Is it time for Federal Integrity Body or should we just turn off the life support machine for integrity in the federal public sector?  

Nov 2, 2020

It is not a pretty picture.  Bernard Keane writing in Crikey said recently: “Everywhere you look in the Morrison government, you see sleaze and self-interest, if not outright corruption. Merely itemising the current scandals on foot is an arduous task.”

Keane provided a list but it was far from comprehensive.  He didn’t mention Mathias Corman’s Hello World travel for his family. Hello World has done very well out of the Federal Government. It is another case where police investigated the leak of the information rather than the possible criminal breach itself. Nor did Keane mention the buses used by Christian Porter as advertising vehicles before the last federal election, which were only paid for after the transaction went public. No Godwin Grech was needed for that one. The CEO of the bus company was elevated to the AAT. Nor Stuart Robert’s enormous internet account. Nor Susan Ley’s travel expenses. These are all federal ministers, as is the trouble-prone Angus Taylor. Is Alan Tudge’s proclaimed criminality in disregarding orders by the AAT to release a man from imprisonment corrupt, or just contempt for the law – apparently sanctioned by Australia’s First Law Officer, the same Christian Porter, whose duty it is to see the law upheld.

It’s not so long ago that the Australian Wheat Board was up to its neck in corruption, and the Reserve Bank, of all people, was not immune, with Securency.

But it is not just about reciting a litany of scams.

Underlying value/culture problems are creating the tsunami of corruption. Milton Friedman created the underlying values system of the last 35 years – Gordon Gekko said that greed is good, but he was just parroting Friedman. Friedman proclaimed that there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game. To be fair to Friedman, we only heard and acted on the first part of the proclamation, but not the caveat: “so long as it stays within the rules of the game”.

In Australia, Friedman’s pernicious ethos was inflicted on the public sector as well as business. It led to corporatisation of the public sector and managerialism. Everything had to be contestable and everything a market. One of the ironies is that, increasingly, large amounts of public money are being spent without contestability – without a tender.

Since the 19810’s it has become an article of faith that talented people will not take on public service unless they are paid top dollar – no matter that the evidence of decades was thrown overboard. Think of HC “Nugget” Coombs, JG Crawford, Douglas Copland, Sir William Hudson – a very different man from his trouble-prone grandson. Angus Taylor would have made a fortune out of the Snowy Scheme.

It all came to be about the money.  “Just show me the money!”   Senior executives in bodies such as ASIC and Australia Post, and their Boards and internal auditors and those with internal governance roles in such entities have lost the plot. It’s too long since they were in the public bar of a pub to sense what will fail the pub test.

When people have been caught out rorting, very often they have been able to get out of that embarrassing jam simply by paying the money back.  It is not an option if you rob a bank.  So, as long as you don’t wield a gun, have a go.  If you get caught, you’ll probably just have to pay it back.

As a lawyer who often interacts with the public sector, every week I encounter public sector bodies which simply disregard the law. They deliberately act illegally or don’t even consider the law as being of sufficient importance to be bothered asking about what it requires.  In the past week, both Scott Morrison and David Littleproud have shot their mouths off: Morrison basically suspended the CEO of Australia Post without pausing to wonder whether that is one of the powers of the Prime Minister; Littleproud threatened to revoke deposit guarantees for ANZ Bank as revenge for its stricter climate policy. Laura Tingle wrote: “Littleproud and the band of Nationals MPs and senators who joined the ANZ-bashing conga line seemed to have little regard for things like a bank board’s obligation to make risk management decisions in the best interest of their shareholders, or indeed to be transparent about their actions. But maybe that is not all that surprising. It is hard to think of a recent government that has done more to reduce transparency or frustrate inquiries into activities carried out in its name.”

Sports Rorts is another case in point: $100 million was handed out for political gain and in total disregard of the governing Act. ASIC’s stated (when pressed for an explanation) policy not to oversee the activities of not-for-profit companies is another example.  ASIC has the duty.  But without publicising it, ASIC just don’t do that part of its duties.

The new disregard for ethics and integrity is seen in the explanations our leaders try to float when they are caught out.  Deputy Prime Minister Michael McCormack suggested that paying $30 million to Liberal party donors for a bit of land worth $3 million would look like good value one day!  Presumably he was reduced to that explanation after the Government’s two favoured explanations – that corruption isn’t a problem at federal level; and that the Federal Government can’t walk (respond to Covid) and chew gum (publish its anti-corruption proposal) at the same time – had failed that same pub test.
On a wider front, suddenly the Coalition has flipped from its forever opposition to picking winners.  The Government has announced that its policies to get the economy moving again are based on picking winners – we are going to support six priority industry sectors: advanced manufacturing, cyber security, food and agribusiness, medical technologies and pharmaceuticals, mining equipment, technology and services, and oil, gas and energy resources.

This is a Government which can’t give $100m in sports grants to the properly selected clubs when there is a better (but illegal) option of picking up some marginal seats.  What hope have we got with billions and billions of dollars which we are in the process of spending where there are no rules?

The whole exercise has been guided by hand-picked people from the industries which are set to benefit massively from this new game.  Did I hear “conflict of interest”?

What of Friedman’s caveat: “so long as it stays within the rules of the game”. The problem is that we do not have institutions which are up to the task of enforcing the rules.

Significant rorts which have come to light have been by the good work of the Audit Office. In the recent budget, the Audit Office given a $14 million cut in its budget. According to Laura Tingle, this will see the number of its audits cut from 48 to 38 each year – a reduction of more than 20%.

Time was that the Ombudsman would intervene much more than now in cases of maladministration.   In many respects, the Ombudsman has become a captive of the system.

Notably the AFP has gone missing. These days, it has a very sensitive political antenna and well-developed techniques for looking the other way when it is politic to do so – just ask Angus Taylor, Michaela Cash, Peter Dutton, and all those who gained financially from the Woodside /Timor Leste connection, starting with Alexander Downer – and to do the Government’s bidding when there has been an embarrassing leak about au pairs or some such major issue of national security. Unlike the Audit Office, the AFP’s budget was increased in the 2020 budget.

If there is a prosecution, it will be against a leaker and not against the perpetrators of the real criminality. That has happened so often – ask Bernard Collaery and Witness K.

If there is an inquiry into a scandal, it’s likely to be a last resort, and done by one of the big consulting firms, or perhaps a big law firm or maybe a former public servant known to be “sound”. Jane Halton, of Children Overboard fame, seems to be the person of the moment.  Someone who can be depended on not to rock the (metaphorical) boat.

The big consulting firms in particular seem to have no concept of what conflict of interest means.  They work over an enormously wide canvass – basically anything that makes a buck.  The last thing that they would want is to upset such a major client as the Federal Government.

I was in a reasonably large law firm which decided it needed to grow by merger.  One of the big consulting firms expressed interest in having us join.  That firm’s major selling point to us as a law firm was that, because it audits so many entities, it would be able to refer them to us as potential clients.  It’s just amazing what auditors can find out – who are the incumbent lawyers, how much the lawyers are paid, key players on both sides, which lawyers are highly regarded, and so might be targets for recruitment, which are not well regarded and might be supplanted.  All very useful to the legal arm of a big consulting/auditing firm.

Is there anything wrong with that picture? Is there anything wrong with the same firm doing legal work for an entity and also auditing that entity? (Working too long in the big end of town can dull the senses).

A very few people and even fewer firms are prepared to rock the boat.  And the ethos of the age is “just show me the money”.  It is not to pursue what is correct, and hang the cost. Very wise too. Doing what’s correct is likely to get you sacked or even prosecuted.

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