ICAC’s defining moment
The New South Wales Independent Commission Against Corruption has been doing such a blistering job that it is inevitable it would face an array of brawny forces seeking to cut it down.
Politicians, wealthy business interests and even a dedicated crown prosecutor are asking the High Court to clip its wings, if not ground it entirely. ICAC’s no-holds-barred inquisitorial process is being challenged by the rule-heavy adversarial system.
Ever since Barry O’Farrell went into the library with a pistol and terminated his premiership, conservative voices have called for the defenestration of the country’s most effective corruption-fighting body. In particular, to spare the gilded reputations of notable figures, there should be no more public hearings. Presumably there would be an exception for Labor politicians who are in the frame.
The idea was splendidly ridiculed by former judge and ICAC commissioner David Ipp: “The whole raison d’être of ICAC is the exposure of corruption. The idea of exposing corruption behind closed doors is oxymoronic.”
Oxymoronic is right. But ICAC is facing more serious attacks on three fronts.
There’s a constitutional challenge from Newcastle property developer and former mayor, so-called “walking ATM” Jeff McCloy, who was handing out cash in his Bentley to Liberal candidates. He’s asking the High Court to strike down NSW legislation that bans political donations from property developers, the tobacco industry, the liquor industry and gambling outfits, as well as their associates, on the basis that it violates the implied freedom of political communication. That will be heard by the court in the middle of June.
From NSW deputy senior crown prosecutor Margaret Cunneen, SC, comes a challenge seeking a new statutory interpretation of what constitutes “corruption” under the ICAC Act. The High Court has scheduled that for a hearing starting on March 4.
And there is also a group of applications from Travers Duncan and business interests associated with Cascade Coal and NuCoal Resources (previously Doyles Creek Mining) asking the High Court to overturn NSW legislation giving effect to ICAC’s recommendation that mining exploration licences be cancelled because they had been corruptly obtained. Those cases will be heard together from February 10.
The implication of McCloy’s case was brazenly set out by his barrister, former Commonwealth solicitor-general David Bennett, QC, in a discussion last September with a panel of experts looking at reform of NSW’s election funding laws.
Bennett was asked, if McCloy’s constitutional challenge were successful, where that would leave ICAC. He replied: “With very little to do.”
If the court finds that constitutionally it is not possible to prevent the liquor, gambling, tobacco and property interests from cashing up their political favourites, then vast chunks of ICAC’s work will collapse.
The panel was chaired by Dr Kerry Schott, herself a target of one of Eddie Obeid’s dastardly schemes. Panel member and former state MP Andrew Tink quizzed Bennett for more information: “So the structure of corruption around ICAC falls away if the High Court upholds you?”
It’s not just the rights of these industries to donate to parties and politicians. McCloy is also seeking to strike down the provisions that set caps on the amounts that can be donated.
As Bennett put it: “We are attacking that, too. We are attacking that and we are attacking indirect donation. We are attacking all of it.”
Tink: “So this case is really quite profoundly important for us, is it not?”
Tink: “That is putting it mildly. If you are attacking the caps, that is the whole system. It is really the whole current legislative framework that is in question. This is really important. It is not just whether developers as a class should be banned or not banned or whatever – when I say attack, it is a legal attack. It is a legal attack on the whole framework of the legislation. I did not understand that before. I do now.”
Bennett is seeking to build on the 2013 findings of the court in the Unions NSW case. There it was decided that parts of state legislation on election funding and expenditure, which restricted political donations to individuals and aggregated the amount political parties and their affiliates could spend on advertising and election material, were unconstitutional.
It was an “impermissible burden on the implied freedom of communication on political matters, contrary to the Commonwealth constitution”.
There was an anti-corruption purpose behind the Election Funding, Expenditure and Disclosures Act, but that wasn’t sufficient to stop the idea that money should be free to talk.
Tossing a freedom morsel to unions, corporations and other structures not on the electoral roll seems a heady idea to journalists and publishers who have been vainly hoping the implied right of political communication might come to the rescue of fearless reporting on politicians and affairs of state.
