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Mick Symons

The Pyramid of Corruption: Why Small Ethical Breaches Become Major Scandals

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The Pyramid of Corruption: Why Small Ethical Breaches Become Major Scandals

What Councils and SMEs Need to Know in 2026

When considering corruption, most individuals typically envision large-scale fraud, bribery, criminal prosecutions, or prominent media scandals.

The reality is vastly different.

Significant corruption cases seldom originate with a suitcase of cash or a multi-million-dollar fraud. They often begin with minor ethical compromises that go unchallenged. A favour granted to a colleague. A conflict of interest that has not been disclosed. A gift accepted without hesitation. A procurement shortcut that may seem initially inconsequential.

These seemingly minor breaches are the foundation of what is commonly called the Pyramid of Corruption.

For councils, government agencies, and small to medium-sized enterprises (SMEs), a thorough understanding of this idea is essential. Organizations that disregard low-level misconduct often establish conditions conducive to serious fraud, corruption, governance failures, and reputational damage.

Understanding the Pyramid of Corruption

The Pyramid of Corruption shows how misconduct intensifies in the absence of timely organizational intervention.

At the foundation of the pyramid lie minor ethical breaches. As these behaviours become normalised, more serious misconduct usually arises. Over time, corruption becomes ingrained in the organization’s culture.

By the time organizations recognise the issue, the financial, legal, and reputational consequences may be large.

The principle is clear: preventing corruption begins well before the involvement of fraud investigators.

The Foundation: Small Ethical Breaches

Most corruption scandals originate from conduct that employees and managers often regard as inconsequential.

Typical examples include:

  • Undisclosed conflicts of interest.
  • Acceptance of gifts and benefits.
  • Favouritism in recruitment decisions.
  • Misuse of vehicles, equipment, or resources.
  • Manipulation of leave records or timesheets.
  • Circumventing procurement procedures.
  • Failure to declare secondary employment.

Individually, these actions may seem insignificant. Together, they foster a culture in which employees perceive rules as flexible and accountability as unlikely.

Once that mindset is established, the organization becomes susceptible to more serious misconduct.

A recurring observation by anti-corruption agencies throughout Australia is that misconduct often arises not from the absence of policies, but from their disregard or inconsistent enforcement. The NSW ICAC has consistently identified procurement environments in which gifts, benefits, and supplier relationships have influenced decision-making, despite formal policies and controls.

The Middle Layer: Fraud and Abuse of Authority

As ethical standards decline, the potential for fraud and abuse correspondingly rises.

This stage typically involves:

  • Procurement related fraud.
  • Tender process manipulation.
  • Incorrect invoicing.
  • Improper use of organizational funds.
  • Unauthorized expenditure.
  • Improper exercise of delegated authority.
  • Giving preferential treatment to suppliers or contractors.

For councils, procurement continues to represent one area with the highest risk of corruption.

The NSW Independent Commission Against Corruption has extensively investigated council procurement processes, identifying instances where employees manipulated purchasing decisions, showed preferential treatment to suppliers, or accepted benefits for awarding contracts.

SMEs face similar risks. Many business owners place considerable trust in long-tenured employees while exercising limited financial oversight. Regrettably, trust without verification may give rise to opportunities for misconduct.

The Queensland Crime and Corruption Commission’s 2025 analysis of local government corruption risks identified procurement activities, rising infrastructure spending, and evolving operating environments as critical areas requiring enhanced governance oversight.

The Top of the Pyramid: Systemic Corruption

At the highest level, corruption is integrated into the organizational culture.

Employees no longer perceive misconduct as an isolated occurrence. So it is regarded as “how things are done around here..”

Warning signs include:

  • Widespread conflicts of interest.
  • Collusion between employees and suppliers.
  • Manipulated procurement outcomes.
  • Suppression of complaints.
  • Retaliation against whistleblowers.
  • Lack of executive action despite acknowledged concerns.
  • Systematic concealment of improper conduct.

When corruption reaches this stage, organizations often encounter regulatory investigations, media scrutiny, and substantial reputational harm.

Restoring public trust may require several years.

A Recent Example: Governance Failures Under Investigation

Recent developments illustrate how governance issues may intensify in the absence of adequate oversight.

In June 2026, the NSW Independent Commission Against Corruption ICAC) started public hearings relating to the University of Wollongong, addressing allegations related to recruitment practices, conflicts of interest, and contract awards. The inquiry is examining whether senior officials manipulated recruitment processes and whether contracts were awarded without governance and due process.

The inquiry is assessing whether senior officials influenced recruitment processes improperly and whether contracts were awarded absent governance and due process. Instead, they focus on governance controls, conflicts of interest, decision-making processes, and accountability.

This reflects an increasing trend throughout Australia. Integrity agencies are placing increasing emphasis on governance deficiencies that create opportunities for misconduct before financial losses.

The key takeaway for councils and SMEs is clear: inadequate governance often serves as the conduit through which corruption risks arise.

The Hidden Enablers of Corruption

Corruption seldom thrives in isolation.

Organizational deficiencies often contribute to the escalation of misconduct.

Poor Leadership

Employees observe leaders’ actions significantly more attentively than their words.

If leaders disregard misconduct, neglect to address complaints, or enforce standards inconsistently, employees promptly perceive that integrity is discretionary.

Policies That Exist Only on Paper

Many organizations have excellent policies.

Far fewer have effective implementation.

A code of conduct that remains unread on an intranet will not effectively prevent corruption.

Employees require practical guidance, consistent reinforcement, and transparent accountability.

Inadequate Training

Many employees receive minimal training on:

  • Potential Conflicts of Interest.
  • Procurement Integrity.
  • Fraud awareness.
  • Gifts and benefits.
  • Reporting Responsibilities.

Without education, employees rarely identify risks before issues arise.

Fear of Speaking Up

A key indicator of corruption is an organizational environment in which employees feel apprehensive about reporting concerns.

Recent governance reforms throughout Australia have further enhanced protections for whistleblowers, recognising that reporting remains one of the most effective means of early misconduct detection. In June 2026, the Alice Springs Town Council implemented an enhanced whistleblower policy aimed at safeguarding individuals who report misconduct and protecting them from retaliation.

How Councils and SMEs Can Break the Pyramid

The most effective corruption prevention strategies prioritise addressing misconduct at the foundational level to prevent its escalation.

Build an Ethical Culture

Integrity must be integrated into daily decision-making processes.

Employees should recognise that ethical conduct is a compliance obligation and a fundamental organizational value.

Strengthen Procurement Controls

Procurement continues to be among the highest risk functions within both councils and SMEs.

Regular reviews ought to assess:

  • Tendering procedures.
  • Delegations.
  • Vendor Partnerships.
  • Contract variations.
  • Conflict of Interest Disclosures.

Establish Effective Reporting Channels

Employees must know:

  • Procedures for Reporting Concerns.
  • Intended Recipients of Reports.
  • What protections exist.
  • Next steps following the submission of a report.

Confidence in reporting systems substantially enhances the accuracy of early detection.

Conduct Regular Audits

Routine audits should concentrate on:

  • Financial control measures.
  • Procurement Operations.
  • Delegated authority.
  • Recruitment Procedures.
  • Conflict management frameworks.

Audits often detect emerging risks before their escalation into significant issues.

Investigate Concerns Promptly

Minor misconduct issues should never be disregarded simply because they seem insignificant.

Timely intervention often mitigates the need for more extensive and costly investigations.

Final Thoughts

The Pyramid of Corruption serves as a compelling reminder that significant integrity failures seldom occur abruptly.

Most corruption scandals originate from minor ethical compromises that are overlooked, justified, or normalised.

For councils and SMEs, the challenge extends beyond merely identifying major instances of corruption. The challenge lies in identifying and addressing the behaviours at the base of the pyramid before they escalate into more serious issues.

Effective governance, competent leadership, robust reporting systems, and proactive investigations continue to be the most effective tools for preventing corruption.

Organizations that take early action safeguard not only their financial assets but also their reputation, organizational culture, and public trust.

In 2026 and the future, integrity will be recognised as more than merely a compliance issue. It is a strategic business priority.

Contact ACCA ([email protected]) for help in this area.

Can a Brief Touch Still Lead to Dismissal in Australia in 2026?

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Can a Brief Touch Still Lead to Dismissal in Australia in 2026?

Many employees still believe that a brief physical interaction at work — a touch on the back, shoulder, waist or even buttocks — is unlikely to justify dismissal.

That assumption is increasingly risky.

Australian workplaces in 2026 operate under far stricter expectations concerning workplace behaviour, sexual harassment and psychological safety. Employers now face significant legal obligations to prevent inappropriate conduct, and tribunals are applying modern community standards when assessing workplace misconduct.

One Fair Work Commission decision that continues to influence employers and investigators is John Keron v Westpac Banking Corporation [2022] FWC 221. (DWF)

The decision sends a clear message:

Even a brief intentional touch can justify dismissal if it breaches workplace standards and undermines workplace safety and respect.

The attached draft article provided an excellent foundation for this discussion.

The Westpac Decision Still Matters in 2026

The case involved a senior Westpac manager with more than 35 years of otherwise unblemished service. After a compulsory professional development workshop, employees attended a work-related social gathering at a hotel venue.

Later in the evening, CCTV captured the employee placing his hand on a female colleague’s lower buttocks and moving it upwards toward her waist. Westpac conducted an internal investigation and terminated his employment for serious misconduct. The employee then challenged the dismissal in the Fair Work Commission.

Deputy President Binet upheld the dismissal. (DWF)

Importantly, the Commission acknowledged that community expectations regarding consent and workplace conduct had significantly changed.

The Commission stated:

“The bar as to what constitutes consent for physical and sexual interactions has been significantly raised in the broader community.” (DWF)

That observation remains highly relevant in 2026.

“It Was Only a Joke” No Longer Provides Protection

Historically, some workplace behaviour was minimised as “banter”, “harmless fun” or “nothing serious”.

Australian employers can no longer afford to adopt that approach.

The introduction of positive duties under anti-discrimination legislation, increased psychosocial safety obligations under work health and safety laws, and heightened public awareness following national workplace harassment inquiries have fundamentally shifted employer expectations.

Today, employers must actively prevent inappropriate conduct, not merely respond after the damage occurs.

That includes:

  • unwanted touching;
  • sexually suggestive conduct;
  • inappropriate jokes;
  • physical familiarity;
  • after-hours misconduct connected to work; and
  • behaviour occurring at conferences, Christmas parties or networking events.

The key issue is not whether the employee intended harm.

The key question is whether the conduct was unwelcome and whether it breached workplace standards.

Work Functions Are Still Workplaces

One of the most important aspects of the Keron decision involved the Commission’s finding that the conduct remained sufficiently connected to employment even though it occurred after formal work activities had ended. (DWF)

Many employees wrongly assume workplace rules stop applying once alcohol is served or official hours finish.

They do not.

In 2026, employers routinely investigate conduct occurring at:

  • Christmas functions;
  • conferences;
  • interstate travel;
  • training programs;
  • networking events;
  • client dinners;
  • sporting events; and
  • informal after-work drinks.

If there is a sufficient connection to employment, disciplinary action may follow.

The Fair Work Commission has repeatedly confirmed that out-of-hours conduct may justify dismissal where the behaviour damages workplace relationships, creates safety risks or harms the employer’s reputation. (Holding Redlich)

Alcohol Is Not an Excuse

Alcohol continues to play a major role in workplace misconduct investigations.

However, intoxication rarely excuses inappropriate conduct.

In Keron, the Commission accepted the employee had consumed substantial alcohol but still concluded the conduct justified dismissal. (Holding Redlich)

In fact, intoxication may increase employer concerns because impaired judgment can heighten workplace safety and reputational risks.

Employers now regularly remind staff that workplace behaviour expectations continue to apply regardless of alcohol consumption.

Training and Policies Matter

Another critical issue in the Westpac matter involved workplace training.

The Commission noted that Westpac had provided training concerning sexual harassment, discrimination and workplace conduct shortly before the incident occurred. (DWF)

That significantly strengthened Westpac’s position.

The lesson for employers is clear.

Policies sitting unread on an intranet will not adequately protect an organisation.

Training must be:

  • regular;
  • practical;
  • contemporary;
  • scenario-based; and
  • actively reinforced by management.

Employees should clearly understand:

  • what constitutes inappropriate conduct;
  • how workplace standards apply at social events;
  • the consequences of misconduct; and
  • how complaints will be investigated.

This issue is particularly important for councils, government agencies and SMEs where informal workplace cultures sometimes blur professional boundaries.

Procedural Fairness Still Matters

Importantly, stronger expectations around workplace conduct do not remove the obligation for procedural fairness.

Employers must still conduct proper investigations before making disciplinary decisions.

A fair investigation should assess:

  • witness evidence;
  • CCTV or electronic evidence;
  • surrounding circumstances;
  • workplace policies;
  • credibility issues; and
  • whether the alleged conduct actually occurred.

Australian tribunals continue to criticise employers who rush investigations or predetermine outcomes.

Even where allegations involve sensitive conduct, employers must ensure investigations remain impartial, balanced and evidence-based.

The 2026 Reality

The modern workplace has changed.

Conduct once dismissed as “minor” can now result in serious disciplinary action, including termination of employment.

Employees should understand that brief physical contact may still breach workplace policies, particularly where the conduct is intimate, unwelcome or capable of causing discomfort.

For employers, the message is equally clear:

Strong workplace culture requires more than policies alone. It requires leadership, training, consistent enforcement and professionally conducted investigations.

Failing to act appropriately may expose organisations to:

  • unfair dismissal claims;
  • sexual harassment complaints;
  • workers compensation claims;
  • psychosocial hazard investigations;
  • reputational damage; and
  • regulatory scrutiny.

In 2026, Australian workplaces are expected to be respectful, psychologically safe and professionally managed.

Tribunals are making it increasingly clear that employers who enforce those standards reasonably and fairly will often receive strong legal support from the Fair Work Commission. (DWF)

 

Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026? Updated article

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Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026?

Updated for 2026: New Case Law and Practical Lessons

This article has been updated to include recent Federal Court commentary, Fair Work Commission decisions and practical guidance for councils, government agencies and SMEs conducting workplace investigations where legal professional privilege may be in issue.  Original article can be read here

Many councils, government agencies, and employers still believe that hiring lawyers to carry out a workplace investigation automatically protects the process with legal professional privilege.

That idea is still risky.

Australian courts and tribunals keep confirming that simply having a law firm involved does not create privilege. The crucial question is whether the investigation is mainly to get legal advice or to get ready for a lawsuit.

By 2026, this problem has become more important because investigations now more often include:

  • psychological and social risks
  • accusations of bullying and harassment
  • complaints about unwanted sexual behaviour
  • reporting of wrongdoing by an insider
  • code of Conduct breaches
  • conflicts of interest
  • fraud and corruption allegations
  • unfair dismissal proceedings; and
  • workers’ compensation and workplace conflicts

Employers who do not understand privilege may accidentally reveal sensitive information during lawsuits, Commission hearings, court reviews, and investigations.

The Key Legal Principle

The High Court’s decision in Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 is still the fundamental rule. Privilege applies only when the main reason for the communication or document is to get or give legal advice, or to use it in current or expected legal cases.

Who the investigator is does not matter.

If the primary goal of the investigation is to find out if rules were broken, if bad behaviour happened, or if someone should be disciplined, then privilege might not protect the information.

The Fair Work Commission Warning Employers Still Ignore

One of the most important workplace investigation decisions is Gaynor King [2018] FWC 6006.

The City of Darwin hired Minter Ellison to look into bullying claims. The Council later said the report was confidential because lawyers carried out the investigation.

Commissioner Wilson did not accept that argument.

The Commission looked into the real reason for the investigation and found that the main goal was to see if workplace behaviour rules and Council policies were broken, not to get legal advice.

The Commission also looked at how the employer acted: employees were told about the investigation, the accusations, and the results. Sharing this information weakened the claim of privilege.

That decision is still very important in 2026 because many organisations still organise investigations in ways that do not protect privilege.

Why Some Investigation Reports Remain Protected

Privilege applies when the investigation is done mainly to get legal advice.

In the cases Bowker, Coombe and Zwarts v DP World Melbourne Ltd [2015] FWC 7312 and Kirkman v DP World Melbourne Ltd [2016] FWC 605, the Fair Work Commission agreed that certain information was protected because the investigators were hired specifically to help lawyers give legal advice.

