Richard Bolt on dealing with corruption when it’s in your own executive. Why it happens, and what he learned about the duty to protect the agency

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RICHARD BOLT: THE COALFACE As a public sector leader, you must be able to hold two apparently contradictory thoughts at the same time – that although corruption is certain to happen, and indeed is happening, we’re becoming more ethical.

Corruption has been a companion in every department I’ve led. One of my executives purchased supplies from his own company. Another traded shares in a firm that won a major contract. A third favoured family members with service work. A fourth channelled unauthorised funds to a major project’s contractor through a back door.

Those cases of corruption have taught me a great deal about people, organisations and management. Those lessons have been some of the most powerful of my career, up there with major emergencies or critical audits of programs I’ve driven.

What was the most important learning from these corrupt episodes? Quite simply, that there’s a real risk in any organisation that someone — no matter how honest or well-intentioned they may appear from the outside — wants to steal funds or profit from inside knowledge. And the larger the organisation, the more likely that risk will become reality.

If you acknowledge that risk, it means that tackling corruption must be treated as core business by senior government executives. The fact that most of us comply with rules, and assume others do too, breeds denial. This means that being prepared starts with assuming it will happen.

Of course, prevention has to be a priority. But it’s not enough. Public services have complex and costly systems to ensure funds are spent properly and conflicts of interest are managed. But as history repeatedly shows, where there’s a will, there’s a way. Actively looking for corruption and acting decisively when it’s found are also essential.

Even after my first encounter with corruption, I missed a case of misappropriation which almost literally stared me in the face. I visited a school in a low-income area and was struck by its digital facilities, such as a robotics lab, film studio and radio station.  I asked the principal whether the school was really able to pay for its equipment from its government funding entitlement. Yes I was told, which I accepted on face value. But the real answer was no – funding above the formula had been provided without authority.

This case taught me that corruption isn’t only done for financial reward. Sometimes it comes from a Robin Hood-like belief that the public is best served if some rules are broken. The well-equipped school is one example. The channelling of a million dollars through a labour hire company to the contractor building the now-defunct Ultranet is another. Deputy Secretary Darrell Fraser was committed to the project and wanted to keep it alive after the government that funded it lost office.

READ MORE: The man behind the $1m Ultranet payment: ‘I saw it as my only option’

Of course, corruption is devilishly difficult. But not always. In one case, an internal audit found strong circumstantial evidence but no proof, so I couldn’t act. When the allegation became public more than a year later, I called in the executive for another interview. He totally and forcefully denied any wrongdoing to my face, but as soon as he left my office he phoned a confidante and told him he had convinced me that they were in the clear. I know that, because a few minutes later my department was contacted by IBAC, the Victorian government corruption authority, with a full account of the executive’s phone conversation. IBAC knew this because they were recording the executive’s phone.

This episode taught me that tackling corruption requires determination and persistence. As a senior public sector leader, you have to take corruption seriously, and in doing so you’re sending an important cultural message. And even though the emerging field of data analytics holds promise for fraud detection, the really conclusive evidence is nearly always human and often comes from people close to the perpetrator, like an estranged spouse or a direct report. It’s a big step for them to come forward, so they need to know that their information will be treated seriously.

Dealing effectively with corruption is also a team game. An anti-corruption body like IBAC in Victoria is legally independent, but it’s also inter-dependent with the agencies that it investigates. A complex inquiry can require close cooperation between IBAC and an agency, which can even extend to working together in managing an executive under investigation.

Some leaders believe they have a duty to protect their agency by tightly controlling cooperation with outside investigators. In my experience, a team approach is essential because it’s in the interest of both parties. It’s theoretically possible for an investigation to be vexatious or biased, and a defensive approach could be warranted should that happen. But because corruption investigations can result in court proceedings, they need to be especially rigorous — even more than other forms of independent investigation like official audits.

I’ve been asked if corruption has reduced my faith in people. The answer is no; if anything it has achieved the opposite. That’s because when a small group of mostly senior executives use intense secrecy and misdirected skill to gain what they’re not entitled to, they have to resort to that level of secrecy and skill for one very positive reason: the honesty of the vast majority of public servants and the strength of our accountability systems.

Indeed, it seems clear that the morality of public servants, and the public at large, is steadily improving. Witness the progressive strengthening of public services’ support for family responsibilities, LGBTI staff, mental illness, and victims of family violence. The society I grew up in couldn’t deal with one of those challenges. That’s why I can hold two apparently contradictory thoughts at the same time – that although corruption is certain to happen, we’re becoming more ethical and inclusive.

Sometimes those contradictions can coexist in the same person. One executive, in a department I led, improperly sought personal reward and seemed drawn to people of poor character. At the same time, he was demonstrably a skilled leader with a strong and seemingly genuine commitment to the public good.

And if you’re wondering why this article only addresses corruption by executives, not ministers, that’s because it hasn’t happened in my experience. Yes, the occasional minister has pushed a procurement or project for questionable reasons. But the right decisions were ultimately made because, in Victoria, we have robust laws and processes governing Cabinet and departments. Having said that, I know that evidence suggests ministerial corruption is a serious risk in some jurisdictions.

The learnings

  • As a senior executives you should expect and prepare for corruption — particularly by other senior executives.
  • Preventing corruption is important, but cure is essential. Elaborate controls can be circumvented if someone is determined to do it.
  • Your staff are a critical source of intelligence on corruption, but to come forward they need to know that you care and will act.
  • Remember, there is no stereotype of a corrupt official: they include skilled and motivated administrators with a willingness to enrich themselves and lie about it.
  • Even though the large majority of public servants want to do the right thing, being serious about corruption should built trust, not suspicion.
  • You should see anti-corruption bodies as partners in the integrity strategies of departments and agencies. They have powers that you don’t; you need each other.

MORE FROM RICHARD BOLT: How do you handle a crisis in government? Start with contingency planning, then get ready to take your blinkers off

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