Universities are increasingly finding themselves dealing with allegations of corruption and misconduct. These allegations usually fall within the jurisdiction of a State regulator (Corruption Regulator), established by a State Act (Corruption Act). The Corruption Regulator is charged with maintaining the public's confidence in the operation of public sector agencies, and combating and reducing the incidence of major corruption and crime in the public sector.

As is well known in the higher education sector, such allegations pose significant reputational risk to universities and can ultimately lead to senior executives or academics of universities having to resign.

This is the second of two articles on allegations of corrupt conduct in universities.

In 'An overview of recent allegations of corrupt conduct in universities: Part I', available on our website, we considered the recent trend of Corruption Regulators targeting senior executives within universities, the recent interest of the media, and the NSW Corruption Regulator's work into corruption risks associated with international students.

We also provided a summary comparing the Corruption Regulators in each jurisdiction. This summary included the legislation pursuant to which they are established, related whistleblower / public interest disclosure legislation, the conduct which they regulate, how that conduct can relate to universities and a summary of their investigative powers. The summary is intended as a useful 'ready reckoner' for in-house counsel when considering allegations of conduct that could trigger the jurisdiction of a Corruption Regulator.

This article considers topical issues that have arisen in this space in relation to:

  • universities that have interstate and international campuses;
  • the use of agents to recruit international students, as considered in the ICAC report; and
  • the implications of the High Court's decision in Independent Commission Against Corruption v Cunneen & Ors [2015] HCA 14 (Cunneen case), in relation to the jurisdiction of Corruption Regulators to investigate the conduct of private individuals that relates to the performance of official functions.

Universities that have interstate and international campuses

It is common for Australian universities to have campuses not only in the State in which the university is established, but in neighbouring States. For example, in addition to its main campuses in Lismore in NSW, Southern Cross University has a Gold Coast campus at Coolangatta in Queensland and branch campuses for international students in Sydney and Melbourne.

This practice of universities having operations outside their State of establishment gives rise to the possibility of particular allegations being of interest to Corruption Regulators in multiple States. Take, for example, a NSW university operating a campus in Queensland, where there is an allegation that an employee of the university offered an inducement to a Queensland departmental officer to renew a regulatory licence/registration required for the operation of a school of the university in Queensland. The alleged conduct would fall within the jurisdiction of the NSW Independent Commission Against Corruption (NSW Corruption Regulator), because the allegation concerns conduct of a public official in NSW. The alleged conduct would also fall within the jurisdiction of the Queensland Crime and Corruption Commission (Qld Corruption Regulator), because it could adversely affect the Queensland department official's performance of their functions or exercise of their powers.

Australian universities are also commonly providing access to their programs in overseas jurisdictions. Some of these arrangements are facilitated through local providers who operate higher education businesses in those overseas jurisdictions. Increasingly, however, Australian universities are establishing their own overseas campuses. For example, Swinburne University of Technology's campus in Malaysia, the University of Wollongong in Dubai, the Monash University Prato Centre in Italy, Charles Sturt University's campus in Ontario and RMIT Vietnam.

In addition to conduct falling within the jurisdiction of the Corruption Regulator in the State in which the university is established, the university will also find itself subject to national and internal laws relating to corruption. For example, the Commonwealth Criminal Code (the schedule to the Criminal Code Act 1995) deals with bribery of foreign public officials, bribery and corruption generally and fraud. And of course, the overseas jurisdictions in which universities operate will have their own laws (and regulators) dealing with allegations of corruption.

Most Australian universities have in-house experience and expertise for dealing with the Corruption Regulator in the State in which the university is established. However, for many Australian universities, their expanding operations mean that they must now be cognisant of the corruption laws in other States (and where relevant in overseas jurisdictions in which they have campuses) and experience and expertise dealing with a broader range of regulators.

The use of agents to recruit international students

Earlier this year, Four Corners carried out an investigation into the alleged use of unethical, and in some cases fraudulent, agents engaged by Australian universities to recruit international students for admission. This investigation coincided with the release of the NSW Corruption Regulator's April 2015 report, Learning the Hard Way: Managing Corruption Risks associated with International Students at Universities in NSW (ICAC Report).

The ICAC Report is well known to the higher education sector in Australia. The ICAC Report records that profits from international students are now central to the broader funding of many universities' activities. This creates an unavoidable tension between maintaining and growing the revenue stream from international students and maintaining the academic standards and integrity of the university.

ICAC formulated 12 'key corruption prevention initiatives' that it recommends universities should consider adapting and adopting as appropriate to their circumstances. The full list can be found at the conclusion of the report, however some key initiatives (and those emphasised by ICAC in the media release that launched the report ) are:

  • 'separating the compliance function from the business development function where feasible, which may include moving the admission functions out of international student offices that are responsible for marketing and recruitment and limiting the impact of international students numbers on faculty budgets;
  • restricting the freedom of academics to enter into binding agreements with overseas agents and partners on behalf of the university without considering the full cost and risk of such agreements;
  • considering the full costs associated with international students of different capabilities when making marketing decisions;
  • limiting the number of overseas agents with which the universities work, where possible; and
  • increasing due diligence on and monitoring of agents and partners, particularly focusing on the use of fine-grained data analysis of student issues that can be linked to markets, agents and partners.'