The Commission examined:

  • the exact words used in the retainer
  • the role of the lawyers
  • the reason for the investigation
  • how documents were managed
  • whether findings were broadly disclosed; and
  • whether the employer kept things confidential as they should

Privilege is determined by how things are organised, their goals, and how people behave—not by job titles or guesses.

Recent Federal Court Commentary (2023–2026)

The Federal Court’s decision in Diawara v National Australia Bank Limited [2023] FCA 1048 provides one of the most important recent clarifications. (Australasian Lawyer)

The case was about a claim of privilege over a cultural review report created during a discrimination dispute. The Court confirmed that:

  • the dominant purpose test remains the central inquiry
  • the focus is on why the person made or obtained the document
  • the party claiming privilege must prove the necessary facts; and
  • privilege can apply even if the document is used for secondary or additional purposes

The Court looked at the agreement between Herbert Smith Freehills and Wise Workplace Solutions and agreed that the main reason for the report was to help the lawyers legally advise NAB.

This decision confirms that privilege can be kept, but only when the evidence clearly shows that the main reason was legal advice.

Recent Oversight Commentary

A 2022 external review by the South Australian Ombudsman highlighted the importance of the dominant purpose test when evaluating claims of privilege over investigation materials. The Ombudsman said that if investigations mainly focus on gathering facts about employee complaints or policy violations, claims of privilege might fail unless the evidence clearly shows the investigation was for obtaining legal advice.

The Ombudsman also emphasised that labelling a document “privileged and confidential” does not make it privileged. Courts and oversight agencies will focus on the true nature of the work and the actual reason for the investigation.

Why This Matters for Local Government

The problem is especially serious for councils.

Local government investigations often include:

  • councillor behaviour
  • allegations against a senior executive
  • code of Conduct matters
  • complaints about bullying
  • procurement concerns
  • allegations of corruption
  • protected disclosures; and
  • conflicts of interest

Many councils believe that hiring outside lawyers guarantees privacy.

That assumption becomes a problem when things get to:

  • The Fair Work Commission
  • NCAT
  • ICAC
  • The NSW Ombudsman
  • Legal process
  • Public interest disclosure investigations; or
  • Judicial review.

If privilege doesn’t apply, sensitive information might be exposed, including:

  • draft findings;
  • internal communications;
  • witness credibility assessments;
  • legal assumptions;
  • procedural weaknesses; and
  • governance failures.

 

The Practical Lessons for Employers in 2026

Organisations should not automatically assume they have special rights just because lawyers are investigating.

The safer approach is to separate:

  • factual investigations
  • disciplinary decision-making
  • witness evidence collection; and
  • legal advice.

Employers should get advice early on how to organise the investigation before choosing investigators.

  • Retainer documents are important.
  • How the investigation is carried out is important.
  • How findings are shared is important.
  • How reports are shared is important.
  • How the organisation uses the report later may decide if the privilege continues.

Often, the best protection isn’t a privilege.

The best way to protect yourself is by carrying out investigations that are:

  • procedurally fair
  • impartial
  • based on evidence
  • properly documented; and
  • capable of withstanding external scrutiny

The main lesson from the Commission, the Federal Court, and oversight authorities is still the same.

In 2026, organisations that still do not understand legal professional privilege may find out too late that their supposedly confidential investigation materials can be revealed during lawsuits or regulatory checks.

Are your policies putting you at risk?

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Your Policies Might Be Putting You at Risk

Many organisations highlight their policy library as evidence of effective governance oversight. After reviewing thousands of investigations, audits, and compliance failures, one fact remains unequivocally clear:

An ignored policy can create greater risk than having no policy at all.

Across Australia, organisations are increasingly facing this challenge through employee complaints, regulatory scrutiny, Ombudsman inquiries, integrity investigations, and costly litigation. The pattern remains consistent: the policy is established, yet the practice is not implemented.

The discrepancy between documented policies and actual practices now constitutes one of the most significant governance risks confronting employers.

This is precisely where ACCA provides help.

The Hidden Risk Inside Your Policy Library

Most organisations cannot answer three basic questions:

  • When were your policies last reviewed?
  • Do your staff members understand these?
  • Could you provide evidence that they are being followed?

If the response to these questions is unclear, your organisation may be at risk.

Outdated Policies Create Legal and Regulatory Exposure

Legislation changes. Case law evolves. Regulators raise expectations.

However, many organisations continue to rely on policies that were written five, seven, or even ten years ago. A bullying policy developed before implementing psychosocial risk obligations, or a sexual harassment policy established before positive duty reforms, is outdated and is a potential liability.

Untrained staff Cannot comply with rules they do not understand

In investigations, employees regularly state:

  • “I think I saw it when I started.”
  • “I know we have one, but I’ve never read it.”
  • “I didn’t know that was required.”

Courts and regulators routinely assess whether employees received training, whether policies were readily accessible, and whether expectations were consistently reinforced. A policy that lacks clarity and understanding is indefensible.

Managers who ignore policies create evidence against the Organisation

This is the most severe failure.

When managers circumvent procurement regulations, disregard grievance procedures, neglect to get conflict of interest declarations, or delay investigations, they generate a paper trail that compromises the organisation’s defence.

Courts evaluate actions rather than assurances.

A carefully drafted policy that is not followed may strengthen a claim against your organisation.

Why Councils and Public Entities Face Even Greater Scrutiny?

Local government and public sector bodies uphold comprehensive policy frameworks, including codes of conduct, procurement protocols, conflicts of interest management, fraud control, public interest disclosures, delegations, and governance structures.

However, volume does not equate to compliance.

Integrity agencies, auditors, and investigators consistently identify discrepancies between documented requirements and actual practices. These gaps result in reputational harm, determinations of maladministration, and, in certain instances, an elevated corruption risk.

This is the point at which independent oversight becomes essential.

How ACCA Protects Your Organisation

ACCA specialises in identifying the specific risks outlined above before their development into legal, financial, or reputational issues.

We offer independent, expert compliance support through:

  1. Policy Health Checks

Thoroughly evaluate your current policies to confirm they accurately reflect:

  • current legislation
  • recent case law
  • regulator expectations
  • contemporary workplace risks

We identify gaps, inconsistencies, and outdated content and deliver clear, actionable recommendations.

  1. Compliance Audits

We assess the extent to which your policies are being implemented. This encompasses:

  • reviewing real‑world practices
  • interviewing staff
  • assessing training and awareness
  • examining documentation and decision-making
  • identifying where managers are bypassing requirements

This is the evidence that regulators seek — and the evidence that most organisations do not possess.

  1. Practical, Targeted Training

We provide training that staff effectively comprehend and retain. No jargon. No generic slides. Clear, practical guidance specifically tailored to your risk profile.

  1. Implementation Support

Policies only work when embedded. We help you:

  • communicate expectations
  • reinforce standards
  • establish monitoring processes
  • hold managers accountable

This transforms policies from static documents into dynamic controls.

If you have not tested your policies, you do not know your Risk

Most organisations can tell you how many policies they have. Few individuals can determine whether those policies are effective.

If your policies have not undergone independent review within the past two years, staff have not received training, or compliance has never been tested, it is important to act now.

When a regulator, investigator, or tribunal reviews your organisation, they will not be impressed by the volume of your policy library.

They will try to determine whether your staff adhere to it.

Strengthen your governance before someone else tests it

ACCA helps organisations to bridge the gap between policy and practice, thus safeguarding against preventable legal, financial, and reputational risks.

If you want to assess the effectiveness of your policies or require an independent compliance review, ACCA is available to help.

Contact ACCA today to schedule a confidential consultation regarding your policy framework and compliance risks.

 ([email protected])

 

Why Every Organisation Needs a Conflict of Interest Policy

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Why Every Organisation Needs a Conflict of Interest Policy in 2026

Conflicts of interest are still one of the biggest risks to good management and honesty for Australian organisations in 2026. Many people still think a conflict only happens when someone is dishonest or gets something they shouldn’t. Conflicts happen every day, often involving honest employees who don’t realise how their personal interests, relationships, or financial situations might affect, or seem to affect, their professional decisions.

Regulators, integrity agencies, and industrial tribunals now examine governance failures more carefully than before. Employees question decisions they think are unfair. Social media spreads accusations quickly, usually before the facts are known. Councils, government agencies, nonprofits, and private businesses must now have a strong conflict of interest policy. It is an essential rule for managing and controlling.

Organisations that handle conflicts effectively improve decision-making, protect their reputation, lower legal risks, and keep public trust. People who fail often find that the consequences—such as investigations, lawsuits, and damage to their reputation—are much more expensive than preventing the problem.

Understanding Conflicts of Interest

The Australian Public Service Commission (APSC) describes a conflict of interest as:

“a situation where a public official’s private interests could conflict with their official duties.”
Source: Australian Public Service Commission, APS Values and Code of Conduct in Practice – Conflict of Interest Guidance.

This definition forms the basis for most Commonwealth and state government systems. It means that conflicts happen when personal interests—money, relationships, or other things—could affect, or seem to affect, professional decisions. By 2026, regulators and integrity agencies expect organisations to use this definition and apply it consistently in procurement, hiring, second jobs, and workplace decisions.

Conflicts often happen because of:

  • family or personal relationships
  • friendships or romantic relationships
  • financial interests
  • gifts and hospitality
  • outside employment
  • business associations
  • investments and property ownership
  • future employment opportunities

A conflict does not always mean corrupt behaviour. All employees, managers, councillors, and directors will face situations where their personal and work interests come together. The problem is not that a conflict exists, but whether the conflict is recognised, shared, and handled.

 Actual, Perceived and Potential Conflicts

Actual Conflicts

A real conflict happens when personal interests directly clash with official duties—for example:

  • taking part in recruitment involving a relative
  • approving invoices for a family‑owned business
  • awarding contracts to a company in which the employee holds shares

These conflicts need to be dealt with right away.

Perceived Conflicts

A possible conflict arises when a reasonable person thinks personal interests might affect someone’s decision. No bad behaviour is needed.

The High Court’s decision in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 is still the main authority on this. The Court said that the question is whether a reasonable and fair minded person might think that the decision maker could be biased. Although Ebner dealt with judges, the same principle also applies to how organisations are governed.

Potential Conflicts

A possible conflict may arise in the future if certain situations arise—for example:

  • discussing future employment with a contractor
  • purchasing shares in a supplier
  • entering a relationship within a reporting line

Possible conflicts must be reported and watched closely.

Why Disclosure Matters More Than the Conflict

Organisations can usually handle conflicts they share. They cannot handle conflicts that remain hidden.

After being shared, organisations can put controls in place such as:

  • removing the employee from decision-making
  • appointing an independent reviewer
  • reallocating duties
  • increasing oversight
  • documenting a management plan

When employees hide important interests, it becomes a problem of trust, not just management. Many disciplinary cases focus on not revealing the conflict rather than the conflict itself.

Most conflicts can be managed. Concealment rarely can.

What the Courts and Industrial Tribunals Have Said

Australian tribunals regularly emphasise the importance of being open and honest within organisations.

B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWC 6191

The Fair Work Commission confirmed that employers may enforce conflict‑of‑interest policies designed to protect integrity and public confidence.

Lawler v Department of Corrective Services [2021] WAIRC 00864

The WA Industrial Relations Commission agreed that it was fair to fire a prison officer who did not reveal the real nature of their relationship with a prisoner. The Commission found that the secret relationship caused a serious conflict and made people doubt the officer’s ability to do his job.

Across jurisdictions, three principles remain consistent:

  1. Employers have a genuine reason to keep their organisation honest and trustworthy.
  2. Conflict of interest policies are legal and fair.
  3. Failure to disclose can justify disciplinary action, including dismissal.

Procurement, Recruitment, and Workplace Relationships

Procurement

Buying goods and services is still one of the riskiest management activities. The Australian National Audit Office (ANAO) keeps finding that poor handling of conflicts is a common problem in managing procurement and grants.

Common risks are:

  • prior relationships with suppliers
  • gifts and hospitality
  • financial interests
  • former business associations
  • future employment discussions

Being clear and writing things down are very important.

Recruitment and Promotion

Knowing an applicant does not automatically cause a conflict. However, hidden relationships can make people doubt the fairness of the process. Sharing information protects both the organisation and the panel members.

Workplace Relationships

Personal relationships between people in a supervisor-subordinate relationship create clear risks. Most organisations now ask people to share information about relationships—not to ban them, but to make sure decisions are fair and unbiased.

Lessons from Recent Integrity Investigations

ICAC—Operation Hector (2024)

The NSW Independent Commission Against Corruption found that secret relationships between decision-makers and contractors affected how Inner West Council and Transport for NSW bought services.

ICAC—Tim Crakanthorp Investigation (2024)

The ICAC found that the former NSW Minister did not properly reveal conflicts as required by ministerial rules. Even though no corruption was found, the situation showed how badly handling conflicts can damage a reputation.

IBAC—Victorian Public Sector Guidance

The Victorian Independent Broad based Anti corruption Commission keeps finding that badly handled conflicts are a common cause of corruption. IBAC emphasises that sharing information early, keeping good records, and supervising closely are the best ways to prevent problems.

Most conflicts can be handled if caught early. The biggest dangers happen when conflicts are kept secret.

The Growing Risk of Secondary Employment

Working from home and more online businesses have led to more people having second jobs in Australia. Although not always a problem, outside work can sometimes cause risks such as:

  • confidential information
  • intellectual property
  • competing loyalties
  • client relationships
  • workplace fatigue
  • competition with the employer

The Australian Public Service Commission understands that a second job can cause real or possible conflicts. The question is not whether an employee has a second job, but whether that job interferes with their primary responsibilities.

A clear policy helps employees know when they need to share information and lets organisations identify risks early.

Building an Effective Conflict of Interest Framework

An obvious conflict of interest policy should cover:

  • Who must reveal: employees, contractors, consultants, executives, directors, councillors, and volunteers
  • What must be disclosed: any interest that could influence, or appear to influence, official duties
  • When disclosure must occur: when the individual learns of the conflict
  • Who assesses the conflict: an independent manager, governance officer, or committee
  • How conflicts are managed: recusal, reassignment, independent review, increased supervision
  • How decisions are recorded: conflict registers and written management plans

Policies by themselves are not enough. Regular practice and hands-on examples are very important.

The Cost of Getting It Wrong

Poor conflict management exposes organisations to:

  • workplace investigations
  • dismissal disputes
  • procurement challenges
  • audit findings
  • corruption allegations
  • regulatory scrutiny
  • litigation
  • reputational damage
  • reduced employee trust
  • loss of public confidence

Damage to reputation is often worse than any money lost. People may forgive mistakes, but they rarely forgive hiding the truth.

Conclusion

Conflicts of interest cannot be avoided. It is impossible to get rid of them. It is important to manage them.

The consistent message from courts, tribunals, auditors, and integrity agencies is clear:
Most conflicts can be managed when disclosed. The greatest risks arise when conflicts remain hidden.

In 2026, organisations that create strong rules to manage conflicts of interest can better protect honesty, improve their culture, and keep the public’s trust.

A clear conflict of interest policy is one of the best ways to achieve this.

Workplace Bullying Prevention Australia: Why Councils and SMEs Must Act Before Problems Escalate

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Workplace Bullying Prevention Australia: Why Councils and SMEs Must Act Before Problems Escalate

Workplace bullying continues to challenge Australian organisations despite years of focus on workplace culture, employee wellbeing and compliance. Councils and small to medium-sized businesses (SMEs) regularly deal with the consequences of bullying complaints, including workplace investigations, staff turnover, workers’ compensation claims, damaged morale, and reputational harm.

Many organisations still view workplace bullying as an employee relations issue. That approach is no longer sufficient.

In 2026, regulators increasingly treat workplace bullying as a psychosocial hazard that employers must actively manage under workplace health and safety obligations. Organisations that ignore the warning signs expose themselves to significant legal, financial, and operational risks.

The reality is straightforward. Preventing workplace bullying costs far less than dealing with the fallout.

Why Workplace Bullying Matters More Than Ever

Workplace bullying affects far more than the individuals directly involved. It can undermine workplace culture, damage productivity, and create lasting impacts across entire teams.

When employees experience bullying, organisations often see:

  • Increased absenteeism.
  • Higher staff turnover.
  • Reduced productivity.
  • Lower employee engagement.
  • Workplace conflict.
  • Workers’ compensation claims.
  • Costly workplace investigations.

