Victoria’s parliament passed landmark legislation on the final day of its term, granting the Independent Broad-based Anti-corruption Commission (IBAC) powerful new tools to combat corruption.
Now able to investigate financial flows beyond government agencies and target non-government entities like subcontractors benefiting from public funds, IBAC confronts a significant accountability blind spot.
These changes respond directly to long-standing concerns that IBAC’s narrow investigative scope left vast areas of misconduct unexamined.
Following the money to uncover hidden misconduct
Previously, IBAC’s remit limited it mainly to corruption within public bodies under specific narrow circumstances. The new laws fundamentally shift that position by granting the authority to ‘follow the dollar.’
This means IBAC can track financial transactions linked to third parties who benefit indirectly from public funds, such as contractors or affiliated entities. By expanding the investigative perimeter, IBAC now has the practical capability to detect complex financial networks used to conceal misconduct or corrupt practices.
Expanding corrupt conduct to include ‘grey corruption’
The legislation also redefines ‘corrupt conduct’ by removing the requirement that misconduct be criminal in nature.
It broadens the definition to include serious disciplinary matters, addressing the so-called ‘grey corruption.’
Examples include pork-barrelling — where government resources are unfairly distributed for political gain — and cronyism, which undermines public interest but might not meet criminal offense thresholds.
Integrity experts have long flagged how these subtler forms of corruption erode trust without attracting legal penalties, effectively limiting IBAC’s ability to act. This broader definition empowers IBAC to investigate practices damaging to governance integrity even when criminal prosecution is not feasible.
Implications for governance and risk management
This legislative reform highlights a vital governance lesson: risk frameworks and controls must evolve beyond traditional legal boundaries to capture behaviours that can corrode institutional integrity.
Relying solely on criminal definitions of corruption can leave systemic blind spots where unethical or damaging practices thrive unchecked.
Leaders responsible for risk and integrity assurance must now consider how to design monitoring and escalation protocols that accommodate signals of misconduct falling under disciplinary or governance breaches, not only criminal acts. Expanding investigative reach also demands enhanced oversight of third-party relationships and supply chains linked to public funding.
Challenges in operationalising expanded powers
While extended powers enable greater investigative reach, deploying them effectively poses challenges. IBAC and government need clear ownership and coordination to trace complex financial flows and identify misconduct in non-governmental entities. Ensuring robust data access, analytic capability, and inter-agency collaboration becomes crucial to realise the law’s intent.
There is also a strategic choice in balancing investigative scope with appropriate thresholds to avoid resource dilution. Defining evidentiary standards for disciplinary matters, and managing the reputational risks of inquiries into grey areas, will require disciplined governance and decision quality.
Lessons from Victoria’s approach to integrity reform
Victoria’s fast-tracked reforms, driven by Premier Ben Carroll’s early priorities and a royal commission announcement, demonstrate leadership commitment to integrity as a governance cornerstone. This decisive action shows how political sponsorship can accelerate closing critical gaps in corruption controls.
“Broadening the scope beyond criminal offences is essential to address corruption that undermines public trust but remains invisible under old rules.”
Boards, executives and risk managers can draw practical insight from Victoria’s example: effective fraud and corruption risk management demands periodic reassessment of investigative definitions and controls to ensure they reflect real-world conduct patterns, including emerging non-criminal risks. Combining expanded powers with targeted assurance and evidence-based escalation strengthens governance resilience.
Practical leadership challenge questions
- Who owns the risk oversight of third-party financial flows linked to public or organisational funds?
- What evidence do we gather to detect corrupt conduct beyond criminal offences, and how do we escalate disciplinary or grey-area integrity issues?
- Are current controls and monitoring systems designed to surface complex, indirect misconduct such as pork-barrelling or cronyism?
- How do we ensure effective collaboration between investigative functions and external agencies to trace opaque financial trails?
- What governance frameworks manage trade-offs between investigation scope, resource prioritisation, and reputational impact?
Victoria’s expanded anti-corruption framework underscores that evolving risk definitions and adapting enforcement tools are vital to closing accountability gaps. Leaders committed to integrity must continuously test their governance maturity against these shifting boundaries to stay ahead of emerging corruption risks.
Innovation of Risk provides risk maturity and assessment tools to help organisations have better internal risk, governance and assurance discussions.
This post is general information only and is not legal, regulatory, audit or professional advice.