keynote Address: The Launch of the National Anti-Corruption Commission' (Speech, UN Global Compact Network Australia, 2023 Australian Dialogue on Bribery and Corruption, 18 July 2023).