Joint ventures

The term joint venture can refer to a variety of project relationships between a public sector agency and private sector organisations or individuals. NSW Treasury has described a joint venture as "an activity of a commercial nature, for profit or gain, carried on jointly and involving a range of technical, managerial and financial resources or other assets in the form of jointly controlled operations, assets and entities".1  

Large scale joint ventures between the government and the private sector can also be called public-private partnerships (PPP). A common type of PPP is a privately-financed project (PFP) which features "a service normally provided to the public by the government, involving the creation of an asset through private sector financing and ownership control".2

Projects of this kind share many of the corruption risks that arise in other procurement situations but they may be exacerbated by the complexity of the transactions. Poorly structured contracts and insufficient monitoring could leave the public agency exposed to financial and related probity risks.  

The different ways that the private and public sectors do business can also give rise to corruption risks. For example, giving gifts, lobbying, and using connections can be an accepted and expected part of doing business in the private sector, whereas such activities are subject to greater scrutiny and regulation in the public sector.  

Public agencies may also engage consultants or employees with private sector experience to work on the joint venture who may not fully understand public sector values and obligations.

The improper conduct of joint ventures can constitute corrupt conduct as defined by the Independent Commission Against Corruption Act 1988.


Corruption risks

A risk assessment of joint ventures may identify some or all of the following corruption risks:

  • The initial decision to enter into a joint venture (rather than a more conventional form of procurement) being based on improper motives or following a flawed process (such as a failure to prepare a business case, or undertaken by an officer without delegation).
  • An employee or their associate having a financial interest in the joint partner and deliberately failing to declare this conflict of interest.
  • An employee colluding with the people involved in the joint partnership for personal benefit, such as a financial gain or promise of future employment.
  • An employee accepting or soliciting a bribe or secret commission from a joint venture tenderer to give partial consideration to the tender.
  • An employee or the joint venture partner misusing either party's confidential information for personal benefit.  
  • A private partner perhaps being dishonest or attempting to improperly influence staff of the agency.
  • Employees of the public sector agency identifying too closely with the interests of the joint venture partner (also known as "capture") subsequently leading to a failure to properly monitor the work performed and preferential treatment in later dealings.
  • Conducting business in social settings or exchanging gifts in breach of a relevant code of conduct.
  • The public sector agency agreeing to unwarranted expansions in the scope and length of the project.


Managing corruption risks

As a minimum your agency should:

  • Introduce policy and procedures for joint ventures that contain elements listed in the Policy Development Guide and Checklist (see Tips and tools below).
  • Include in the policy sanctions for any breach of the policy and procedures.  
  • Review the policy every two years.
  • Refer to joint ventures in relevant corporate documents such as codes of conduct.
  • Train all relevant employees in this policy and procedures to ensure they are aware of their accountabilities.
  • Include joint ventures in the agency's internal audit and corruption risk management processes.


Risk management strategies

Following your risk assessment of the management of joint ventures, you should consider these risk management strategies:  

  • Establishing a steering committee to oversee the joint venture.
  • Ensuring contracts do not compromise the ability of the agency to act in the public interest or adversely affect the agency's overriding accountabilities, and that they give your agency the ability to address unethical conduct and to efficiently sever the relationship if intractable probity problems arise.
  • Ensuring contracts are clear and well structured.
  • Establishing a written negotiation protocol that includes a dispute resolution mechanism to prevent ad hoc decision making.
  • Ensuring confidential information is secure (unless it is required to be publicly available under the Premier's Memorandum 2007-01 (
  • Communicating public sector values to the private partner in the tender process and integrating these into the joint venture agreements.
  • Conducting a corruption risk assessment before entering a contract with the partner, and if necessary preparing a probity plan or engaging a probity advisor.
  • Ensuring no one person has absolute control over any part of the joint venture process by segregating duties or increasing oversight and accountability.
  • Obtaining financial advice, for example on the proposed costing of the project. If necessary, appointing a dedicated administrative secretariat for the joint venture.
  • Managing any conflicting commercial and regulatory roles. (The appropriate approach will depend on the type and scale of development. Options available include the use of external consultants or officers from another agency, segregation of duties, and referral to an independent hearing and assessment panel (IHAP)3).

Record-keeping and reporting strategies

You should consider the following record-keeping and reporting strategies:

  • Maintaining the financial records of joint venture parties and auditing in accordance with the relevant legislation and government and corporate guidelines.
  • Utilising a checklist setting out the process the agency needs to follow.4   
  • Creating and securely storing records of meetings and decision making between joint partners (including keeping file notes of telephone conversations).
  • Using agreed security level access with all information.
  • Conducting a probity audit of the project.


Case studies

Case study 1: Kickbacks in land development

In 2005, the ICAC investigated a joint venture between a local Aboriginal land council (LALC) and a private company for a residential development on a large parcel of land owned by the land council. The ICAC's investigation found:

  • The chairperson of the LALC had accepted the position of Aboriginal liaison officer to the joint venture, in circumstances in which he had a clear conflict of interest

  • The chairperson of the LALC accepted payment for occupying the position of Aboriginal liaison officer

  • The chairperson of the LALC did not disclose to the members that he was employed as the Aboriginal liaison officer, or the monies he was receiving

  • Members of the LALC were only able to obtain limited information concerning the progress of the joint venture and, in particular, the expenditure of funds raised by the mortgages over LALC land.

