Corruption Matters - December 2020 | Issue 56
Six lessons from the ICAC’s Operation Cygnet
In August 2020, the ICAC released its report into allegations of corrupt conduct in the housing unit of the NSW Department of Family and Community Services (FACS). The investigation, codenamed Operation Cygnet, found that a public official authorised over $1.67 million in payments for repairs to leased properties to his own company. What went wrong? What can we learn?
Recognise your risks, gaps and traps
The ability to identify and act on risks is a foundational skill for effective corruption prevention. The main takeaways from Operaton Cygnet are as follows.
- Look at the incentives created. FACS relied on the private market to obtain quotes for the repair of properties. Without proper scrutiny, property owners could act on personal incentives to maximise the condition of their properties and therefore the amount they were paid by FACS.
- Review your operational controls. Headlease coordinators operated with substantial autonomy, often working alone in the field, and had end-to-end authority of the repairs process. They also did not require any secondary approval in relation to the negotiation of scope of works, requesting and accepting quotes, and approving payments or extension of rental payments whilst works were carried out. In addition, there was an absence of basic guidelines and common understanding about how the repairs process was to be carried out, when approval at each key decision point should be sought, or the number and form quotes should take to ensure consistency and accountability.
- Understand your information requirements. The collection, analysis and reporting of repair costs and lease extensions were very limited. This made it difficult to monitor expenditure, develop cost and time benchmarks, determine that works were performed, or to identify spending trends and possible red flags. The lack of information exacerbated a disconnect between budget responsibility and program expenditure. While another entity, the Land and Housing Commission, was responsible for the overall budget, it had almost no control or visibility over expenditure. Headlease coordinators, on the other hand, had an extraordinary level of control over expenditure but no accountability for the budget.
Engage in active supervision and create a positive culture
The corrupt public official misled his manager about the nature of his private employment, hid his suspicious transactions from colleagues, and ignored FACS’ conflict of interest and private employment declaration frameworks. When an allegation was raised, he could repeatedly refuse to supply information, which, to be discovered later, would have exposed his conduct.
Even in the face of such challenges, proactive steps can be taken by agencies to prevent and detection corruption.
- Require staff in high-risk positions to regularly make declarations that they are or are not engaging in secondary employment, or do or do not have any conflicts of interests. While this still allows staff determined to conceal private interests to do so, it makes this more difficult by requiring active and repeated deception. Systems and requirements can also be put in place to prompt managers to review approvals when they expire, to seek a new approval when a staff member’s role changes, or to alert a new line manager about existing or previously refused staff approvals.
- Conduct reviews or audits into your control environment, and investigate and act on failings and complaints. Recommendations arising out of reviews and investigations should then be implemented.
- Staff should acquire the skills, capabilities and knowledge required for their role, and understand the expectations of the agency. More generally, a supportive environment where team members and members of the public feel free to share ideas, opinions and concerns without fear of retaliation or penalty may encourage those who are aware of wrongdoing to come forward.
More information on Operation Cygnet is available from the ICAC website.
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