Australia: What is Corrupt Conduct in New South Wales?

During last year's ICAC hearings into the business affairs of former Liberal MP Daryl Maguire, the corruption watchdog quietly announced it would investigate another state politician– and no, not former premier Gladys Berejiklian, but the former NSW Minister for Sport and current Member for Drummoyne, John Sidoti.

Corruption inquiry

The primary objective of the inquiry was to determine whether Mr Sidoti had "improperly influenced another person, or persons, to dishonestly or partially exercise any of their official functions" in relation to development controls and the rezoning of several blocks of land at Five Dock in Sydney's inner west.

At the time, Mr Sidoti stood aside from his role pending the outcome of the inquiry.

But yesterday, the NSW government moved to suspend him from parliament – a move that was, unsurprisingly, supported by Labor MPs.

The suspension will last for at least until the end of parliament's sitting year in November and follow's ICAC's determination late last month that the minister engaged in 'serious corrupt conduct'.

The ICAC referred its findings to the NSW Office of the Director of Public Prosecutions (ODPP) who are now tasked with determining whether to bring criminal charges against the MP.

ICAC's findings

The corruption watchdog found that Mr Sidoti had indeed used his official role as a member of parliament to try to "improperly influence" Liberal City of Canada Bay (CCBC) councillors in relation to properties in Five Dock between late 2013 and early 2017.

Mr Sidoti's electorate of Drummoyne covers the City of Canada Bay.

The ICAC decision is publicly available on its website, and states that:

"Between approximately late 2013 and February 2017, Mr Sidoti engaged in a protracted course of conduct to try to improperly influence CCBC Liberal councillors, Helen McCaffrey, Mirjana Cestar and Tanveer Ahmed. Mr Sidoti's electorate covered the same area as the CCBC.

"Despite his representations that he was acting at all times in the interests of his constituents ... the outcomes that he wanted those councillors to deliver were entirely directed to his private interest in increasing the development potential of his family's growing number of properties in and around the Five Dock town centre."

"At all times, Mr Sidoti represented to the Liberal councillors who could vote on the matter that he was acting on behalf of their shared constituents – either unnamed and unspecified shopkeepers who wanted the town centre expanded to include the Waterview Street block, or landowners in the Waterview Street block – when the Commission has found that the outcomes he was pursuing were directed to the pursuit of his family's property interests.

"The Commission found that Mr Sidoti's conduct towards the councillors involved the use of pressure and threats to try to interfere with the impartial exercise of their official functions, to further his family property interests.

It was contrary to his public duty to always put the public interest before his family property interests and involved a serious attempt to interfere with the independence and integrity of the exercise by other officials of their official functions.

The Commission also found that when the councillors refused to comply with his desires to act in favour of his representations, he withdrew his endorsement for those who were contending the 2017 council election."

Maintains innocence

Despite the finding, Mr Sidoti has refused to resign, despite the request to do so by current Premier Dominic Perrottet.

He has vehemently professed his innocence and announced plans to appeal ICAC's findings to the Supreme Court of NSW, declaring:

"This Frankenstein monster is out of control and nobody is safe".

"You don't have to look far to read the long line of people who have entered the ICAC process and come out beaten up and stained by the c-word."

The meaning of corrupt conduct in New South Wales

Sections 7, 8 and 9 of the Independent Commission Against Corruption Act 1988 set out the meaning of 'corrupt conduct' in New South Wales.

Section 7 of the ICAC Act broadly states that corrupt conduct is that which falls within the definition contained in the following section (section 8) and is not limited by the provisions contained in the section thereafter (section 9).

Section 7 proceeds to make clear that attempts and conspiracies to engage in corrupt conduct amount to such conduct.

Section 8 of the ICAC Act is titled 'General Nature of Corrupt Conduct'. The section explains the meaning of and provides a non-exhaustive list of offences which ordinarily amount to corrupt conduct.

Meaning of corrupt conduct

Subsection 8(1) provides that corrupt conduct is any conduct:

• that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority,
• of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions,
• of a public official or former public official that constitutes or involves a breach of public trust, or
• of a public official or former public official that involves the misuse of information or material that he or she has acquired in the course of his or her official functions, whether or not for his or her benefit or for the benefit of any other person.

What is a 'public official'?

A 'public official' is defined by section 3 of the Act as an individual having public official functions or acting in a public official capacity.

The definition includes:

• the Governor a person appointed to an office by the Governor,
• a Minister of the Crown, a member of the Executive Council or a Parliamentary Secretary,
• a member of the Legislative Council or of the Legislative Assembly,
• a person employed by the President of the Legislative Council or the Speaker of the Legislative Assembly or both,
• a parliamentary staff member,
• a judicial officer such as a magistrate, judge or justice,
• a public service employee,
• an individual who constitutes or is a member of a public authority,
• a person in the service of the Crown or of a public authority,
• an individual entitled to be reimbursed expenses, from a fund kept by a public authority,
• a member of the NSW Police Force,
• an building or development accreditation authority or registered certifier,
• an employee of or any person otherwise engaged by or acting for or on behalf of, or in the place of, or as deputy or delegate of, a public authority or any person or body described in any of the above, or
• any other person declared by the regulations to be a public officer.

