Integrity of Integrity Commission under fire over ‘reasonable apprehension of bias’

In a scathing critique of the ACT Integrity Commission, a report has found that a $150,000 contract awarded to the agency’s CEO raised concern about ‘a reasonable apprehension of bias’.

ACT Integrity Commissioner Michael Adams KC. He says ’the mere fact I worked with Mr A does not provide the basis for a conclusion that there was any apprehended bias involved in the decision ultimately made to enter into the contract for consultancy with Mr A.’ Picture: Ray Strange

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The integrity of the ACT Integrity Commission has been slammed in a report by the agency’s overseer, which has found the commission awarded a $150,000 contract to its then chief executive while he was still CEO, without proper disclosure.

In a critique of the Integrity Commission’s conduct, ACT Ombudsman Iain Anderson – who acts as the commission’s Inspector – found the circumstances behind the $350-an-hour contract “raise a substantial concern about there being a reasonable apprehension of bias” by the commission.

“The procurement lacked appropriate probity and risk mitigation measures to withstand public scrutiny and did not have appropriate risk treatments in place,” the report found.

The findings on the commission’s lack of disclosure, mismanagement of conflicts of interest and apprehensions of bias come at an awkward time for the integrity agency.

Now facing questions over its own conduct, the Integrity Commission is investigating whether public officials within the ACT Education Directorate “failed to exercise their official functions honestly and/or impartially” when making procurement decisions over the Campbell Primary School Modernisation Project between 2019 and 2020.

The findings by Mr Anderson come after the commission was forced to withdraw false claims about The Australian’s Janet Albrechtsen when it made findings of apprehended bias against jurist Walter Sofronoff.

The commission’s draft report contained clear misrepresentations and unfounded allegations that it agreed to remove only after involvement by The Australian’s lawyers.

Walter Sofronoff after his swearing in as president of the Court of Appeal. Pictures: Jack Tran

The investigation into the CEO procurement was prompted when Mr Anderson noticed a contract valued at $150,000 awarded by the commission to then-CEO John Hoitink while he was still in the role.

“There were no records in the commission’s conflicts of interest register of any declarations of conflicts of interest for this ­procurement,” Mr Anderson noted.

$350 an hour

The contract began on August 22, 2022, the same day incoming CEO Judy Lind started and one day after Mr Hoitink’s employment as CEO ended. Mr Hoitink is referred to in the Inspector’s report only as ‘Mr A’.

Mr Hoitink proposed in an email to Integrity Commissioner Michael Adams that he be given a contract to deliver services to the commission and that this be exempted from any public compe­titive process.

The then-CEO “did not declare a conflict of interest when preparing documents for the procurement, including a draft of the statement of requirements and a draft document to exempt the procurement of his services from a competitive tender process,” Mr Anderson found.

Mr Adams forwarded Mr Hoitink’s proposal email to the commission’s chief financial officer and requested he commence “a single select process to procure (Mr Hoitink’s) services”.

The hourly rate was to be $350 with a maximum daily rate of $2000.

“The commission’s procurement documents (including an exemption from competitive procurement requirements and the statement of requirements) were copied directly from the material provided by the then CEO with his procurement proposal – and were then used to assess that procurement proposal,” Mr Anderson found.

“There was no record of any consideration or declaration of potential apprehensions of bias in the decision-making process, nor any measures taken to address or manage such concerns.”

Mr Anderson noted that the services to be provided “were of the type that would ordinarily be performed by the CEO or staff of the commission”.

No evidence

Mr Anderson said in response to his request for information when he began his investigation, “the commission provided me with no evidence that anyone had turned their mind to whether the commission had an actual need for the services … being proposed”.

“No evidence was provided of any consultation with the incoming CEO on whether there was a need for the services before the contract was entered into,” he said. “In this regard, I note the incoming CEO had worked at a senior level in a larger integrity agency with telephone interception powers and might therefore have been expected to have relevant experience in issues relating to telephone interception, for ­example.

