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Chapter 2

Examination of the Annual Report

2.1        The 2008–2009 Annual Report is the third Annual Report of the Integrity Commissioner and covers the second full year of operation.[1] As noted by the Integrity Commissioner, ACLEI is still a relatively new agency.[2] During the reporting year it further consolidated its core activities and strengthened its position within the broader integrity environment.

2.2        The committee's concurrent inquiry into the operation of the Law Enforcement Integrity Commissioner Act 2006 has provided an important avenue for the committee to consider, in detail, a number of legislative, administrative and broader matters of interest concerning the work of ACLEI. Issues canvassed in that inquiry have not been reiterated here. The committee's examination of the 2008–2009 Annual Report focuses principally on:

• ACLEI's compliance with reporting requirements (see Appendix 1); and
• ACLEI's performance and focus during the reporting period.

The broader context

2.3        During the 2008–2009 year ACLEI continued to build and sharpen its investigative expertise. ACLEI also 'fine-tuned its direction',[3] in effect emerging as a more externally focused agency. This occurred in two ways. First, ACLEI developed a more strategic orientation. Second, ACLEI actively sought to influence the broader policy and law enforcement environment. As the Integrity Commissioner, Mr Philip Moss, observed:

[T]his third annual report shows ACLEI taking a strategic view of its role and responsibilities and shows ACLEI starting to influence its environment through investigations, relationship development, policy initiatives and corruption prevention activities.[4]

2.4        ACLEI also responded to applicable changes in the operating environment to ensure its own practices and processes remained relevant.

Strategic orientation

2.5        Under the LEIC Act the Integrity Commissioner must give priority to serious and systemic corruption.[5] The Integrity Commissioner explained that over the reporting period—and with the benefit of on-the-ground experience—ACLEI was in a better position to understand and target its response to serious and systemic corruption than in previous years:

During 2008–09, I tightened ACLEI's focus to deal with corruption issues that are of the most destructive nature—namely, those that put at risk the ability of law enforcement agencies to fight serious and organised crime or that threaten the public confidence in law enforcement.[6]

2.6        The Annual Report stated that the 'tightened focus' on serious and organised crime 'takes its lead' from the Australian Government's recognition of the threat serious and organised crime poses to national security. The report went on to explain:

By concentrating on exposing the law enforcement end of any 'corruption handshake', ACLEI can help to ensure that legitimate law enforcement activities, which are intended to counter organised crime, are not undermined from within.[7]

2.7        Whilst ACLEI focused its attention on the high risk areas of serious and systemic corruption, the Integrity Commissioner reminded the committee that he is required to assess all potential corruption issues notified or referred to ACLEI:

[H]eads of agencies are required to notify me of corruption issues as they become aware of them. So the full range come to ACLEI's attention. When I come to deal with [issues] in terms of applying my resources, it is a question of the prioritisation of those corruption issues. So I see the lot, but I may focus on the higher end.[8]

2.8        Those issues considered 'serious' and/or indicative of 'systemic' corruption will be investigated by ACLEI. Issues of a less serious or isolated nature may be referred to the relevant home agency, with ACLEI maintaining a monitoring role. In this way, as noted by the Integrity Commissioner above, ACLEI is able to build up a picture of the full range of corruption risks in the Commonwealth law enforcement field.

Influencing the environment

2.9        The Annual Report notes that corruption deterrence—'creating a law enforcement environment that is resistant, even hostile, to corruption'—is central to ACLEI's role.[9] Accordingly, ACLEI engaged in a number of activities in the 2008–2009 year that complement the deterrent effect inherent in its investigative role. These activities included:

• Corruption risk reviews of the ACC and AFP, which culminated in the report, Resistance to Corruption;[10]
• Presentations to AFP and ACC staff to help inculcate a culture of integrity;
• Identification of corruption risks during investigations and the transmittal of this learning or information back to the agency; and
• Use of ACLEI's experience in dealing with matters concerning unauthorised disclosure of information and other security breaches to contribute to the Australian Law Reform Commission's (ALRC) Inquiry into Secrecy Law.[11]

2.10      The committee continues to support the proactive approach ACLEI has taken to corruption deterrence and prevention and notes the value of the activities undertaken in the 2008–2009 year.

