CHAPTER 3

KEY ISSUES

3.1        This chapter discusses two substantive issues which were raised in submissions and evidence during the committee's inquiry:

• the need for ACLEI's jurisdiction to be extended to Customs; and
• whether it is appropriate to provide the AFP with the capacity to conduct proceeds of crime litigation.

Extension of ACLEI's jurisdiction

3.2        ACLEI's submission noted that, since 1 January 2011, the law enforcement functions of Customs have, through regulations, come under the Integrity Commissioner's jurisdiction. ACLEI's submission advised that in the first six months of this arrangement:

• the Chief Executive Officer (CEO) of Customs has notified the Integrity Commissioner of 20 corruption issues;
• ACLEI received four referrals of possible corruption issues from other sources;
• ACLEI commenced six investigations into these corruption issues, all of which are being conducted jointly with Customs;
• Customs has conducted several briefings to help ACLEI staff to become familiar with the range of the agency's operations and activities;
• the Integrity Commissioner and senior ACLEI staff have provided awareness-raising presentations to Customs staff at site visits across the country; and
• Customs has taken a number of steps to inform its staff about ACLEI and ACLEI's role.[1]

3.3        At the public hearing, Customs noted its close involvement with ACLEI since 1 January 2011, and highlighted its support for Schedule 1 of the Bill:

The Customs and Border Protection Service welcomed the change and continues to work closely with the Australian Commission for Law Enforcement Integrity, ACLEI, to be well positioned for a successful transition period. The measure recognises the important role played by officers from the Customs and Border Protection Service in safeguarding Australia's borders and the corruption risk that is associated with this role.[2]

3.4        Customs expanded on measures taken since the integrity partnership began with ACLEI to raise awareness and familiarise staff with the new integrity framework:

Initiatives have included site visits in the regions, briefings by senior customs and border protection officers and a joint online media presentation for staff stressing this integrity partnership. The DVD and intranet presentation, jointly developed by customs and border protection and ACLEI and made available to all of our staff, outlines the importance of this relationship between our two organisations. It emphasises the crucial role played by all customs and border protection officers in protecting the integrity of our agency and helps staff to know what to do if they suspect inappropriate, corrupt or criminal behaviour in the workplace.[3]

3.5        A 'community of practice' has also been developed for those involved in corruption prevention:

This community of practice, led by ACLEI, will include all of the agencies in their jurisdiction. While this is in its early stages, we believe that this will provide an avenue for agencies to share best practices and ideas on corruption prevention.[4]

Disclosure

3.6        As noted in Chapter 2, Schedule 1 of the Bill will amend the Customs Administration Act to provide an exemption from the general prohibition on disclosure in the case of disclosures for the purposes of the LEIC Act. ACLEI highlighted in its submission why it believes that this particular amendment is important:

ACLEI considers that it is important to put beyond doubt that it would be lawful for [Customs] staff or former staff members to provide information direct to the Integrity Commissioner or ACLEI if they have a concern about suspected corrupt conduct within the agency, or if they are required to do so in the course of an investigation by the Integrity Commissioner. It is foreseeable that a lack of clarity in relation to this matter could inhibit referrals of information or allegations to the Integrity Commissioner of possible corrupt conduct or the thorough investigation of a corruption issue.[5]

Resourcing

3.7        ACLEI noted at the public hearing that extra resources were transferred internally from the Customs budget for the inclusion of Customs in the regulations from 1 January 2011. These resources were in the form of five extra positions, to assist with the additional workload.[6]

AFP's power to commence and conduct proceeds of crime litigation

3.8        Two submissions received by the committee expressed concern about the proposed measures in Schedule 2 of the Bill, relating to the AFP's power to commence and conduct proceeds of crime litigation.

