Beware: corrupt conduct is not always criminal

Jul 2, 2024
Australian Parliament House in Canberra

Last week, Anthony Albanese was reckoned by some to have caused a political coup by luring a former NSW Liberal Treasurer, Matt Kean out of NSW politics and into a Commonwealth position as chair of the climate change authority. Strictly, this might rate as a patronage job, rather than one controlled by public service Act processes. Kean has environmental credentials, but his appointment was neither at arm’s length, nor, in the ordinary sense on merit.

The ACT Integrity Commissioner, Michael Adams has laboured long and hard over his investigation into the hiring of a consultant to the Canberra Institute of Technology before coming to interim conclusions that a former CEO, Leanne Cover, was engaged in seriously corrupt conduct in concealing some of what was happening from her controlling board.

Many of those who work their way through a far from rollicking report will have their eyes firmly shut by the end of the 312-page Part 1 of the report, drawing conclusions into the investigations so far. But some eyebrows will be raised by the end of their ordeal because there is very little in the report suggesting criminality or conscious mismanagement by Ms Cover. Her alleged sin, rather, was in being consciously less than frank to the CIT board and to her minister about a cascading array of consultancies given to a “change agent” and “skills and complexity thinker” seeking to adjust the working culture of the CIT.

At first it appears that she was – in the famous words of Sir Robert Armstrong in the Spycatcher trial – “economical with the truth.” She would say inadvertently, or at least with some initial ignorance of what her board chair, Craig Sloan, had shared with board members (not very much). As she became aware that Chris Steele was becoming agitated about the consultancies – and the possibility of adverse publicity about the size and subject matter of the consultancies, it is suggested that her concealment became more deliberate – to the point where she was being deceptive and dishonest and was, in the opinion of Commissioner Adams, in breach of public trust. Some of the conduct seemed designed to go around clear indications given by the minister, especially as to the undesirability of showering the consultant with even more largesse.

It may well be that further investigations suggest conflict of interest on Ms Cover’s part, or undue influence by the charismatic consultant, Patrick Hollingworth, who ultimately secured contracts worth over $8 million. And that was only part of the gravy train going to consultants as Ms Cover was trying to reshape the CIT into a new era in which it was being required to compete with the private sector in its training program.

Certainly, Ms Close was soon on notice that Mr Hollingworth’s fondness for gobbledygook, psychobabble and acronyms was a public relations disaster in waiting, the more so for the vagueness of his consultancy contracts and the lack of clear indicators about what he was offering, and how one would know whether he was delivering it.

A proper case for a public spectacle

I fancy that Adams might have got more quickly to the nub of the matter if he had held open hearings to have both Mr Hollingworth and Ms Cover explain in public some of the jargon their repurposing of the institute involved. The point could have been made by howls of derisive laughter, if the more pathetic because $8 million in public money was riding on the magic carpet.

Trying in arrears to explain what was meant by designing structures and elements that “enable greater coordination of analysis and decision making in relation to products, offerings and services” is inevitably bound to lead to waffling on the part of those procuring such services.

But nothing has been advanced so far suggesting bribery or fraudulent connivance between the parties. To the contrary it appears that Ms Cover was trying to cover her bum, whether by stalling or frustrating inquiries (including by ABC journalists under FOI), or by restricting the number of people with much knowledge of the procurement. She got in too deep, probably by relative inexperience, though perhaps the fact that Mr Hollingworth was mentoring her as a manager contributed to the debacle.

I cannot help thinking that she would have escaped triumphantly from the inquisitions had she been through a PM&C coaching session on how to play a dead bat at an estimates committee hearing. These folk were practising economy with the truth even before Sir Robert Armstrong coined the phrase.

Let’s suppose, as the evidence so far indicates that Ms Cover committed no crime. She was deserving of the sack for progressive mismanagement of her duty to the public purse, the public interest, her minister and her board. Yet an anti-corruption inquiry has found her behaviour seriously corrupt within the meaning of the legislation. The broad definition of corruption is much the same as in the Federal NACC, or NSW ICAC.

Is this a demonstration of the truth of the gloomy claim that anti-corruption bodies will soon be condemning behaviour that involves no criminality at all? That completely innocent people will find themselves crucified, without even much in the way of later prospects of vindicating their actions? Is it evidence that we need very tight definitions so that a NACC can only investigate crime or criminally corrupt conduct? Is it yet another demonstration of why inquiries should be conducted behind closed doors, rather than as a kangaroo court in public?

I don’t think so. The scope of good anti-corruption bodies embraces, in its definition of “corrupt conduct” spectacularly poor stewardship of public resources. That involves something more than mere incompetence, inadvertence or failure to tick a box.

A duty to keep the board informed, not in the dark

Adams said that Cover’s progressive failure to consult the board could not reasonably be regarded as a mere oversight or a misjudgement. Any reasonable CEO must have known that consulting the board was not only desirable but necessary.

“The need to inform the Board, in particular, about the procurement and terms of the … contracts and inform them of the substance of the [minister’s] Chief of Staff’s conversation that occurred at a pivotal juncture, and seek its approval before moving forward would have been appreciated by any public official in Ms Cover’s position and I am satisfied, was fully understood by her.

“I am reasonably satisfied that this was not done because she deliberately decided not to do so. In coming to this conclusion, I am conscious of the fact that there is no evidence from which it is reasonable to infer any particular underlying motive. A number of possibilities are speculatively open, but it is unnecessary to deal with them…

“Ms Cover’s dealings concerning the sixth contract alone constituted a gross breach of trust.