For councils, the risks can be even greater. Allegations involving senior managers, executives or elected members can quickly attract media attention and erode community confidence.

For SMEs, the loss of a valued employee or a prolonged workplace dispute can significantly disrupt day-to-day operations.

What Is Workplace Bullying?

Workplace bullying occurs when a person or group repeatedly behaves unreasonably towards a worker or group of workers in a way that creates a risk to health and safety.

The key elements are repetition, unreasonable behaviour, and risk.

Bullying may involve:

  • Repeated verbal abuse.
  • Intimidation or aggressive behaviour.
  • Persistent humiliation.
  • Deliberately excluding individuals from workplace activities.
  • Spreading rumours or gossip.
  • Unreasonable workloads or deadlines.
  • Withholding information necessary to perform duties.
  • Harassment through emails, messaging applications or social media.

Although a single incident may not constitute workplace bullying, employers should never ignore inappropriate behaviour. Early intervention often prevents minor issues from developing into formal complaints or workplace investigations.

Workplace Bullying Is Now a Psychosocial Hazard

Australian workplaces have experienced a significant shift in how they manage employee wellbeing.

Employers are now expected to identify and manage psychosocial hazards with the same diligence they apply to physical hazards. Workplace bullying remains one of the most common and damaging psychosocial risks.

Unchecked bullying can contribute to:

  • Anxiety and depression.
  • Stress-related illness.
  • Reduced workplace participation.
  • Long-term psychological injury.
  • Increased workers’ compensation costs.

The impact often extends beyond the affected employee. Teams experiencing unresolved conflict frequently suffer declining morale, reduced collaboration, and poorer performance.

Organisations that actively manage psychosocial risks are better positioned to create safe, productive, and compliant workplaces.

The Hidden Cost of Workplace Bullying

Many organisations underestimate the true cost of workplace bullying.

The direct expenses associated with complaints often include legal advice, investigations, and compensation claims. However, the indirect costs frequently exceed the visible financial impacts.

These costs may include:

  • Internal investigations.
  • Independent workplace investigations.
  • Legal representation.
  • Recruitment and onboarding expenses.
  • Lost productivity.
  • Increased sick leave.
  • Reduced employee engagement.
  • Damage to organisational reputation.

Every bullying complaint consumes management time and organisational resources. The longer issues remain unresolved, the more expensive they become.

Why Councils Face Unique Risks

Local government operates in an environment where transparency, accountability and public trust are essential.

Unlike private sector organisations, councils must manage workplace issues while maintaining public confidence and responding to community expectations.

Poorly managed workplace bullying complaints can result in:

  • Governance reviews.
  • Community criticism.
  • Political pressure.
  • Adverse media coverage.
  • Reputational damage.

A complaint that begins as an internal employment matter can quickly become a public issue.

That reality makes early intervention and effective workplace culture management critical for councils of all sizes.

Leadership Shapes Workplace Culture

Strong leadership remains the most effective defence against workplace bullying.

Employees closely observe how leaders behave and what behaviour they tolerate. Managers who ignore inappropriate conduct often create an environment where bullying flourishes.

Leaders who consistently demonstrate professionalism, accountability and respect set a very different standard.

Effective leaders:

  • Address concerns promptly.
  • Communicate expectations clearly.
  • Support respectful workplace behaviour.
  • Hold individuals accountable.
  • Promote psychological safety.

Organisations rarely regret acting too early. They often regret acting too late.

Policies Alone Will Not Prevent Bullying

Every organisation should maintain a clear workplace bullying policy. However, policies only work when employees understand them, and leaders apply them consistently.

An effective policy should:

  • Define workplace bullying.
  • Provide practical examples.
  • Explain reporting pathways.
  • Outline investigation procedures.
  • Emphasise procedural fairness.
  • Explain confidentiality obligations.
  • Identify available support services.

A policy hidden on an intranet page will not change workplace behaviour.

Employees need confidence that leaders will enforce the policy fairly and consistently.

Training Builds Capability and Accountability

Workplace bullying prevention requires ongoing education.

Employees need to understand what bullying looks like, how to report concerns and what standards of behaviour the organisation expects.

Managers require additional skills in:

  • Complaint management.
  • Conflict resolution.
  • Difficult conversations.
  • Psychosocial risk management.
  • Early intervention strategies.
  • Workplace investigations.

Regular training helps organisations reinforce expectations and maintain a respectful workplace culture.

Early Intervention Prevents Escalation

Most serious workplace disputes begin with relatively minor issues that organisations fail to address.

Common warning signs include:

  • Interpersonal conflict.
  • Increased complaints.
  • Team dysfunction.
  • Employee disengagement.
  • Declining morale.
  • Increased absenteeism.

Managers who identify these indicators early can often resolve issues through coaching, mediation, facilitated discussions or other informal processes.

Early intervention remains one of the most effective workplace bullying prevention strategies available.

When Should You Engage an External Investigator?

Some matters require an independent assessment.

External workplace investigators may be appropriate when:

  • Senior managers are involved.
  • Conflicts of interest exist.
  • Serious misconduct is alleged.
  • Multiple parties are involved.
  • Organisational impartiality may be questioned.
  • Significant reputational risks exist.

An independent investigation helps demonstrate procedural fairness, transparency, and objectivity.

For councils, government agencies and larger SMEs, independent investigations often provide confidence to employees, executives, governing bodies, and the wider community.

Creating a Respectful Workplace Culture

Preventing workplace bullying requires more than policies, training sessions and investigations.

It requires leadership commitment and a workplace culture built on respect, accountability, and professionalism.

Organisations that encourage employees to raise concerns early, address complaints fairly and support respectful behaviour create safer and more productive workplaces.

The benefits are substantial:

  • Stronger employee engagement.
  • Higher retention rates.
  • Better organisational performance.
  • Reduced workplace conflict.
  • Lower legal and compliance risks.

Final Thoughts

Workplace bullying is no longer simply an HR issue. It is a workplace health and safety issue, a governance issue, and a leadership issue.

Councils and SMEs that invest in workplace bullying prevention, psychosocial risk management, leadership development and workplace culture create stronger, safer, and more resilient organisations.

Those that delay action often face escalating conflict, costly investigations, reduced productivity, and reputational damage.

The most successful organisations understand a simple truth: preventing workplace bullying is not just about compliance. It is about protecting people, strengthening culture, and building a workplace where employees can perform at their best.

 

Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026?

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Update June 2026: This article has been expanded to include recent Federal Court commentary, additional case studies and practical guidance for councils, government agencies and SMEs. Read our updated article: “Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026?“

Is Legal Professional Privilege Still Relevant for Workplace Investigations in 2026?

Many councils, government agencies, and employers still believe that hiring lawyers to carry out a workplace investigation automatically protects the process with legal professional privilege.

That idea is still risky.

Australian courts and tribunals keep confirming that simply having a law firm involved does not create privilege. The crucial question is whether the investigation is mainly to get legal advice or to get ready for a lawsuit.

By 2026, this problem has become more important because investigations now more often include:

  • psychological and social risks
  • accusations of bullying and harassment
  • complaints about unwanted sexual behaviour
  • reporting of wrongdoing by an insider
  • code of Conduct breaches
  • conflicts of interest
  • fraud and corruption allegations
  • unfair dismissal proceedings; and
  • workers’ compensation and workplace conflicts

Employers who do not understand privilege may accidentally reveal sensitive information during lawsuits, Commission hearings, court reviews, and investigations.

The Key Legal Principle

The High Court’s decision in Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49 is still the fundamental rule. Privilege applies only when the main reason for the communication or document is to get or give legal advice, or to use it in current or expected legal cases.

Who the investigator is does not matter.

If the primary goal of the investigation is to find out if rules were broken, if bad behaviour happened, or if someone should be disciplined, then privilege might not protect the information.

The Fair Work Commission Warning Employers Still Ignore

One of the most important workplace investigation decisions is Gaynor King [2018] FWC 6006.

The City of Darwin hired Minter Ellison to look into bullying claims. The Council later said the report was confidential because lawyers carried out the investigation.

Commissioner Wilson did not accept that argument.

The Commission looked into the real reason for the investigation and found that the main goal was to see if workplace behaviour rules and Council policies were broken, not to get legal advice.

The Commission also looked at how the employer acted: employees were told about the investigation, the accusations, and the results. Sharing this information weakened the claim of privilege.

That decision is still very important in 2026 because many organisations still organise investigations in ways that do not protect privilege.

Why Some Investigation Reports Remain Protected

Privilege applies when the investigation is done mainly to get legal advice.

In the cases Bowker, Coombe and Zwarts v DP World Melbourne Ltd [2015] FWC 7312 and Kirkman v DP World Melbourne Ltd [2016] FWC 605, the Fair Work Commission agreed that certain information was protected because the investigators were hired specifically to help lawyers give legal advice.

The Commission examined:

  • the exact words used in the retainer
  • the role of the lawyers
  • the reason for the investigation
  • how documents were managed
  • whether findings were broadly disclosed; and
  • whether the employer kept things confidential as they should

Privilege is determined by how things are organised, their goals, and how people behave—not by job titles or guesses.

Recent Federal Court Commentary (2023–2026)

The Federal Court’s decision in Diawara v National Australia Bank Limited [2023] FCA 1048 provides one of the most important recent clarifications. (Australasian Lawyer)

The case was about a claim of privilege over a cultural review report created during a discrimination dispute. The Court confirmed that:

  • the dominant purpose test remains the central inquiry
  • the focus is on why the person made or obtained the document
  • the party claiming privilege must prove the necessary facts; and
  • privilege can apply even if the document is used for secondary or additional purposes

The Court looked at the agreement between Herbert Smith Freehills and Wise Workplace Solutions and agreed that the main reason for the report was to help the lawyers legally advise NAB.

This decision confirms that privilege can be kept, but only when the evidence clearly shows that the main reason was legal advice.

Recent Oversight Commentary

A 2022 external review by the South Australian Ombudsman highlighted the importance of the dominant purpose test when evaluating claims of privilege over investigation materials. The Ombudsman said that if investigations mainly focus on gathering facts about employee complaints or policy violations, claims of privilege might fail unless the evidence clearly shows the investigation was for obtaining legal advice.

The Ombudsman also emphasised that labelling a document “privileged and confidential” does not make it privileged. Courts and oversight agencies will focus on the true nature of the work and the actual reason for the investigation.

Why This Matters for Local Government

The problem is especially serious for councils.

Local government investigations often include:

  • councillor behaviour
  • allegations against a senior executive
  • code of Conduct matters
  • complaints about bullying
  • procurement concerns
  • allegations of corruption
  • protected disclosures; and
  • conflicts of interest

Many councils believe that hiring outside lawyers guarantees privacy.

That assumption becomes a problem when things get to:

  • The Fair Work Commission
  • NCAT
  • ICAC
  • The NSW Ombudsman
  • Legal process
  • Public interest disclosure investigations; or
  • Judicial review.

If privilege doesn’t apply, sensitive information might be exposed, including:

  • draft findings;
  • internal communications;
  • witness credibility assessments;
  • legal assumptions;
  • procedural weaknesses; and
  • governance failures.

 The Practical Lessons for Employers in 2026

Organisations should not automatically assume they have special rights just because lawyers are investigating.

The safer approach is to separate:

  • factual investigations
  • disciplinary decision-making
  • witness evidence collection; and
  • legal advice.

Employers should get advice early on how to organise the investigation before choosing investigators.

  • Retainer documents are important.
  • How the investigation is carried out is important.
  • How findings are shared is important.
  • How reports are shared is important.
  • How the organisation uses the report later may decide if the privilege continues.

Often, the best protection isn’t a privilege.

The best way to protect yourself is by carrying out investigations that are:

  • procedurally fair
  • impartial
  • based on evidence
  • properly documented; and
  • capable of withstanding external scrutiny

The main lesson from the Commission, the Federal Court, and oversight authorities is still the same.

In 2026, organisations that still do not understand legal professional privilege may find out too late that their supposedly confidential investigation materials can be revealed during lawsuits or regulatory checks.

Governance Matters — Especially When Nobody Is Watching

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Governance Matters — Especially When Nobody Is Watching

Governance Looks Strong on Paper — But Is It?

Today, most organizations publicly champion governance, compliance, and accountability.

They publish policies, codes of conduct, procurement procedures, fraud control frameworks, workplace behaviour standards, and risk management plans. Boards and executive teams routinely tackle integrity, transparency, and compliance obligations.

Despite these efforts, governance failures persist across Australia.

By 2026, policies are rarely the problem. The problem is whether those policies are truly understood, consistently applied, properly enforced, and backed by leadership behaviour.

Many organizations seem compliant outwardly, while serious problems silently brew beneath.

This remains a top governance risk for councils, government agencies, and SMEs.

Why Governance Failures Still Occur in 2026

Modern organizations navigate ever-tougher environments.

Councils and government departments confront:

  • rising community expectations
  • tighter financial pressures
  • increasing regulatory obligations
  • workforce shortages
  • cyber security threats
  • procurement scrutiny
  • heightened public accountability

SMEs face these common challenges:

  • rising operating costs
  • staffing pressures
  • economic uncertainty
  • increasing compliance obligations
  • intense commercial competition

Under pressure, organizations can slowly normalize poor practices.

Shortcuts may replace proper processes. Oversight can weaken. Employees may avoid reporting concerns out of fear of conflict, reputational damage, or career repercussions.

Importantly, governance failures seldom start with major misconduct.

They often start with small rationalizations:

  • “we need to get this project finished.”
  • “everyone does it this way.”
  • “it’s only temporary.”
  • “the organization cannot afford delays.”

Repeated compromises eventually erode accountability, transparency, and organizational integrity.

Performance Pressure and Ethical Risk

A top governance risk in 2026 is performance pressure.

Many organizations intensely focus on:

  • financial performance
  • project delivery
  • operational targets
  • KPIs
  • political expectations
  • public image

While performance matters, problems arise when organizations prioritize outcomes over ethical decisions and proper oversight.

This can foster environments where employees feel pressured to:

  • manipulate reporting
  • ignore compliance failures
  • bypass procurement controls
  • avoid documenting concerns
  • conceal mistakes
  • protect reputations instead of addressing problems

In many investigations, warning signs appeared well before formal action.

The failure was not because of lack of information. The failure was the unwillingness to confront the problem early.

Why Councils and SMEs Remain Vulnerable

Local Government Risks

The failure was the unwillingness to confront the problem early.

  • public funds
  • procurement processes
  • development approvals
  • community services
  • infrastructure projects
  • regulatory functions

Even the perception of favoritism, poor transparency, weak procurement controls, or inconsistent decisions can erode community confidence.

Public trust is hard to earn and easy to lose.

Poor governance also exposes councils to:

  • reputational damage
  • regulatory scrutiny
  • legal disputes
  • workplace conflict
  • adverse media attention
  • loss of community confidence

SME Risks

SMEs face distinct yet equally serious governance challenges.

Smaller organizations often depend on trusted staff, informal systems, and minimal oversight.

Without strong internal controls, businesses risk becoming vulnerable to:

  • procurement manipulation
  • payroll irregularities
  • fraud
  • conflicts of interest
  • financial misconduct
  • cyber-related scams
  • poor record keeping

In many SMEs, governance weaknesses are not deliberate. They develop gradually because operational pressures take priority over oversight.

Warning Signs Leaders Often Ignore

They develop gradually as operational pressures overshadow oversight.

Common indicators include:

  • resistance to scrutiny
  • poor record keeping
  • inconsistent decision-making
  • weak procurement controls
  • lack of policy enforcement
  • repeated complaints about transparency
  • employees afraid to report concerns
  • senior staff avoiding accountability
  • excessive reliance on one employee controlling key functions
  • unexplained financial anomalies
  • informal approval processes
  • poor complaint handling

Organizations must take these indicators seriously.

Unaddressed small issues can escalate into major organizational, financial, and reputational risks.

Governance Is More Than Compliance

Strong governance isn’t about the number of policies an organization has.

It is measured by:

  • leadership behaviour
  • accountability
  • transparency
  • ethical decision-making
  • effective oversight
  • consistent policy enforcement
  • willingness to address misconduct
  • organizational culture

Policies alone don’t build integrity. Leadership behaviour does.

Leadership behaviour delivers.

When leaders dodge tough talks, skip consistent standards, or put reputation over accountability, organizational culture can quickly decay.

Building a Culture of Accountability

Organizations that manage governance risks effectively share key characteristics.