No rationale for need for change

3.9        The Law Council of Australia (Law Council) noted the lack of rationale provided for the proposed change in both the Minister's second reading speech and the Explanatory Memorandum.[7]

3.10      With respect to a lack of information in the second reading speech, Ms Helen Donovan from the Law Council argued:

...it does not follow from [the Minister's] statements that in order to establish a criminal assets confiscation task force that is, in the words of the minister, specialised and more effective it is necessary for the AFP to be able to conduct its own proceedings under the Proceeds of Crime Act. Why would that be the case? Why can't the Commonwealth DPP remain a permanent member of the task force and be allocated the necessary resources to allow the director to properly participate in and contribute to its work? That is the obvious question here and there is not really even the hint of an answer to that question in the second reading speech.[8]

3.11      Ms Donovan continued that, given the significance of the issues involved in the proposed amendments, more specific information is necessary:

...guesstimates about how much organised crime costs the community are not relevant to and do not help to resolve the question of which agencies should be responsible for proceedings under the Proceeds of Crime Act.[9]

3.12      Ms Donovan asserted that, by not providing a rationale for the proposed amendments, an informed debate could not take place. Ms Donovan noted that the Department's submission did not clarify the issues further:

The department's submission, firstly, states that the current arrangements under the Proceeds of Crime Act are essentially successful. However, it is asserted that the amendments will make the administration of the act more streamlined and more effective. I am not sure how we and other outside stakeholders can even begin to engage with this sort of opaque assertion. There appears to be an unwillingness to speak frankly on the public record about the current arrangements under the act and the purported shortcomings or frustrations of those arrangements. As a result, it is not possible to have a discussion about whether those frustrations are legitimate or whether the proposed amendment are the best way or an effective way to address any current shortcomings with the act and its administration.[10]

3.13      The Law Council also pointed out that the amendments in Schedule 2 of the Bill were not the subject of prior public consultation.[11]

AFP/Department response

3.14      At the public hearing, a representative from the AFP stated that the proposed amendments would allow proceeds of crime matters to be streamlined and made more efficient:

There are significant operational and administrative benefits which can be realised by consolidating proceeds of crime investigations and litigations within the one agency. These benefits include adopting a more proactive approach by being able to respond and take restraint much earlier in the proceedings, effective collaboration in the coordinated use of resources, and the streamlining of issues between investigative and litigation resources.[12]

3.15      The AFP noted the experience of other agencies, both domestic and international, in which one agency has responsibility for both investigation and litigation processes:

It has made much more of a streamline in terms of how decisions are made, how quickly decisions can be made and how adaptable those decisions are to what the investigation may be facing.[13]

3.16      Further, the time involved in the process would be shortened by the multi-agency approach of the Taskforce:

...we believe that it will be far more efficient for...our manager of the criminal assets branch, working alongside the manager of litigation on a daily basis, making daily decisions about the most effective course of conduct that is presented to them at any moment on any particular investigation. This is as opposed to needing to move between agencies, which at times can inefficient, to get advice and to make decisions. This is about making it faster in terms of our ability to react to the criminal environment, and I think out of that will come a lot of efficiencies.[14]

3.17      In relation to consultation, a representative from the Department advised that 'the consultation that occurred was within the Commonwealth only'[15] and included consultation with a broad range of 'other agencies and departments who are involved in either law enforcement or process type actions or investigations that might give rise to proceeds actions'.[16]

Potential for 'conflict of interest'

3.18      In its submission, the Law Council set out the value of the CDPP's involvement in proceeds of crime litigation in ensuring independence. Specifically, the Law Council stated that the involvement of the DPP 'offers a valuable safeguard against the misuse or overuse of the powers available' under the Proceeds of Crime Act:

• first, the involvement of the CDPP guarantees that an authority which is independent of the investigating agency makes an objective assessment about the appropriateness of proceeding with any application, in view of the objectives of the legislation, the available and admissible evidence and the likely prospects of success; and
• second, it guarantees that the person who commences and conducts the proceedings is an officer of the court and the Crown, with all the duties that entails, and thus has a personal obligation to ensure that the court's powers and processes are not abused.[17]

3.19      At the public hearing, Ms Donovan expanded on the Law Council's submission in relation to the separation of responsibilities:

...[I]t certainly is better that there is a separation between the agency which does the investigation and then the agency which comes fresh to the available evidence and the speculation about evidence that might become available and makes an assessment about whether or not it is appropriate to proceed at that time and in which way it is appropriate to proceed. Otherwise there is not the necessary distance and objectivity from the investigation. I think that the AFP itself would acknowledge that. That is why they are suggesting that their internal arrangements will try to build this in...[T]he model that is proposed is an inferior one because it is based on the idea that that there will be Chinese walls within the Criminal Assets Confiscation Taskforce and that the legal team will somehow sit separately and exercise its judgment objectively and independently.[18]

