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Do you have culture of speaking out? Anticipating whistleblowing reforms

November 22, 2018

 

 

In addition to the governments injection of $51 million into the in the courts for more prosecutions, and the $70 million injection to Australian Securities and Investments Commission (ASIC) to allow them to use their suite of enforcement tools, ASIC Commissioner John Price also commented last week about the incoming reforms to the whistleblowing legislation and the role of Office of the Whistleblower in providing support.

 

Earlier this year, at the ASIC Annual Forum, there was a panel session hosted by ASIC Commissioner Warren Day, responsible for intelligence and assessments, which looked at reforms and especially weighed in heavily on the question for compensation as protection and rewards for whistleblowers.

 

The prevailing position from the panel is that the reforms did not follow the rewards system like the one followed in the Securities and Enforcement Commission (SEC) in the United States.

 

At the first GRC Event Series Event in June, Warren Day spoke to members about the upcoming reforms in the whistleblower legislation saying that “We have a view that rewards may not be appropriate at this time, it may be that in the future they are. I think it is safe to say on the behalf of the commission [ASIC] we don’t see a situation where we have rewards on their own like they do in the US.”

 

He explained that the US-style system the whistle-blower only gets rewarded if there is successful prosecution based on the actionable information and there still the risk of the retaliation and being blacklisted whether the whistleblower is awarded or not.

 

At the time the Australian whistleblower reforms were expected to have their way through parliament last month and then requirement around policies for organisations should be in place by January of next year.

 

However, in late November, the reforms have not yet passed through the Senate, so it is hard to say how much that has affected the timeline for mandatory policies.

 

Price said that for 2017-2018 period and stated they had received 228 disclosures and he said that these reports generally include:

 

Allegations of corporate misconduct, generally including corporate governance breaches, or conflicts of interest or misuse of company funds make up around two thirds (2/3) of whistleblower reports. These are internally focused allegations about the operations and management of the company.

 

He said that they are seeing an increase in the last three years in ‘proportion’ to reports about financial services and credit matters.

 

“In terms of matters that ASIC pursues through surveillance or investigation, around 1/3 of all whistleblower reports being worked on in ASIC stakeholder and enforcement teams relate to the large financial services institutions, reflecting our priorities to improve the functioning of the financial system,” Price said.

 

List of expected amendments to the whistleblower regime laid out by Price in last week’s event:

  • broaden the definition of whistleblowers to include a company’s former employees, officers, and contractors, and certain family members;

  • broaden the types of wrongdoing that whistleblowers can make disclosures about that will attract the protections;

  • clarify who in companies can receive whistleblower disclosures;

  • apply the protections to anonymous disclosures;

  • provide better protections for whistleblowers against detriment and better access to compensation;

  • expand the orders that may be made by a court in favour of a person who has suffered loss, damage, or injury as a result of detrimental conduct;

  • increase penalties for individuals and corporations if a whistleblower’s identity is revealed without consent;

  • provide avenues for making emergency or public interest disclosures, under certain limited circumstances; and

  • require public and large proprietary companies to have an internal whistleblower policy that is made available to their officers and employees, with penalties applying for non-compliance.

 

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