They:

  • encourage reporting of concerns
  • respond to complaints consistently
  • maintain strong procurement and financial controls
  • review policies regularly
  • provide ongoing staff training
  • support independent oversight
  • act early when warning signs emerge
  • prioritize transparency and accountability

Strong organizations know governance is not a onetime exercise.

Governance demands constant focus, regular review, and strong leadership commitment.

Final Thoughts

Governance failures continue to harm councils, government agencies, and SMEs across Australia.

The lesson is obvious.

A policy on a shelf offers little protection without a culture of integrity, accountability, transparency, and ethical leadership.

Real governance is not about appearances.

It is about what leaders, managers, and employees do when no one’s watching.

Contact [email protected] for help in these areas.

How Should Employers Address Misconduct Allegations in 2026?

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How Should Employers Address Misconduct Allegations in 2026?

Allegations of workplace misconduct are becoming more complicated, more noticeable, and much more dangerous for employers in 2026.

Local councils, government agencies, and small businesses are now receiving more complaints about:

  • bullying and harassment
  • conflicts of interest
  • misuse of resources
  • fraud and corruption
  • inappropriate social media conduct
  • discrimination
  • workplace behavioural issues

Meanwhile, employees now have vastly different expectations. Employees better understand their workplace rights, psychological safety requirements are being examined more closely, and organisations face increasing demands to show fairness, transparency, and accountability.

A single investigation that is not managed well can rapidly become more serious:

  • unfair dismissal proceedings
  • workers compensation claims
  • psychological injury allegations
  • reputational damage
  • union disputes
  • media scrutiny
  • loss of staff confidence

Despite these changing risks, one principle stays the same:

Procedural fairness remains central to every justifiable workplace investigation.

Why Procedural Fairness Still Matters

Procedural fairness is not just an HR formality or a legal technicality.

It supports a legal and trustworthy investigation process.

Employees who face allegations must be provided with:

  • clear details of the allegations
  • enough time to respond
  • access to relevant information
  • an opportunity to provide evidence
  • a fair and unbiased assessment process

Investigators and decision-makers should remain open-minded throughout the entire investigation. If an investigator works backward from a desired result, the honesty of the process is already affected.

The Fair Work Commission keeps emphasising that assumptions, hints, and unsupported opinions cannot replace factual evidence.

The Continuing Relevance of Deng v Westpac

One of the most often talked about cases about procedural fairness is Kefeng Deng v Westpac Banking Corporation [2018] FWC 7334. (CaseNote)

Westpac looked into claims about using customer information improperly and breaking internal rules. Although the Commission agreed that there were valid concerns about the employee’s behaviour, the investigation process itself faced strong criticism.

The Fair Work Commission pointed out several major failures, including:

  • insufficient detail provided before the interview
  • a five-hour interview with minimal breaks
  • failure to thoroughly test or corroborate evidence
  • an apparent overreliance on the investigator’s opinion
  • only 24 hours provided for the employee to respond to detailed allegations

Commissioner Riordan said parts of the process were unfair and criticised the investigation for not properly following important leads. The Commission ultimately determined that the dismissal was unfair and ordered the employee to be reinstated.

The decision is still especially important in 2026 because many organisations keep making the same mistakes.

Common Investigation Failures Still Seen in 2026

Although people are more aware of governance and workplace culture, many employers still do not fully understand how complex misconduct investigations can be.

Frequent problems include:

  • managers investigating their own staff without training
  • poorly framed allegations
  • lack of independence
  • rushing investigations
  • failing to gather corroborating evidence
  • excessive delays
  • inadequate interview practices
  • confidentiality breaches
  • failing to separate fact from opinion
  • predetermined outcomes

In local government settings, these problems become more serious because investigations often draw political attention, council members’ examination, and public interest.

For SMEs, the impact can be equally damaging. An investigation with mistakes can damage workplace relationships, lower morale, and cause long-term harm to reputation.

Why Poor Investigations Create Bigger Problems

Many organisations strongly emphasize “resolving the issue quickly.”

This approach often leads to much higher risks in the long term.

An investigation conducted poorly can be detrimental:

  • complainants
  • respondents
  • witnesses
  • workplace culture
  • leadership credibility
  • staff trust
  • public confidence

Employees soon lose trust in systems they see as biased, inconsistent, or unfair.

When trust is lost, organisations often experience more complaints, higher employee turnover, and employees becoming less willing to report wrongdoing.

What a Professional Investigation Looks Like in 2026

A proper workplace investigation should include:

  • logical terms of reference
  • properly articulated allegations
  • impartial investigators
  • evidence-based findings
  • procedural fairness throughout
  • documented reasoning
  • proportionate recommendations
  • independent review of findings before disciplinary action

Importantly, findings must always rely on evidence rather than assumptions, office politics, or the pressure to reach a quick result.

Effective investigations follow a systematic and fair approach and can withstand careful examination by others.

The Value of Independent Investigators

For important, sensitive, or high-risk issues, independent investigators offer some of the best protections for councils, government agencies, and small and medium-sized enterprises.

Independent investigators provide:

  • objectivity
  • investigative expertise
  • procedural fairness experience
  • evidentiary assessment skills
  • independence from internal politics
  • increased credibility

External investigators also help show employees, regulators, and tribunals that the organisation handled the matter fairly and professionally.

That trustworthiness can become especially important if the issue later goes to the Fair Work Commission, a regulator, or the media.

Final Thoughts

By 2026, workplace investigations must be handled with greater seriousness than just routine HR tasks.

Allegations of misconduct now have major legal, operational, cultural, and reputational affects.

The organisations best able to handle these risks are those that:

  • act early
  • investigate professionally
  • maintain procedural fairness
  • document decisions carefully
  • remain evidence-focused throughout the process

When investigations are conducted correctly, organisations protect both themselves and the integrity of their workplace culture.

Cybersecurity risks for local councils and sme’s in Australia

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Cybercrime Is No Longer “Someone Else’s Problem” — Why Councils and SMEs Must Act Now

For many organisations, cybercrime once seemed a problem only for large corporations, banks, or global tech companies.

That’s no longer reality.

Today, cybercriminals increasingly target Australian local councils, government departments, and small to medium-sized businesses, viewing them as easier to breach and slower to react.

Modern cyber threats go beyond fake invoices and suspicious emails. Cybercrime has evolved into a sophisticated, highly disruptive threat that can cripple operations, damage reputations, expose confidential data, and cost organisations hundreds of thousands in recovery.

Many organisations still underestimate their true vulnerability.

The Cyber Threat Has Changed

In 2020, cybercrime talks centred on viruses and fraudulent banking transactions. Today, the threat landscape is far more advanced.

Cyber-attacks now routinely involve:

  • ransomware attacks that lock organisations out of their systems
  • theft of confidential customer or employee information
  • attacks targeting financial systems and payroll
  • business email compromise scams
  • data leaks published online
  • disruption of operational services
  • attacks through third-party suppliers or contractors

For councils and government agencies, the impact goes beyond financial loss. Public trust, regulatory scrutiny, reputational damage, and service disruption can cause lasting harm to both the organisation and the community it serves.

For SMEs, a serious cyber incident can threaten the business’s very survival.

Why Local Government and SMEs Are Being Targeted

Cybercriminals know many smaller organisations lack dedicated cybersecurity teams or advanced protection systems.

Local councils often hold extensive personal information, property records, financial data, and sensitive internal communications. SMEs may store customer payment details, payroll data, supplier contracts, and confidential business information.

Attackers know even brief disruptions pressure victims to pay ransoms quickly.

Many attacks now come from simple human error, not complex hacking.

One employee clicking a malicious email attachment can give criminals access to the entire network.

The Real Cost of a Cyber Attack

Cybercrime’s financial damage can be severe, but its operational and reputational impacts are often worse.

An attack can cause:

  • prolonged system outages
  • inability to deliver services
  • loss of critical records
  • exposure of confidential information
  • legal liability
  • privacy breaches
  • insurance complications
  • reputational harm within the community or industry

For councils, cyber incidents can swiftly spark media frenzy and political scrutiny.

For SMEs, customer confidence can vanish overnight.

Everyday Risks Often Overlooked

Many organisations still lack adequate safeguards.

Common weaknesses include:

  • poor password management
  • lack of staff cyber awareness training
  • outdated software
  • insufficient backup systems
  • weak remote access controls
  • no tested business continuity plan
  • unrestricted access to sensitive information

Disgruntled employees, ex-staff, contractors, or suppliers can pose insider risks when systems are poorly managed.

Why Smaller Organisations Are Vulnerable

Many SMEs and local government departments prioritise operational delivery, assuming cyber security is an “IT issue”.

No, it isn’t.

Cyber security is now a core governance, risk, and compliance issue.

Executives, managers, and leadership teams must grasp that unpreparedness for cyber incidents risks severe financial, legal, and reputational damage to the organisation.

Regulators and insurers now expect organisations to show solid cyber risk management.

Building a Practical Cyber Defence Strategy

Every organisation must have:

  • regular data backups
  • multi-factor authentication
  • cyber awareness training for staff
  • tested incident response procedures
  • restricted user access controls
  • updated software and security patches
  • a business continuity plan
  • regular cyber risk reviews

Preparation costs far less than recovery.

Cybersecurity Is Now a Governance Issue

Cybercrime is an immediate threat.

It is a current operational reality affecting organisations of all sizes across Australia.

Councils, government agencies, and SMEs that ignore cyber security risk financial damage, public embarrassment, lost trust, operational disruption, and legal exposure.

The organisations that survive future cyber threats best prepare before an incident, not after.

When Love Becomes a Lie: The Alarming Rise of Romance Scams in Australia

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When Love Becomes a Lie: The Alarming Rise of Romance Scams in Australia

Every day across Australia, people searching for companionship are being targeted by sophisticated criminals who know exactly how to exploit trust, loneliness, and emotional vulnerability.

What starts as a friendly online message can swiftly become daily talks, emotional dependence, and promises of a shared future. For many victims, the relationship feels real, comforting, and deeply personal.

Behind the polished profile and affectionate messages lurks an organised overseas scammer, wielding psychological manipulation—and growing AI—to steal life savings and ruin lives.

Romance scams are now one of Australia’s fastest growing and most financially devastating frauds. Yet despite growing awareness campaigns, thousands of people continue to fall victim each year because these scams no longer resemble the crude online frauds of the past.

Despite growing awareness campaigns, thousands still fall victim each year because these scams have evolved beyond the crude online frauds of the past.

Perhaps the most frightening reality of all is this:

Romance scams never start with money.

They start with hope.

The Perfect Crime: Why Romance Scams Work So Well

Most people think they’d spot a scam instantly. They imagine obvious warning signs, poorly written messages, unrealistic stories, or suspicious behaviour.

They picture glaring warning signs, sloppy messages, far-fetched stories, or shady behaviour.

These offenders know emotional trust outweighs immediate financial gain. Rather than rushing victims, they spend weeks or even months forging what seems like a genuine emotional connection.

The process is intentional.

Scammers study their victims closely. They learn about hobbies, family, personal history, grief, loneliness, and emotional vulnerability. They mimic values and interests to fake compatibility and emotional intimacy.

If the victim loves gardening, the scammer suddenly does too.

If the victim recently lost a spouse, the scammer claims to understand grief, having suffered a personal loss too.

If the victim is religious, the scammer poses as caring, moral, and family-oriented.

Every interaction is crafted to build emotional dependence.

For many victims—especially older Australians, widowed individuals, retirees, or those living alone—the attention and emotional support can feel truly life-changing.

That emotional bond forms the scam’s foundation.

Why Older Australians Are Being Specifically Targeted

Romance scams affect all ages, but older Australians are increasingly prime targets.

Scammers know many older people face loneliness after retirement, divorce, illness, or losing a long-term partner. They also know older Australians are likelier to have amassed savings, property, or superannuation.

This isn’t about intelligence.

Many victims are highly educated, financially responsible, and professionally successful—yet never imagined they could be manipulated.

But romance scams don’t hinge on intelligence failure.

They revolve entirely around emotional manipulation.

There’s nothing foolish about seeking companionship later in life. Humans are naturally wired for connection. Humans are hardwired for connection.

Scammers ruthlessly exploit that need with deadly precision.

That is precisely the scammer’s intent.

The Lies Are Carefully Constructed

Romance scams succeed because their stories are carefully crafted to sound believable.

Scammers often pose as overseas workers:

  • engineers
  • military personnel
  • mining contractors
  • oil rig workers
  • doctors
  • international business operators

These professions conveniently explain why they cannot meet in person and why communication may sometimes be interrupted.

More importantly, they provide believable causes for future financial emergencies.

The scammer seldom demands money right away.

They prioritise building trust first.

Once the emotional connection forms, the first “problem” appears.

  • Payment delayed.
  • A medical emergency.
  • Medical emergency.
  • Travel complications.
  • Customs snag.
  • Travel hassles.
  • Overseas banking challenges.

Once that boundary is crossed, the situation often spirals quickly.

How Victims Lose Their Savings

Romance scams unfold in a disturbingly predictable pattern.

The victim sends a small amount to help during an “emergency”. The scammer replies with gratitude, affection, and promises of a shared future.

The bond deepens.

Then another emergency strikes.

One more.

And another!.

Over time, victims can transfer tens or even hundreds of thousands of dollars via bank transfers, gift cards, cryptocurrency platforms, or international payment systems.

Redraws available on mortgages.

Others tap superannuation, sell assets, or take personal loans.

By the time family or banks intervene, financial losses can be catastrophic.

But the emotional damage is often far worse.

Many victims are not grieving the money.

They grieve the relationship they believed real.

Artificial Intelligence Has Changed Everything

The rise of artificial intelligence has sharply escalated the sophistication of romance scams.

Traditional warning signs are vanishing.

Scammers now use AI-generated profile photos that look entirely authentic and cannot be easily spotted by reverse-image searches.

Some use voice-cloning technology to craft realistic phone calls. Some use deep fake technology to simulate live video calls.

AI tools can craft emotionally intelligent messages tailored precisely to the victim’s personality and emotional state.

The result is a chillingly convincing deception.

Even the tech savvy are being manipulated by these advanced tactics.

Romance scams are now professional operations.

They are highly organised criminal enterprises exploiting cutting-edge technology and psychological manipulation to prey on the vulnerable.

Case Study: “I Thought I Had Found Love”

At 72, Margaret received a simple message on Facebook.

“Hello beautiful lady. I hope you don’t mind me saying hello. You have a warm smile.”

She wasn’t seeking romance. After losing her husband several years earlier, she spent most evenings alone. Widowed years ago, she spent most evenings alone.

The conversation felt harmless—even comforting.

He claimed to be a widowed engineer abroad. He was attentive, respectful, and kind—always. Each morning, he messaged Margaret to ask how she had slept. Every evening he wanted to hear about her day.

Every evening, he craved hearing about her day.

Margaret felt truly seen again.

When her daughter questioned the relationship, Margaret stood by him.

“He’s different,”, she said. “He actually listens.”

Then came the first crisis.

Michael said he was facing temporary overseas banking issues and urgently needed help. Embarrassed to ask, he vowed to repay the money right away.

Margaret transferred $2,000.

Michael thanked her deeply and vowed they wouild meet in person soon.

In the following months, requests escalated.

There were medical expenses. Customs fees apply. Travel troubles. Investment opportunities await. Each payment stood as the last hurdle before they could start their life together.

By the time Margaret realised the truth, she had lost over $140,000.

Her savings vanished. Part of her superannuation was withdrawn. She had taken a loan she could not comfortably repay.

But the financial loss was not the worst pain.

“It wasn’t the money,”, she later admitted. “It was believing someone cared about me.”

Stories like Margaret’s are alarmingly common across Australia.

The Warning Signs Australians Should Never Ignore

Despite their growing sophistication, most scams still show common warning signs.

A major red flag is intense emotions early in the relationship. Scammers declare strong feelings quickly to exploit emotional vulnerability.

Another warning sign is secrecy.

Victims are often urged to avoid discussing the relationship with family or friends because “people will not understand” or “others are jealous”.

Scammers also dodge genuine face-to-face meetings. Excuses like overseas work, emergencies, poor internet, or travel complications become constant reasons they cannot meet.

Any request involving money should immediately raise concern.

This includes:

  • emergency payments
  • medical expenses
  • cryptocurrency investments
  • customs fees
  • travel costs
  • financial “release fees”

No real online relationship demands repeated financial requests.