Changes in ACLEI's operating environment

2.11      Being in a position to influence the external environment means, in part, being conversant with environmental changes or features that may influence or impact on ACLEI's processes and direction.  Appendix 3 in the Annual Report outlines the various developments in legislation, case law and administrative review that ACLEI has taken account of in the 2008–2009 year when considering the currency of its practices and procedures. These developments included:

• Inquiry into the Privacy Act 1988, which was undertaken by the ALRC;
• Inquiry into Law Enforcement Integrity Models, which this committee reported on in February 2009;
• Inquiry into whistleblower protections within the Australian Government public sector, which the House of Representatives Standing Committee on Legal and Constitutional Affairs reported on in February 2009;
• Review of secrecy laws, which was undertaken by the ALRC;
• Review of the Royal Commissions Act, which was undertaken by the ALRC; and
• Relevant decisions of courts and administrative tribunals.[12]

Relevant decisions of courts and administrative tribunals

2.12      Four court decisions were seen as relevant to ACLEI's practices and procedures and a brief summary of their effect on ACLEI was provided in the Annual Report. ACLEI informed the committee that none of the four cases had directly impacted on ACLEI's practices and procedures. However ACLEI explained that:

[A]ny relevant precedent and commentary is noted and informs ACLEI’s exercise of its powers.[13]

Other issues

2.13      This section focuses on three issues that were of particular interest to the committee: ACLEI's performance; intelligence-sharing; and the exercise of powers.

Performance

2.14      Annual reporting by Australian Government agencies is based on an 'outcome and output' structure, which is derived from the Portfolio Budget Statements. These statements are published as part of the annual Budget process with a statement prepared for each agency.

2.15      ACLEI had one outcome and one output in 2008–2009 as follows:

Outcome: Assurance that Australian Government law enforcement agencies and their staff act with integrity.

Output: Detect, investigate and prevent corruption in prescribed Commonwealth law enforcement agencies; assist law enforcement agencies to maintain and improve the integrity of staff members.[14]

2.16      ACLEI had two key performance indicators (KPIs) corresponding to the outcome and output:

• Possible corruption issues in the AFP and the ACC that are brought to the attention of the Integrity Commissioner are independently assessed and, where appropriate, investigated in a timely manner.
• Corruption prevention awareness is increased in the AFP and ACC.[15]

2.17      In a statement to the committee the Integrity Commissioner noted that ACLEI did not meet the two corresponding targets for the first performance indicator, which concern the timeliness of assessments and investigations. The targets are as follows:

• 100% of possible corruption issues brought to the attention of the Integrity Commissioner are assessed within 90 days.
• 75% of investigations of corruption issues are concluded within six months of commencement of the investigation.[16]

2.18      With respect to the first target, only 27 per cent of assessments were completed within 90 days of receipt. In the case of the second target no ACLEI investigations were completed within the six-month target range.

2.19      The Integrity Commissioner explained that the performance targets were established in early 2008 when ACLEI had not long been in operation. The experience of ACLEI, he noted, has revealed the targets as being 'overly ambitious'. In view of this—and in line with the outcomes of the Australian Government's Operation Sunlight[17]—the targets have been replaced for the present (2009–2010) year with more qualitative measures.[18]  However, the Commissioner observed that there was some merit in the first quantitative target:

I believe the first KPI [target] to be a worthwhile measure of performance, although 100 per cent within three months I think is too high. Since the end of the year we are looking at, 2008–09, we have achieved a rate of 62 per cent. I reported at the end of June last year at 27 per cent and now I can report a rate of 62 per cent of assessments made within three months. My endeavour will be to lift that percentage from 62 per cent to 75 per cent.[19]

2.20      As noted above, in the 2008–2009 year ACLEI was unable to complete any investigations within the six-month timeframe as set in the second target. The Annual Report explained that the complexity of investigations, which have required multiple methods of evidence gathering including private hearings, interviews, surveillance and meetings in multiple locations around Australia, coupled with the small size and single location of ACLEI contributed to the time taken to complete investigations.[20]