“I am also reasonably satisfied that it was dishonest by the standards of ordinary people and known by Ms Cover to be dishonest in this sense.

“The consequence of her conduct was to give Mr Hollingworth a substantial financial gain at the cost of the Territory. This was not isolated conduct by Ms Cover but part of a pattern of concealment…

“Under s 184 of the Act, the Commission cannot include in this report a finding that Ms Cover has engaged in corrupt conduct unless the corrupt conduct is serious corrupt conduct or systemic corrupt conduct.

“Serious corrupt conduct is defined in s 10 as ‘corrupt conduct that is likely to threaten public confidence in the integrity of government or public administration’. ‘Integrity” carries two major meanings: the first connotes moral rectitude; the second, organisational soundness or doing what is required or undertaken to be done.

“The facts found here permit a gradation of possible conclusions … The failure to inform the Board of any of the identified matters, if done because Ms Cover was unaware of her obligation to inform, is a matter of competence and raises no issue of criminality.

“On the other hand, understanding and fulfilling the obligation to inform the Board of important matters is a fundamental responsibility of the CEO. The failure here was not trivial or insubstantial, but was of major significance, with serious consequences for the operations of the agency, and adverse financial and reputational consequences.

“It is an essential component of the Board’s ability to undertake its responsibilities that it is able to place complete trust in the CEO’s appreciation of the scope of the duty to disclose important information. Due governance of the CIT as a separate agency outside the direct control of government depended on the elements of its structure – of which the Minister, the Board and the CEO were the major formal elements – working cooperatively, with each being able to trust the others to perform their responsibilities with due care and diligence.

‘Dishonest, a breach of public trust, and worthy of the sack’.

“Thus, considered only as a failure of competence, the conduct of the CEO in concealing from the Board matters in relation to the procurement of the fifth and sixth contracts could have constituted “reasonable grounds for dismissing, dispensing with the services of, or otherwise terminating the services of, a public official” within the meaning of [the Act].

“I am satisfied to the requisite degree that Ms Cover’s conduct also constituted dishonest conduct within the meaning of [the Act] and, also, constituted “a breach of public trust” and/or “the misuse of information or material acquired … in the course of performing … [her] official functions.”

“The integrity of the legal frameworks that provide for governance of public entities such as the CIT, depends on the due performance of their responsibilities by the officials who are charged with its management including, in particular, the CEO. Her corrupt conduct adversely impacted the exercise by the Board of its supervisory function …

“Accordingly, this conduct was ‘likely to threaten public confidence in the integrity of government or public administration. It follows that Ms Cover was guilty of serious corrupt conduct.”

I shouldn’t be surprised if this line of approach, as much focused on the consequences of poor stewardship as on conscious malfeasance, would strike terror in the hearts of some Commonwealth public servants were the National Anti-Corruption Commission to adopt a similar approach.

Even leaving aside the spurned references from the Robodebt inquiry, I can think of a dozen senior level public servants whose substandard attendance to their duties, and negligent but conscious failure to perform them was at least as bad as that alleged of Leanne Clover. In some cases, the losses to the Commonwealth, and the damage to the public interest, involved many millions more than that lost by the ACT CIT system.

In some cases, some of the malfeasance or culpable incompetence was exposed by watchdog officials such as the auditor general – to yawns by coalition ministers and complete indifference and inaction by public service supervisors and superiors.

I suppose it could be said that if the Robodebt iniquities, perhaps the biggest public administration scandal in Australia’s history, which cost the Commonwealth billions, caused suicides and untold misery is beneath the notice of the NACC, all the others would be too.

Integrity scholars with long memories might recall one of the early own goals by NSW politicians in the early days of ICAC, set up by the reforming Greiner government. One of Nick Greiner’s ministers was Terry Metherell, who was at one stage forced to stand down after allegations of tax avoidance. Metherell expected to be soon restored to the ministry, but when Greiner was forced into minority government, it became impossible to promote Metherell. Metherell resigned from the Liberal Party and became a crossbench burr in Greiner’s saddle, saying that the times called for special leadership qualities, but the Greiner government had lost its way.

Greiner did a deal with Metherell, agreeing to appoint him to a public service position in the NSW Environmental Protection Agency. ICAC, called upon to investigate the appointment, found that Griener’s action had been corrupt within the meaning of ICAC’s legislation, in effect because it was a political appointment to a position which should have been determined by merit by the NSW Public Service Board. Greiner was forced to resign. In due course, the ICAC finding was reversed by the NSW Court of Appeal, but by then Greiner was out of his old job, and out of parliament.

Last week Anthony Albanese was reckoned by some to have caused a political coup by luring a former NSW Liberal Treasurer, Matt Kean out of NSW politics and into a Commonwealth position as chair of the climate change authority. Strictly, this might rate as a patronage job, rather than one controlled by public service Act processes. Kean has environmental credentials, but his appointment was neither at arm’s length, nor, in the ordinary sense on merit.

Kean has, of course, been denounced by his old colleagues as a rat. He can have expected no less. But the parallels between Albo and Greiner were striking. There was only mild criticism of Albanese’s cynical patronage. Indeed, his office was soon leaking it about that if Donald Trump gets elected, Albo might find Scott Morrison a job as envoy to 1600 Pennsylvania Avenue. That’s because of Morrison and Trump’s shared interest in Jesus Christ.

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