In the weeks ahead, Dominic Perrottet will face the same test that all of his recent predecessors have failed. Will the NSW Premier continue to protect the state’s all-powerful anti-corruption commission from the consequences of its unlawful conduct?
Or will this state finally have a leader who insists that the normal law applies to everyone – even a powerful agency with a penchant for publicity and a record of destroying premiers?
Since 2015, the Independent Commission Against Corruption has been the beneficiary of special legislation that retrospectively excuses its unlawful conduct.
Without this law, known as the Independent Commission Against Corruption (Validation) Act, ICAC would be dragged before a court and held accountable for exceeding its jurisdiction and unlawfully harming people who have committed no offence.
How do I know this? Because that process had already started, only to be cut short in 2015 when parliament changed the rules.
The Validation Act has no place in the statute book of a democracy. It is the clearest example of lawmakers losing sight of the principle that the law should apply to everyone – including the mighty.
The great irony is that the beneficiary of this corruption of the rule of law is an agency that is supposed to fight corruption.
This affair is the equivalent of the most influential policeman in a small town unlawfully demolishing his neighbours’ houses and then prevailing on the town council for retrospective approval of the destruction of property.
If that offends your sense of right and wrong, consider what happened in NSW. ICAC exceeded its jurisdiction and damaged the reputations of people who had committed no offence by declaring them corrupt without a basis in law.
That is a lifetime penalty that can kill a career and in some countries even make it impossible to operate a bank account.
So what should a government do when such a life-changing declaration is improperly made? The short answer is to do the opposite of what happened in NSW.
When the High Court ruled that ICAC had exceeded its jurisdiction NSW protected the wrongdoer and ignored the victims of wrongdoing.
Parliament had been kept in the dark about crucial facts.
ICAC had made no secret of the fact that it had lobbied for retrospective protection. But the legislators were not told that the Validation Act would have the effect of reversing the outcome of legal proceedings that ICAC was about to lose.
Nor were they told that ICAC had already conceded in those proceedings that it had no defence to the argument that some of its corruption findings were invalid. Nor were they told that Margaret Beazley, who was then president of the Court of Appeal, had already circulated a draft declaration confirming that ICAC had no legal basis for making certain findings of corruption. Nor were they told that ICAC had been provided with a confidential draft of the Validation Act before it was presented to parliament.
The Validation Act passed through parliament on May 6, 2015, two days before Beazley’s draft declaration had been due to be finalised.
Late last year, those additional facts were considered by parliament’s ICAC oversight committee as part of its inquiry into the reputational harm that can be inflicted by this commission.
For a time, it looked as though that committee might grapple with this problem. Instead, it produced a report that would help only some of the victims of this wrongdoing: those who were already before the court.
That’s good, but not sufficient. The Validation Act is a source of injustice and should be repealed, not merely amended, so the normal law can help all those affected by ICAC’s misconduct.
Beazley’s draft declaration had been sought by directors of Cascade Coal who had been caught up in one of ICAC’s spectacular public hearings. The commission was inquiring into the allocation of a coal exploration licence involving Eddie and Moses Obeid and former mineral resources minister Ian Macdonald.
Last year, the Obeids and Macdonald were found guilty of a criminal conspiracy and jailed.
During the trial prosecutors did not call the Cascade directors or anyone associated with the company to give evidence. The ruling in that case by the Supreme Court’s Justice Elizabeth Fullerton explains why:
“The Crown also submitted that the Cascade Coal P/L witnesses were, from their perspective, involved in ‘a series of legitimate arm’s length commercial transactions’ and for that reason ‘their understanding and involvement is not material to determination of the offence charged’.”
In 2018, the Federal Court ruled that Cascade and certain directors had not engaged in anti-competitive behaviour despite an allegation to that effect at the ICAC inquiry. In 2019, the full court of the Federal Court upheld that decision awarding costs to Cascade. In March 2020, the NSW Director of Public Prosecutions decided that nobody associated with Cascade should be prosecuted on the basis of the ICAC report.
Now that the courts have ruled, parliament has a basis for action. That, however, is not the end of this story.
In 2019 the Legislative Council’s standing committee on law and justice recommended that the government should address the issue of compensation for innocent shareholders affected by the ICAC-driven cancellation of coal exploration licences.
Cascade is among those affected along with NuCoal Resources, which has never been accused of wrongdoing.
This committee was well aware that ICAC had recommended that these licences should be cancelled. But it made the point that ICAC also recommended that any cancellation could be “accompanied by a power to compensate any innocent persons affected … to the extent considered appropriate”.
Chris Merritt is vice-president of the Rule of Law Institute of Australia.