What you need to know
- The Victorian Government has introduced the Independent Broad-based Anti-corruption Commission Amendment Bill 2026 (Bill) which, if passed, will significantly expand IBAC’s jurisdiction to investigate corruption involving public funds.
- The Bill gives IBAC new ‘follow-the-money’ powers to trace public funds into the private sector through ‘associated entities’ - including contractors, subcontractors, agents, and joint ventures.
- The Bill also broadens the definition of ‘corrupt conduct’ beyond criminal offences to include ‘serious disciplinary matters’, and captures conduct where the intended benefit was never obtained.
- The reforms include transitional provisions allowing IBAC to apply the expanded powers to certain historical conduct. Previously completed or dismissed matters cannot be reopened.
- The Bill is being fast-tracked and, if passed, will commence the day after Royal Assent.
What you need to do
- Review your organisation’s compliance frameworks to ensure they manage for corruption and integrity risks across the entire contractual chain, not just within your own organisation.
- Have systems and processes in place that address where your organisation or its employees become the subject of an investigation or inquiry.
- Strengthen due diligence and integrity screening of contractors, subcontractors and other third parties involved in government-funded projects.
- Review procurement and tendering processes, conflicts of interest policies and gifts and benefits arrangements to ensure you are familiar with them.
- Businesses in the construction and infrastructure sectors should pay particular attention given the current Victorian Royal Commission into the Integrity of Major Public and Civil Infrastructure Projects and the proposed Office of the Special Prosecutor.
The Victorian Government has moved to give IBAC the power to follow public money into the private sector. The Bill would allow IBAC to investigate suspected corrupt conduct involving public funds even where the relevant conduct occurs in the private sector, broadening the types of conduct that may fall within its remit.
Following the money
Under the current Independent Broad-based Anti-corruption Commission Act 2011 (Vic), IBAC’s jurisdiction covers corrupt conduct involving public bodies, public officers and bodies that perform functions on behalf of the State. That can leave a gap where public funds move through a chain of private entities. The Bill is intended to close that gap by enabling IBAC to follow public funds into the private sector.
Central to the reforms is the new concept of an associated entity. Broadly, this will cover a person or body that provides services or performs functions for or on behalf of the State, a public body or a public officer, including:
- contracted service providers and subcontractors;
- agents and delegates;
- concession holders and trustees;
- parties to partnerships, profit-sharing, cooperative, joint venture and similar arrangements; and
- third-party contractors further down a chain of contracts or subcontracting arrangements.
The definition is deliberately broad and is capable of applying across a range of arrangements, including contracts, subcontracts, agency arrangements and joint venture agreements. It can capture private companies and individuals involved in delivering public functions or using public funds.
An associated entity may be treated as a public body or public officer, enlivening IBAC’s jurisdiction, where it is performing a public function on behalf of the State, a public officer or public body and there is a nexus between the suspected corrupt conduct and public funds or a publicly funded project, function or undertaking. This is broadly consistent with the National Anti-Corruption Commission’s investigations framework which extends oversight to certain contractors and other entities performing functions for or on behalf of the Commonwealth.
Receipt or use of public funds may be relevant to whether a function is a public function, depending on the circumstances. For example, a subcontractor delivering works on a government-funded transport project could fall within IBAC’s jurisdiction if the statutory connection to public money and a public function is present. Private contractors will not, however, be automatically subject to an IBAC investigation - the relevant function, funding connection and conduct must be assessed in context.
A wider net for corrupt conduct
The Bill broadens the threshold for what IBAC may investigate. It proposes to replace the current requirement for a ‘relevant offence’ - a defined category of criminal offending - with conduct constituting any criminal offence or a serious disciplinary matter.
A serious disciplinary matter covers serious misconduct, conduct warranting termination or significant employment or contractual sanctions, and serious breaches of applicable codes of conduct. It also extends to serious contraventions of applicable codes of conduct. The changes are aimed at capturing so-called ‘grey corruption’ - conduct that may not be criminal but may involve a serious breach of public trust, abuse of power or misuse of information.
The Bill also clarifies that a benefit need not actually be obtained for conduct to be corrupt conduct. An intention to obtain the benefit may be enough, and attempts are already captured by the statutory definition. The Bill would also enable IBAC to consider non-financial benefits-for example, priority access to future contracts or tendering opportunities.