Cryptocurrency: The New Weapon in Romance Scams

Many modern romance scams now centre on cryptocurrency investment schemes.

After building emotional trust, scammers pitch “exclusive” investment opportunities that seem legitimate. Victims may first spot fake profits on slick, scammer-controlled online platforms.

The victim pours more money into what they believe are smart financial decisions.

The platform vanishes — taking the funds with it.

The relationship becomes the very mechanism for financial exploitation.

What Families Need to Understand

Families often grow frustrated when loved ones deny they are being scammed.

But anger and ridicule seldom help.

By the time the deception is uncovered, the victim is often already emotionally dependent on the scammer. Direct confrontation can sometimes drive victims closer to the offender instead of away.

Support, patience, and calm, evidence-based discussions are almost always far more effective.

Victims deserve compassion, not judgement.

How Australians Can Protect Themselves

Awareness is one of the strongest defences against romance scams.

People should be wary of relationships that move too fast online. Emotional pressure, secrecy, repeated excuses, and money requests are major warning signs.

Independent identity verification is crucial. Photos, messages, and video calls can now all be manipulated with artificial intelligence.

Australians should never transfer money to anyone they have not truly met and independently verified in person.

  • Not for emergencies.
  • Not for travel.
  • Not for investments.
  • Not for “just this once.”

If something feels wrong, speak to someone you trust.

Scammers thrive on secrecy and isolation.

The Final Message Australia Needs to Hear

Romance scams are no longer isolated incidents targeting just a few vulnerable people.

They are sophisticated international fraud operations raking in enormous profits through emotional exploitation.

They succeed by targeting something fundamentally human:

The desire for companionship, trust, love, and connection drives us.

Victims should never feel shame.

These offenders are skilled professionals who expertly manipulate emotions using ever-advancing technology.

The more openly Australians discuss romance scams, the harder these criminals can operate in silence.

Awareness saves lives—period.

Conversation protects families.

Education remains one of our most powerful weapons against this growing threat.

Lack of Sleep, Poor Decisions and Rising Workplace Risk: Why Councils and SMEs Should Pay Attention

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Lack of Sleep, Poor Decisions and Rising Workplace Risk

Introduction: The Hidden Cost of Workplace Fatigue

Across Australia, many workplaces still treat exhaustion as a sign of commitment. Employees who work late into the night, managers surviving on minimal sleep, and executives constantly “pushing through” are often praised for their dedication.

However, growing research suggests this culture may be creating a serious governance and compliance risk for Local Government, government agencies, and SMEs.

How Lack of Sleep Impacts Decision-Making

Lack of sleep does far more than reduce productivity. Research now links fatigue to poor judgment, inflexible thinking, impaired decision-making, and unethical behaviour.

Tired employees are more likely to cut corners, ignore procedures, make reactive decisions, and fail to properly consider the consequences of their actions. Fatigue also reduces emotional control and increases “tunnel vision” thinking, where individuals focus only on immediate outcomes rather than long-term risks.

Fatigue and Unethical Behaviour in the Workplace

Importantly, one of the first abilities people lose when tired is the capacity to reflect on the ethical consequences of their actions. This means exhausted employees are more likely to rationalise shortcuts or justify conduct they would normally recognise as inappropriate.

What begins as “just getting the job done” can quickly evolve into procedural breaches, poor workplace behaviour, or misconduct.

Governance Risks for Local Government and Public Sector Organisations

For councils and government organisations, this creates significant risk.

Fatigued staff may:

  • Overlook procurement requirements
  • Mishandle complaints
  • Fail to maintain proper records
  • Make poor decisions under pressure
  • Ignore compliance obligations

In environments where accountability, transparency, and procedural fairness are critical, even small lapses can lead to allegations of misconduct, governance failures, reputational damage, or legal scrutiny.

Many investigations into workplace misconduct, fraud, corruption, and compliance breaches reveal a common factor — employees operating under excessive workload pressure and chronic fatigue.

Why SMEs Are Particularly Vulnerable

For SMEs, the danger can be even greater.

Small businesses often operate with limited staff, high workloads, and minimal internal oversight. Owners and employees frequently manage multiple responsibilities while working extended hours. Over time, fatigue can weaken internal controls and create conditions where errors, poor judgment, or even fraudulent conduct become more likely.

Common Workplace Failures Linked to Exhaustion

An exhausted finance employee may fail to identify suspicious transactions. A fatigued manager may ignore bullying or harassment complaints. An overworked staff member may manipulate records simply to keep up with unrealistic expectations.

These issues are rarely isolated incidents. They are often symptoms of a workplace culture where fatigue has become normalised.

Workplace Fatigue as a Risk Management Issue

The issue is not simply employee wellbeing — it is organisational risk management.

Businesses and councils that reward constant overwork may unintentionally be increasing their exposure to fraud, misconduct, poor workplace culture, and legal liability.

Forward-thinking organisations are now recognising fatigue as both a workplace safety issue and a governance issue. Managing workloads, encouraging healthy work practices, and reducing burnout are no longer optional wellbeing initiatives — they are essential risk mitigation strategies.

Creating a Sustainable Workplace Culture

Leaders should ask themselves an important question:

Are we rewarding productivity — or simply rewarding exhaustion?

Organisations that prioritise sustainable workloads, ethical leadership, and employee wellbeing are far more likely to maintain strong governance, effective decision-making, and healthy workplace cultures.

Conclusion: An Exhausted Workplace Is Not a High-Performing Workplace

The message for leaders is simple: an exhausted workplace is not a high-performing workplace.

It is a workplace operating with reduced judgment, weakened ethical safeguards, and increased exposure to serious organisational risk.

For Local Government, government agencies, and SMEs, managing fatigue is no longer just a wellbeing initiative — it is a critical governance and compliance priority.

Interviewing Elderly Witnesses and Victims: Best Practice for Fraud, Elder Abuse and Workplace Investigations

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Interviewing Elderly Witnesses and Victims: Best Practice for Fraud, Elder Abuse and Workplace Investigations

Investigators handling fraud, elder abuse and workplace matters need interview methods that protect evidence, reduce risk and respond appropriately to the communication, cognitive and trauma-related needs that may affect older witnesses and victims.

Why Older Interviewees Require a Different Investigative Approach

As Australia’s population ages, investigators are increasingly required to interview elderly people as witnesses and as victims. These interviews arise across a wide range of matters — including fraud, elder abuse, family violence, institutional misconduct, workplace investigations, insurance claims, and serious criminal offences.

Yet many investigations still apply one-size-fits-all interviewing techniques that fail to account for age-related vulnerabilities. When this happens, the consequences can be significant: unreliable evidence, distressed interviewees, and investigations that fail under legal scrutiny.

This article examines best practice for interviewing elderly witnesses and victims, outlines key safeguards, and highlights why poor interviewing — not age — is often the real source of evidentiary problems.

Why Interviewing Elderly People Requires Careful Adjustment

Age alone does not determine a person’s reliability or credibility. Many older people provide clear, accurate and detailed accounts. However, investigators must recognise that ageing can be associated with changes that affect the interview process, including:

  • hearing or vision impairment
  • reduced stamina or fatigue
  • medication effects
  • slower processing speed
  • mild cognitive impairment or dementia
  • heightened anxiety, particularly in formal settings

Importantly, these factors affect how information is communicated, not necessarily whether the information is true.

When investigators fail to adapt their approach, inconsistencies may be introduced that are later (incorrectly) attributed to the witness’s age.

Elderly Victims vs Elderly Witnesses: Is There a Difference?

There is overlap in approach, but the context and risks differ.

Elderly victims

Elderly victims may be dealing with:

  • trauma (recent or historic),
  • dependency on carers or family members,
  • fear of retaliation or loss of support,
  • shame or reluctance to report abuse.

Common examples include financial exploitation, neglect, family violence, or institutional abuse.

Elderly witnesses

Elderly witnesses may not be personally harmed but may:

  • feel pressure due to formal legal processes,
  • worry about “getting it wrong”,
  • experience stress when questioned aggressively,
  • disengage if treated dismissively.

In both cases, rapport, respect, and structure are essential.

Preparing for the Interview: Setting the Conditions for Success

Choose the right environment

The interview setting matters more than many investigators realise. Best practice includes:

  • a quiet room with minimal background noise
  • good lighting without glare
  • seating that allows face-to-face conversation at eye level
  • space for mobility aids
  • removal of physical barriers such as large desks

Where appropriate, conducting the interview in a familiar location (such as the person’s home or a community facility) may improve comfort and recall.

Timing matters

Older adults may experience:

  • fatigue later in the day,
  • medication cycles that affect concentration,
  • reduced tolerance for long interviews.

Investigators should:

  • ask when the person feels most alert,
  • plan shorter sessions with breaks,
  • be open to multiple interviews if required.

Conducting the Interview: What Works (and What Doesn’t)

Start with rapport, not questions

Many older people feel dismissed or rushed by professionals. Taking time to:

  • introduce yourself clearly,
  • explain your role and purpose,
  • outline what will happen next,

can significantly improve cooperation and recall.

A calm, respectful tone is not “soft” — it is forensically effective.

Use open-ended, non-suggestive questions

As with child forensic interviewing, research consistently shows that open narrative produces the most reliable information.

Effective examples include:

  • “Can you tell me, in your own words, what happened?”
  • “What do you remember about that day?”
  • “You mentioned X — can you tell me more about that?”

Avoid:

  • rapid-fire questioning,
  • interrupting narratives,
  • multi-part questions,
  • leading or assumptive language.

When clarification is required, phrases such as “Help me understand…” are preferable to confrontation.

One idea per question

Cognitive load matters. Questions that bundle multiple concepts (“Where were you, who was with you, and what time was it?”) can overwhelm and confuse.

Instead:

  • ask one question at a time,
  • pause and allow processing time,
  • check understanding without patronising.

Safeguards When Cognitive Impairment Is Present

Some elderly interviewees may have mild cognitive impairment or dementia. This does not automatically render their evidence unreliable, but it does require additional safeguards.

Best practice includes:

  • shorter interviews,
  • simpler sentence structure,
  • frequent breaks,
  • avoiding hypothetical questions,
  • confirming understanding gently.

Where capacity is genuinely in doubt, investigators must consider legal and ethical obligations around consent and representation.

Trauma-Informed Interviewing with Elderly Victims

Many elderly victims have experienced cumulative trauma across their lives. A trauma-informed approach recognises that:

  • memory may be fragmented,
  • emotional responses may appear delayed or muted,
  • minimisation is common (“It wasn’t that bad”).

Investigators should avoid interpreting these responses as dishonesty. Courts and inquiries — including findings of the Royal Commission into Institutional Responses to Child Sexual Abuse — have repeatedly highlighted how interviewing style can distort evidence.

Lessons from Courts and Public Inquiries

Judicial criticism frequently focuses not on what an elderly person remembered, but how they were questioned.

Common themes include:

  • excessive pressure on vulnerable witnesses,
  • confusing or misleading questions,
  • failure to accommodate impairment,
  • dismissive treatment affecting credibility.

Australian courts have increasingly emphasised the need for procedural fairness and appropriate safeguards for vulnerable witnesses, including older adults.

Applying These Principles in Fraud, Elder Abuse and Workplace Investigations

These risks are especially acute in fraud, elder abuse and workplace investigations, where credibility, consent, dependency, procedural fairness and evidentiary integrity are often central to the outcome.

  • Fraud investigations often require careful testing of comprehension, consent and financial understanding without introducing assumption or embarrassment.
  • Elder abuse matters demand trauma-informed interviewing, safe interview conditions and careful attention to dependency on carers or family members.
  • Workplace investigations require procedural fairness, neutral questioning and the avoidance of age-based assumptions about credibility or capacity.

Across all three contexts, an unstructured, rushed or poorly adapted interview can weaken evidence, increase challenge risk and expose the investigation itself to criticism.

In many matters, the most defensible course is to:

  • limit questioning to what is necessary and proportionate,
  • document communication needs and safeguards carefully, and
  • refer or escalate promptly where specialist, police or legal involvement is required.

Knowing when not to interview is a hallmark of professional judgement.

Key Takeaways for Investigators

  • Age does not equal unreliability
  • Poor interviewing creates inconsistencies
  • Environment, timing, and pacing matter
  • Open-ended questioning improves accuracy
  • Trauma-informed practice benefits both evidence and wellbeing
  • Courts increasingly scrutinise how elderly people are interviewed

Final Thought

Interviewing elderly witnesses and victims is not about lowering standards — it is about applying the right standards.

When investigators adapt their approach thoughtfully, they protect the dignity of the individual and the integrity of the investigation.

Workplace behaviour and culture

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Bullying, Harassment, and Misconduct

Workplace behaviour and culture go far beyond being merely human resources concerns.

These concerns centre on governance, compliance, and risk management.

These issues directly affect governance, compliance, and risk management.

  • Formal complaints
  • Workplace investigations
  • Sick leave and workers’ compensation claims
  • Staff resignations
  • Unfair dismissal claims
  • Legal action
  • Reputational damage
  • Loss of productivity
  • Audit and governance issues

So workplace behaviour is a critical organizational risk—not just a personality issue.

What Exactly Defines Workplace Behaviour?

Workplace behaviour includes:

  • Bullying
  • Harassment
  • Sexual harassment
  • Discrimination
  • Aggressive management styles
  • Conflicts between staff
  • Inappropriate language
  • Misuse of authority
  • Misconduct
  • Breaches of the Code of Conduct
  • Victimisation
  • Unprofessional behaviour

These behaviours erode workplace culture and pose serious risks to the organization.

Why Workplace Culture Matters

Workplace culture is often described as:

“The way we do things around here.”

If the culture allows:

  • Bullying
  • Harassment
  • Aggressive behaviour
  • Poor management behaviour
  • Ignoring complaints
  • Favouritism
  • Conflicts of interest
  • Lack of accountability

Policies cannot resolve the issue because staff prioritise organizational culture over formal rules.

Toxic workplace culture often leads to:

  • High staff turnover
  • Increased sick leave
  • Low morale
  • Complaints
  • Investigations
  • Loss of staff
  • Difficulty recruiting staff
  • Reputational damage

Workplace culture is a governance matter, forged by the tone set from the top.

Bullying in the Workplace

Workplace bullying involves repeated unreasonable behaviour that threatens health and safety.

Examples include:

  • Yelling at staff
  • Constant criticism
  • Excluding staff
  • Setting unrealistic deadlines
  • Withholding information
  • Public humiliation
  • Threatening job loss
  • Excessive monitoring
  • Misuse of performance management
  • Spreading rumours

Bullying often escalates into both a WHS and HR issue.

Harassment and Sexual Harassment

Harassment encompasses any behaviour that:

  • Offends
  • Humiliates
  • Intimidates

Sexual harassment includes:

  • Unwelcome comments
  • Jokes
  • Messages
  • Emails
  • Physical contact
  • Requests for dates
  • Inappropriate comments
  • Displaying inappropriate material

Organizations now bear a proactive responsibility to prevent sexual harassment, not just respond to complaints.

Misconduct

Misconduct may include:

  • Breaches of the Code of Conduct
  • Inappropriate behaviour
  • Misuse of resources
  • Conflicts of interest
  • Fraud or theft
  • Breaches of policy
  • Failure to follow lawful and reasonable directions

Misconduct often sparks formal investigations.

Why These Issues Become Major Problems

Workplace behaviour issues can quickly escalate into major problems when:

  • Complaints are ignored
  • Managers do not act
  • Managers are the problem
  • There is no reporting system
  • Policies exist but are not followed
  • Investigations are not handled properly
  • There is no training
  • Leadership tolerates poor behaviour
  • There are no consequences

Many major workplace investigations stem from a minor issue that was first overlooked.

What Organizations Should Have in Place

To proactively manage workplace behaviour risks, Councils, and organizations should implement:

  • Code of Conduct
  • Workplace Behaviour Policy
  • Bullying and Harassment Policy
  • Complaint Handling Procedure
  • Investigation Procedure
  • Training for managers
  • Training for staff
  • External investigator available
  • Confidential reporting process
  • Proper documentation
  • Leadership training
  • Clear consequences for misconduct

This forms a key part of a strong compliance and governance framework.

The Role of Managers and Leaders

Managers and leaders shape workplace culture in important and impactful ways.

Staff closely watch how managers act and what they allow.

When managers:

  • Ignore bad behaviour
  • Do not act on complaints
  • Play favourites
  • Bully staff
  • Do not follow policy
  • Do not document issues

As a result, the workplace culture will deteriorate.

