Preparing for a National Anti-Corruption Commission

What companies should know 7 min read

The Commonwealth Parliament has passed the National Anti-Corruption Commission Bill 2022 (Cth) (NACC Bill), paving the way for a National Anti-Corruption Commission (NACC) to commence operations by mid-2023. The passage of the NACC Bill fulfils the Government's key election promise to establish a 'powerful, transparent and independent National Anti-Corruption Commission' by the end of 2022.¹

From mid-2023, companies, including their officers, directors and employees, may be subject to:

• investigation if serious or systemic corrupt conduct is alleged that involves that company, its officers, directors or employees and a Commonwealth public official. The NACC can investigate the matter itself or refer the matter for criminal investigation;
• compulsory information-gathering powers, including notices to give information or produce documents, summonses to give sworn evidence, search warrants, and warrants to authorise arrests if they hold information or documents potentially relevant to a NACC investigation, whether as a witness or a subject of the investigation; and
• an adverse finding in a written report by the NACC, or a finding or recommendation that affects a company's relationship with government entities.

How companies should prepare

Now is a good time to review the adequacy of your anti-bribery and corruption policies and processes, particularly in relation to domestic corruption, to test whether they meet legal requirements and best practice. Appropriate steps may include:

• conducting and maintaining a risk assessment to identify areas of risk for your business - these will include where you are contracting with government officials or engaging with them regarding business opportunities, including but not limited to gifts and hospitality or engagement via third parties. Consider the appropriateness of your controls in light of the risk assessment findings;
• raising awareness of the Bill's contents and its implications for employees and agents who are acting as government contractors or engaging with government;
• refreshing anti-corruption training and encourage reporting of issues through internal whistleblower channels and other reporting mechanisms;
• reviewing internal policies and procedures (including for internal investigations) to account for potential NACC requests for documents, summons, and search warrants, noting the ability of the NACC to request privileged documents; and
• updating anti-bribery and corruption contractual clauses to account for investigation of third parties by the NACC.

In this Insight, we consider how the NACC will operate, what powers it will have and how it defines corrupt conduct.

What is the NACC?

The passage of the NACC Bill establishes the NACC, which will be granted powers to investigate and report on serious or systemic corrupt conduct affecting the federal public sector. The NACC will be an independent agency headed by the National Anti-Corruption Commissioner, along with up to three Deputy Commissioners.

In addition to investigating corruption, the NACC will be responsible for referring evidence of criminal conduct for investigation by the Australian Federal Police and prosecution by the CDPP, undertaking education and prevention activities and providing advice on corruption risks and vulnerabilities across Government.

The NACC is expected to commence operations in mid-2023.

What are the powers of the NACC?

The NACC will have broad powers akin to a Royal Commission, including:

• the power to oversee corruption investigations undertaken by Commonwealth agencies;
• powers to commence investigations independently;
• accepting referrals from public complainants and whistleblowers and commencing investigations on the basis of such referrals;
• the ability to refer matters involving criminality to law enforcement authorities, such as the Australian Federal Police, or investigate the issue jointly with those agencies or entities;
• the power to make findings that a person (including a company) has engaged, is engaging or will engage, in corrupt conduct or conduct that could constitute or involve corrupt conduct – although these findings will not be considered a finding of criminal guilt; and
• extensive information-gathering powers to compel the production of documents and oral evidence while overriding protections for privilege (including legal professional privilege and the privilege against self-incrimination). Unlike a Royal Commission, however, evidence which includes sensitive information, legal advice, or evidence that is protected by legal professional privilege and secrecy provisions can only be given in private hearings.

What conduct can be investigated by the NACC?

Detection and investigation of 'corrupt conduct'

The NACC will be empowered to investigate serious or systemic 'corrupt conduct', which is defined broadly to include:

• conduct of a Commonwealth public official that:
• constitutes or involves a breach of public trust;
• constitutes, involves or is engaged in for the purpose of abuse of the person's office as a public official; or
• constitutes or involves the misuse of information or documents acquired in the person's capacity as a Commonwealth public official (this includes former Commonwealth public officials); and
  • conduct of any person, regardless of whether they are a Commonwealth public official, that adversely affects or could adversely affect, either directly or indirectly:
  • the honest or impartial exercise of any Commonwealth public official's powers as a Commonwealth public official; or
  • the honest or impartial performance of a Commonwealth public official's functions or duties as a Commonwealth public official.

Although the NACC's primary focus will be on corrupt conduct of public officials, the broad scope of corrupt conduct means that the NACC will also be able to conduct a corruption investigation into allegations against a business or any officer or employee of a business, and make findings in relation to such conduct.

The corrupt conduct does not need to be for a person's personal benefit, and can include conduct that occurred prior to the establishment of the NACC. There is no express limit on the NACC's retrospective reach. The NACC Bill also specifies that the conduct of a former Commonwealth public official while they were in office can be corrupt conduct, as can the misuse by a former Commonwealth public official of information that was acquired in the course of their duties while they were a Commonwealth public official.

Corrupt conduct does not extend to advocating for a company's own interests

As mentioned above, for companies to be investigated by the NACC, their conduct must 'adversely affect' the exercise of a Commonwealth public official's powers, functions or duties, or they must conspire with another person to engage in such corrupt conduct or attempt to engage in such conduct. The Explanatory Memorandum to the NACC Bill explicitly acknowledges that a person or a company may advocate for their interests to Commonwealth public officials and parliamentarians, and engage in 'vigorous' lobbying without being at risk of engaging in corrupt conduct - as long as there is nothing in the conduct or circumstances which could be expected to induce or influence a Commonwealth public official to exercise a power dishonestly or partially. ²

Referrals and joint investigations by the NACC

The NACC will be able to receive referrals from public complainants and whistleblowers. It will also be mandatory for Commonwealth government and intelligence agencies, including but not limited to parliamentary offices, Commonwealth entities and companies, the High Court, the Defence Intelligence Organisation and the Australian Secret Intelligence Service, to refer matters to the NACC when they become aware of corrupt conduct concerning their staff. Accordingly, it is likely that NACC will act as a clearing house for all Commonwealth corruption complaints.

The NACC can refer consideration of a corruption issue to a Commonwealth or State agency (including the AFP). It will also have the option to investigate a corruption issue jointly with such an agency or entity, or to refer the issue for internal investigation by the Commonwealth agency to which the alleged corrupt conduct relates.

Reporting by the NACC on investigations and findings

The Commissioner of the NACC must report on corruption investigations. These reports will set out the Commissioner's findings or opinions on the corruption issue, and any recommendations that the Commissioner thinks fit to make. There is no express limit on the recommendations that may be made by the Commissioner, although they can include terminating employment and requiring a company to remediate its policies or procedures. Reports do not, however, resolve whether a person is criminally culpable, and affected persons must be given an opportunity to respond to critical findings.

The reports must be provided to the Prime Minister, or a relevant Minister, as well as tabled in Parliament where one or more public hearings were held. The NACC may also publish the whole or part of its report where the Commissioner is satisfied it is in the public interest to do so.

A finding by the NACC is not a finding or opinion about criminal guilt. Beyond this, the NACC Bill does not specify the implications of a finding. It also does not specify what uses a finding can subsequently be put to by another authority, such as the AFP or the CDPP.