This matters to private-sector participants because conduct that previously fell outside the criminal threshold may become relevant to an IBAC inquiry, particularly where it relates to procurement, tendering, conflicts of interest, gifts or benefits, or the performance of a publicly funded function. It does not turn an IBAC finding into a criminal conviction and IBAC’s role remains investigative and integrity-focused, with criminal matters dealt with through the appropriate prosecutorial processes.
Looking back: the transitional rules
The transitional provisions would apply the amendments to conduct occurring on or after commencement. However, the provisions will also apply to certain conduct that occurred before the Bill commences including conduct that is the subject of a complaint or notification that IBAC had not, before commencement, determined to dismiss, investigate or refer, as well as conduct subject to an investigation that had commenced but had not been completed before commencement.
The important limitation is that the transitional provisions do not, of themselves, permit IBAC to reopen a complaint or notification that it dismissed or referred before commencement, or an investigation it completed before commencement.
The Bill would also delay for six months the mandatory notification obligations for the relevant principal officer of a body that becomes a public body only because of the new associated entity provisions.
Sector spotlight: what this means for the construction industry
The Victorian construction and infrastructure sectors are likely to be an early focus. Major public projects commonly involve government agencies, project delivery bodies, head contractors, consortia, subcontractors, labour-hire firms, consultants and suppliers. The Bill’s 'follow the money' approach means that integrity risks may be examined beyond the entity that signed the primary government contract.
That focus comes as Victoria establishes the Royal Commission into the Integrity of Major Public and Civil Infrastructure Projects and proposes an Office of the Special Prosecutor. The Royal Commission is expected to examine allegations of corruption, criminal conduct and serious misconduct across major projects, including the role of contractors, subcontractors, labour-hire operators, consortia and government agencies. The Office of the Special Prosecutor is intended to ensure that wrongdoing identified through the inquiry can be pursued.
Businesses already responding to the Royal Commission should treat the Bill as a signal that the enforcement environment for publicly funded projects is tightening on multiple fronts simultaneously.
Taken together, these developments point to a more integrated enforcement and accountability environment for participants in publicly funded projects. Documents and decisions that may previously have been treated as commercial or operational matters - such as subcontractor selection, variations, payment flows, conflicts and site access - may be relevant to IBAC integrity investigations.
What should businesses do?
Businesses that receive, manage or spend public money should treat the Bill as a prompt to revisit and test their compliance controls. Businesses should consider the full contractual chain, not just their employees, directors and direct counterparties.
- Map the chain: Identify every contractor, subcontractor, agent, joint venture partner, labour-hire provider and other intermediary involved in delivering a government-funded project. Understand how public money, information and decision-making authority move through payment and subcontracting flows on each project.
- Strengthen third-party due diligence: Refresh pre-qualification, onboarding and ongoing screening processes for integrity, conflicts, beneficial ownership, sanctions, adverse media and connections to public officials. Due diligence should be proportionate to the role and the value and sensitivity of the relevant work.
- Review procurement and integrity controls: Test tendering, conflicts of interest, gifts and benefits, approval and variation processes, payment controls and escalation channels. Make sure the controls apply consistently to employees and third parties.
- Preserve information and cooperation rights: Ensure contracts contain workable audit, information-sharing, record-keeping and cooperation obligations, including requirements to preserve documents and support internal and external investigations.
- Test escalation and reporting processes: Review how concerns about misconduct are identified, escalated and investigated, including whistleblower and anonymous reporting channels. Ensure employees and third parties have clear, accessible avenues to raise concerns and that reports are appropriately escalated and acted on.
- Prepare for allegations and investigations: Confirm who will manage a suspected integrity issue, how legal and business teams will coordinate with project-level legal advisers and insurers, and how the organisation will respond to requests from IBAC, the Royal Commission, Victoria Police or other regulators.
The Bill is not yet law, and its final operation will depend on the parliamentary process. We will monitor the Bill and provide an update in due course.
Authors: James Clarke, Partner; Dario Aloe, Senior Associate; Jasmine Xu, Lawyer and Sancia Bingham, Lawyer.
Want to know more?
- Quickguide — Anti-Bribery Laws in Australia (9 September 2024)
