CHAPTER 5
Committee views and recommendations
5.1
This inquiry examined a range of issues concerning the investigative
processes and powers of the Australian Federal Police (AFP) in relation to non‑criminal
matters under the Proceeds of Crime Act 2002 (POC Act). At the outset,
the committee expresses its support for the Commonwealth proceeds of crime
regime as a crucial part of law enforcement efforts to disrupt serious and
organised crime in Australia. It is right and appropriate that proceeds of
crime matters are investigated and litigated in order to deprive criminal
individuals and organisations of the material proceeds of their unlawful
activities. It is a matter of substantial importance that Australia's proceeds
of crime regime operates efficiently and effectively, both in terms of the
legislative framework established by the POC Act, and in the way that matters
are investigated and litigated.
5.2
The inquiry focused largely on the way in which the AFP deals with
literary proceeds investigations, which are one stream within the broader
proceeds of crime regime. The evidence received by the committee highlighted
several issues arising from the AFP's processes relating to proceeds of crime
matters which the committee believes need to be addressed.
5.3
The committee heard a range of evidence in relation to the legislative
framework for literary proceeds matters under the POC Act and the differences
between literary proceeds investigations and other investigations under the POC
Act. Investigative powers available to the AFP under the POC Act drew much
commentary from submitters, and the committee considers some changes in this
area are justified. Finally, the committee believes that several measures in
relation to investigations specifically involving media and publishing
organisations are also worth pursuing.
AFP processes and procedures during proceeds of crime investigations
5.4
This inquiry has highlighted various aspects of the processes and
procedures followed by the AFP during proceeds of crime investigations,
demonstrated in particular by the recent literary proceeds investigation
involving Seven West Media (Seven West).
5.5
In relation to this particular matter, it is clear that serious errors
were made by the AFP at several stages during the investigation. This raises
questions regarding whether the AFP had the requisite competencies, training
and oversight in place to deal with such matters. It is the committee's view
that, in this instance, the investigative approach taken by the AFP was
unreasonable and caused unnecessary damage to the reputation of a media
organisation which is part of a major Australian public company. In particular,
the decision to obtain search warrants while a process for the production of
documents was still underway was a significant error of judgement in
circumstances where Seven West had been communicative and cooperative. The
errors made in the text of the search warrants and associated orders are
concerning, as are the allegations of unprofessional conduct by AFP officers during
the execution of the search warrants.
5.6
The committee is aware that the AFP has acknowledged a number of
failings in relation to the preparation and execution of the search warrants
and other orders. The committee welcomes both the AFP's internal review and
that being currently undertaken by the Australian Commission for Law
Enforcement Integrity, and expects that these reviews will result in remedial
action where appropriate.
5.7
However, the committee offers the following specific comments in
relation to several issues arising from the investigation of Seven West.
Scope of the production order and
search warrant
5.8
A key point of disagreement between the AFP and Seven West was whether
two draft agreements produced by Seven West during the execution of search
warrants on Seven West premises fell within the scope of the initial production
order, and accordingly should have been produced by Seven West at that earlier stage
of the investigation. This is a technical question that hinges on the
definitions of 'electronic and written records' and 'draft agreements', and
about which the AFP and Seven West contested opposing views (see Chapter 3).
5.9
It is not the committee's role to define the terms of production orders
or search warrants. However, the committee is concerned about the differing
interpretations of the terms of the production order arrived at in this
particular case. It highlights the need for production orders to be drafted as
clearly as possible to ensure that parties to those orders cannot misinterpret
their terms and so that relevant documents are produced to law enforcement
agencies in response to such orders. The committee is of the view that
responsibility for any lack of clarity in the production orders rests with the
AFP. The committee is also of the view that the AFP has not justified its
decision to apply for search warrants.
The need for greater awareness about
the nature of proceeds of crime investigations
5.10
The AFP told the committee that the errors contained in the search
warrant and section 246 assistance orders in the Seven West case arose due to the
use of incorrect templates during the drafting of those documents. This
subsequently resulted in a form of words being used that was appropriate for
criminal investigations, but not investigations in support of civil recovery
action under the POC Act. The AFP recognised the need for its general
investigators to have a better understanding of the differences between
criminal investigations and investigations under the POC Act, and in particular
literary proceeds investigations.
5.11
The committee welcomes the AFP's comments about improving the education
of its officers and strengthening its training tools relevant to investigations
under the POC Act. The committee believes that such education and training
should be mandatory for AFP investigators and urges the AFP to implement these
changes in a timely manner.