Culture Flows Powerfully from the Top Down.

Final Thought

Many organizations see workplace behaviour issues as solely the responsibility of Human Resources.

They are not.

These issues touch on governance, risk management, legal matters, and reputation.

If workplace behaviour is not managed effectively, it will inevitably become:

  • A complaint
  • An investigation
  • A legal issue
  • A reputational issue

A powerful way to manage workplace behaviour is to:

  • Set clear standards
  • Train staff and managers
  • Act on issues early
  • Investigate properly
  • Ensure leadership sets the right example

Remember

Workplace culture springs from influences that go far beyond formal policies.

It is shaped by the behaviour you allow.

Contact [email protected] if you need help in this area.

Policy Failures-The Biggest Risk No One Talks About

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Policy Failures-The Biggest Risk No One Talks About

One of the greatest compliance risks in local government and business is not missing policies—it is having policies go ignored.

Most organisations boast shelves brimming with policies. Their policies cover procurement, complaints, code of conduct, conflicts of interest, fraud and corruption, workplace behaviour, delegations, and financial management.

A policy is one thing; following it is another.

When policies are ignored, organisations risk serious consequences such as fraud, corruption, legal action, audit findings, and damage to their reputation.

This is why policy failure stands as one of the most critical governance and compliance risks facing local government and business.

What Exactly Is a Policy Failure?

A policy failure happens when:

  • Staff do not know that the policy exists
  • Staff do not understand the policy
  • The policy does not reflect what actually happens in practice
  • Managers allow exceptions without approval
  • The policy is out of date
  • The policy conflicts with the legislation
  • No one monitors whether the policy is being followed
  • There are no consequences for not following the policy

Simply put, the organisation has rules—yet no one bothers to follow them.

From a compliance perspective, this is often worse than having no policy, as the organisation falsely believes it is protected when it is not.

Why Policy Failures Are a Critical Risk in Local Government

Local government navigates a complex, highly regulated environment. Councils must comply with:

  • Local Government Acts
  • Procurement regulations
  • Records management legislation
  • Work health and safety laws
  • Privacy laws
  • Anti-discrimination legislation
  • Financial management regulations
  • Fraud and corruption control requirements

Policies ensure strict adherence to these laws. Failing to follow the policies could cause the organisation to unknowingly breach legislation.

This could lead to:

  • Audit findings
  • Investigations
  • Public complaints
  • ICAC or integrity body investigations
  • Loss of public trust
  • Media attention
  • Councillor complaints
  • Legal claims

For local government, policy failure is not just an internal problem—it can quickly escalate into a public governance crisis.

Why Policy Failures Are a Major Risk in Business and SMEs

Many SMEs have policies too, but they are often:

  • Copied from the internet
  • Provided by an accountant or an HR provider
  • Written once and never reviewed
  • Not explained to the staff
  • Not used by managers

This creates risks in areas such as:

  • Workplace bullying and harassment
  • Unfair dismissal
  • Procurement and purchasing
  • Financial delegations
  • Fraud and theft
  • Conflicts of interest
  • Workplace health and safety

If something goes wrong and the organisation faces court, the first question asked is:

“Did you have a policy, and did you follow it?”

If the answer is “We had a policy, but we didn’t follow it,” the organisation faces significant exposure.

Common Examples of Policy Failure

Policy failures occur all too often. Examples include:

Procurement Policy Not Followed

  • Quotes not obtained
  • Contracts awarded to preferred suppliers
  • Conflicts of interest not declared
  • Delegations ignored

Code of Conduct Not Enforced

  • Bullying ignored
  • Inappropriate behaviour not addressed
  • Complaints not investigated

Delegations Policy Ignored

  • Managers approving expenses they are not authorised to approve
  • Purchases made without approval
  • Contracts signed without authority

Fraud and Corruption Policy Exists, But No One Reports Issues

  • Staff are afraid to report
  • No reporting system
  • Reports ignored

Records Management Policy Not Followed

  • Missing documents
  • Poor file notes
  • Verbal decisions with no record

These situations are not rare—they often occur in both local government and SMEs.

Why Policies Are Not Followed

Here are several key reasons policies fail:

  1. Policies are too long and too complicated
  2. Staff are not trained in the policies
  3. Managers do not enforce the policies
  4. The policy does not match actual work practices
  5. There is a culture of “this is how we’ve always done it”
  6. There are no consequences for noncompliance
  7. Policies are written to satisfy auditors, not to guide staff
  8. Policies are not reviewed and become out of date

A policy left untouched in a folder is not a policy—it is just a document.

The Risks Created by Policy Failure

When policies are ignored, organisations risk becoming vulnerable to:

  • Fraud and corruption
  • Financial mismanagement
  • Bullying and harassment claims
  • Unfair dismissal claims
  • Breach of legislation
  • Audit findings
  • Poor governance findings
  • Loss of reputation
  • Loss of public trust
  • Investigations by regulators or integrity bodies

From a governance perspective, policy failure is more often seen as a management failure than simply a staff failure.

How Organisations Can Fix Policy Failure

Tackling policy failure is not about crafting more policies. It is about making sure the policies you already have are:

  • Correct
  • Up to date
  • Practical
  • Understood
  • Followed
  • Enforced

It is about ensuring the policies you already have are:

  • Reviewed regularly
  • Simple and practical
  • Staff and managers are trained in the application of the policies
  • Monitored for compliance
  • Audited especially those in high-risk areas
  • Enforced with consequences for noncompliance
  • Reviewed to ensure procedures match policies
  • Reviewed to ensure policies match legislation

Above all, management must lead by example through their actions. When managers ignore policies, staff follow their lead and disregard them too.

Final Thoughts

“We have a policy for that.”

The real question is:

“Do we follow it?”

Policies become effective only when actively used, clearly understood, and consistently enforced.

Otherwise, they foster a false sense of security while exposing the organisation to severe compliance, legal, financial, and reputational risks.

Otherwise, they foster a false sense of security and leave the organisation vulnerable to severe compliance, legal, financial, and reputational risks.

Governance failures can quickly escalate into glaring problems.

Fraud and Financial Mismanagement in Local Government and SMEs

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Graphic promoting fraud and financial mismanagement prevention for local government and SMEs, featuring a security shield with padlock, magnifying glass over financial reports marked “Fraud,” and messaging about governance, controls, early detection, and integrity.

Fraud and Financial Mismanagement: A Serious Risk for Local Government and SMEs

Fraud and financial mismanagement affect not just large corporations. Local governments and small to medium-sized enterprises (SMEs) often confront heightened risks because they typically have fewer controls, limited staff, and greater levels of employee trust.

Unfortunately, this combination creates fertile ground for fraud, corruption, and financial mismanagement that often remain hidden for long periods.

This article explores the critical risk of fraud, how it unfolds, and the strategies Local Government and SMEs can use to combat it.

Why Fraud and Financial Mismanagement Are Serious Risks

Fraud often hides in plain sight, far from obvious or conspicuous. It often begins modestly and thrives. A single incident of a minor false invoice or misuse of a company credit card can quickly escalate into ongoing theft, procurement fraud, or manipulation of financial records.

In local government, fraud involving public funds triggers financial losses, damages reputations, and sparks political fallout. A fraud incident within a council can quickly grab front-page headlines, triggering investigations, audits, and intense public scrutiny.

For SMEs, fraud can strike with devastating impact. Many small businesses run on razor-thin profit margins, where a single act of fraud can trigger severe financial distress or even bankruptcy.

So fraud prevention and financial controls must take centre stage, not be relegated to afterthoughts.

Common Types of Fraud in Local Government and SMEs

Fraud and financial mismanagement typically reveal themselves through recognisable patterns. The most common types include:

  1. Procurement Fraud

This stands as one of the most critical fraud risks facing local government. It features:

  • Fake invoices
  • Collusion with suppliers
  • Conflicts of interest
  • Overcharging for goods or services
  • Paying for work not completed

Procurement fraud thrives on the large sums of money involved and the inherent trust placed in the procurement process.

  1. Payroll Fraud

Payroll fraud includes:

  • Ghost employees
  • False overtime claims
  • Unauthorised pay increases
  • Timesheet manipulation

Payroll fraud can persist undetected for years when payroll reports are not thoroughly reviewed.

  1. Expense Claim Fraud

This occurs when employees claim:

  • Personal expenses as business expenses
  • Fake receipts
  • Inflated travel claims
  • Unauthorised use of company credit cards

Though individual claims may be small, over time they can drain organisations of thousands of dollars.

  1. Theft of Cash or Assets

This includes:

  • Stealing cash
  • Taking equipment or materials
  • Misuse of fuel cards
  • Using council or company equipment for private work

  1. Financial Mismanagement

Financial mismanagement may not always be fraudulent, yet it can inflict just as much damage. It features:

  • Poor record keeping
  • Unauthorised spending
  • Budget blowouts
  • Failure to reconcile accounts
  • Lack of financial oversight
  • Not following procurement policies

Financial mismanagement often opens the door to fraud.

Why Fraud Occurs (The Fraud Triangle)

Fraud experts often invoke the Fraud Triangle to reveal why people commit fraud. It centres around three key factors:

  1. Pressure—Financial problems, gambling, debt, lifestyle pressures
  2. Opportunity—Weak internal controls, poor supervision, lack of audits
  3. Rationalisation—The person convinces themselves the fraud is justified (“I’m underpaid,” “I’ll pay it back,” “No one will notice”)

By reducing opportunities, an organisation significantly slashes the risk of fraud.

Warning Signs of Fraud and Financial Mismanagement

Warning signs constantly reveal when something is wrong. Watch out for these common red flags:

  • An employee who never takes leave
  • One person controlling a process from start to finish
  • Missing receipts or invoices
  • Suppliers who refuse to provide documentation
  • Regular budget overruns
  • Complaints about unfair procurement processes
  • Poor record keeping
  • Delays in financial reporting
  • Staff living beyond their means
  • Resistance to audits or oversight

Though not definitive proof of fraud, these indicators raise enough concern to demand a thorough review.

How Local Government and SMEs Can Prevent Fraud

Fortunately, straightforward controls can stop most fraud in its tracks.

  1. Segregation of Duties

No single person should control a process from start to finish. For instance:

  • One person raises a purchase order
  • Another person approves it
  • Another person processes the invoice
  • Another person approves payment

  1. Clear Policies and Procedures

Organisations must set clear, decisive policies on:

  • Procurement
  • Conflict of interest
  • Expenses
  • Use of credit cards
  • Delegations and approvals
  • Financial management

Policies must not only exist—they must be actively used and enforced.

  1. Regular Audits

Regular internal and external audits serve as a powerful weapon against fraud. People are much less likely to commit fraud when they know they are being watched.

  1. Fraud and Corruption Control Plan

Local governments and organisations must have a Fraud and Corruption Control Plan that identifies risks and outlines how to manage them.

  1. Encourage Reporting

Many fraud cases became known only because someone reported them. There should be:

  • Confidential reporting systems
  • Whistleblower policies
  • A culture where people feel safe reporting concerns

  1. Management Oversight

Managers must regularly carry out regular reviews:

  • Financial reports
  • Supplier lists
  • Overtime reports
  • Credit card statements
  • Procurement reports

Fraud prevention is a shared responsibility in management, not merely an accounting task.

The Real Cost of Fraud

The cost of fraud extends well beyond the money stolen. The actual cost breaks down into:

  • Investigation costs
  • Audit costs
  • Legal costs
  • Loss of reputation
  • Loss of public trust
  • Staff morale damage
  • Management time
  • Possible disciplinary action or termination
  • Media spotlight—especially shining on Local Government

Often, reputational damage cuts deeper than financial loss.

Final Thoughts

Fraud and financial mismanagement pose serious threats to local governments and SMEs, which rely heavily on trust, grapple with limited resources, and often lack strong internal controls.

Yet, most fraud is preventable.

When organisations zero in on:

  • Strong internal controls
  • Clear policies
  • Management oversight
  • Regular audits
  • Fraud awareness
  • Encouraging reporting

They can significantly slash their risk of fraud.

Fraud prevention is not just about catching wrongdoers—it is about creating systems that actively stop fraud before it starts.

Contact [email protected] if you need help in this area.

 

Why Every Small Business Needs a Code of Conduct (Before It’s Too Late)

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Why every small business needs a Code of Conduct—Most Don’t have one

Many small and medium-sized businesses (SMEs) run on trust. Owners know their staff; small teams work closely together. As a result, many business owners believe formal policies or a Code of Conduct are unnecessary.

Workplace investigations and tribunal decisions reveal this approach can expose a business to major legal and financial risks.

The reality is simple:

If you employ people, you must have clear behaviour rules.

That is exactly what a Code of Conduct does.

This article explains why a Code of Conduct matters for SMEs, what happens without one, and where many small businesses go wrong.

What is a Code of conduct?

A Code of Conduct defines the expected standards of workplace behaviour. It typically covers issues like:

  • Bullying
  • Sexual harassment
  • Discrimination
  • Conflicts of interest
  • Theft and fraud
  • Use of company property
  • Social media behaviour
  • Confidential information
  • Workplace safety
  • Reporting misconduct

For small businesses, a Code of Conduct can be brief and simple. But it must clearly define what employees can and cannot do.

Equally importantly, it must explain:

  • What happens if someone breaches the Code
  • How to report a problem
  • How the business will investigate complaints

Do small businesses really have codes of conduct?

Research shows many small businesses lack a formal Code of Conduct or workplace policies.

This is rarely because business owners are careless. Usually because:

  • They think policies are only for large corporations
  • They depend on “common sense”
  • They believe problems will not happen in a small team
  • They do not know what policies they are legally expected to have
  • They do not know how to write policies
  • They do not know how to investigate complaints properly

Workplace complaints are common in small businesses, especially involving:

  • Bullying
  • Sexual harassment
  • Theft
  • Fraud
  • Conflicts between employees
  • Misuse of company money or resources

When these issues arise without a Code of Conduct or policies, the business is exposed.

The Biggest Mistake SMEs Make

Many small businesses with policies make an important mistake:

They have policies but fail to implement them.

Workplace decisions and investigations repeatedly face the same problems:

  • Employees say they never saw the policy
  • No training was provided
  • Policies were not explained at induction
  • The policy was written but never used
  • Complaints were handled informally
  • The business owner tried to investigate without training
  • No records were kept
  • Different employees were treated differently
  • The business could not show it followed a proper process

Legally, a policy not communicated and enforced is nearly the same as having no policy.

Why a Code of Conduct protects a business

A Code of Conduct is more than just rules. It is about safeguarding the business.

If a bullying or sexual harassment claim arises, one of the first questions will be:

“What did the business do to prevent this behaviour?”

A business must show it:

  • Had a Code of Conduct
  • Had bullying and sexual harassment policies
  • Trained staff
  • Had a complaint procedure
  • Investigated complaints properly
  • Acted when misconduct was found

Without these, a business struggles to defend a claim.

This is why a Code of Conduct is not just an HR document — it is a risk management tool.

Small business owners often try to handle complaints themselves

This is yet another high-risk zone.

In a small business, the owner, or manager often:

  • Knows both people involved
  • Wants to fix the problem quickly
  • Tries to “have a chat” to sort it out
  • Does not document the process
  • Does not interview witnesses properly
  • Does not follow procedural fairness
  • Decides without proper evidence

This can make the situation worse and expose the business to claims of:

  • Unfair dismissal
  • Bullying
  • Failure to investigate properly
  • Bias
  • Victimisation

Many SMEs now hire external investigators—not because of the complexity, but because the risk is high.

The cost of not having a Code of Conduct

For SMEs, lacking a Code of Conduct or workplace policies risks:

  • Unfair dismissal claims
  • Bullying claims
  • Sexual harassment claims
  • General protections claims
  • Workers compensation stress claims
  • Staff resignations
  • Loss of reputation
  • Time spent dealing with complaints instead of running the business
  • Legal costs
  • Settlement payments

Most of these problems cost far more than putting proper policies and training into practice.

The policies a small business must have

Every SME should have at a minimum:

  1. Code of Conduct
  2. Bullying Policy
  3. Sexual Harassment Policy
  4. Discrimination Policy
  5. Complaint Handling Procedure
  6. Workplace Investigation Procedure
  7. Disciplinary Procedure
  8. Conflict of Interest Policy
  9. Fraud and Theft Policy (especially for staff handling money)
  10. Social Media Policy

These need not be long or complicated.