3.20      Further, the Law Council argued that a coordinated approach to proceeds of crime matters does not require a transfer of powers to the AFP:

It is not clear why a 'multi-agency approach to combating organised crime' requires the centralisation of functions in the AFP, even if the AFP is responsible for coordinating and housing the [Criminal Assets Confiscation] Taskforce.[19]

3.21      The Victorian Director of Public Prosecutions' (Victorian DPP) submission also objected to the AFP being given the powers to commence proceedings under the Proceeds of Crime Act. The Victorian DPP noted that in Victoria under the regime set out in the Confiscation Act (1997) (Vic), it is the Victorian DPP in whom these powers are vested. The Assistant Director of Assets Confiscation Operations within the Victorian DPP can also apply for certain orders, however:

[I]n practice, he/she rarely does so, and even then only after consultation with the [Victorian] Director of Public Prosecutions. In effect, the Victorian regime vests the powers solely in the Director of Public Prosecutions, in the context of serious indictable prosecutions.[20]

3.22      Similarly to the Law Council, the Victorian DPP asserted that the strengths of such a regime are operational distance and objectivity, combined with independent prosecutorial discretion as to whether to make or not to make applications as the particular case and evidence may warrant:

The Victorian scheme has thus had the benefit that a consistent high standard (extending to evidentiary, procedural and ethical matters) has been maintained in all court directed proceeds of crime litigation processes. The same observation may be made of the Commonwealth scheme to this point.[21]

3.23      The Victorian DPP concluded:

There would appear to be no reason in principle why the Commonwealth Director of Public Prosecutions ought not remain the sole applicant in such proceedings. The integrity and efficiency of the process is not necessarily enhanced by the provision of concurrent power.[22]

AFP/Department response

3.24      A representative from the AFP explained that the Bill does not make any substantive changes to the kinds of proceeds of crime action that can be taken. These actions include 'the threshold tests for taking that action or the basis on which a court can make proceeds orders'.[23]

3.25      The representative continued that the proposed amendments would only affect civil proceedings:

Under the proposed changes, the AFP will be able to litigate both non-conviction and conviction based proceeds of crime actions. It is important to note that both of these actions are essentially civil proceedings, not criminal proceedings. With conviction based proceeds action, the AFP is not litigating the criminal prosecution but is instead litigating restraint and forfeiture of assets linked to a criminal conviction. The legislation does not change the present arrangements, where the DPP will conduct criminal prosecutions; furthermore, there are safeguards in place to deal with the use of information obtained from proceeds matters being used in other criminal investigations or prosecutions.[24]

3.26      According to the AFP, the Bill will enhance efficiency and objectivity:

The arrangements proposed by the bill can, we believe, actually provide for greater independence between the criminal and confiscation processes. The decision to litigate for asset confiscation and the decision to prosecute a person for a criminal offence will now rest with separate agencies.[25]

3.27      Domestic and international precedents for agencies with a role in investigation and litigation of proceeds of crime matters, as well as precedent within the Commonwealth, would 'place the AFP well [to] undertake this role'.[26]

3.28      The AFP representative outlined the internal integrity measures that it has in place, and the scrutiny to which it is subject:

The AFP's existing accountability framework will also apply to proceeds investigations and the ultimate litigation. This includes internal measures, including the AFP's professional standards regime, and external measures, including oversight by the Ombudsman and the Australian Commission for Law Enforcement Integrity, and the AFP... is also accountable to the public through parliamentary joint committees and Senate estimates processes.[27]

3.29      The AFP continued that, given the nature of its function as a law enforcement agency, it is subject to comprehensive oversight measures above and beyond those of other agencies:

...the AFP has a very robust and active oversight mechanism that extends a lot further, I would suggest, than that of any Commonwealth agency currently in the Commonwealth. There are many checks and balances on the actions of our officers.[28]

3.30      Further, the litigation officers employed under the Taskforce would be subject to the same professional and ethical standards as CDPP officers:

...the AFP, through the commissioner of the AFP, is very accountable and the commissioner will take his responsibilities very seriously in respect of discharging those responsibilities under this act...Ultimately, we will be judged by the decisions of the court and there are...a number of accountability mechanisms. The Commonwealth DPP currently seek external objective advice and we will do the same, particularly on high-value or potentially contentious matters. I do not see that the current arrangements for the Commonwealth DPP are, in effect, all that different from what is proposed for the commissioner of police.[29]