Recommendation 1
5.12
The committee recommends that the Australian Federal Police develops and
provides mandatory education and training tools to its investigators in
relation to the nature of investigations in support of civil action under the Proceeds
of Crime Act 2002.
Making all relevant information
available to magistrates granting orders and warrants
5.13
Both the judgment of the Federal Court and evidence presented to
this inquiry suggest that the AFP failed to communicate all relevant
information to the magistrates responsible for granting search warrants and
associated orders in the Seven West investigation. In the Federal Court judgment,
her honour Justice Jagot found that the AFP had misled the issuing
magistrates by stating that the AFP was not satisfied that Seven West had
complied with the initial production order, when a consensual regime was in
place for continuing compliance with that order.[1]
5.14
The committee considers it essential that in future investigations,
the AFP places all relevant information before a magistrate when applying
for a search warrant under the POC Act, including the details of any other
information gathering activities related to the matter and whether such
activities are ongoing.
Recommendation 2
5.15
The committee recommends that, when making applications for search
warrants under section 225 of the Proceeds of Crime Act 2002, the
Australian Federal Police presents all relevant information to the issuing
magistrate, including full details of any other information gathering
activities undertaken by the Australian Federal Police in relation to the
matter and whether such activities are ongoing.
5.16
Further, it appears likely that in this case the issuing magistrates
wrongly assumed that the POC Act created a criminal offence relating to the
derivation of literary proceeds. This matter highlights the need for
magistrates to have full access to all relevant Commonwealth legislation when
granting search warrants and associated orders. The committee recommends that
the AFP implements protocols to ensure that its officers always provide
magistrates with the relevant Commonwealth legislation in order to ensure that
fully informed decisions are made.
Recommendation 3
5.17
The committee recommends that the Australian Federal Police implements
protocols to ensure that applications made to a magistrate for the granting of
search warrants or other associated orders must be accompanied by a copy of the
legislative provisions to which the application relates.
Literary proceeds matters under the POC Act
5.18
Literary proceeds orders are designed to prevent individuals who have
committed an offence from deriving financial benefit through the commercial
exploitation of their criminal notoriety. The AFP and other submitters to the
inquiry agreed that literary proceeds matters are unique within the POC Act, as
the actions that give rise to a literary proceeds order (that is the selling of
a story by a criminal on the basis of their notoriety, and the purchase of that
story by a publishing or media organisation) are not illegal acts.
5.19
The committee also heard evidence that the types of organisations the
AFP is likely to be dealing with in literary proceeds investigations are
potentially more likely to be cooperative than other groups the AFP deals with
during other types of proceeds of crime investigations. As such, the
investigative powers necessary for other types of action under the POC Act may
be more intrusive than is required in a typical literary proceeds matter.
5.20
The POC Act confers on the AFP the same investigative powers for literary
proceeds matters as for all other matters under the POC Act. It was
suggested by several stakeholders that, due to the differences between literary
proceeds matters and other matters under the POC Act, literary proceeds matters
should be clearly distinguished from other types of matters under the POC Act,
or excised from the POC Act altogether and located in standalone legislation. Acting
AFP Commissioner Andrew Colvin APM OAM informed the committee that
there is potential to revisit the way literary proceeds matters are treated:
[T]here are clearly deficiencies within the legislation
insofar as the way literary proceeds and normal proceeds are dealt with. To the
extent that the committee is minded to want to make legislative reform, we
certainly welcome working with the committee on that...If the committee wish to
do that, I think there is some work that could be done around clearly
distinguishing literary proceeds and other proceeds matters. What form that
took would require some work, I would suggest.[2]
5.21
The committee considers that clearly distinguishing literary proceeds
matters from other types of matters under the POC Act would give clarity to
the AFP, the courts, and media and publishing organisations likely to be
involved in such investigations. The committee also considers the impact on
organisations such as Seven West, given that the name of the Act gives rise to
the impression that any company investigated under its provisions must be
involved in criminal activity. This obviously has a significant impact on an
international media organisation that relies on having a good reputation. The
committee has not formed a definitive view on whether this would best be
accomplished by excising literary proceeds provisions from
the POC Act altogether and placing them in standalone legislation, or
by amending the POC Act in other ways to clearly separate literary
proceeds matters from the remainder of the regime. As such, the committee
recommends that the government consider these options.