But they must exist, be explained to staff, and be used when needed.

Final Thoughts

The Code of Conduct and policies must exist, be explained to staff, and used when needed.

Many companies do not realise how vulnerable they are when things go wrong at work.

A Code of Conduct and workplace policies are more than just paperwork.

They protect the business, the owner, and the employees.

From my experience investigating workplace complaints, the businesses that struggle most are not those with the worst behaviour — they are the ones with:

  • No policies
  • No training
  • No investigation process
  • No documentation
  • No understanding of their legal obligations

These problems can be fixed.

With the right policies, training, and investigation processes, a small business can significantly reduce its risk and handle problems properly when they arise.

As a small business, you need:

  • A Code of Conduct
  • Workplace policies
  • Training for managers on handling complaints
  • Workplace investigation services
  • Advice on bullying, sexual harassment, fraud, or misconduct investigations

If you have none of these, then contact ACCA ([email protected]). I can help protect you, your business, and your employees by ensuring you have the proper policies and ensuring matters are handled properly, fairly, and legally.

$90,000 Sexual Harassment Case: A Warning for Councils and Small Businesses

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Sexual harassment penalty $90,000 Fair Work breaches – lessons for employers on liability, HR failures, and workplace compliance in Australia.

$90,000 Sexual Harassment Case: A Warning for Councils and Small Businesses

 

$90,000 Sexual Harassment Decision – What Council CEOs and SME Managers Must Learn From This Case

A recent Federal Circuit and Family Court decision has sent a very clear message to employers across Australia: failing to properly manage workplace sexual harassment and basic employment obligations can be extremely costly — both financially and reputationally.

In Mejia v Capital City Café-Bar [2026], the Court ordered a café director to pay approximately $90,000 in compensation and penalties following a sexual harassment incident involving a young employee. This case is significant because it is one of the first published decisions under the new sexual harassment jurisdiction introduced under the Fair Work Act reforms in March 2023.

For Council CEOs, senior managers, and SME owners, this case provides several critical lessons.

What Happened in This Case?

The employee, a 23-year-old migrant worker, alleged that the café director hugged her, kissed her without consent, and attempted to offer her money while pinning her against a sink.

The incident occurred shortly after the employee had raised concerns about her pay and the fact that she had not been receiving pay slips. The employee did not return to work after the incident and later commenced legal proceedings.

The Court accepted that the incident caused distress, humiliation, and ongoing emotional impact, and compensation was awarded accordingly.

However, the sexual harassment itself was only part of the problem.

The Employer’s Bigger Problem – Multiple Fair Work Breaches

What significantly increased the penalties was the employer’s broader failure to comply with basic employment laws. The Court found the director had failed to:

  • Provide a Fair Work Information Statement
  • Provide a Casual Employment Information Statement
  • Provide pay slips
  • Pay correct wages including overtime and casual loading
  • Maintain proper employment records
  • Make the Award and National Employment Standards available
  • Provided false pay slips to the Fair Work Ombudsman

The Judge described this as a “comprehensive, if not complete, disregard for the obligations of a national system employer.”

This is a critical point for employers: sexual harassment cases often expose broader compliance failures.

Important Legal Development – New Sexual Harassment Jurisdiction

This case was brought under section 527D of the Fair Work Act, introduced under the Secure Jobs, Better Pay reforms.

This means employees now have another legal pathway to pursue sexual harassment claims — in addition to the Human Rights Commission and anti-discrimination processes.

In practical terms, this increases the legal risk for employers.

Key Takeaways for Council CEOs and SME Managers

  1. A Single Incident Can Result in Large Compensation

The Court made it clear that sexual harassment does not need to be repeated behaviour to result in significant damages.

Many managers still believe that a “one-off incident” is less serious.
This case confirms that is not how courts see it.

  1. Power Imbalance Matters

The Court placed significant weight on:

  • The employee being young
  • Being a migrant
  • Having limited financial resources
  • The offender being the business owner and in a position of authority

This highlights a major risk area for:

  • Small businesses
  • Councils
  • Family-run businesses
  • Workplaces where owners/directors deal directly with staff

Power imbalance increases damages.

  1. Poor HR Practices Will Make Everything Worse

The penalties were not just for harassment — they were for systemic non-compliance.

This is where many councils and SMEs are exposed:

  • No proper policies
  • No training
  • Poor documentation
  • Incorrect pay slips
  • No investigation procedures
  • No HR systems
  • No external investigator

When something goes wrong, these failures compound liability.

  1. Text Messages and Apologies Can Become Evidence

The director sent messages apologising and asking the employee to keep the incident secret.

This significantly damaged his case.

Managers and business owners often try to “fix things informally” after an incident.
This can make the legal situation worse.

  1. This Case Sends a Message About Personal Liability

Importantly, the director personally was ordered to pay penalties.

This is critical for:

  • Council senior managers
  • Directors
  • Business owners
  • CEOs
  • General Managers

You can be personally liable, not just the organisation.

What Organisations Should Do Now

This case clearly shows what organisations should have in place:

  1. A clear sexual harassment policy
  2. Complaint reporting procedures
  3. Investigation procedures
  4. Manager training
  5. Proper wage and payroll compliance
  6. Proper employment records
  7. Access to an external investigator
  8. Post-investigation follow-up processes

Organisations that do not have these systems are exposed to significant risk.

Final Thoughts

This decision is a warning to employers across Australia. The combination of sexual harassment and basic employment law breaches resulted in a $90,000 outcome for a single incident involving one employee in a small business.

For councils and SMEs, the message is very clear:

If you do not have proper workplace policies, complaint procedures, and investigation processes in place before something happens, it is already too late.

Prevention, proper procedures, and independent investigations are no longer optional — they are a critical part of risk management and governance.

If you have none of these, then contact ACCA ([email protected]). I can help protect you, your business, and your employees by ensuring you have the proper policies and ensuring matters are handled properly, fairly, and legally.

How Global Events Affect Workplace Behaviour (Australia)

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Managing workplace conflict and employee behaviour during global events in Australia”

Managing Workplace Dynamics during World Turmoil

When World Events Walk Into the Workplace: A Guide for Small Business Owners

We live and work in a time where global events are no longer distant headlines. They arrive in our workplaces through conversations in the lunchroom, news, social media posts, personal stress, and sometimes, conflict between colleagues.

In Australia, recent international conflicts have shown that political and social issues can quickly become workplace issues. These situations can be challenging for small and medium-sized Many business owners are unsure how to respond, what to say, or whether they should say anything.

The reality is this: ignoring the issue rarely makes it go away. Silence can sometimes make matters worse.

Why Global Events Affect Local Workplaces

Employees do not leave their personal views, cultural identity, or family connections at the door when they come to work. Many people have strong personal ties to global events through family, religion, culture, or deeply held beliefs. Fear of world events can affect concern for job security, personal, and family safety and it can affect morale, concentration, relationships at work, and overall workplace culture.

For employers and managers, the key is not to take sides, but to manage the workplace environment professionally, respectfully, and safely.

This is where leadership, clear policies, and open communication become essential.

Start with clear and calm communication

One of the most effective things a business owner or manager can do during times of political or social tension is to communicate early and clearly.

This does not mean making political statements. It means reinforcing workplace expectations and reminding staff of the organisation’s values.

You might hold a short team meeting or send a communication to staff that covers:

  • Acknowledge that significant events happen. People may feel strongly about these events.
  • Reinforce that the workplace must remain respectful and professional.
  • Remind staff about policies relating to bullying, harassment, discrimination, and social media.
  • Let employees know what support is available if they are feeling stressed or affected by events.
  • Encourage respectful conversations but clarify that aggressive or intimidating behaviour will not be tolerated.

The purpose of this communication is not to control opinions; it is to set behavioural expectations.

Reinforce Workplace Values and Behaviour Standards

In periods of social tension, workplace behaviour can change quickly. Comments that might be brushed off can suddenly become very personal. Jokes can be misinterpreted. Discussions can turn into arguments.

Therefore, it is important to restate your workplace values, such as:

  • Respect
  • Inclusion
  • Diversity
  • Professional behaviour
  • Zero tolerance for bullying and harassment
  • Respectful communication, even when people disagree

As an employer, you are not responsible for what people think — but you are responsible for how people behave at work.

Monitor Workplace Dynamics

Managers and supervisors should be alert during times of political or social tension. Watch for:

  • Changes in behaviour
  • Increased conflict between employees
  • Complaints about inappropriate comments
  • Social media issues spilling into the workplace
  • Employees appearing to be distressed, distracted, or withdrawn
  • Team divisions forming along political, cultural, or religious lines

Early intervention is critical. Minor issues can become formal complaints very quickly if not managed early and properly.

Review Your Workplace Policies

Many businesses have policies on bullying, harassment, discrimination, and social media — but they are often outdated or rarely discussed.

It is important in these times to review and update policies to ensure they cover:

  • Bullying and harassment
  • Discrimination and racial or religious vilification
  • Code of conduct
  • Social media behaviour
  • Working from home behaviour and online meetings
  • Complaint reporting procedures
  • Investigation procedures
  • Confidentiality requirements

The key areas small businesses should focus on:

  • workplace conflict management
  • managing political discussions at work
  • bullying and harassment policies Australia
  • workplace investigations Australia
  • employee complaints handling
  • respectful workplace culture
  • diversity and inclusion in the workplace
  • workplace behaviour policy
  • HR support for small business
  • independent workplace investigator
  • misconduct investigations
  • workplace compliance Australia
  • psychosocial hazards workplace
  • safe work culture Australia

Provide Support Options for Employees

Employees may be genuinely distressed by world events. Others may experience conflict with colleagues because of differing views.

Support options may include:

  • Employee Assistance Programs (EAP)
  • Flexible working arrangements
  • More breaks during stressful periods
  • Access to a manager or HR to discuss concerns confidentially
  • Bringing in an external investigator or workplace consultant if conflict escalates

Small businesses often think these issues only happen in large corporations, but small teams can be affected even more because people work closely together.

Conclusion

Global events will continue to influence Australian workplaces. That is the reality of modern work and a diverse workforce. The role of a business owner or manager is not to solve global problems; it is to make sure the workplace remains safe, respectful, and productive.

The businesses that handle these situations well are the ones that:

  • Communicate early
  • Set clear behaviour expectations
  • Act quickly when issues arise
  • Update their policies
  • Seek external help when needed

Handled properly, difficult times can strengthen workplace culture, build trust, and show strong leadership.

Handled poorly, they can lead to complaints, investigations, staff turnover, and significant reputational damage.

As always, prevention is far better than investigation.

For more information on workplace investigations, misconduct, and compliance support for small and medium businesses, visit www.acca-aust.com.au or contact me directly at [email protected]

Why Every SME Must Have a Code of Conduct: A Governance, Compliance, and Risk Management Necessity

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Code of conduct and business risk

Why Every SME Must Have a Code of Conduct: A Governance, Compliance, and Risk Management Necessity

One of the most common and dangerous gaps I see when working with small and medium-sized enterprises (SMEs) is the complete absence of a Code of Conduct, or a document so outdated or generic that it is effectively useless. Many SME owners believe a Code of Conduct is something only large corporations, government departments, or highly regulated industries need. That belief is not only incorrect—it is risky.

A Code of Conduct is not a “nice to have” document. It is one of the most important governance, compliance, and risk management tools an organisation can implement. Without it, organisations risk misconduct, workplace disputes, bullying and harassment claims, fraud, conflicts of interest, reputational damage, and sometimes legal liability.

A Code of Conduct defines the expected behaviour within an organisation to ensure compliance and good governance. It tells employees what they can and cannot do, what they must do, what their rights are, and what will happen if the rules are broken. Without clear rules, organisations create situations where bad behaviour can happen because no one has clearly explained the rules.

The Situation in Small and Medium-sized Enterprises: “We’ve Never Had One and We’re Fine”

I often hear this when doing compliance checks or workplace investigations in small and medium-sized businesses. This sentence is often said right before a serious problem happens at work, such as bullying, harassment, theft, fraud, conflicts of interest, or serious wrongdoing by a manager or longtime employee.

Just because there is no Code of Conduct does not mean people are not behaving badly. It usually means the organisation has no framework for dealing with it when it happens.

It means the organisation does not have a plan for handling it when it happens.

If you have never told employees the rules, it is hard to punish someone for breaking them.

This is where many small and medium-sized businesses risk unfair dismissal claims, general protection claims, and workplace disputes that could have been prevented with a clear and well-communicated Code of Conduct.

A Code of Conduct Protects Both the Employer and the Employee

Many people mistakenly believe that a Code of Conduct protects the employer. A Code of Conduct protects both the organisation and its workers.

For employees, a Code of Conduct shows:

  • What behaviour is expected in the workplace
  • What behaviour is unacceptable
  • Their right to a safe workplace
  • Their right to report inappropriate behaviour
  • How complaints will be handled
  • Protection from retaliation or victimisation
  • Expectations around confidentiality
  • Conflicts of interest requirements
  • Use of company property and systems
  • Social media behaviour
  • Workplace health and safety obligations

For employers, a Code of Conduct means:

  • Sets behavioural standards
  • Supports disciplinary action when misconduct occurs
  • Demonstrates compliance with workplace laws
  • Reduces legal risk
  • Supports workplace investigations
  • Provides a framework for managing complaints
  • Demonstrates governance and leadership
  • Protects organisational reputation
  • Helps create a respectful workplace culture

A Code of Conduct shows that an organisation has told its staff what behaviour is expected. This is especially important if the organisation ever has to explain a decision in a tribunal, court, or regulatory investigation.

Misconduct Thrives in Silence and Uncertainty

A major cause of bad behaviour at work is unclear expectations, not bad people. When employees are not clearly told what counts as bullying, harassment, conflicts of interest, fraud, or misuse of company resources, they often make their own decisions about it. That judgement does not always match legal or organisational expectations.

I have noticed situations where workers:

  • Awarded contracts to friends because no conflict of interest policy existed
  • Used company vehicles for personal business because no policy said they could not
  • Sent inappropriate messages to coworkers, thinking it was “just a joke”
  • Accessed confidential information because no one told them it was restricted
  • Engaged in secondary employment that directly conflicted with their employer’s interests

In many of these cases, the employee’s initial reaction during an investigation is: “No one ever told me I couldn’t do that.”

Sometimes they are correct.

This is why a Code of Conduct is more than just a document; it helps manage risks.

A Code of Conduct is a Key Part of Compliance and Risk Management Frameworks

If an organisation genuinely wants to follow rules, manage risks, and have good leadership, it needs a Code of Conduct along with other important policies such as:

  • Workplace Behaviour Policy
  • Bullying and Harassment Policy
  • Sexual Harassment Policy
  • Conflict of Interest Policy
  • Whistleblower Policy
  • Fraud and Corruption Control Policy
  • Workplace Health and Safety Policy
  • Social Media Policy
  • Complaint Handling Procedure
  • Workplace Investigation Procedure

These documents combine to create rules that keep the organisation and its workers safe.

Small and medium-sized businesses that want to grow, bid for government contracts, get certified, or show good corporate governance often need to have a Code of Conduct. Many government contracts and ISO standards now require organisations to show they have ethical conduct systems and behaviour rules.

In other words, if your organisation wants to grow, having a Code of Conduct is now required.

Culture is Driven by What Leadership Tolerates

A Code of Conduct is also a guide for leaders. It shapes the workplace atmosphere. It tells employees what leadership cares about and what it will not accept.

If a company does not have a Code of Conduct, employees will observe how leaders act and think that is the normal way to behave. If managers bully staff, ignore complaints, swear at employees, or treat some people better than others, that becomes the workplace culture, even if leaders did not mean for it to happen.

A well-constructed Code of Conduct communicates:

  • This defines us.
  • This is how we act.
  • We will not accept this.
  • That is a strong tool for managing and leading.

A Code of Conduct is Critical During Workplace Investigations

From an investigation point of view, a Code of Conduct is one of the most important documents for evaluating claims. Investigators determine whether the behaviour broke the rules. Did it breach the

  • The Code of Conduct
  • Workplace policies
  • Employment contracts
  • Legislation
  • Reasonable and lawful directions

If there is no Code of Conduct, investigators must use more general rules like “reasonable behaviour,” which are harder to support in court.