3.31      Another representative of the AFP outlined the measures that would be put in place for the permanent Taskforce in relation to litigation action:

...litigation action is undertaken in a measured and objective way by the AFP. In terms of planning for the permanent task force, the AFP will draw upon guidelines that are currently in place with the DPP. They have a protocol on the proceeds of crime. There are a number of factors that they and the AFP will take into consideration in initiating litigation under the act. They include: the strength of the evidence available, the seriousness of the alleged crime, the total value of the assets potentially subject to confiscation action, the potential costs of an undertaking as to damages and the potential impact of confiscation action on any ongoing investigation. So, in terms of the litigation framework within the AFP, there will be strong and robust guidelines in regard to the work they will undertake.[30]

3.32      The Department also assured the committee that, within the Taskforce, 'suitably qualified and experienced lawyers' would undertake the commencement and conduct of proceeds of crime matters.[31] At the public hearing, a representative of the Department noted:

...this would not be the only situation where, in the Commonwealth, lawyers were employed by an agency conducting civil litigation and in that process were themselves properly acting as officers of the court, with the duties and obligations that attend to legal practitioners. So the mere fact that they are employed by the AFP does not of and in itself remove from them those obligations, provided that they are operating as legal practitioners. There are some conditions set down in the Legal Services directions for the conduct of civil litigation by agencies that the AFP would need to have regard to to ensure that those obligations were not removed from the employees.[32]

3.33      The representative continued that, it was envisaged the legal practitioners would have 'professional and ethical duty as officers of the court, as do Commonwealth DPP members currently'.[33]

3.34      The Department advised that a Manager of Litigation would be appointed to have oversight of decisions concerning litigation of proceeds of crime matters. The position would 'ensure an objective assessment about the appropriateness of proceeding with a matter'.[34]

3.35      The Manager of Litigation would be a delegate of the AFP Commissioner, and would operate 'independently of the operational arm of the Taskforce which undertakes proceeds investigations, and other areas of the AFP undertaking criminal investigations'.[35]

3.36      The Department expanded on this appointment at the public hearing, noting that discussions would be ongoing in relation to the separation of the AFP's investigation and litigation functions:

...[W]e are having discussions and need to have those discussions about how to appropriately manage the separation of responsibilities between what is properly an investigation decision and what may ultimately be a litigation decision. That is why the manager of litigation is proposed to be quite independent within the task force of the investigation progress... The commissioner needs to be assured that he is getting good independent advice that is objective. Until the bill is settled and until we can progress the discussions a little further with the DPP on the basis of the bill, we cannot finalise what those arrangements are.[36]

Withdrawal of the CDPP from the Taskforce

3.37      The Department stated that it is 'envisaged that the DPP would not be a permanent part of the Taskforce once the Bill is passed and the AFP will employ lawyers to litigate on behalf of the Taskforce.'[37]

3.38      The AFP advised, however, that CDPP involvement would continue despite the CDPP's withdrawal from the Taskforce. Even so, the AFP expressed the view that it would have no objection to the CDPP becoming a permanent member of the Taskforce.[38]

3.39      In relation to the resourcing of the Taskforce, the Department stated that this aspect would be decided after the signing of a Memorandum of Understanding between the AFP and the CDPP. As the administrative detail regarding which agency has carriage of a particular matter is still to be determined, resourcing would not be transferred until those matters are finalised.[39]

3.40      A representative of the AFP elaborated on the issue of resourcing:

In large part, the task force both in its interim form and in its final form is an amalgamation of resources that currently exist within the AFP as well as within other agencies that will form part of the task force. But, of course, when and if the bill is enacted, it will place on the AFP an additional responsibility that we do not have now which is effectively the litigation of proceeds of crime matters both conviction and non-conviction based.[40]

AFP's settlement policy

3.41      In its submission, the CDPP raised concerns regarding the number of qualified specialist staff involved in pursuing confiscation matters, and the level of funding that will be available to ensure appropriate legal expertise available to the Taskforce after the withdrawal of the CDPP. Of particular concern was the potential increase in settlement of cases, which may occur if there is an imbalance of non-legal and legal staff:

Although a focus on financial staff may lead to an increase in matters being commenced, if not balanced by adequate legal resources, it may create undue pressure to resolve matters by way of settlement. While settlement may be an appropriate outcome in some matters, in other matters it is necessary to have adequate legal resources and resolve to litigate the proceedings to achieve a satisfactory outcome.[41]

3.42      The CDPP further expressed the concern that this imbalance could affect the approach to litigation, since 'an approach which is perceived to be too willing to settle may be a far lesser deterrent'.[42]

AFP response

3.43      A representative of the AFP addressed the issue of a settlement policy:

One key issue that is often raised in this type of discussion about an agency having both responsibilities, and certainly in the context of some of the reporting previously around New South Wales jurisdiction, is negotiated settlement and the policies that have been discussed there. I think it will be useful for me to put on the record some of the thinking of the AFP in consultation with AGD [Attorney-General's Department] around that. An AFP negotiation settlement policy is under development at the moment and will incorporate the following elements, which will give the committee some comfort. Approval for any settlement will be decided by the manager of proceeds of crime litigation, the legal practitioner at SES level that I mentioned earlier.[43]

3.44      Further, the AFP outlined the aspects of the process that will be required to be taken into account by the Manager of Litigation:

• the prospects of a successful litigation;
• the risks of litigation;
• the costs of investigation and litigation, including as to what stage the maximum benefit of a settlement versus litigation are realised;
• the public interest test about whether the return of assets may facilitate the commission of further offences;
• any precedent value the decision may have; and
• the deterrent effect of the litigation.[44]

3.45      The AFP representative also explained that the position adopted by the CDPP in regard to settlement would be maintained by the AFP under the proposed amendments:

It is certainly the AFP's intention to maintain the current Commonwealth Director of Public Prosecutions position whereby an agreement to settle a matter will not be used as a trade-off for reduced criminal charges or for any other favourable treatment to the offender in respect of current or potential criminal proceedings and the consent to forfeiture on criminal cases may be used as mitigation in sentencing as set out in the proceeds of crime legislation at the discretion of the court in only limited circumstances.[45]

Concerns about the NSW model

3.46      The Parliamentary Joint Committee on the Australian Crime Committee (PJC‑ACC) previously considered the benefits of having a single Commonwealth agency with responsibility for both investigating and commencing proceeds of crime matters.[46]

3.47      That committee's report noted the multi-agency asset recovery model adopted by NSW. This model allows the NSW Crime Commission to confiscate the assets of those involved in serious criminal activity under the Criminal Assets Recovery Act 1990 (NSW).[47]

3.48       The committee recommended that the Australian Government give this issue further consideration.[48]

3.49      During the current inquiry, the Law Council submitted that the NSW model of asset confiscation should not be viewed as being a successful model, and indicated that there may be significant problems with the emulation of a model that does not separate between those responsible for investigating and prosecuting proceeds of crime legislation:

Recent experience in New South Wales indicates that apparent success in confiscating criminal assets may, in fact, mask serious problems in practice and procedure. In that regard, it is noted that the NSW Crime Commission and its practices and procedures is the conduct of actions under the Criminal Assets Recovery Act 1990 (NSW) are now the subject of a Police Integrity Commission inquiry.[49]

3.50      Ms Donovan expanded on this concern at the public hearing:

What we are flagging is that in New South Wales there is now some suggestion that the Crime Commission has not properly exercised the policy powers that have been given to it. There are some allegations of corruption against individuals who have been involved in that process, which I understand are subject to proceedings.[50]

3.51      Ms Donovan continued:

...[A]t that time [of the release of the PJC-ACC report] there was agreement amongst a lot of law enforcement agencies that the New South Wales model was a particularly good one because New South Wales was seen to be recouping great amounts of assets. I think they had a higher percentage than anybody else. Now there is some suggestion that whilst that may have been the case, the means that were employed to secure those returns were not necessarily proper and there may have been a degree of corruption involved.[51]

3.52      Ms Donovan recommended that 'the Commonwealth await the outcome and findings of that inquiry before moving to emulate the New South Wales model'.[52]