2.21      The Integrity Commissioner further explained that a number of investigations had been completed to the stage of operational reports. The next stage involves an assessment of those operational reports by the Integrity Commissioner for report to the Minister:

Investigations are not finalised until I deem them to be completed, that is, there is a rigour that I apply as Integrity Commissioner at the end of the day to work done. As operational reports have been completed, a decision is made whether to continue or discontinue, depending on the outcome. So what has happened is that a queue of operational reports has developed for preparation and finalisation as reports to the minister.[21]

2.22      The Integrity Commissioner informed the committee that he had introduced measures to expedite the finalising of operational reports, including developing the capacity of operational staff to assist with report writing. He further provided assurance that matters awaiting finalisation were still, in certain ways, being progressed:

I should say that even though these investigations are still waiting to be reported on, it does not mean that the outcomes are not being progressed in this sense, that under section 146 of the LEIC Act, which relates to evidence of breach of duty or misconduct by a staff member of an agency, I can refer those matters to the agency for it to commence action forthwith. ... Not completed does not mean that progress is not being made by the agency to contain the corruption risk that might exist in a particular case.[22]

2.23      The committee recognises that over the reporting period the number of issues referred and notified to ACLEI increased significantly—and continues to do so. Along with this, other pressures or emerging investigation priorities have meant that the Integrity Commissioner has needed to direct his attention away from the backlog of operational reports to newer, more urgent issues.[23]

2.24      The steady increase in matters notified and referred to the Integrity Commissioner over the life of ACLEI and the subsequent impacts on the timeliness of assessments and investigations has been of concern to the committee for some time. The workload pressure on ACLEI staff is also of concern. In the committee's examination of the 2007–2008 Annual Report the committee discussed the potential impacts of investigation delays on those individuals and agencies under investigation and recommended that ACLEI's funding be reviewed to ensure it is commensurate with the number of corruption matters being notified and referred to the Integrity Commissioner.[24]

2.25      The committee notes that in 2008–2009 ACLEI made gains from a previous budget decision, which enabled the fit-out of a secure operations facility for investigation staff (launched in December 2009) and the recruitment of three more staff.[25] These additions will, no doubt, impact positively on ACLEI's ability to manage and process assessments and investigations.

2.26      The committee considers that more time is needed for the impacts of these increased resources to be realised. Nonetheless, ACLEI's funding level remains of significant concern to the committee, as discussed in prior reports.[26]

Intelligence-sharing

2.27      Intelligence-gathering is integral to the work of ACLEI. This relies on the sharing of intelligence with other law enforcement and government agencies and, in some cases, private sector agencies. ACLEI has gained access to a range of law enforcement and government databases. These arrangements are underpinned by memoranda of understanding.

2.28      The Annual Report states, however, that access to some information holdings is only granted on a fee-for-service basis. The cost of this for an agency of ACLEI's size is significant.[27] As Mr Peter Bache, Executive Director of ACLEI, explained:

The individual search costs are not particularly high for an individual item. However, to conduct an extensive search, often there are multiple entities and multiple components of that entity that you might want to look at, so the costs accumulate quite rapidly.[28]

2.29      Mr Bache further informed the committee that internal IT infrastructure costs to enable electronic access to databases can be quite high. In relation to one particular database he explained:

To enable us to access the information electronically and to improve timeliness—and to improve access, because some of the information is not available by manual means—we require a particular IT infrastructure. That infrastructure costs a large amount of money. In percentage terms, it is a very large amount of our budget, whereas with a larger agency it would be a much smaller amount.[29]

2.30      Another barrier to the timely access of intelligence identified by Mr Bache, is the limited human resources ACLEI has been able to devote to building relationships of trust with potential state-based intelligence sources:

[M]any of the state agencies will certainly provide us with information but it requires some effort on our part and a considerable amount of time to create a relationship and, if you like, prove our credentials so that they are prepared to provide that information while satisfying their own legislation. Particularly in the early part of the establishment of ACLEI, we simply did not have the staff to devote to that.[30]

