Victorian IBAC fires warning shot over its audit

Victoria’s anti-corruption watchdog warns a review of its performance ordered by parliament faces legal hurdles.

IBAC Commissioner Robert Redlich. Picture: AAP

Victoria’s anti-corruption watchdog has launched an extraordinary move to limit an indepen­dent parliamentary review of the agency’s performance.

In what is being interpreted as a direct challenge to parliament’s integrity and oversight committee, the Independent Broad-based Anti-corruption Commission has contested key aspects of the audit’s legal authority.

IBAC has written to IOC chair Labor MP Harriet Shing flagging concerns about the audit and saying the agency was prevented by the IBAC Act from sharing ­“certain types of information” with auditors.

“We trust the information set out in this letter is helpful to the committee, particularly to the extent it brings to your attention some of the limitations associated with the appointment of Callida as the independent auditor,” IBAC chief executive Marlo Baragwanath stated in the March 16 letter.

“Other issues IBAC will raise with Callida relate to the restriction on the provision of certain types of information by IBAC as specified by the IBAC Act.”

The letter exposes behind-the-scenes tensions between IBAC and the IOC over the conduct of the parliamentary review. IBAC, with its power to bug phones, raid homes, conduct under­cover surveillance and hold public hearings, is one of the most powerful and secretive institutions in Victoria, but the IOC oversees its conduct.

Sources believe IBAC is using legal technicalities to limit the review, which under legislation must occur every four years. “This is part of a strategy to stifle the independent review,” one source said.

“It’s become clear IBAC doesn’t want to be scrutinised and is trying to dictate the terms of its performance audit. This is a rather unique situation.”

An IBAC spokesperson said the agency was engaging with the audit. “The legal matters raised with the committee were done for the purposes of transparency. IBAC has already commenced working with Callida on the performance audit, and will continue to support and actively engage with Callida until the audit is complete,” the spokesperson said.

The IOC awarded Callida Consulting a $440,000 contract to conduct the first performance audit of IBAC and the agency that monitors it, the Victorian Inspectorate.

Callida can be armed with sweeping powers, including those similar to the Victorian auditor-general, to scrutinise the anti-­corruption agencies.

Callida has been charged with assessing whether the agencies are achieving objectives “effectively, economically and efficiently” and “providing an overall opinion on whether IBAC and the VI have complied with the 2011 acts establishing the agencies”.

Ms Shing declined to address specific concerns raised by the agency or comment on the view that IBAC was using legal technicalities to limit the audit.

“Callida has been approved by the parliament as the independent performance auditor, and is in the process of working with integrity agencies on these audits,” she said.

“As these audits are by their very nature independent, I don’t intend to comment further. I look forward to seeing the results of this work in due course.”

Ms Baragwanath’s letter sets out the agency’s concerns about the audit. “I am writing to you to advise that I believe there is an issue with the manner in which Callida has been appointed that will limit Callida’s ability to perform its audit functions, as well as IBAC’s ability to share information with Callida (or its employees),” she stated.

The letter challenges the legal right of Callida employees to conduct the audit, stating that while Callida has been conferred audit powers, this does not necessarily extend to its employees.

“We have concerns with the ability of such a body corporate to delegate its powers and functions … to individuals within its employ,” Ms Baragwanath states. “As Callida has been appointed as independent performance auditor … it is the company itself … that is authorised to exercise the powers of the Auditor-General.

“As such, in our view this means only Callida’s board of directors, acting collectively, can exercise powers … we do not consider that the terms of the Audit Act permit Callida to appoint its employees as ‘authorised persons’.”

Ms Baragwanath said Callida staff could be appointed as independent auditors under S170 of the IBAC Act to get around the issue. “If Callida employees are appointed as independent auditors, both Callida and employees will be required to comply … which limits the disclosure of IBAC information to the performance of their functions or exercise of their powers,” she states.

“If key Callida employees are not appointed as independent audi­tors, then we consider that any information that comes into their possession on the course of the performance audit would necessarily be governed … which further restricts the disclosure of information by them.”

Ms Baragwanath states that IBAC will “continue to support and actively work” with Callida and is committed to legislative changes to remove some technicalities around future audits.

“Although the above matters may cause Callida some difficulties, IBAC will continue to support and actively work with Callida to ensure the conduct and finalis­ation of the performance audit,” she states.