A clear Code of Conduct helps identify things like:

  • Breach of the Code of Conduct
  • Failure to follow a lawful and reasonable direction
  • Conflict of interest not declared
  • Bullying behaviour in breach of workplace policy
  • Harassment in breach of workplace policy
  • Misuse of company resources
  • Breach of confidentiality

This makes disciplinary decisions easier to justify and lowers the risk for the organisation.

Communication is Just as Important as the Document

One of the biggest mistakes organisations make is making a Code of Conduct and then storing it somewhere no one looks at, like a drawer or shared drive.

A Code of Conduct must be:

  • Provided to all employees
  • Explained during induction
  • Reinforced through training
  • Signed or acknowledged by the employees
  • Reviewed regularly
  • Applied consistently

If a Code of Conduct is not shared and followed, it has no value for compliance.

Final Thoughts: Prevention is Always Cheaper Than Investigation

Workplace investigations cost a lot, take a long time, cause stress for employees, and can be risky for companies. Legal expenses, lost work time, harm to reputation, and time spent by managers can be substantial.

A Code of Conduct is an easy and effective way to stop workplace problems before they begin. It sets clear expectations, offers guidance, helps managers, protects employees, and lowers the risk for the organisation.

From the standpoint of following rules, managing governance, and handling risks, the question should not be:

“Do we really need a Code of Conduct?”

The real question should be:

“Can we afford not to have one?”

For small and medium-sized businesses, a Code of Conduct is not just paperwork—it is a useful tool to protect the company, its workers, and its leaders.

In today’s workplaces, where rules, behaviour, and company culture are closely watched, having a clear, easy-to-understand, and well-shared Code of Conduct is essential.

It is essential.  For assistance with these policies contact  me directly – [email protected]

How to handle sexual harassment allegations in any workplace in 2026

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Dealing with sexual harassment allegations

Sexual harassment is no longer something that sits only with Human Resources. In today’s workplace, it is a serious governance, risk, and leadership issue. Organisations in Australia are now expected to respond to sexual harassment allegations in a way that is fair, transparent, and professionally managed. When complaints are handled poorly, the consequences can include legal claims, reputational damage, low staff morale, and loss of trust in management.

This guide provides a practical, real-world approach to handling sexual harassment complaints in a way that is fair, legally defensible, and consistent with modern workplace expectations.

Understanding Sexual Harassment in Today’s Workplace

Sexual harassment is generally defined as unwelcome conduct of a sexual nature that causes a person to feel offended, humiliated, or intimidated. However, modern workplace investigations focus less on what the person intended and more on how the behaviour was experienced by the other person.

Sexual harassment can include:

  • Inappropriate jokes or comments
  • Unwanted physical contact
  • Repeated requests for dates
  • Suggestive emails, messages, or social media contact
  • Sharing inappropriate images or content
  • Behaviour that creates a hostile or uncomfortable work environment

Importantly, sexual harassment can occur in the office, at work functions, during travel, or through digital communication such as emails, messaging apps, and social media.

Why Handling Complaints Properly Matters

From a workplace investigation perspective, sexual harassment complaints are high-risk matters. If handled incorrectly, organisations may face:

  • Legal action
  • Workers compensation claims
  • Industrial disputes
  • Reputational damage
  • Loss of staff trust and morale
  • Media scrutiny, particularly in the public sector

For this reason, every sexual harassment complaint should be treated as a serious workplace complaint requiring a structured and procedurally fair investigation.

  1. Have a Clear and Practical Policy

Every organisation should have a clear sexual harassment and workplace behaviour policy. However, a policy is only useful if employees understand it and feel confident using it.

A good policy should:

  • Clearly define sexual harassment
  • Provide examples of unacceptable behaviour
  • Explain how to report a complaint
  • Outline the workplace investigation process
  • Commit to confidentiality and procedural fairness
  • Clearly state that retaliation will not be tolerated

Policies should be reviewed regularly to ensure they reflect current Australian legislation and workplace expectations.

  1. Make Reporting Safe and Accessible

One of the biggest issues in sexual harassment matters is underreporting. Many employees do not report behaviour because they fear retaliation, believe nothing will happen, or worry it will damage their career.

Organisations should provide multiple ways for employees to report concerns, such as:

  • Reporting to a manager
  • Reporting to HR
  • Anonymous reporting channels
  • Reporting to an external investigator
  • Whistle blower channels (where appropriate)

Providing access to an independent workplace investigator is often considered best practice, particularly in small businesses, local government, and organisations where conflicts of interest may arise.

  1. Take Every Complaint Seriously

A common mistake, organisations make is trying to “informally resolve” serious allegations too quickly or dismissing behaviour as a misunderstanding or personality conflict. This can significantly increase organisational risk.

Every complaint should be assessed properly and, where appropriate, referred for a formal workplace investigation. Even if the allegation appears minor, it should still be documented and assessed.

  1. Act Quickly — But Fairly

Timeliness is critical in sexual harassment investigations. Delays can:

  • Increase stress for the complainant
  • Lead to evidence being lost
  • Create perceptions that the organisation is ignoring the issue
  • Increase legal risk

However, acting quickly does not mean rushing to judgement. A fair investigation requires:

  • No assumptions
  • Proper evidence gathering
  • Interviews with relevant witnesses
  • Procedural fairness for all parties

The best approach is to acknowledge the complaint immediately and commence a structured investigation as soon as possible.

  1. Ensure Independence in the Investigation

One of the most important decisions an organisation can make is who conducts the investigation.

In many cases, particularly in SMEs, family businesses, and local government, using an external workplace investigator is the safest and most defensible option. An external investigator:

  • Removes perceived bias
  • Provides independence
  • Brings investigation expertise
  • Improves credibility of the outcome
  • Reduces organisational risk
  • Ensures procedural fairness

This is particularly important where allegations involve senior staff or management.

  1. Follow a Structured Workplace Investigation Process

A proper sexual harassment investigation should include:

  • A clear investigation plan
  • Formal interviews with the complainant, respondent, and witnesses
  • Collection of evidence (emails, messages, CCTV, personnel files, etc.)
  • Maintaining confidentiality
  • Making findings based on evidence
  • Preparing a formal investigation report

Good documentation is essential. If a decision is later challenged in court or a tribunal, the investigation report and evidence will be critical.

  1. Prevent Retaliation

Retaliation after a complaint is made is one of the biggest risks to an organisation. Retaliation can include:

  • Excluding someone from meetings
  • Changing shifts or duties unfairly
  • Performance managing someone unfairly
  • Bullying or victimisation
  • Termination or demotion after a complaint

Employers have a legal obligation to prevent victimisation. This means actively monitoring the workplace after a complaint is made and after the investigation is completed.

  1. Make Findings and Decisions That Are Defensible

At the conclusion of the workplace investigation, findings must be based on evidence — not opinions, assumptions, or office politics.

Possible outcomes may include:

  • No finding
  • Training or counselling
  • Formal warning
  • Final warning
  • Demotion
  • Termination of employment

The key is that the outcome must be proportionate, consistent, and clearly linked to the investigation findings.

  1. Communicate the Outcome Carefully

Both the complainant and the respondent should be advised of the outcome in a professional and respectful way. While confidentiality must be maintained, both parties should understand that the complaint was taken seriously and investigated properly.

Poor communication at this stage can undo an otherwise well-run investigation.

  1. Provide Ongoing Support

A workplace investigation does not end when the report is finished. Employers should:

  • Check in with the complainant
  • Monitor the workplace environment
  • Ensure no retaliation occurs
  • Provide access to EAP or counselling if required
  • Consider whether team training or cultural change is needed

  1. Focus on Prevention, Not Just Response

The best organisations understand that preventing sexual harassment is far better than investigating it after it occurs.

Prevention strategies include:

  • Regular workplace behaviour training
  • Clear behavioural expectations
  • Strong leadership
  • Early intervention when issues arise
  • Culture and staff surveys
  • Independent reporting options

Prevention is an ongoing process, not a once-a-year training session.

  1. Leadership Sets the Workplace Culture

Workplace culture is driven from the top. If leaders ignore behaviour, minimise complaints, or avoid difficult issues, employees will notice.

Leaders must:

  • Model respectful behaviour
  • Act on complaints
  • Support fair investigations
  • Be visible in their commitment to a safe workplace

Without leadership support, policies and training will have very little impact.

  1. Always Look for Improvement

Every workplace investigation provides lessons. Good organisations review each matter and ask:

  • Did our reporting process work?
  • Was the investigation handled quickly?
  • Was the process fair?
  • Do we need better training?
  • Are there cultural issues we need to address?

Continuous improvement reduces future risk.

Conclusion

Handling sexual harassment allegations in 2026 requires more than simply following a policy. It requires professionalism, procedural fairness, independence, and strong leadership. Organisations that respond properly not only reduce legal and reputational risk, but also build safer, more respectful workplaces where employees feel confident to speak up.

If your organisation requires an independent workplace investigator or advice on handling a sexual harassment complaint or workplace investigation, ACCA Aust provides professional, independent investigation services across Australia.

Are You Being Ripped Off by Your Employees?

by
Procurement fraud

Are You Being Ripped Off by Your Employees?

If your company purchases goods or services from a third party, then you are probably being ripped off!

Procurement fraud represents a significant challenge for organizations of all sizes. Costly, elusive, and difficult to prosecute, procurement fraud can silently drain resources and undermine trust within a business. In the past five years, procurement fraud has been a significant issue in Australia, with substantial financial impacts. The estimated cost of fraud against the Commonwealth alone rose from $91.6 million in 2017–18 to $265.9 million in 2020–21.

Procurement fraud can hit government at all levels and the private sector. 

New South Wales: A Pakistani national was charged with sending proceeds from a multimillion-dollar scam targeting the NSW government overseas, involving $2.1 million mistakenly transferred to scammers posing as a legitimate financial institution.

South Australia: An audit revealed that Ventia, holding a $4 billion contract with the South Australian government, overcharged for services, including a $65,000 quote for a fence estimated at $2,000 by a local contractor.

Procurement Fraud Has Many Tentacles:

Fake Invoicing

A small construction company discovered that an employee had created a fake supplier and submitted false invoices for non-existent services. The employee approved the payments, diverting funds to their own account. Fraud was detected only after an internal audit. 

Collusion With Vendors

In a medium-sized manufacturing firm, procurement staff colluded with vendors to inflate prices. The staff received kickbacks from the vendors for approving overpriced contracts. Uncovered by information from a whistleblower. 

Unauthorized Purchases

A retail business faced procurement fraud when an employee made unauthorized purchases using the company’s procurement system. The employee ordered personal items and disguised them as business expenses. Identified after routine audit. 

This article explores the key aspects of procurement fraud, digging into its causes, common schemes, and effective mitigation strategies. By understanding the risks and putting preventive measures into practice, organizations can safeguard their resources and enhance operational integrity.

What Is Procurement Fraud?

Procurement fraud occurs when individuals or groups manipulate the purchasing process to gain undue financial or material advantage. This manipulation often involves collaboration between employees and suppliers, creating an environment ripe for fraudulent activity.

For example: A vendor is awarded a contract at an inflated price. In exchange, the employee who approved the deal receives kickbacks, which could be cash, gifts, or other favours.

Procurement fraud is more likely to occur in organizations with high purchasing volumes and inadequate oversight. Internal factors, such as financial stress, personal challenges, or dissatisfaction with the employer, often motivate offenders.

Five Common Types of Procurement Fraud

Kickbacks

This is one of the most common forms of procurement fraud. This scheme involves collusion between employees and suppliers. The supplier is awarded a contract at an inflated price, and in return, the employee receives compensation, often termed a “kickback.” This can be money, benefits such as goods and/or travel for self or family.

Conflicts of Interest

In conflict-of-interest schemes, the employee manipulates the procurement process to benefit friends or family members. While awarding contracts to acquaintances is not inherently fraudulent, the absence of transparency and adherence to fair bidding processes introduces the element of fraud.

Sham Company Payments

This involves payments made to shell companies that provide no actual goods or services. Such schemes flourish in environments with lax procurement oversight, where invoice reconciliation and purchase order matching are not diligently performed. NO separation of duties.

Inflation or Under-Delivery

Here, suppliers inflate prices or deliver substandard or fewer goods than agreed upon in the contract. Employees often facilitate these discrepancies for compensation.

Falsified Statements

This form of fraud occurs when suppliers misrepresent their qualifications or certifications. Claiming to have indigenous mix for government contracts. Providing food or other items claiming they are organic, but the goods are standard.  

How to Spot Procurement Fraud

Some common signs:

Unusual Employee Behaviour

Observe sudden changes in the lifestyle of employees involved in procurement. A significant improvement in material wealth, such as driving an expensive car, may justify closer scrutiny.

Irregular Bid Activity

Be alert to anomalies in the bidding process, such as disproportionate support for a particular vendor or unauthorized subcontracting. Many variations in contract once awarded.

Material or Service Discrepancies

Track the quality and quantity of delivered goods. Discrepancies in inventory levels or subpar materials are potential red flags.

Discrepancies in Invoices

Cross-check invoices with purchase orders and delivery receipts. Inconsistent or inflated invoices often signal fraudulent activity. Another reason for separation of duties.

Responding to Procurement Fraud

Policy: 

You MUST have a fraud and procurement (corruption) policy.  This policy should outline the action to take if you discover/suspect procurement fraud.  

Notification: 

What is the immediate action–what areas should be advised? This may include HR, Legal, and/or the police.   

Communication Plan: 

Develop internal and external communication strategies, including appointing a PR representative to handle public relations. The public response to a fraud can cripple a business. 

Audit Process:

Investigate to determine the fraud and identify all participants.

Stakeholder Engagement: 

Notify board members, investors, and regulators as necessary to ensure transparency and accountability.

Best Practices in Preventing Procurement Fraud. 

You need to be proactive.  

Procurement Training

Provide training to procurement and finance teams about common fraud schemes and the importance of vigilance. Incorporate fraud awareness into the onboarding process for new employees.

Provide ongoing training to tell the team about emerging threats.

Establish Approval Controls

Implement a documented procurement process with multiple layers of approval. This approach makes sure purchases undergo scrutiny, making it harder for fraudulent transactions to slip through. Once again-Separation of Duties. 

Develop Preferred Vendor Lists

Work exclusively with vetted and approved suppliers. By conducting rigorous due diligence and maintaining a pre-qualified vendor list, organizations can reduce exposure to fraudulent suppliers.

Conduct Regular Audits

Schedule regular internal and external audits to identify potential vulnerabilities in procurement practices. High-visibility audits act as a deterrent to would-be fraudsters.

Create a Whistleblower Policy

Encourage employees to report suspicious activity without fear of retaliation. A strong whistleblower policy fosters a culture of accountability and transparency, helping to uncover fraud early.

Building a Fraud-Resistant Culture

Fraud will flourish if there are weak internal controls and poor communication. A strong organizational culture that emphasizes ethical behaviour, transparency, and accountability is key to preventing fraud.

Tips for Cultivating an Ethical Culture:

Leadership Commitment:

Lead from the top. Display a commitment to ethical practices. 

Explicit Policies:

Develop and Enforce Policies That Outline Acceptable Behaviours and Procurement Procedures.

Open Communication:

Develop processes for employees to voice concerns or report irregularities (anonymous reporting, strong anti-reprisal policies).

Regular Training:

Inform all employees of fraud risks and prevention strategies. Toolbox talks and/or planned discussions with examples. 

Conclusion

Procurement fraud poses a significant threat, undermining trust and depleting resources in both businesses and government entities. By understanding the various forms of procurement fraud, recognizing the warning signs, and putting preventive measures into practice, companies, and government can greatly mitigate their risk.

Integrating strong internal controls, conducting regular audits, and fostering a whistleblower-friendly culture are essential steps to protect procurement processes. These efforts not only safeguard financial resources but also bolster the integrity and reputation of the organization.

I can help protect you, your business, and your employees by ensuring you have the proper policies and ensuring matters are handled properly, fairly, and legally. Contact ACCA-AUST at [email protected]

#ProcurementFraud #RiskManagement #EthicalLeadership #BusinessIntegrity

 

FREE Fraud Health Check for Small Businesses

Think you might be the Victim of Fraud? 

Fill out the form below to get sent our free survey that provides you with an indication of the potential vulnerability of your business to fraudulent activities.

    FREE Fraud Health Check for Businesses

    Think you might be the Victim of Fraud? 

    Fill out the form below to get sent our free survey that provides you with an indication of the potential vulnerability of your business to fraudulent activities.