Misuse of public funds says Vic Ombudsman

The Victorian Ombudsman has tabled her report into the misuse of staff budget entitlements during the 2014 State election.  Key points in the wash up from this Inquiry are:

  • 21 Labor MPs breached guidelines for use of Parliamentary funds
  • The scheme saw Labor’s field organisers partially paid as Parliamentary staff
  • Labor has paid back $388,000

This Blog generally deals with not-for-profit (NFP) governance and policy matters rather than government or business issues, however, the issue of compliance with governing documents is a common one, affecting both first and third sectors.

The Ombudsman makes the following observations about a key governing document constraining the behaviour of Parliamentarians – which could be likened to a Board Code of Conduct:

“34. The Parliament of Victoria Members’ Guide provides guidance on the responsibilities
and obligations of Members of Parliament. It is approved by both the President of the Legislative Council and the Speaker of the Legislative Assembly.
35. The Guide provides that Members’ staff budgets can fund the employment of additional Electorate Officers to assist them in their parliamentary and electorate duties. It prohibits the use of Electorate Officers to support Members in their political or party duties. It also prohibits the transfer of Members’ Electorate Office and Communication Budget between Members, and the use of a retiring Member’s budget to communicate on behalf of a new candidate.”

The Ombudsman then reports her finding that:

“38. On any reading, the use of Electorate Officers by Members of the 57th Parliament to campaign for the election of candidates to the 58th Parliament is party-political activity. In the absence of a clear demarcation between the roles, it stretches credulity for Field Organiser work to be considered work supporting the parliamentary or electorate duties of a Member of the 57th Parliament.”

The key lesson for NFP directors and managers is encapsulated in the Ombudsman’s comments about MPs lack of knowledge of the obligations imposed by the Members’ Guide.

“56. The Members’ Guide is not an enforceable document; it provides ‘guidance’ which, it would appear, few Members have even read. While ignorance of the law is no excuse, the question must be asked: how relevant and useful is this guidance, if it is poorly understood and widely ignored?” (emphasis added)

If NFP organisations have codes of conduct or policies which have not been read or understood by their office bearers, how ‘relevant and useful’ are these governing documents?

Code Review / Board briefing opportunity

To assist your Board or Policy / Audit and Risk Committees to review your Code of Conduct or to consider the governance lessons from this story, contact me on 0419 347 599 or by email (garry.pearson@polgovpro.com.au).

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