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The revelations at the NSW Independent Commission Against Corruption this week serve as a timely reminder that the federal government’s proposed Commonwealth Integrity Commission would be a watchdog with some bark but hardly any bite. By Mike Seccombe.

ICAC and the federal watchdog

It’s been a wild fortnight at the New South Wales Independent Commission Against Corruption (ICAC).

A hundred thousand dollars in an Aldi shopping bag, personally delivered to NSW Labor Party headquarters by a property developer who is now banned from Australia on ASIO advice as being an agent of communist Chinese government influence.

That huge donation, allegedly disguised as a series of smaller amounts from straw donors, some of whom could never have afforded such generosity, some of whom were allegedly strongarmed into falsely claiming to have donated, one of whom took his own life rather than go before an ICAC inquiry.

Senior party members implicated. Evidence of a clandestine meeting behind Parliament House between party general-secretary Kaila Murnain and former MP Ernest Wong, and of a tearful Murnain seeking guidance from former secretary and senator Sam Dastyari – and being told to “cover your arse” – as they drove around the streets of Sydney in his car.

Pictures released by ICAC of the banned billionaire Chinese donor, Huang Xiangmo, smiling for Wong’s camera at a party fundraiser, alongside then federal and state Labor leaders Bill Shorten and Luke Foley.

To say the ICAC hearings – and there is likely more ugly detail to come in the four weeks ahead – has been damaging to Labor would be an understatement.

“A diabolical situation,” is how the new Labor leader, Anthony Albanese, described it.

These ICAC hearings have served as a reminder of the clout of Australia’s original and strongest permanent anti-corruption commission. And while every other jurisdiction in the country now has its own anti-corruption commission, the one where money, power and influence are most concentrated – the federal government – still has none.

Before the election, the Morrison government promised a Commonwealth Integrity Commission (CIC). Since then, though, it has dragged its feet. Some money was allocated in the budget, but the legislation necessary to set one up has dropped off its legislative agenda.

And even assuming the government eventually gets around to the CIC, the reality is the model it proposes would preclude investigations such as the current one being undertaken by ICAC. They simply would not happen.

So says Stephen Charles, AO, QC, former justice of the Victorian Supreme Court and one of Australia’s leading experts on the tawdry subject of political corruption and efforts to combat it, stretching back more than 30 years to when he was counsel assisting the inquiry into allegations against High Court justice Lionel Murphy.

Matters such as the one currently before ICAC, Charles says, are “not covered at all” by the government’s proposed model. “And it is quite carefully designed not to cover them,” he says. This view is shared by a number of other eminent legal critics.

For years, those concerned about political corruption have championed the idea of a federal body: the Greens, some independent federal parliamentarians – notably Tasmania’s Andrew Wilkie and Centre Alliance – and the progressive think tank The Australia Institute, which harnessed dozens of Australia’s most senior former judges, eminent barristers and legal academics to the cause. Measures of public opinion showed overwhelming support for the establishment of a federal equivalent of ICAC.

Yet the major parties resisted. At the beginning of 2018, though, in response to mounting external pressure, and at the urging of the shadow attorney-general, Mark Dreyfus, Labor adopted such a body into its platform. The Coalition held off for the better part of a year before producing its own, far more limited alternative, the CIC.

Theirs is a two-part proposal, one arm of which would slightly extend the scope of an existing body, the Australian Commission for Law Enforcement Integrity, and would have strong powers. The second arm, far more limited in its powers, would cover politicians, their staff and the Commonwealth public service and contractors.

It would not hold public hearings, would not be able to initiate its own inquiries or act on tipoffs from whistleblowers or the public, and would act only on the instruction of agency heads or the government. It would not be allowed to make findings of corruption, only to determine if a case were strong enough to refer to the Commonwealth director of public prosecutions. It would be able to investigate matters only on the reasonable suspicion of criminal conduct. And it would not be able to seize evidence or conduct surveillance.

In enumerating these shortcomings in a speech earlier this year, Dreyfus called Christian Porter’s model “the integrity commission you design when you don’t want an integrity commission”.

According to new research from the recently established Centre for Public Integrity (CPI), it’s a fair assessment. Among other legal luminaries, the centre’s board includes Stephen Charles; Tony Fitzgerald, AC, QC, whose investigations exposed the deep corruption of the Bjelke-Petersen government and the Queensland Police Service; and David Ipp, AO, QC, and Geoffrey Watson, SC, both ex-ICAC. It compared the powers conferred on the various state and territory anti-corruption bodies and found NSW and Queensland came out best, while Victoria, Tasmania and South Australia are the worst. But Porter’s proposal, the CPI found, is weaker than any of them.