Recommendation 4
5.22
The committee recommends that the Commonwealth government investigates
options for distinguishing literary proceeds matters from other matters under
the Proceeds of Crime Act 2002 (POC Act) with particular consideration
given to:
- retaining literary proceeds matters within the POC Act, and
amending the Act to clearly distinguish between literary proceeds matters and
other proceeds of crime matters; or
-
removing literary proceeds matters from the POC Act
altogether and creating standalone legislation to deal with literary proceeds
matters.
Possible changes to the investigative powers available under the POC Act
5.23
While numerous changes were proposed to the investigative powers
available to the AFP and other enforcement agencies under the POC Act, the
committee considers that two particular proposals warrant further comment,
namely: changes to the requirements for obtaining search warrants under
the POC Act; and the possible introduction of an enforceable
undertakings mechanism in relation to literary proceeds matters. These are
discussed below.
Requirements for obtaining a search
warrant under the POC Act
5.24
During the inquiry, some stakeholders argued that the requirements for obtaining
a search warrant under the POC Act should be amended to ensure that coercive
search powers are only exercised where reasonably necessary and proportionate
to a legitimate purpose. It was argued that wherever possible, other less
intrusive means of information gathering should be pursued before coercive
search warrants are granted.
5.25
In particular, the Rule of Law Institute of Australia suggested that
magistrates should not be able to grant a search warrant in respect of
evidential material unless:
-
the document(s) sought cannot be identified or described with
sufficient particularity for the purpose of obtaining a production order; or
- a production order requiring the document has been given but not
complied with; or
- there are reasonable grounds to suspect that a production order
would not be complied with; or
- the investigation for the purposes of which the warrant is being
sought might be seriously prejudiced by seeking a production order if an
authorised officer does not gain immediate access to the document without
notice to any person.
5.26
The AFP did not support this proposal, on the grounds that there are
instances in which the AFP would not be in a position to apply for a production
order, or would not be able to obtain the material required through the use of
a production order. The AFP stated that this is because search warrants
can be granted in respect of a wider range of material, and in relation to a
wider range of premises and people, than production orders. The AFP argued that
such an amendment would have a serious adverse impact on the AFP's ability to
investigate and litigate proceeds of crime matters.[3]
5.27
The committee agrees in principle that, where it is possible for the AFP
to seek information via a production order before progressing to a more
intrusive search warrant, it should do so. The committee sees no problem with
enshrining this principle within the POC Act, provided that the AFP is not
unduly prevented from bypassing the requirement to seek a production order in
the first instance in cases where this is genuinely warranted. In order to
ensure this, the committee considers that the Rule of Law Institute's proposed
amendment should include an additional provision allowing a warrant be granted
if the evidential material sought could not otherwise be obtained via a
production order (for example, when material is held by an individual rather
than a body corporate). The Commonwealth government should develop and
introduce amendments to the POC Act with these principles in mind.
Recommendation 5
5.28
The committee recommends that the Commonwealth government develops and
introduces amendments to the Proceeds of Crime Act 2002 in order to
ensure that, wherever possible during investigations under the Act, information
is sought via a production order before a search warrant is granted.
Allowing for enforceable
undertakings in relation to literary proceeds matters
5.29
In relation to the recent literary proceeds investigation involving
Seven West, the committee heard that it would have been helpful if there had
been a mechanism in place that allowed the AFP to reach an undertaking with
Seven West in relation to payments or potential payments to be made to
Schapelle Corby. It was argued that the ability to reach such an undertaking
would have obviated the need for more intrusive measures to be taken, including
the execution of search warrants.
5.30
The committee notes that enforceable undertakings regimes exist in other
areas of Commonwealth regulation, for example the civil regulatory regime
administered by the Australian Securities and Investments Commission. The
committee considers that a similar regime may be useful in the specific context
of literary proceeds investigations. It is the view of the committee that
creating a clear legislative basis for such undertakings is preferable to the
AFP or other agencies entering into informal undertakings with organisations
during literary proceeds investigations. The committee also agrees with the AFP
that an enforceable undertakings mechanism should supplement, not replace,
other investigative powers available in relation to literary proceeds
investigations.
5.31
The committee acknowledges the various factors outlined by the AFP that
would need to be considered in developing any legislative enforceable
undertakings mechanism for literary proceeds investigations,[4]
and considers that the government should be mindful of these factors in
developing any amendments to the POC Act to introduce such a mechanism.
Recommendation 6
5.32
The committee recommends that the Commonwealth government investigates
options for introducing enforceable undertakings powers as an option available
to law enforcement agencies during literary proceeds investigations.
