If, as the AFR’s Ingrid Mansell suggests today, Qantas sells 40% of its Frequent Flyer unit, it will make David Epstein’s life a little more complicated in his new role at our major airline.

Such a sale would throw into relief the operation of the Government’s lobbying code of conduct, and a little-known requirement that many in-house lobbyists would almost certainly not be aware of.

This gets a bit technical but hang in there.

As we’ve noted with almost painful regularity, the lobbyist code of conduct and register only applies to third-party lobbyists. In-house lobbyists — the full-time heads of government relations and corporate affairs and their staff — are exempt. The code makes it clear that it does not apply to “any person, company or organisation, or the employees of such company or organisation, engaging in lobbying activities on their own behalf rather than for a client.”

Many company lawyers and lobbyists would have read that and assumed they weren’t covered.

But it’s not so simple. The Department of Prime Minister and Cabinet provided an FAQ about the code — one that was amended after discussions with industry before the operation of the Lobbyist Register commenced in July. The FAQ is on the website but doesn’t form part of the code. Good lawyers and lobbyists would have dug down to find it. Others may not have been so diligent.

The problem with defining in-house lobbyists is that many large corporate entities have multiple firms under the corporate brand, and no all of them are fully owned by the parent company. That doesn’t just apply to the likes of Macquarie Bank and Babcock and Brown and their investment funds, but too many large corporates that have structured themselves into separate companies.

The FAQ explicitly addresses that situation, and says you’re not an in-house lobbyist if you represent a company within your group that isn’t fully-owned. Like a 60% Frequent Flyer program.

The FAQ says:

What if the employees of a wholly owned company in a group structure lobby on behalf of another company within the group that is not wholly owned?

A group company that is not wholly owned must, by definition, have other individuals or companies outside the corporate group who stand to benefit from any lobbying activity undertaken on its behalf.

Accordingly, if a group company is engaged to lobby on behalf of a non wholly owned company, the employees who lobby on its behalf are regarded as lobbying on behalf of a third party. In these circumstances:

  • the company that employs the relevant staff should be registered as a lobbyist;
  • the relevant staff of that company should be registered as employees who undertake lobbying activities;
  • and the non wholly owned company should be listed as a client.

The non-wholly owned company should be identified as a client when lobbying activities are undertaken on its behalf, and removed from the list of clients no later than three months after the lobbying activities have concluded.

John Faulkner told the Senate yesterday that David Epstein has voluntarily offered not to lobby on Qantas’s behalf for twelve months on any issue he had official dealings with — the same requirement as would apply if he were a third-party lobbyist under the code of conduct. Fair enough.

However, if the Frequent Flyer sale goes ahead, Epstein would be banned outright from lobbying in relation to Frequent Flyer issues. And after 12 months, he’ll have to go on the Lobbyist Register. And what are Frequent Flyer issues anyway? Surely they couldn’t be separated from general aviation issues.

This little scenario would be widespread across large companies — and in the media sector, in particular, where cross-ownership of companies abounds and the big TV networks are owned by private equity. No one from CVC, for example, could lobby on behalf of the Nine Network unless they were registered as a lobbyist or were also an employee or director of Nine.

There’s a good chance plenty of in-house lobbyists aren’t aware of this and have been discussing companies under their corporate brand with Ministers and officials, unaware that the part-ownership of those companies means they’re breaching the code.

Ministers and their officials wouldn’t be aware of the breach because few of them are aware of the full ownership structures of the companies who lobby them. In my days as a bureaucrat, I tried to ascertain the ownership structures of companies whenever they sent representatives or executives to meet the Minister. But it could be hard work, and wasn’t always possible.

A diligent, intelligent Opposition might find this a useful avenue to explore via Senate Estimates or Questions on Notice. There are likely to have been multiple breaches of the lobbyist code already. They would be inadvertent, and the fault of lobbyists rather than Ministers, but they’d be breaches nonetheless.

Peter Fray

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