2.31      The Integrity Commissioner noted that, whilst not the most efficient means of acquiring intelligence, under sections 75 and 76 of the LEIC Act he is able to compel the provision of information.[31]

2.32      Notwithstanding these barriers, ACLEI witnesses reflected positively on improvements to intelligence-gathering over the 2008–2009 year. Further, they assured the committee that the present obstacles are, in the main, surmountable:

I think we are far more advanced than we were this time 12 months ago in accessing information and it is improving. Just through the nature of our work we are establishing those relationships and becoming known and the roadblocks, if you like, are being removed. I am very confident there will be very few impediments to our access—other than financial, let me add—in the near future.[32]

2.33      The committee commends the progress ACLEI has made in establishing sound relationships with state and federal intelligence sources, which facilitates a trusted basis for the exchange of data. The committee also notes ACLEI's undertaking to explore options for further improving intelligence access arrangements.

2.34      Efficient and timely access to intelligence is critical to the work of ACLEI. It concerns the committee that ACLEI's access to intelligence may be impeded by the cost of acquiring this data. In particular, the committee questions the requirement that ACLEI pay a fee for intelligence held by other Commonwealth agencies. Such a requirement runs counter to achieving a cooperative and efficient government response to matters of corruption. The committee will continue to monitor the matter of intelligence-sharing.

Exercise of powers

2.35      The Integrity Commissioner is granted a range of powers for the purposes of conducting investigations and public inquiries. As with the previous two reporting periods, ACLEI did not exercise a number of these powers 'in its own right'. However, ACLEI undertook joint investigations with other agencies and, in some instances, those agencies exercised equivalent powers.[33]

2.36      The intrusive information-gathering powers that the Integrity Commissioner holds, but which in the 2008–2009 year ACLEI did not employ in its own right, include:

• Power of entry (s. 105, LEIC Act)
• Application for, and execution of, search warrants (s. 107-138, LEIC Act)
• Telecommunications interception and access (Telecommunications (Interception and Access) Act 1979)
• Use of surveillance devices (Surveillance Devices Act 2004)
• Controlled operations (Part 1AB, Crimes Act 1914)
• Assumed identity (Part 1AC, Crimes Act 1914)[34]

2.37      As in the previous two reporting periods, the Integrity Commissioner exercised the three powers outlined in the table below.

		2007–08	2008–09
Notice to a staff member of a law enforcement agency to provide information or produce documents or things	s. 75(1), LEIC Act	5	10
Notice to a person other than a staff member of a law enforcement agency to provide information or produce documents or things	s. 76(1)(b), LEIC Act	26	12
Summons to attend a hearing to give evidence and/or produce documents or things	s. 83, LEIC Act	5	19
Total		36	41

2.38      The Annual Report notes a change in practice in the 2008–09 year away from the issuing of notices and toward the use of summonses. This is captured in the comparative table above. ACLEI submitted that the reason for this change is that summonses can offer the advantage of preventing the disclosure of information, including in evidence obtained in hearings, if so directed by the Integrity Commissioner.[35] Specifically, section 83 of the LEIC Act, which concerns summonses, contains a provision enabling the Integrity Commissioner to prohibit the disclosure of information given in a hearing. No such provision has been included under sections 75 and 76, which concern the issuing of notices to provide information, documents or things.

2.39      The committee understands that the capacity to keep confidential certain information in order to protect investigations from compromise is critical. At the same time, the committee notes that the holding of hearings to receive evidence and/or documents is a costly and time consuming process. The committee is of the view, therefore, that the decision to hold a hearing should be determined by the need to take evidence in person and not to remedy an apparent anomaly in the existing legislation.

2.40      The committee supports the Integrity Commissioner's current approach as a stop-gap measure. However, the committee suggests that other options—including amending the legislation to incorporate a provision enabling the Integrity Commissioner to prohibit disclosure of information invoked under sections 75 and 76 of the LEIC Act—be given consideration.

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