What is a 'public authority'?

A 'public authority' is defined by section 3 as including:

• a Public Service agency or any other government sector agency within the meaning of the Government Sector Employment Act 2013,
• a statutory body representing the Crown,
• an auditable entity within the meaning of the Government Sector Audit Act 1983,
• a local government authority,
• the NSW Police Force, and
• any other body, or holder of an office, declared by the regulations to be a public authority.

Offences which ordinarily amount to corrupt conduct

Subsections 8(2) and 8(2A) go on to outline the types of offences and behaviours which ordinarily amount to corrupt conduct.

In that regard, subsection 8(2) provides that official misconduct – including breach of trust, fraud in office, nonfeasance, misfeasance, malfeasance, oppression, extortion or imposition – may amount to corrupt conduct.

With a view to making it easier to identify corrupt conduct, the subsection proceeds to stipulate that it may involve:

The subsection adds that corrupt conduct may involve matters of the same or a similar nature to those above, as well as conspiracies to engage in the conduct.

The more recent section 8(2A) expands on the above, providing that corrupt conduct also encompasses that which impairs, or that could impair, public confidence in public administration and which could involve any of the following:

• collusive tendering,
• fraud relating to applications for licences, permits or other authorities designed to protect health and safety or the environment or designed to facilitate the management and commercial exploitation of resources,
• dishonestly obtaining or assisting in obtaining, or dishonestly benefiting from, the payment or application of public funds for private advantage or the disposition of public assets for private advantage,
• defrauding the public revenue, and
• fraudulently obtaining or retaining employment or appointment as a public official.

Retrospective operation

Subsection 8(3) makes the operation of the section retrospective, meaning it captures conduct which occurred before the section's commencement.

Subsection 8(4) provides that the section's provisions relating to public officials apply to persons who became public officials after the section's commencement.

Global reach

Subsection 8(5) makes clear that the definition of corrupt conduct includes that which occurs outside Australia.

Where corruption is not considered corrupt conduct

Section 9 of the Act is titled 'Limitation on Nature of Corrupt Conduct' and outlines situation whereby conduct which would otherwise be considered as corrupt is not considered to be so.

It provides that conduct does not amount to corrupt conduct unless it could constitute or involve:

• a criminal offence,
• a disciplinary offence,
• reasonable grounds for dismissing, dispensing with the services of or otherwise terminating the services of a public official, or
• a substantial breach of an applicable code of conduct by a Minister of the Crown or a member of a House of Parliament.

The section proceeds to state that it is immaterial whether proceedings or actions for the above can no longer be brought or continued, or that action for dismissal, dispensing or other termination can no longer be taken.

The section provides the following definitions:

'Criminal offence' means a criminal offence under the law of the State or under any other law relevant to the conduct in question.

'Disciplinary offence' includes any misconduct, irregularity, neglect of duty, breach of discipline or other matter that constitutes or may constitute grounds for disciplinary action under any law.

'Applicable code of conduct' means:

• In relation to a Minister of the Crown—a ministerial code of conduct prescribed or adopted for the purposes of this section by the regulations, or
• In relation to a member of the Legislative Council or of the Legislative Assembly (including a Minister of the Crown)—a code of conduct adopted for the purposes of this section by resolution of the House concerned.

Serious or systemic corrupt conduct

In addition to the above provisions, section 12A of the Act enables the ICAC to make findings of 'serious corrupt conduct' and 'systemic corrupt conduct' in the most serious of cases.

Possible criminal charges against Mr Sidoti

On finding that Mr Sidoti engaged in corrupt conduct, the ICAC referred the matter to the ODPP to determine whether criminal charges, including for the offence of misconduct in public office, should be brought.

The offence of misconduct in public office

Misconduct in public office is a common law offence – which means it was developed by courts over time, and it is not enacted in legislation.

In that regard, the common law makes it "an offence for a public official, in the course of or connected to his or her public offence, to wilfully misconduct himself or herself by act or omission without reasonable excuse or justification, where such misconduct is serious and meriting criminal punishment."

Because it is a common law offence, there is no maximum prescribed penalty. Rather the penalty is 'at large', which means that it is at the discretion of the court, and various matters will be taken into consideration when sentencing, such as the seriousness of the offence, its level of sophistication, any breach of trust, any history of offending, any guilty plea, the timing of a guilty plea, and prospects for rehabilitation.

Case in point: Eddie O'Beid & Co

Former NSW politician Eddie O'Beid was found guilty of misconduct in a public office in 2016 and sentenced to five years imprisonment for failing to declare a personal stake in Circular Quay café leases. He served three.

Mr O'Beid was also found guilty of conspiring to wilfully commit misconduct in public office in relation to a corrupt tender scheme involving a coal license by the NSW Supreme Court last year, along with Former Labor Minister Ian Macdonald and Mr O'Beid's son Moses.

Ian McDonalds was sentenced to five years and three months behind bars, Moses was sentenced to at least three years and Eddie O'Beid was sentenced to at least three years. All three men have launched appeals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.