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Words are wonderfully malleable things, particularly when lawyers and politicians get involved in defining them.

Take, for example, a verdict available to the Scottish judicial system: not proven.

Long ago, Scottish verdicts came in only two forms “proven”, when a defendant was deemed guilty and convicted, and “not proven”, when a defendant was deemed innocent and acquitted.

However, from 1728, the Scottish system began allowing for a verdict more familiar to us, “not guilty”. And from that time, the meaning of those words “not proven” shifted.

No longer was it the equivalent of not guilty. Instead the verdict was, and still is, imposed when a court is not sufficiently convinced of a person’s innocence to bring in a finding of not guilty but not confident enough of the evidence to convict. Thus the accused escapes legal penalty but is left with a stained reputation.

Does a systematic attempt by a political party to subvert electoral funding laws amount to serious corrupt conduct?

In 1827, after a case in which a woman walked free after being accused of having poisoned a servant, Sir Walter Scott termed it the “bastard verdict”, and that descriptor has stuck. Scott was convinced of the woman’s guilt, and famously told her counsel: “All I can say is, that if that woman was my wife, I should take good care to be my own cook.”

After almost 300 years, the Scots are still arguing over whether or not the bastard verdict should be retained. The latest bid to abolish it was defeated in the Scottish parliament in February, 80 votes to 28 .

The fact is the verdict – reached in only a small number of cases – is widely seen as a very useful one.

1 . ICAC's ability to pronounce corruption

In Australia, we are used to something more definitive. Here the relevant law enforcement agency puts allegations of wrongdoing before a court and at the end of the process, the accused is found guilty or innocent. It’s black and white. It’s binary. Right?

Well, no. Not always. Consider the New South Wales Independent Commission Against Corruption, established in 1988 to “investigate, expose and prevent corruption involving or affecting public authorities and public officials”.

As its name suggests, it is not a court. It cannot prosecute anyone, although it can recommend that the Director of Public Prosecutions does.

ICAC is an intriguing hybrid. It conducts its own investigations but does not lay charges. It takes evidence much like a court but does not convict. It also has an educative role and recommends on changes to the law.

The most remarkable thing about ICAC, though, is the fact that it can pronounce someone corrupt in advance of – or in the absence of – any criminal proceeding.

As a result, there is a cohort of people in New South Wales who find themselves in the same position as those Scots against whom a “not proven” verdict has been entered: unconvicted but with reputations indelibly stained.

Not surprisingly, this is controversial. Some people would like to see the power removed. Others would have ICAC hearings conducted in private, arguing that the publicity attendant on its investigations of high-profile people, particularly political people, is damaging to reputations even where there is no finding of corruption. And some would have ICAC abolished.

There is no doubt it is an extraordinary power, as one lawyer with long experience of ICAC attests.

“A very unusual power,” he says, “but it exists for a reason.”

He explains: “Those who set it up knew securing convictions was always going to be difficult in the kinds of offences it deals with. And they knew the public was sick and tired of seeing evidence that people were corrupt, yet they incurred no penalty at all. So they created it as a specific kind of penalty. It’s a serious sanction. People can now say openly ‘corrupt former politician Joe Tripodi’ and not be sued for defamation.”

His choice of example – Tripodi – is not at all random. Just this week, ICAC pronounced him corrupt in its latest report, resulting from its investigation into the Liberal Party’s concerted effort to evade state electoral laws during the 2011 election campaign, including by laundering money through opaque entities such as the Free Enterprise Foundation and a dodgy company called Eight By Five, not to mention simply accepting bags of cash.

The irony is that Tripodi, a former Labor politician, was the only one found to have acted corruptly. That is not to say there was anything wrong with what ICAC found. Rather that there is a definitional problem here.

Only Tripodi was deemed corrupt, but ICAC also pointed the finger at a host of others. The commission found nine current and former Liberal MPs acted with the intention of evading political donations laws by taking banned donations from property developers. They are Chris Hartcher, Mike Gallacher, Tim Owen, Andrew Cornwell, Chris Spence, Darren Webber, Craig Baumann, Garry Edwards and Bart Bassett. Only Gallacher remains in parliament.

The report named a number of others as well – political staffers and party functionaries and property developers.

2 . “Findings of fact”

The commission’s summary reads:

“The ICAC’s findings include that Raymond Carter, Andrew Cornwell, Garry Edwards, the Hon. Michael Gallacher MLC, Nabil Gazal Jnr, Nicholas Gazal, Hilton Grugeon, Christopher Hartcher, Timothy Koelma, Jeffrey McCloy, Timothy Owen, Christopher Spence, Hugh Thomson and Darren Williams acted with the intention of evading laws under the Election Funding, Expenditure and Disclosures Act 1981 relating to the disclosure of political donations and the ban on donations from property developers.

“Messrs Grugeon, Hartcher, Koelma, McCloy, Owen, Thomson and Williams were also found to have acted with the intention of evading the election funding laws relating to caps on political donations. The Commission also found that Craig Baumann, Nicholas Di Girolamo, Troy Palmer and Darren Webber acted with the intention of evading the election funding laws relating to the disclosure of political donations and that Bart Bassett knowingly solicited a political donation from a property developer.

“The ICAC found that during November and December 2010 the Free Enterprise Foundation was used to channel donations to the NSW Liberal Party for its 2011 state election campaign so that the identity of the true donors was disguised. A substantial portion of the $693,000 provided by the foundation and used by the NSW Liberal Party in the campaign originated from donors who were property developers and, therefore, prohibited donors under the election funding laws.

