Corruption Matters - November 2018 - Issue 52

Non-government organisations: does the ICAC have jurisdiction?

For the first time in its 30-year history, the ICAC recently released an investigation report into corrupt conduct within a non-government organisation (NGO). The investigation revealed that a former CEO and chairperson of two NGOs misused up to $773K of public money.

ngo letters on wooden blocks

There are thousands of NGOs in NSW that receive some form of state or local government funding. The services provided by these NGOs are diverse and valuable. The funding arrangements are, likewise, diverse. Some NGOs deliver core public services on behalf of government and are subject to detailed contracts and reporting requirements; others receive one-off grants, donations or concessions that may be subject to less stringent oversight.

Increasingly, governments across Australia are outsourcing the delivery of human and community services, which means more and more taxpayer funds are being managed by the NGO sector.

While government-funded NGOs are generally not classified as public authorities for the purposes of the Independent Commission Against Corruption Act 1988, the ICAC has jurisdiction over individuals working for NGOs when they perform public official functions using public money provided for that purpose.

Eman Sharobeem, former CEO of the Immigrant Women’s Health Service (IWHS) and former chairperson of the Non-English Speaking Housing Women’s Scheme Inc. (NESH), misused up to $773,000 of public money. At the time, IWHS was primarily funded by the South West Sydney Local Health District and NESH was funded by the NSW Department of Family and Community Services.

On 19 September 2018, the ICAC released its report into Operation Tarlo, detailing 24 findings of serious corrupt conduct against Ms Sharobeem, including that she improperly:

Ms Sharobeem’s conduct represented a significant breach of the trust that had been placed in her by the NGOs’ board members, staff and clients, the latter of whom were often in vulnerable circumstances, including escaping domestic violence. Given their relatively modest funding of about $350,000 each per year, the amount of money she misused also represented a significant loss to both NGOs.

The investigation revealed that there were failures regarding how the boards of IWHS and NSEH managed the activities of their respective organisations and the performance of Ms Sharobeem, and that these failures delayed the detection of her corrupt conduct.

The report noted that, while people who volunteer to be board members of NGOs are generally motivated by altruism and a commitment to their community, there are significant responsibilities that come with this role. Board members cannot know the minutiae of what happens on a day-to-day level at their NGO, however, it is incumbent upon them to know:

The Commission made 12 corruption prevention recommendations to the South West Sydney Local Health District and the NSW Department of Family and Community Services. A copy of the report is available from the ICAC website.

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