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Lock Her Up!

When a public servant appropriates $100 million in government money for dishonest purposes contrary to law, we call it theft; a criminal offence which carries a maximum penalty of ten years in prison. When the public servant’s boss – the Minister – does it, however, it seems we’re not supposed to care.

Clarification (June 2021): This post was not intended to state that Ms McKenzie is a criminal or that she is guilty of a criminal offence. The post is intended to point out that, in the author’s view, Ms McKenzie could potentially be exposed to liability under the criminal dishonesty provisions for misusing funds considering arguments by the ANAO and two eminent legal scholars that the legal basis for the sports grants scheme was unclear and, as a result, the money granted could have been misappropriated. Ms McKenzie has since resigned from the ministry.

As you all most definitely know by now, Senator Bridget McKenzie purported to make $100 million in sports grants using a criteria, separate from that devised by Sports Australia (ASC), with the intention of targeting the LNP’s targeted and marginal seats. This idea isn’t new. As many have pointed out, sports ministers of both parties have used similar tactics with Keating-era sports minister Ros Kelly infamously doing so on a whiteboard.

The Community Sport Infrastructure Program was heavily promoted at the election, including the curious choice by the Liberal Mayo candidate Georgina Downer to hand over a novelty cheque despite never having been elected by the locals both before and after the incident. That incident inspired the recently tabled ANAO report which absolutely savaged the program raising serious concerns about its governance.

In the media scrum over the report, this paragraph was somewhat understated:

A significant shortcoming was that, while the program guidelines identified that the Minister for Sport would approve CSIG funding, there are no records evidencing that the Minister was advised of the legal basis on which the Minister could undertake an approval role, and it is not evident to the ANAO what the legal authority was.

‘Award of Funding under the Community Sport Infrastructure Program’. 2020. Australian National Audit Office: 9. (emphasis added)

The ANAO was unable to determine what the legal basis for the $100 million rort was. Neither were two eminent constitutional lawyers. Anne Twomey, a USyd legal scholar who argued that sports grants are beyond the powers of the Commonwealth, and Ian Cunliffe, who pointed out (months ago) that McKenzie did not have the power under the ASC Act to be the decision maker.

In other words, the money for the grants was appropriated in an unlawful manner. In other other words, the money was stolen.

To use the Criminal Code’s language, the property of the Commonwealth was dishonestly appropriated with the intention of permanently depriving the Commonwealth of such property.

131. Theft

(1) A person commits an offence if:

(a) the person dishonestly appropriates property belonging to another with the intention of permanently depriving the other of the property; and

(b) the property belongs to a Commonwealth entity.

Penalty: Imprisonment for 10 years

Criminal Code 1995 (Comm.), sch. 1, para. 131.1.

As discussed above, McKenzie likely has absolutely no authority to be the decision maker for the sports grants process. She also certainly didn’t intend for this money to be returned to the Sports Commission as she intended it to be gifted, thus permanently depriving the Commonwealth entity of that money. She did this dishonestly, as the grants program – notwithstanding its illegality – was portrayed as a community support program when it was actually unreported electoral expenditure and was designed as such. On a strict reading of the Code (without considering its actual application), there’s a potential breach.

The fact that no one in Government seriously seems to be considering McKenzie’s potential criminal liability is yet another example of the Morrison government’s contempt for democratic institutions; including the rule of law. The Constitution says that money is not to be appropriated except according to law (at s. 83), a provision designed to require expenditure to undergo Parliamentary scrutiny.

The Australian Sports Commission Act 1989, the law which the Minister purported to make the grants under, gives the ASC Board the power to make grants but not the Minister administering the Act. (at ss. 8(d)). The same Act gives the Minister the power to ‘direct’ the Commission to exercise its powers in a certain way, but requires that – among other things – the Minister cause notice of the direction to be published in the Gazette and presented to Parliament (at s. 11). This publication requirement is designed to make executive intervention in what are supposed to be independent processes accountable to Parliament by immediately exposing such decisions to scrutiny.

Senator McKenzie has no excuse for not being aware that this could be unlawful as she had access to some of the most talented and respected lawyers on the continent. At no point did she, the Department, or the Commission, seek their advice as to whether this program was legal.

She has potentially placed the recipients of these purported grants – community sporting groups who can’t afford lawsuits – in the face of recovery proceedings. She has also exposed the Government to civil claims from failed applicants, a fact that has been seized upon by Slater and Gordon. As pointed out by Michael Bradley at Crikey, if the Government loses on these claims she’s also potentially exposed herself to civil liability under the PGPA Act’s rules around ‘causing a loss to the Commonwealth’ (at s. 69 of that Act).

Too much of the media’s attention has been focused on whether the Minister followed the rules and not whether she followed the law. If any other person stole $100,000,000 from the Commonwealth, they’d be in jail.

In a perfect world, I’d advise Senator McKenzie that she better get a lawyer, son – she’s gonna need a real good one. (As the ANAO report stated that she and her Department should have done in the first place). Unfortunately, she’ll instead be forced to resign from her new role and will live a happy life on a government pension, perhaps with a lobbying job, because this government has no respect for the law – or democracy.