Chapter 2

Background to the inquiry


In June and July 2019 there was media reporting on new roles for two former Ministers of the current government, the Hon. Christopher Pyne and
the Hon. Julie Bishop.1 Mr Pyne, who until late May 2019, was the Minister for Defence, was reported as being employed by consultancy firm EY, which undertakes work for the Australian Government, including for the Department of Defence. Ms Bishop, who was Minister for Foreign Affairs until August 2018, had reportedly taken on a position on the board of Palladium, a provider of a range services to the Australian Government, including to the Department of Foreign Affairs and Trade.2
The nature of both Mr Pyne and Ms Bishop's roles gave rise to the question of whether these new roles were compliant with the obligations of former Ministers with the Prime Minister's Statement of Ministerial Standards (Ministerial Standards). On 4 July 2019, Senator the Hon. Mathias Cormann, Minister for Finance, made a statement to the Senate relating to Ministerial Standards.3 Senator Cormann advised that the Prime Minister,
the Hon. Scott Morrison MP, had sought a advice from the then Secretary of the Department of the Prime Minister and Cabinet (PM&C), Dr Martin Parkinson AC PSM, on the compliance of 'two former ministers in our government' with the Ministerial Standards.4
On 22 July 2019, Senator Cormann tabled correspondence in the Senate from Dr Parkinson to the Prime Minister.5 This correspondence outlined the outcome of Dr Parkinson's investigation into compliance by former Ministers Pyne and Bishop with the Ministerial Standards.

This chapter:
sets out the background to the relevant section of the Ministerial Standards;
gives and overview of the timelines for the appointment of Mr Pyne and Ms Bishop to their respective positions with EY and Palladium; and
summarises Dr Parkinson's findings in his advice to the Prime Minister.

Statement on Ministerial Standards

The Ministerial Standards set out the Prime Minister's expectations for the conduct and behaviour of members of his Ministry. Although referred to by various titles under different Prime Ministers, such standards have been in place since 1996, when the then Prime Minister, the Hon. John Howard, introduced a ministerial code of conduct.6 The most recent version of the Ministerial Standards was released on 30 August 2018, shortly after Mr Morrison became Prime Minister.7 An abstract describes the purpose of the Ministerial Standards:
The Australian people deserve a Government that will act with integrity and in the best interests of the people they serve.
Serving the Australian people as Ministers and Assistant Ministers is an honour and comes with expectations to act at all times to the highest possible standards of probity.
All Ministers and Assistant Ministers are expected to conduct themselves in line with standards established in this Statement in order to maintain the trust of the Australian people.
All parliamentarians are required to disclose private interests to the parliament. Given the additional powers of Ministers and Assistant Ministers, the Prime Minister expects them to provide him with additional information about their private interests to ensure there are no conflicts with their roles as ministers.
This Statement is principles based and is not a complete list of rules. The Prime Minister expects all ministers in the Australian Government to live up to the high standards expected of them by the Australian people at all times.8
The 1996 document, 'A guide on key elements of ministerial responsibility', did not contain limitations on the nature of the postparliamentary employment of former ministers.9 In 2007, then Prime Minister, the Hon. Kevin Rudd, issued 'Standards of Ministerial Ethics', which provided a 12-month limitation on the types of employment that former Ministers could undertake.10 The December 2013 Statement of Ministerial Standards, issued by the then Prime Minister, the Hon. Tony Abbott, provided for an 18 month restraint.11
The relevant section of the current Ministerial Standards reads:
Post-ministerial employment
2.25. Ministers are required to undertake that, for an eighteen month period after ceasing to be a Minister, they will not lobby, advocate or have business meetings with members of the government, parliament, public service or defence force on any matters on which they have had official dealings as Minister in their last eighteen months in office. Ministers are also required to undertake that, on leaving office, they will not take personal advantage of information to which they have had access as a Minister, where that information is not generally available to the public.
2.26. Ministers shall ensure that their personal conduct is consistent with the dignity, reputation and integrity of the Parliament.12

Timelines of appointments

This section sets out the timelines leading up to the post-ministerial employment of Mr Pyne by EY, and the post-ministerial appointment of Ms Bishop by Palladium.

