Australia: Senate committee calls for incentivising corporate whistleblowers: a ‘fundamental shift in approach’ for fighting fraud in Australia

Last Updated: 1 July 2014
Article by Ben Allen and Hamish McNair


The Senate Economics References Committee yesterday released its final report of the Inquiry into the Performance of the Australian Securities and Investments Commission (ASIC). For corporations, one of the most important aspects of the examination was an investigation into the protections afforded by ASIC to corporate and private whistleblowers.

Leading up to the release of the Committee's final report, many people have called for regulators to consider US-style cash rewards for whistleblowers, while Inquiry witnesses described the current Australian whistleblower regime as 'out-of-date' and 'inadequate'.1

The Committee's final report recommends a number of major reforms to the regulation, protection and reward of whistleblowers in Australia, described as a "fundamental shift in approach to corporate law enforcement". This will have very significant consequences for how Australian organisations manage fraud risk and internal reporting of fraudulent activity.

The Committee's findings

As well as supporting the establishment of an 'Office of the Whistleblower' as a specialist office within ASIC, the Committee recommends that Australia's current corporate whistleblower protections should be extended to cover anonymous disclosures, and that the 'good faith' requirement be removed from the provisions of the Corporations Act 2001.

Perhaps most significant for many organisations is the potentially game-changing recommendation that the government explore options to incentivise whistleblowers in Australia through a rewards-based system, similar to the US.2 With no incentive system in operation in Australia, the current regime is largely focused around protection legislation. The recent passage of the Public Interest Disclosure Act 2013 is an example in the context of public sector whistleblowing. Further, the Corporations Act designates certain protections to whistleblower activities in the private sector, including protection from civil, criminal or contractual liability, prohibition against victimisation and confidentiality provisions.

Adoption of US-style incentivised whistleblower schemes

Incentivised whistleblower schemes are a well-oiled machine in the United States. In 2012-2013 alone, around 6500 tips were received by the Securities and Exchange Commission (SEC), and rewards were paid to six whistleblowers, ranging from US$50,000 to $14 million.3

Late last year, the SEC awarded more than $14 million to a whistleblower as a reward for information that helped it to bring an enforcement action for large-scale investment fraud. This was the largest award made by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, which rewards voluntary whistleblowers who provide the SEC with original information that leads to a successful action. Under the Act, where the SEC obtains more than $1 million in monetary sanctions, the whistleblower is entitled to 10-30% of the sanction.

A separate incentivised whistleblower system established in the US by the False Claims Act allows private individuals to bring claims on behalf of the government and to claim a percentage of the overall amount recovered, if successful. This scheme is known as the qui tam system and essentially allows individuals to recover 15-25% of a successful claim where the government regulator is involved, or 25-30% where the regulator chooses not to join the claim. From 1987 to 2012, this scheme has resulted in the recovery of over $35 billion in funds by the US government.4

At a general level it would seem that both the US-style cash reward scheme and qui tam arrangements could be introduced in Australia without the need for any major legislative or cultural change. Despite this, the Committee's report stopped short of recommending full or immediate adoption of US-style rewards schemes.

The recovery trends from incentivised whistleblower schemes in the US are indicative of the sharp increase in the investigation of fraud allegations that Australian organisations will likely face if they are introduced here.

How can organisations prepare for incentivised whistleblower schemes?

In its findings, the Committee advocates regulations which will encourage - or even require - companies to operate internal whistleblower systems. Therefore, in terms of both future reform and best practice, having a robust internal compliance process will be a key consideration for all organisations, regardless of whether reporting incentives exist.

For the financial services industry, conversations with risk and compliance officers and with others who have governance oversight need to commence immediately. These areas are increasingly in the spotlight in relation to how organisations manage their affairs, particularly in relation to compliance. Other industries similarly need to start these conversations now, especially those who contract with government.

Preparing for whistleblower tip-offs external to the organisation will include ensuring that fraud control detection and prevention mechanisms in-house are of the highest quality – especially in the areas of financial management, invoicing and information technology.

If a reward-based scheme or qui tam arrangements are introduced in Australia, the prospect of rewards for whistleblowers will undoubtedly result in a sharp rise in the number and type of whistleblower tips received, across a range of industry sectors. In preparing for incentivised whistleblower schemes, ensuring that organisations' fraud detection systems and reporting policies are ahead of the game will be critical to containing fraud risks and cost exposure.


1Senate Economics References Committee, Performance of the Australian Securities and Investment Commission (June 2014) 202

2Senate Economics References Committee, Performance of the Australian Securities and Investment Commission (June 2014) Recommendation 16

3US Securities and Exchange Commission, 2013 Annual Report to Congress on the Dodd-Frank Whistleblower Program (November 2013)

4US Department of Justice, 'Fraud Statistics – Overview, October 1 1987 – September 30 2012' (24 October 2012) at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ben Allen
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.