Report into public sector corruption warns not-for-profits and other front groups being used to mask donations

This article is more than 1 year old

This article is more than 1 year old

Political donors and lobbyists are creating or joining not-for-profit groups to hide their attempts to influence government, the New South Wales corruption watchdog says.

The NSW Independent Commission Against Corruption (Icac) released an 86-page report on Tuesday detailing the current corruption risks threatening the NSW public sector.

The report identified hidden lobbying – rather than professional and transparent lobbying – as “more likely to cross over into corruption”.

Its evidence suggested a range of techniques were being used to hide outside influence on government, including the use of not-for-profit business associations or charities.

The report also said not-for-profits were used to mask donations or, in rare cases, hide commercial lobbying of government.

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“Not-for-profit associations can be set up and used to make political donations, with the intention of avoiding disclosure of the identity of the true donor(s),” the report said.

“A related technique is known as ‘astroturfing’ (that is, a fake grassroots campaign). If an organisation with commercial or policy interests can generate the appearance of genuine community support for (or opposition to) an issue, its chances of success are improved. Regrettably, the nature of social media makes it easier to engage in astroturfing-like behaviour.”

The report comes at a critical point in the push to improve Australia’s anti-corruption framework. Crossbencher Cathy McGowan last week introduced a bill to federal parliament to set up a national integrity commission, and McGowan has since unveiled plans for an independent parliamentary standards commissioner.

The Coalition has expressed support for improving Australia’s integrity framework, but stopped short of supporting McGowan’s bill or a national integrity commission.

Labor has committed to implementing an integrity commission if it wins government, though it is yet to detail its planned model.

The Icac report makes clear that corruption in NSW remains relatively rare. But the report’s foreword – penned by commissioners Peter Hall, Patricia McDonald and Stephen Rushton – warned constant vigilance was required.

“As this report indicates, there can be no room for complacency,” the commissioners wrote. “If systemic and operational weaknesses are not addressed, corruption can take hold and cause significant damage to an agency’s finances, productivity and reputation.”

The commission expressed concern about the emergence of the “gig economy” and the taking of secondary employment by public servants. A second job is more likely to lead to the misuse of information and resources from their public sector role, the report said.

“From a corruption perspective, the main implication of the gig economy is the growth in the number of public officials that have actual or proposed secondary employment,” the report said. “The commission’s investigations over many years have shown that the abuse of secondary employment, which can include the misuse of information and resources, is one of the main forms of corrupt conduct.”

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The report also warns of the increasingly close relationship between public sector employees and private contractors. The lines have been blurred in some instances.

The Icac cited examples of contractors being issued with public sector credit cards, and consultants advising both government and a corporation on different sides of the same transaction. Contractors were not inherently likely to be more corrupt, the report said, but they were “likely to have a different attitude to the use of public money, the management of conflicts of interest and public sector accountability conventions”.

The report also warned that times of major organisational change within the public sector brought added risk of corruption.

“A number of investigations have shown opportunities for corrupt conduct can arise either during or after a period of organisational change,” the report said.