The CPI concluded the Morrison–Porter model would not allow for the investigation of recent allegations of corruption relating to Crown Casino, and would not be able to investigate potential breaches of the federal ministerial code of conduct or conflict of interest allegations against members of parliament.

Nor, as Dreyfus points out, would ICAC have, had it been working under the Porter model, investigated the activities of the corrupt former NSW Labor powerbroker Eddie Obeid, for that began with an anonymous public tipoff.

And as for the current matter before ICAC this week, its hearings splashed across the news on a daily basis? That would not have happened either. In part because while NSW electoral laws prohibit political donations from property developers, federal laws do not.

But beyond that, as Anthony Whealy, QC, former judge of the NSW Court of Appeal and chair of the CPI, explains: “The way in which this current matter arose was that the [state] electoral commission noticed what might be called some coincidental irregularities about some donations to Labor.

“Because it doesn’t have the power to investigate properly – to coerce people to give evidence, to hold public hearings et cetera – it referred the matter to ICAC.”

Such a referral would not have been possible under the Porter model because it requires a reasonable suspicion that a crime has been committed, says Whealy.

“If a federal ICAC, therefore, were told that there appeared to be some irregularities, and those irregularities were, say, that 10 or 20 people asserted they had made donations of $5000 each to a political party, I don’t think that would amount to a reasonable suspicion,” he says.

Geoffrey Watson underlines the point.

“Under the proposed Porter model, because of its extremely high threshold, you can’t start an investigation, in effect, without it already having been established to a degree of reasonable belief that there has been a criminal offence,” he says. “That’s self-defeating, because the investigation is supposed to determine that very fact.”

Furthermore, says Watson, the CIC would be “hamstrung, in that it would not be able to look at things in the past. It could only investigate things happening after the day it’s set up.

“So, this matter, which occurred in 2014, the federal ICAC would just have to bypass. It could find out that this had occurred and be prohibited from investigating it. I find that almost sickening,” he says.

But very convenient for all sides of politics.

The $100,000 donation now being investigated by ICAC is but the tip of a very large iceberg of political donations by Huang Xiangmo and his associated companies. In the five years before he was denied re-entry to Australia on ASIO advice, the billionaire donated some $2.7 million to Australia’s major political parties at state and federal level – money that he demanded be returned to him after his bid for citizenship failed.

What did all that money buy? Under the Porter model, we would never know.

What we do know is that vast sums are spent by all sorts of people seeking to buy influence and mould government policy, and equally vast sums are spent by parties trying to win or hold power.

A report, ‘Who’s in the Room?’, released last year by the Grattan Institute, totted up some of the numbers. In total, Australian political parties received almost $400 million during the two years spanning the 2016 election, and spent $368 million.

About a third of party receipts came in the form of public funding, via various electoral commissions, and a quarter from known private sources.

“The remaining 40 per cent is money from sources we know nothing about,” the report stated.

It further noted that corruption-prone industries, such as gambling and property development, were “hugely over-represented compared to their contribution to the economy” and that major donors were more likely to get meetings with ministers. Moreover, more than a quarter of federal politicians go on to post-politics jobs for special interests.

Stephen Charles read that report and suggests it goes a long way towards explaining why our conservative parties are holding out against other reform of donations laws and a powerful federal anti-corruption body.

As he told a legal conference in Brisbane a couple of weeks ago, there are a lot of “matters that might attract the interest” of a federal anti-corruption body. He listed just a few – submarine contracts, allegations of systemic fraud in the Defence Department, dubious closed tenders for lucrative contracts related to offshore detention, misuse of members’ entitlements, the “revolving door of ministerial resignations and public service movements into private work” and more.

Which is to say, as Sam Dastyari bluntly put it, they are covering their arse.

Above all, the learned judge told his audience, the government doesn’t want to do anything to impede that flood of money.

“Natural reciprocity,” he said, “means payments all too readily result in favours. But if favours aren’t given in return, the payments will stop.”

This article was first published in the print edition of The Saturday Paper on Sep 7, 2019 as "False teeth". Subscribe here.

Mike Seccombe
is The Saturday Paper’s national correspondent.