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IBAC special report highlights improper conduct by former Victorian Government minister

Today the Independent Broad-based Anti-corruption Commission (IBAC) tabled a special report in Parliament highlighting improper conduct by former Victorian Government Minister Theo Theophanous in his role on the board of the Victorian Planning Authority (VPA).

The special report on IBAC's Operation Clara investigation found Mr Theophanous engaged in lobbying activity in favour of Australian Education City's (AEC) proposed East Werribee project. In doing so he failed to declare a conflict of interest in relation to these activities at VPA board meetings, failed to register AEC as a client on the lobbyists register and sought to advance his private lobbying business by indicating to clients he had access to staff and information within the VPA that would assist with their matters.

The report highlights that Mr Theophanous sought payments from the AEC or associated entities. In lieu of direct payment for his lobbying activities, the investigation found he obtained other benefits from the AEC and a special adviser to the AEC, namely donations (including in-kind support) to his daughter's 2018 campaign for the State electorate of Northcote*.

IBAC Acting Commissioner Stephen Farrow said the report highlights the difficulty in lobbyists undertaking roles as directors on public entity boards.

"Lobbyists' main role is to influence government decisions in favour of private interests. A director on a public entity board should be impartial and should make recommendations that advance the public interest.

"Victoria's current conflict of interest provisions do not go far enough when we have a situation where a lobbyist’s clients may be directly affected by the decisions of the board on which the lobbyist serves," Acting Commissioner Farrow said.

Operation Clara identifies systemic corruption vulnerabilities and regulatory weaknesses in relation to lobbying in Victoria and makes significant recommendations aimed at increasing transparency and protecting against improper influence in political decision-making.

Key recommendations from the report include that the Department of Premier and Cabinet amend the Appointment and Remuneration Guidelines to ensure lobbyists are ineligible for appointment to a public entity board that has functions which relate to any matter on which the lobbyist has represented the interests of third parties.

Another key recommendation is for the Victorian Public Sector Commission to revise the Code of Conduct for Directors of Victorian Public Entities 2016 to expressly prohibit public entity board directors from engaging in lobbying activities on any matter that relates to the functions of the public entity.

A recent IBAC report on donations and lobbying regulation in Victoria called for urgent regulatory reforms that relate directly to the issues and risks identified in Operation Clara. At the time of the report’s release the Victorian Government announced in principle support for all recommendations.

"IBAC welcome the government's announcement that it supports those recommendations and that it will work towards their implementation. The Operation Clara report highlights the pressing need for those reforms to ensure Victorian donations and lobbying regulations are in-step with other states and territories," Acting Commissioner Farrow said.

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IBAC found no evidence that his daughter was aware of the circumstances of these donations and there are no adverse findings about her in the report.

  • Public officials make important decisions affecting the community. In making those decisions, it's vital that they consider a range of perspectives to ensure their decisions are made in the public interest.

    For this reason, there are laws and regulations to restrict how individuals or organisations can buy access or unfairly influence public decision-makers through lobbyists. These laws also ensure a degree of transparency in lobbying activity.  

    IBAC's Operation Clara special report examines the integrity risks associated with lobbying. It provides a clear example of a lack of transparency and a failure to disclose a conflict of interest. 

    Our report makes a set of recommendations to improve the regulation of lobbying in Victoria. Those recommendations build on the findings in our Special report on corruption risks associated with donations and lobbying, which we published late last year.

    Operation Clara was an IBAC investigation into alleged corrupt conduct by Mr Theo Theophanous in relation to a $31 billion development proposal for East Werribee.

    At the time, Mr Theophanous was a member of a government board that was responsible for advising the relevant minister on issues including the development and use of land in growth areas.

    He had previously served as a Victorian Government Minister and after leaving parliament, he established a lobbying business.

    We investigated his relationship with the Australian Education City consortium – this was the commercial body behind the East Werribee development proposal – and we examined whether, in the expectation of receiving a benefit for himself or for members of his family, he attempted to lobby public officers to make decisions favouring the AEC consortium. We also investigated whether he misused this position on the VPA Board.

    Our investigation found that Mr Theophanous did misuse his public position on the VPA board to assist the AEC consortium.

    We found that he lobbied ministers and departmental officers in favour of the AEC proposal but that he did not register AEC as a lobbying client and that he obscured his relationship with AEC.

    In his role as member of the VPA Board, he failed to declare his conflict of interest.

    He advanced his private lobbying business and he sought payments from the AEC for his lobbying activity.

    As a result of Operation Clara, we have made a set of recommendations to strengthen the regulation of lobbying in Victoria. 

    These include amendments to the formal guidelines and code of conduct for directors of public entity boards. The amendments specify that public entity board directors should not engage in lobbying activities in relation to matters that the entity is dealing with or that it may deal with in the future.

    Our recommendations also include amendments to the Lobbyist Code of Conduct to ensure that public entity board directors comply with conflict-of-interest requirements in relation to work they have done prior to their appointment to the board.

    A detailed list of the recommendations can be seen on our website.

    In October 2022 IBAC released our Special report on corruption risks associated with donations and lobbying in Victoria. The recommendations from this report were publicly supported by the Victorian Government.

    The recommendations from the Operation Clara special report build on those recommendations and provide a strong case for reform.

    IBAC has now provided the Operation Clara special report to parliament, and we look forward to working with government and stakeholders to effect much needed change to donations and lobbying regulation for all Victorians.

    I encourage you to visit our website to read the report and the recommendations in full.