Mr Pyne and EY

In June 2019, it was reported in the media that Mr Pyne, the former Minister for Defence, had accepted employment with EY.13 Both EY and Mr Pyne responded to these reports, and the speculation that this employment may be in breach of the Ministerial Standards.
In responding to these reports, an EY spokesperson initially stated that Mr Pyne's role would be related to building EY's defence capability.14 EY subsequently stated that Mr Pyne's role would be related to the 'private sector side of the business':
He will not be lobbying or meeting with public sector MPs, public service or defence force in his EY role. He is supporting the private sector side of the business.15
In speaking of Mr Pyne's employment with EY, Mr Mark Stewart, an EY Partner and Defence Industry Leader, informed the Australian Financial Review that Mr Pyne was engaged 'to help lead conversations about what states need to do to meet the challenges and opportunities this huge defence investment will bring'.16
In a statement on his Twitter account on 29 June 2019, Mr Pyne set out the parameters of his role with EY, and explained how his role was not in breach of the ministerial standards:
I have not taken personal advantage of information I received as a Minister in the Defence portfolio that is not otherwise publicly available. I have not lobbied or had business meetings with any members of the government, public service or defence force on any matters on which I have had official dealings as a Minister in the last eighteen months.
I intend to ensure that anyone I provide advice to has rigorous processes and procedures in place to ensure I am not put in a position where the Ministerial Code of Conduct might be breached.17
Table 2.1 sets out the chronology of key events relating to the Mr Pyne's resignation as a Minister and consultancy arrangements with EY.

Table 2.1:  Chronology of key events: Mr Christopher Pyne and EY
1 March 2019
EY scheduled to host a Future SA Forum with Mr Pyne. However, the event is postponed by Future SA on 22 February 2019
2 March 2019
Mr Pyne announces his retirement from his political career
7 March 2019
Mr Mark Stewart, Partner, Defence Industry Leader, EY, contacted Mr Pyne requesting a meeting to discuss his (Mr Pyne's) post-retirement plans. Meeting scheduled for 8 April 2019
15 March 2019
EY hosts the Future SA Forum, which is attended by Mr Pyne
8 April 2019
EY met with Mr Pyne. At this meeting, they discussed Mr Pyne's postretirement plans and his interest in utilising his experience as a politician and Minister to assist a professional services firm grow their private sector defence industry business
11 April 2019
2019 Federal election announced
17 April 2019
Mr Stewart (on behalf of EY) formally offers consultancy agreement to Mr Pyne
20 April 2019
Mr Pyne accepts offer and suggests start date of 1 June 2019
18 May 2019
2019 Federal election held
29 May 2019
Prime Minister's second ministry sworn in. Mr Pyne ceases to be the Minister for Defence18
7 June 2019
Consultancy agreement commences
Source: Except where otherwise referenced, the material in this table is derived from EY, Submission 4, p.4.

Ms Bishop and Palladium

In early July 2019, Palladium announced the appointment of Ms Bishop to a role as a director, and this appointment was also the subject of media reports.19
In its media release, Palladium referred to Ms Bishop's contacts and expertise:
[Ms] Bishop brings a network of global contacts, years of public service experience and background in driving innovation in international development.20
Ms Bishop did not make any public statements about this post-ministerial role.
Table 2.2:  Chronology of key events: Mr Julie Bishop and Palladium
26 August 2018
Ms Bishop resigns from the Ministry
November 2018
Two directors of Palladium advise of their intention to retire from the board in mid-2019 (retirement date was ultimately end of May 2019)
3 June 2019
Kim Bredhauer, Executive Chairman of Palladium, and Christopher Hirst, Chief Executive Officer of Palladium, agree to approach Ms Bishop about the possibility of joining the board
5 June 2019
Mr Bredhauer contacts Ms Bishop to ask if she would be interested in exploring an opportunity to join the board as a non-executive director. Mr Bredhauer had previously met Ms Bishop once when she was an opposition member of Parliament, prior to her becoming a Minister
6 June 2019
Ms Bishop indicates she could be interested and a meeting is arranged to discuss the opportunity
11 June 2019
Mr Bredhauer and Ms Bishop meet in Perth and discuss the company and the non-executive director role. During this meeting Ms Bishop made it very clear that she was limited in what she could do in adherence to the Ministerial Standards
13 June 2019
Mr Bredhauer advises the current board that he has met with Ms Bishop regarding a non-executive director role and schedules a board call to discuss
13 June 2019
Ms Bishop confirms to Mr Bredhauer that she is interested in appointment as a non-executive director
21 June 2019
Mr Hirst and Mr Bredhauer have a conference call with Ms Bishop. This is Mr Hirst’s first interaction with Ms Bishop, and Ms Bishop immediately explains the requirements set out in the Ministerial Standards.
25 June 2019
Ms Bishop is sent a draft induction pack, which does not include a letter of appointment
27 June 2019
Ms Bishop meets with Darryn Purdy, Executive Director of Palladium, and Ken Warriner, outgoing Chairman of the Board of Palladium, in Sydney to discuss Ms Bishop’s possible appointment. Three non-executive directors join the discussion remotely: John Eales from Australia, Charlie Middleton from the United Kingdom and Alonzo Fulgham from the United States
28 June 2019
Board meeting to officially confirm appointment. Board unanimously approves the appointment of Ms Bishop as a non-executive director
Source: Except as otherwise referenced, material in this table is derived from Palladium, Submission 8.1, p. 2.