  • Land to be developed was transferred from the LALC to a trustee company formed at the instigation of the chairperson and outside the control of the majority of the membership of LALC.

The ICAC's recommendations included that consideration be given to whether, and if so on what grounds, local Aboriginal land councils may dispose of land held by them. In addition, if LALCs undertake commercial development of their land there should be clear guidelines about how it occurs. 

Case study 2: Leaking of confidential information

In April 2006, the ICAC released a report into allegations that information contained in a confidential draft Cabinet minute had been leaked to the private sector proponent of a major road project.

It was alleged that a consultant working for a government agency with an interest in the project had divulged confidential costings to the proponent relating to a proposed relocation of a ventilation stack. These costings were contained in a draft Cabinet minute. The Commission's investigation found that the alleged "leak" had in fact occurred, the effect of which was that the proponent potentially became aware of the government's negotiating position.

Ultimately, the ICAC found that although confidential information had been disclosed, the act was not accompanied by an improper or corrupt motive and no finding of corrupt conduct was made.

However, this investigation did show that in large projects where the partners are required to work closely together (often over a long period of time) there is a risk that the normal conventions around protecting confidential information can break down and that public officials can lose sight of the need to protect the public interest.

Case study 3: Uncompetitive process
In December 2007 the ICAC released a report that found a property developer had offered a $30,000 bribe to a council official as an inducement to sell the developer a council-owned car park on favourable terms. The attempted bribe was refused and reported to the ICAC.

During the negotiations that took place, the developer was advised in writing that his proposal constituted a public-private partnership and therefore had to be dealt with under the relevant sections of the Local Government Act 1993, which, inter alia, required a "public competition through an expression of interest".

Shortly after receiving this advice, the developer attempted to bribe the council official. The Commission found no reliable evidence as to exactly what the developer expected in return for the bribe. However, it is possible that he was seeking favourable terms which involved avoiding the legislative requirements relating to public private partnerships.

The desire to avoid competition and obtain favourable contractual terms can be a motivator for improper conduct. In addition, the investigation showed that negotiations carried out in an informal, ad hoc manner can create opportunities for offers of corrupt inducements.

Frequently asked questions

Why are joint ventures any different from other forms of purchasing goods and services?

The key difference between a joint venture and more conventional forms of procurement (which are discussed in the Procurement module) is that the partners are co-principals, as opposed to the more traditional principal-agent relationship. Sometimes a joint venture entails forming a new legal entity but typically the private sector partners have some form of controlling interest in the management of the project. This means that the private sector partner does not necessarily act at the direction of the public sector agency and the normal 'arm's length' contracting arrangement does not exist. This can be the source of corruption risks for a public sector partner.

Are there additional corruption risks if the joint venture partners have contributed different amounts of money (or in kind) to the project?   

The partner that has contributed the greater amount may argue that they have a right to dictate the outcome. However, it is important that before any contract is signed, all parties agree on the aims and projected outcomes of the venture, and how the financial and other benefits – as well as the risks – are to be distributed. 

How can an agency be sure that the risk of corruption is transferred to the joint venture partner?

A rigorous assessment of the risks to an agency in undertaking a joint venture should always be done before entering a project and corruption risks should always be included in this process. Corruption is one of those risks that cannot successfully be transferred to a private sector partner because it is the responsibility of the agency to protect the public interest.

Contracts can be used to help deter or detect deliberate bad faith or poor performance on the part of a joint venture partner. Ultimately any loss, whether financial, political or social, will be borne by the agency and the minister responsible for the activity being contracted.


Other publications

  • Guidelines in the Procedures and Processes to be followed by Local Government in Public-Private Partnerships, NSW Department of Local Government, September 2005. (An overview of this document is given in the Department of Local Government's Circular 05/51.)
  • NSW Treasury publications
    • Working Government - Guidelines for Privately Financed Projects, (last updated December 2006).
    • Risk allocation and Commercial Principles, May 2007.
    • Eastern Creek AWT Facility Post Implementation Review, (TRP06-1, September 2006).
    • New Schools Privately Financed Project Post Implementation Review, (TRP05-3, December 2005).
    • Emerging PFP Opportunities brochure, December 2002.
    • Private Provision of Public Infrastructure and Services, (TRP02-3, April 2002).
    • Working with Government - Private Financing of Infrastructure and Certain Government Services in NSW, (NSW Government Green Paper, November 2000).

Relevant ICAC investigations


Relevant websites



  • Local Government Amendment (Public Private Partnerships) Act 2004


Related topics on the ICAC website



1. From "Changes to Joint Venture Arrangements under the Public Authorities (Financial Arrangements) Act 1987",  NSW Treasury, Circular 06/18, p.1.
2. Guidelines for Privately Financed Projects, NSW Treasury, Sydney, December 2006 p.8.
3. For more information see Corruption risks in NSW development approval process, ICAC, Sydney, September 2007, pp. 56-57.
4. An example of a checklist is set out at Appendix 9 of Guidelines on the Procedures and Processes to be followed by Local Government in Public-Private Partnerships, NSW Department of Local Government, September 2005.