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By Professor Adam Graycar

Friday’s report in  (28 August 2020) of ICAC’s findings of a NSW bureaucrat approving invoices from his own company raises at least two key issues about private businesses of public servants. First, should public servants own or have a beneficial interest in companies. Second, how should actual or potential conflicts of interest be communicated.

This report on Friday followed another report in the Mandarin at the end of May 2020 in which a Victorian bureaucrat provide business opportunities to a company he owned which provided almost $14 million in contracted staffing resources.

When questionable behaviour is under the spotlight there are usually two types of responses. The first is “I didn’t break any rules”. This is a common retort from politicians. The second is “I didn’t know that what I was doing was not permitted”. This is more likely the bureaucrat’s response. In this case the individual concerned seemed not to have known about conflict of interest, not to have known that approving payments to his own company was against the rules, nor to have known that once he had seen the quotes for a job from other bidders his company submitting a lower quote was not correct.

As I have often argued, we don’t need more rules, we need more integrity.

In this case the ICAC has referred the matter to the Director of Public Prosecutions (DPP). Is this a case of public corruption, or is it fraud, or a mixture of the two.

Supposing the person was in a private business and owned a company to which he steered contracts, and had that company issued inflated invoices and invoices for work that was not done as described, that would be seen clearly as a fraud case rather than as a corruption case.

In the ICAC case several features stand out. Public money was involved, and public wellbeing was involved. (The issues revolved around maintenance of social housing, a situation where demand greatly exceeds supply). The individual misused information for personal gain. The individual was involved in self-dealing — a jargonistic way of saying issuing contracts to a company owned by himself or a family member.

The individual sought approval for private employment, and this was not granted. It seems he continued as if it had been granted. The individual authorised payments that were greater than his delegation. He claims not to have known what his authorising limit was, and was not aware that there were limits to his approval authority.

From the ICAC report there were both integrity breaches on behalf of the individual and departmental breaches in allowing payments to be made that exceeded delegations.

Conflict of interest is understood by most public servants, but not be all. And there is often a shade of grey. A conflict of interest arises when your private interests interfere with your duty to put the public interest first. And these private interests could include those of your family, friends or associates. Public trust is fundamental to public office and when there is a conflict, trust breaks down. Public officials should not benefit from their office — their salary is their reward.

Most public servants behave ethically and cases like these are outliers. But they do occur from time to time. The more rules we have, the more restrictive things become and the more people devise ways to work around the rules, often with no evil intent at all. To work on the assumption that all are potential criminals is counterproductive and will hit morale at a time when we want innovation and new ideas.

The answer for an individual is not to ask whether the I have broken any rules, or whether I did not know about the rules, but rather, was the behaviour acceptable? Is it the right thing to do? Would anybody have a different view? The foundations on which all of this should be built is organisational culture and transparency. It sounds very simple. Seminars that explore whether one should accept a bottle of wine as a gift usually bore people and do not change people’s behaviour. Every organisation will, at some time, encounter somebody on the make, and the structures and processes of the agency will need to be robust and informative. This is the essence of good public administration.

This article was originally published by on 1 September 2020.