In addition to these initiatives advocated by ICAC, compliance by universities with the requirements under the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007 (National Code) is also important to avoiding and, where necessary, responding to allegations of corruption in this space. Importantly, the National Code requires that universities registered as CRICOS providers take all reasonable measures to use agents which have an appropriate knowledge and understanding of the Australian international education industry and do not use education agents who are dishonest or lack integrity (Standard 4 – Education Agents). The requirements of Standard 4 provide a useful guide to universities to ensure that their agreements with agents are drafted to best place the university in a position to deal with corrupt practices by agents recruiting international students.

The implications of the High Court's decision in the Cunneen case

Earlier this year, the High Court found in the Cunneen case that the NSW Corruption Regulator did not have power to investigate allegations made against Margaret Cunneen (Deputy Senior Crown Prosecutor). The allegation was to the effect that she had counselled her son's partner to pretend to have chest pains in order to stop police officers from obtaining evidence of her blood alcohol level at the scene of a road accident.

The NSW Corruption Regulator contended that this was an allegation involving 'corrupt conduct' within the meaning of s.8 of the Independent Commission Against Corruption Act 1988 (NSW) (NSW Corruption Act) because it was conduct directed at a public official in the course of his/her official duties (i.e. the police officer).

The case concerned the interpretation of subsection (2), which extended the definition of corrupt conduct to 'conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect ... the exercise of official functions by any public official'.

The Court considered that the expression could have two possible interpretations:

  • A narrow interpretation, which only applied to conduct that could adversely affect the probity of the exercise of an official function by a public official.
  • A broader interpretation, which would capture any conduct that could adversely affect the efficacy of the exercise of an official function by a public official. Such an interpretation would capture conduct that could lead to the official exercising the function in a different manner or making a different decision, notwithstanding that the conduct did not adversely affect the probity of the exercise of an official function by the public official.

The Court preferred the former narrower interpretation, thereby clarifying that ICAC's jurisdiction (and, therefore, its wide-ranging coercive powers) did not extend to all private conduct that could affect the performance of an official exercising a public function.

As is the case in NSW, the Corruption Acts in Victoria (Independent Broad-based Anti-corruption Commission Act 2011 (Vic), s.4(1)(a)) and Queensland (Crime and Corruption Act 2011 (Qld), 15(1)(a)) also use the expression 'adversely affect' to extend the ambit of the Corruption Regulator's jurisdiction to particular conduct of private individuals and bodies. The Corruption Act in Western Australia (Corruption and Crime Commission Act 2003 (WA), s.4(d)(i)) also uses the expression to extend jurisdiction to public officers acting in a private capacity.

Each of these Acts defines the relevant conduct differently and it is not certain that the expression would be interpreted in the same way as it has been in the NSW Act. The Cunneen case does reveal, however, the approach the High Court will take to considering the scope of a Corruption Regulator's jurisdiction in circumstances where the exercise of their coercive powers has a consequent abrogation of fundamental rights and privileges (see paragraphs 3 and 54 of the decision in particular).

Following the decision, the NSW Government established an Independent Panel, chaired by the Hon. Murray Gleeson AC (formerly Chief Justice of the High Court), to conduct a review of the jurisdiction of the NSW Corruption Regulator in light of the High Court's decision in the Cunneen case. The Independent Panel released its report on 30 July 2015. The Independent Panel recommended against amending the NSW Corruption Act to give 'adversely affects' its widest literal meaning as sought by the NSW Corruption Regulator. Rather, the Independent Panel recommended expanding the definition of 'corrupt conduct' to capture certain specified conduct by private individuals that could impair confidence in public administration.

This recommendation was accepted by the NSW Government and the definition of 'corrupt conduct' was extended in September this year by the insertion of a new subsection (2A) to include 'conduct of any person ... that could impair public confidence in public administration and which could involve any of the following matters', which included collusive tendering, defrauding the public revenue and fraud in relation to applications for particular licences, permits and other authorities.

In light of the decision in the Cunneen case, it is unlikely that conduct of private individuals that merely affects the performance by universities of their functions (or of officers or employees of the university in performing their functions) would be conduct caught by the relevant Corruption Acts. For example, the Corruption Acts would be unlikely to apply to the following conduct:

  • a contractor misleading a university about its experience and expertise with specialist construction work, notwithstanding that the conduct could adversely affect the university discharging its function to provide facilities for study and research;
  • a student lying to a university disciplinary body about misconduct, notwithstanding that the conduct could adversely affect the disciplinary body performing its function to consider and determine allegations of misconduct;
  • a member of the public evading a university traffic/parking inspector, notwithstanding that the conduct could adversely affect the inspector's function of regulating traffic on university land; or
  • a research student falsifying research outcomes to secure industry funding, notwithstanding that conduct could adversely affect the university's function of the advancement and development of knowledge and its application.

There would be other remedies in respect of this type of conduct but, without more, it is probably not conduct that would need to be referred/notified to a Corruption Regulator. You do have to be careful about the particular facts and you should always have the possible application (or not) of Corruption Acts on your checklist of what to consider when dealing with improper conduct.