Getting the NACC of things: Australia progressing a National Anti-Corruption Commission

The Bill, currently before the House of Representatives, will have wide reaching implications for government actors (like MPs and their staff as well as government employees) and private entities alike. As the drafting currently stands, businesses contracted or sub-contracted to work with or for the Australian Federal Government will also be captured by the law.

The new watchdog and its (likely) powers

Under the Bill, the National Anti-Corruption Commission (NACC) will act as an independent agency comprised of a Commissioner and three Deputy Commissioners (appointed by the Governor-General on recommendation from the Government) with the power to investigate and report on serious or systemic corruption and refer that matter for prosecution. 

The NACC will, if the current form of the Bill comes into law, be able to hold both private, and, in exceptional circumstances, public hearings.  This is one of the most contentious elements of the Bill, and it is likely to be the subject of much scrutiny in the upcoming review process.  

For now,  compliance and risk functions in businesses operating Australia should maintain a close watch on developments and begin to plan to incorporate this new regulator into internal training and commercial risk assessment processes.  

"Corrupt conduct" – how is it defined?

The current wording states:

s8(a) - Meaning of corrupt conduct 
(a) any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly: 

1. the honest or impartial exercise of any public official’s powers as a public official; or 
2. the honest or impartial performance of any public official’s functions or duties as a public official; … 

The expected impact on businesses contracting with the Australian Government 

Importantly for businesses, the NACC will have jurisdiction over Contracted Service Providers, (including their employees and officers) who provide goods or services under a Commonwealth Contract to any Australian Government body.  This would include departments, government corporations and statutory bodies. 

A Contracted Service Provider is defined under the Bill to be: 

1. A contractor directly responsible for the provision of goods or services (or both) under the Commonwealth Contract; or
2. A subcontractor responsible under the subcontract for the provision of goods or services (or both) for the purposes (whether direct or indirect) of the Commonwealth contract.

This broad definition would give the NACC extensive investigative access to companies alleged to have or intend to participate in corrupt conduct.

Timing of alleged "corrupt conduct"

Somewhat controversially, the NACC’s ambit of authority will also extend both retrospectively and to future conduct under the current drafting.  Importantly, it will be able to examine historic conduct. This has raised concerns among politicians who fear that past transgressions (such as the pork barrelling scandals) may come under the scrutiny of the NACC. 

These prospective powers will also enable the NACC to investigate corrupt conduct where there is a question about whether a person will engage in corrupt conduct at some time in the future. This enables the NACC to investigate a business or public official where corrupt conduct has not yet occurred, for example where past transgressions have increased the NACC’s scrutiny of all future conduct. 

Powers of investigation

The Commissioner and in limited circumstances their appointed inspector will, noting the application to businesses who have contracted with government, have several investigative powers under the proposed Bill that may impact businesses including: 

• requiring the production of documents and information; 
• accessing, with some limited exceptions, government premises without a warrant for search and seizure purposes; and
• requiring persons to answer questions at a hearing. 

Proposed penalties and protections

Failure to comply with these information gathering powers will be punishable as an imprisonable offence. 

The Bill also proposes to establish a further set of specific whistleblower protections for those bringing issues to the NACC’s attention including employees of businesses contracting with government. 

Parliamentary Progress of the Bill: still some way to go

The NACC Bill has only undergone its second reading in the House of Representatives. 

It is likely to undergo several amendments prior to passing the House of Representatives and the Senate where Labour requires the support of another 12 cross-bench Senate members to pass the Bill. 

Since the first reading of the Bill, parliamentarians have publicly sought a number of amendments to the Bill. Some of these are laid out according to each party below: 

• Greens: The Greens will be seeking three key amendments to the Bill:
  
  • lowering the exceptional circumstances threshold for NACC to hold public hearings; 
  • expansion of the NACC jurisdiction over third parties; and
  • a requirement that the NACC have a multi-party oversight committee.^[1]  
    
    
• Independents: Senator Jacqui Lambie and a number of other independents have also voiced support for lowering the public hearing threshold.^[2]  
  
  
• Liberal: The Coalition has provided in principle support and is waiting to hear further details of the Bill before conducting an inquiry.^[3]  
  
  
• Nationals: The Nationals have raised concerns about the retrospective scope of the NACC including its ability to investigate past pork barrelling scandals.^[4] 
  In the meantime, a Legislation committee has been formed to review the Bill and will be conducting public hearings and accepting submissions until 14 October 2022. The committee is due to provide a report on or before 10 November 2022.^[5]  

Key Actions: Watch closely and plan ahead

This is an area, as with state based anti-corruption bodies, which can result in businesses and their directors and officers being caught up in investigations they never expected.  We will be watching the Bill’s progress and will keep you updated. For now, those with compliance and risk functions should take note and plan to include the new laws in contract risk assessments and internal training on issues such as whistleblower protections in Australia and response to unannounced government visits (dawn raids).

Expect more updates as the Bill progresses: some changes are likely, but it seems that the NACC is definitely looming on the Australian regulatory horizon. 

[1] Media Release by Senator David Shoebridge, 28 September 2022

[2] https://www.theguardian.com/australia-news/2022/sep/27/labors-national-anti-corruption-commission-to-hold-most-hearings-in-private

[3] https://www.theaustralian.com.au/nation/politics/nationals-upset-by-national-anticorruption-commission-threat-to-pork-barrelling/news-story/07b52673fd7f945632b4851144980002

[4] Ibid

[5] https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/National_Anti-Corruption_Commission_Legislation