“What was self-evident was the commission had decided that it wished to continue (Mr Hoitink’s) services, despite having replaced (him) with a very well-qualified CEO, and that having determined that it wished to do this it then proceeded to run a procurement process that would deliver this outcome.”

These shortcomings occurred despite the commission being on the record as stating that “managing conflicts of interest effectively and appropriately is an inherent part of working in the ACT public sector,” Mr Anderson noted.

Over the following four months, Mr Hoitink submitted invoices totalling $113,326.23, all of which were paid following approval by the commissioner.

“Both the commissioner and the then CEO, in response to the procedural fairness processes, provided extensive comments on the need for the procurement, the then CEO’s suitability, and the application of the exemption,” Mr Anderson said. “I maintain the view that these matters should have been clearly documented at the time of the procurement, not retrospectively addressed in response to my investigation.”

Apprehension of bias

Mr Anderson said the commissioner’s declaration of a conflict of interest for the procurement was provided only after he began inquiries and had not previously been provided to the Speaker of the Legislative Assembly or to himself, as required by legislation.

While the commissioner signed the Conflict of Interest Disclosure form prepared by the CFO, this disclosure was not included on the commission’s conflicts of interest register, nor provided to the Speaker of the ACT Legislative Assembly nor to the inspector, as required by its own legislation.

“It was not until 3 August, 2023, nearly 12 months later, that my office was provided with the disclosure, after my office asked about the procurement,” Mr Anderson said.

Mr Hoitink “was in a position of authority in the commission with a statutory obligation to take all reasonable steps to avoid a conflict of interest … On the information before me, it appears that (Mr Hoitink) breached these obligations.”

Mr Hoitink’s legal representative argued that the requirement to identify a conflict of interest “rests with the person whom is given the decision-making ­responsibility”.

Mr Adams told Mr Anderson that “no declaration of a conflict of interest is necessary in this situation for two reasons: first, the personal interest is manifest from the request itself; and, second, the employee is not the decision-maker.”

In his report, the inspector responded: “Respectfully, I do not agree. While (Mr Hoitink) was not the decision-maker on his own engagement as a contractor, he did prepare draft documentation for his own procurement, using his official commission email.

“I do not share the commissioner’s view that a self-evident conflict does not require appropriate disclosure or management. Further, I do not share the commissioner’s view that the conflict had been disclosed by virtue of the fact the conflict was obvious to the commissioner.”

Mr Anderson said he did not suggest the commissioner was biased in his decision-making concerning the procurement of Mr Hoitink’s services.

“I do not have evidence to warrant consideration of the motivation of anyone involved … The circumstances of the procurement do, however, raise a substantial concern about there being a reasonable apprehension of bias.”

The concern was not just about actual bias, Mr Anderson said, but also whether a fair-minded observer might reasonably apprehend the commissioner as the ­decision-maker for the procure­ment was not impartial or had already reached a decision on the procurement before properly considering it.

Hiring CEO ‘no-brainer’

Mr Hoitink’s legal representative claimed he was uniquely qualified to provide the services and he considered the procurement of his services to be urgent and essential to operation of the commission.

But these “were considerations for the commission itself to independently decide and document, not for the person offering their services,” Mr Anderson found.

The Integrity Commission rejected two of the three recommendations made by the Inspector, including that it engage independent procurement advice as an integral part of any proposed single select tender process and develop a procurement policy consistent with the requirements of the ACT government.

The commission said it advised the Inspector that “the commission has (complied) and always will comply with all applicable legislated and mandated procurement requirements”.

The commission accepted a recommendation that it should develop and maintain a register of mandatory staff training on conflicts of interest and bias.

In a lengthy response to the Inspector’s findings, Mr Adams said the contract was not an unusual procurement. “The mere fact I worked with Mr A does not provide the basis for a conclusion that there was any apprehended bias involved in the decision ultimately made to enter into the contract for consultancy with Mr A.”

He said hiring the experienced former CEO to help the incoming CEO was a “no-brainer”.

“I have no doubt any reasonable public scrutiny would regard my appointment of Mr A as a consultant … in the circumstances as not only entirely proper but a sensible response to the problem the commission faced.”