Department response

3.53      A representative of the Department noted that the proposal in the Bill can be distinguished from the NSW model because of robust scrutiny measures which apply in the Commonwealth arena:

From a policy perspective we do not believe that the inquiry of the New South Wales Crime Commission is of particular relevance to this situation. As the Law Council witness indicated, there are allegations of corruption involving particular officers. The AFP is subject to extensive scrutiny, not least by ACLEI, in relation to allegations of corruption. There are also different scrutiny regimes with respect to the exercise of powers under the Proceeds of Crime Act as opposed to under the New South Wales Crime Commission legislation.[53]

3.54      Further, there are significant and important distinctions between the NSW model and the proposed model:

...[T]he New South Wales Crime Commission can conduct examinations on its own motion without actually having court supervision whereas examinations of witnesses for proceeds purposes have to be supervised by the court [in the Commonwealth model].[54]

Committee view

3.55      The two main objectives of the Bill are to provide ACLEI with oversight of Customs on a whole-of-agency basis, and to enable the Commissioner of the AFP to commence and conduct proceeds of crime litigation. The committee believes these objectives will strengthen integrity measures in law enforcement, and, in regard to the second objective, will streamline the proceeds of crime process. The latter will ensure greater efficiency in proceeds of crime matters, and support the Criminal Assets Confiscation Taskforce in its operation.

3.56      The committee acknowledges that concern was expressed in submissions and evidence in relation to measures contained in Schedule 2: in particular, the transfer of powers from the CDPP to the AFP and the issue of a perceived lack of separation between investigation and prosecution functions. The committee believes that the close relationship between the CDPP and the AFP is essential, and encourages the development of a Memorandum of Understanding as soon as possible, in order to provide certainty concerning the delineation of responsibilities.

3.57      The committee considers that the multi-agency approach of the Taskforce, led by and housed in the AFP, will promote anticipated efficiencies. The committee notes, however, the necessity of a high level of scrutiny and accountability to ensure the integrity of the process. The committee understands the significance of existing accountability measures and scrutiny in place for AFP officers, and stresses the importance of ensuring that the Taskforce is subject to the same measures. The committee believes that the existence of such mechanisms as the Senate estimates process, oversight of the AFP by ACLEI, as well as the internal integrity measures within the AFP, will ensure that the Taskforce operates appropriately and effectively.

3.58      The committee agrees that the appointment of the Manager of Litigation to the Taskforce will aid in ensuring objectivity, but suggests that the Australian Government strongly consider inclusion of the CDPP as a permanent member of the Taskforce. This would allow an added level of objectivity and expertise, and will promote a continued cooperative relationship between relevant agencies.

3.59      As a final point, the committee believes that the Explanatory Memorandum to the Bill should have included the information contained in the Department's submission, and evidence given at the public hearing by the Department and the AFP regarding the necessity of the proposed amendments, how it is envisaged the powers to be transferred will be used, and relevant accountability measures. The inclusion of such information would have assisted the committee in its consideration of the Bill. The committee recommends that this oversight be corrected by revising and reissuing the Explanatory Memorandum as soon as possible.

Recommendation 1

3.60      The committee recommends that the Memorandum of Understanding between the Australian Federal Police and the Commonwealth Director of Public Prosecutions, which is intended to establish the working arrangements for the Criminal Assets Confiscation Taskforce, should be finalised as soon as possible following commencement of the Bill to provide certainty for officers in those agencies working on proceeds of crime matters.

Recommendation 2

3.61      The committee recommends that the Commonwealth Director of Public Prosecutions should become a permanent member of the Criminal Assets Confiscation Taskforce.

Recommendation 3

3.62      The committee recommends that the Attorney-General's Department revise and reissue the Explanatory Memorandum to the Bill to specifically include information contained in the Department's submission, and evidence given at the public hearing by the Department and the Australian Federal Police, which explains:

• the rationale for the proposed new powers and functions of the Australian Federal Police with respect to proceeds of crime litigation;
• how it is envisaged that the powers and functions will be used; and
• the relevant scrutiny and accountability mechanisms which will ensure the integrity of the AFP's proceeds of crime litigation function.

Recommendation 4

3.63      Subject to Recommendation 3, and after due consideration of Recommendations 1 and 2, the committee recommends that the Senate pass the Bill.

 

Senator Trish Crossin
Chair

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