“Undisclosed political donations were also channelled through a business, Eight By Five, to benefit Liberal Party 2011 state election campaigns on the Central Coast. These included donations from property developers and donations in excess of the applicable caps on donations.

“The ICAC also found that there were payments made by property developers, who were prohibited donors, to help fund NSW Liberal Party candidates’ campaigns in the Hunter. The true nature of these payments was disguised, for example, as consultancy services or funnelled through another company with the intention of evading the election funding laws.”

The commission’s full report runs to 167 pages. It is a rattling good read. The bottom line, though, is that they all broke NSW law, which prohibits political donations from certain sources including property developers because of the risk of corruption, and also imposes limits on campaign donations.

But the report stresses: “The above are findings of fact, not findings of corrupt conduct.”

And, really, that is the most interesting aspect of the report. It takes us back to the point that words are malleable things when used by politicians and lawyers.

In a foreword to the report, commissioner Megan Latham explains how amendments to the ICAC Act made by the Liberal government, and waved through by the Labor opposition in 2015, changed things.

“These amendments do not allow the Commission to make corrupt conduct findings in cases of failure to comply with the requirements of the Election Funding Act where, although those failures could affect the exercise of official functions of the then Election Funding Authority of NSW, officers of that authority were unaware of any wrongdoing.

“In these circumstances, the Commission has accepted the submission of Counsel Assisting in their 18 December 2015 submissions that: ‘... a combination of the decision in ICAC v Cunneen and the effect of the [2015 Amendment Act] on the matters investigated in Operation Spicer mean that no findings of corrupt conduct can be made where the only breach relied upon was a breach of the [Election Funding Act]’.”

3 . Operation Spicer

If that seems a bit dense, a little explanation of recent legal history might help.

In April last year the High Court was called upon to decide whether ICAC had the power to investigate conduct allegedly engaged in by Margaret Cunneen, SC, NSW’s deputy senior Crown prosecutor, and her son.

In May the previous year, Cunneen was alleged to have told her son’s girlfriend to fake chest pains in order to prevent a police officer from taking a blood-alcohol reading after a car accident.

The issue in question was whether Cunneen’s alleged actions fell within the definition of “corrupt conduct” under the ICAC Act, given that she was acting in a personal capacity rather than in her capacity as a Crown prosecutor.

A 4–1 majority of the High Court found the commission did not have the power to investigate Cunneen.

“The Cunneen decision ripped ICAC apart,” says one lawyer familiar with the commission’s work.

“It was a very tricky problem. A host of ‘corrupt’ findings by ICAC were no longer valid. People could have gone back to the courts to have them expunged.”

The problem was solved by the government passing legislation that retrospectively validated ICAC’s past findings.

But there were two important inquiries still in train, one being Operation Spicer – the investigation into Liberal fundraising that made this week’s findings. People had been questioned, search warrants had been issued, summonses issued – and the parliament also made changes to the ICAC Act that affected them.

“Operation Spicer was principally looking at election funding,” the lawyer says. “What [the Baird government] did was remove the power to make any corrupt conduct finding in relation to election funding matters.

“Why do you do that? Not just to protect politicians. The key people who are protected by this are people in the party administration, out raising dough for the party. Some are sophisticated, members of the executive, the people who make or break political careers.”

Associate professor Gabrielle Appleby, a specialist in public law at the University of NSW, puts a more nuanced view.

“The 2015 amendment did restrict the commission’s ability to make findings of corrupt conduct to serious corrupt conduct,” she says. “But the commission was always supposed to restrict itself as far as practicable to serious and systemic corrupt conduct. This amendment was intended to reinforce that.”

The major problem is that the ICAC legislation never contained any definition of serious corrupt conduct “and the amendments did not try to address this issue”.

The question is, what is “serious”? What is “corrupt”?

Does a systematic attempt by a political party to subvert electoral funding laws amount to serious corrupt conduct?

4 . Limitation period

Then there is the matter of criminality. As the commission report noted, at the time the Liberal Party was evading the law, the Election Funding Act “imposed a three-year limitation period on the commencement of proceedings in respect of an offence. The effect … is that a prosecution for any offence that is relevant to this investigation is now statute-barred.”

That limitation has since been extended to 10 years.

There are, Appleby says, serious questions as to whether the change in the time limitations should apply retrospectively to these individuals.

Either way, there is still the prospect of court action. The report recommended the DPP consider charging the godfather of the NSW Liberal right, Chris Hartcher, with larceny in relation to a $4000 donation. It also recommended the DPP consider charging former MP Andrew Cornwell, his wife, Samantha Brookes, and former Hartcher staffer Timothy Koelma, as well as two others, Timothy Gunasinghe and William Saddington, with giving false or misleading evidence to ICAC.

And it cast doubt on the testimony of other senior party figures, even though it made no findings against them. The most prominent of these is probably former federal assistant treasurer, now cabinet secretary, Arthur Sinodinos.

Sinodinos was chairman of the state finance committee while the rorting was going on, but told ICAC he was unaware of it. The report characterised his evidence as “difficult to accept”.

No doubt the fallout from the Operations Spicer report will continue for some time, in the courts, the state and federal parliaments and in the media.

No doubt most of those mentioned will claim exoneration, because no findings or corruption were made against them and no charges laid.

No doubt, too, many people would consider that a bastard verdict.