Investigation by Dr Parkinson

As noted above, the Prime Minister sought advice from the Secretary of the Department of PM&C on whether Mr Pyne and Ms Bishop's roles with EY and Palladium, respectively, were in compliance with the Ministerial Standards. The section below outlines the findings in Dr Parkinson's report to the Prime Minister.
By way of introduction, Dr Parkinson set out a distinction between the experience and knowledge that a person obtained as a Minister:
It is not reasonable to think that former Ministers can or will 'forget' all information or knowledge gained by them in the course of their ministerial roles. Nor, in my view, can the experience a Minister gains from fulfilling that role be extinguished when they undertake a role after leaving the Parliament.
In this regard, a distinction should be drawn between experience a person gains through being a Minister and specific knowledge they acquire through performing the role. It is the latter which is pertinent to the [Ministerial] Standards.
Notwithstanding this, former Ministers should take care to not divulge the deliberations of the Cabinet or the confidential briefing provided to them by the public service in order to gain benefit for themselves or another party post their ministerial position.21

Mr Pyne

In the report into compliance with Ministerial Standards, Dr Parkinson set out the matters he had taken into account in his investigation of Mr Pyne's appointment, including:
Mr Pyne's public statement issued on 29 June 2019;
an article in the Australian Financial Review, dated 27 June 2019 reporting quotes from a spokesperson for EY;22 and
an interview between Dr Parkinson and Mr Pyne on 11 July.
Dr Parkinson stated:
On the basis of the information available to me, it is not evident that Mr Pyne has disclosed defence related information that is not in the public domain for his personal benefit. Further there is no evidence to suggest that Mr Pyne has lobbied, advocated or had business meetings with members of the Government, parliament, public service or defence force that relate to the matters he dealt with as a Minister in the defence portfolio.23
Dr Parkinson also stated:
I am satisfied that Mr Pyne is plainly aware of his obligations under the Standards, and that he is aware he cannot use the information known only to him because of his ministerial roles to the benefit of himself or EY. Based on the conversation I had with Mr Pyne, I consider he has put in place mechanisms to ensure that, whilst his engagement with EY will appropriately draw on his 26 year experience as a parliamentarian, he will not impart direct or specific knowledge known to him only by virtue of his ministerial position.24

Ms Bishop

In his report Dr Parkinson noted that Ms Bishop had not released a public statement about her employment by Palladium.25
Palladium issued a press release regarding Ms Bishop's appointment on 1 July 2019, in which reference was made to Ms Bishop's contacts, experience and background in international development, as well as:
…her work following the Malaysia Airlines MH17 tragedy in Ukraine, improving Sino-Australian relations, and input into the Colombo Plan, an intergovernmental effort to strengthen economic and social development in the Asia-Pacific region.26
Dr Parkinson did refer to media articles on the appointment, namely:
a 4 July 2019 article on The Guardian;27 and
a 2 July 2019 article in the Australian Financial Review.28
In relation to this material, Dr Parkinson commented:
It seems likely that Ms Bishop's knowledge about Australian government policies regarding aid and development, and her contacts with international leaders, will be utilised by, and benefit, Palladium. Indeed, Palladium's statement [in the Australian Financial Review] suggests that this experience was a key basis for Ms Bishop's appointment. I note that Ms Bishop is one of five Australians on the Board of Palladium, which also includes one member from the United Kingdom and one from the United States.29
On 11 July, Dr Parkinson interviewed Ms Bishop to gather more information about her appointment. Ms Bishop stated that she had not been in contact with Palladium during the time she was Minister for Foreign Affairs and that she had not been a minister for nearly 12 months. Ms Bishop noted that in this time 'certain elements of the Aid program had been recast'.30 Furthermore, 'Ms Bishop has indicated that Palladium does not expect her to engage on any Australian based projects' and that her position on the board 'would not extend to Palladium's tendering processes for projects, lobbying or other activities beyond the role of a Non-Executive Director'.31
Dr Parkinson concluded:
I am satisfied that Ms Bishop is cognisant of her obligations under the [Ministerial] Standards and is aware that the information known to her as a former Minister for Foreign Affairs cannot be used to the benefit of herself or Palladium. Ms Bishop has assured me that she will comply with the [Ministerial] Standards.32


On the issue of enforcement of the Ministerial Standards, Dr Parkinson noted that certain actions were available to the Prime Minister when considering the conduct of current Ministers and whether there was a possible breach of the Ministerial Standards. However, Dr Parkinson continued:
…there are no specific actions that can be taken by you [the Prime Minister] in relation to former Ministers once they have left the Parliament.33

Dr Parkinson concluded:
On the basis of the information available at this time, I have no grounds to believe that either Mr Pyne or Ms Bishop have breached the [Ministerial] Standards.34

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