Protecting press freedoms during AFP investigations
5.33
Evidence presented to the committee during the inquiry indicated that
clearer guidelines and protocols are needed in relation to the conduct of AFP
investigations involving journalists and media organisations. These issues are
particularly relevant to literary proceeds investigations under the POC Act;
however, the inquiry also highlighted broader issues in relation to the way the
AFP and media organisations interact during criminal investigations.
5.34
Several options for reform were proposed by submitters, including:
introducing overarching guidelines to be observed by police when seeking
information from media organisations; developing specific protocols to be
observed during the execution of search warrants where journalists' privilege
is claimed over material; and amending the POC Act to provide protection for
material containing confidential journalists' sources. The committee's view is
that these proposals would give greater clarity to how the AFP and media
organisations should interact during investigations, and create more
appropriate protection for confidential journalists' sources.
Guidelines to be observed when
dealing with media organisations
5.35
The committee considers that the introduction of clear protocols
governing the circumstances in which the AFP can procure information or records
from media organisations during investigations would assist in protecting the
freedom of the press, while still allowing information that is critical to the
success of an investigation to be made available to law enforcement. These
protocols should be developed by the government in consultation with relevant
stakeholders, and have regard to mechanisms of this kind in other
jurisdictions, particularly the model adopted in the United States (which was
favoured by submitters to this inquiry).
Recommendation 7
5.36
The committee recommends that the Commonwealth government develops and
introduces legally enforceable protocols governing the procurement of
information or records from media organisations during investigations by the
Australian Federal Police.
5.37
In developing these protocols, the Commonwealth government should
consult with relevant stakeholders and have regard to relevant examples from
other jurisdictions, including the United States' Government's Policy
regarding obtaining information from, or records of, members of the news media;
and regarding questioning, arresting, or charging members of the news media.
Guidelines to be observed during
the execution of search warrants
5.38
The committee also sees merit in the development of a set of guidelines—including
independent adjudication—to be followed during the execution of search warrants
where journalists' privilege is claimed over material, similar to the existing
procedures in place where claims of legal professional privilege are made. This
would help to protect confidential journalists' sources during AFP
investigations, and allow an independent adjudicator to make final decision
about whether a claim of journalists' privilege should be upheld.
Recommendation 8
5.39
The committee recommends that the Australian Federal Police and relevant
media and publishing stakeholders develop guidelines to be observed during the
execution of search warrants on the premises of media organisations in
circumstances where a claim of journalists' privilege is made.
Amending the POC Act to provide
protection for material containing confidential journalists' sources
5.40
Establishment of the above guidelines would be strengthened by clearer
protections for confidential journalists' sources being introduced into the POC
Act itself. The committee heard that provisions in the Evidence Act 1995
(Evidence Act) are instructive in relation to possible amendments in this area.
5.41
Section 126H of the Evidence Act provides protection for confidential
journalists' sources during court proceedings, and ensures that journalists and
their employers cannot be compelled to identify a confidential informant. Under
subsection 126H(2), this protection does not apply if the court determines
that the public interest in the disclosure of evidence of the identity of the
informant outweighs any likely adverse effect of the disclosure on the
informant or any other person; and outweighs the public interest in the
communication of facts and opinion to the public by the news media and the
ability of the news media to access sources of facts.
5.42
The AFP indicated during the inquiry that it adheres to the spirit of
the protection of journalists' confidential sources found in section 126H of
the Evidence Act when conducting proceeds of crime investigations.[5]
Other submitters and witnesses argued that the same protection offered in the
Evidence Act in relation to court proceedings should be formally introduced
into the POC Act to provide clear protection for material containing
journalists' confidential sources during proceeds of crime investigations. This
could operate by subjecting the powers of the AFP to seize documents
pursuant to a search warrant to the criteria outlined in the Evidence Act
(that is, documents revealing the identity of confidential sources could not be
seized unless the public interest criteria outlined in subsection 126H(2) were
met). The question of whether those criteria were met in relation to specific
documents would need to be determined by an independent third party, preferably
the magistrate responsible for issuing the search warrant.
5.43
The committee agrees that this is a worthwhile change that would accord
with the stated existing practice of the AFP and offer more formal protection
for journalists' confidential sources, while ensuring that documents containing
confidential sources can still be provided to the AFP if a judicial officer
determines it is in the public interest to do so.
Recommendation 9
5.44
The committee recommends that the Proceeds of Crime Act 2002 be
amended to ensure that information subject to journalists' privilege cannot be
obtained by the Australian Federal Police during proceeds of crime
investigations unless the criteria contained in subsection 126H(2) of the Evidence
Act 1995 are met.
Senator
Penny Wright
Chair
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