The US Supreme Court has been handing out First Amendment blessings to a variety of forms of communication, including nude dancing, silence and videos of pitbulls attacking small animals.
Its biggest gift was to let rich political donors out of the cupboard so that they could buy entire elections. We see the end result of this with the immensely wealthy Koch brothers arranging for nearly $1 billion to be ploughed into the right stamp of Republican candidates in next year’s US elections.
It shows that Clive Palmer got a bargain when he bought the balance of power in the senate for a lousy $12 million.
Former US Supreme Court judge John Paul Stevens told a senate committee that financial contributions to politicians should not receive the same constitutional protection as speech itself.
“After all, campaign funds were used to finance the Watergate burglary – actions that clearly were not protected by the First Amendment.”
Professor Anne Twomey, constitutional expert at Sydney Law School, said in a recent paper on political donations and free speech that the High Court has left open the question of whether individuals and specific groups can be prevented from donating to political parties and candidates.
She thought that if there were evidence that the law was designed to prevent a greater risk of corruption, then it might be upheld for that purpose.
She added that whether donations amount to speech is still an unresolved issue for the High Court. However, in a sense that doesn’t matter because the court has now held that banning donations from specified groups or organisations raises the prospect of breaching the implied freedom of political communication.
There’s also a constitutional element in the cases brought by the coal interests, seeking to unwind the amendments to the Mining Act that cancelled their licences – legislation that flowed from ICAC’s operations Jasper and Acacia. They claim that this legislation seeks to determine pre-existing rights and mete out punishments and penalties that are properly the reserve of the judicial branch.
The Cunneen case comes as another fundamental challenge to ICAC because it seeks to redefine “corruption” by substantially narrowing its scope. The relevant bit of the ICAC Act defines corrupt conduct in this way: “any conduct of any person ... that adversely affects or could adversely affect, either directly or indirectly, the exercise of official functions, by any public official, any group or body of public officials or any public authority”.
Then follows a list of offences that involve the corrupt conduct, including bribery, blackmail, fraud, election fraud, perverting the course of justice, embezzlement, tax evasion, treason or other offences against the sovereign, et cetera.
Baldly stated, ICAC has proceeded on the basis that if, for example, a prohibited donor such as a property developer secretly gave money to a political candidate, that was deemed corruption because it could adversely affect official functions or authorities.
A majority of the Court of Appeal in the Cunneen case said that conduct of an individual may be unlawful, but unless that conduct has the capacity to lead a public official or public authority into doing something adverse then no finding of corruption can be made.
The Cunneen case involves the allegation that a policeman had been misled into thinking a person involved in a car accident had chest pains, so as to avoid a breath test. The majority endorsed the idea that: “It could not be said that the police officer acted otherwise than honestly and impartially in taking steps in accordance with his or her understanding of the circumstances.”
ICAC thinks this is a million miles from the proper meaning of conduct that “could adversely affect” a public official or a public authority.
In written submissions to the High Court, ICAC says the majority appeal judges have imposed “a substantial gloss on the statutory text”.
The issue needs to be resolved because there is uncertainty whether ICAC can complete its reports on corrupt conduct involving Australian Water Holdings (Operation Credo) and soliciting, receiving and concealing political donations (Operation Spicer).
According to an affidavit from ICAC’s solicitor, Roy Waldon, there are at least three other current investigations, as yet not made subject to public inquiries, which could also be potentially derailed.
In reports published between June 2010 and October 2014, ICAC made corrupt conduct findings against 26 people on the basis of its understanding of the scope of the act. If the decision of the court of appeal majority is correct, “issues might arise as to whether some of those findings should have been made,” Waldon says.
It’s all in the words and their interpretation. ICAC’s counsel Jeremy Kirk, SC, referred to Romeo and Juliet, where we find Juliet saying: “What’s in a name? That which we call a rose by any other name would smell as sweet.”
He ventured further, referring to Lewis Carroll and Humpty Dumpty, who observed: “ When I use a word it means just what I choose it to mean – neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master – that’s all.”
This article was first published in the print edition of The Saturday Paper on January 31, 2015 as "ICAC’s defining moment".
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