Australia: Strong whistleblower laws in the Asia Pacific region?

Last Updated: 6 December 2017
Article by Murray Thornhill

Several jurisdictions have recently or are currently reviewing their laws relating to protection of whistleblowers both in the public and corporate sectors.

For a long time, Australia has been the subject of criticism for the weakness of its whistleblower protections, including that existing protections are "overly narrow" and make it "unnecessarily difficult" for whistleblowers to make protected disclosures.1

An independent review, conducted by Transparency International in 2014, found Australia's whistleblower protections for the private sector is lacking, despite having comprehensive protections for public sector whistleblowers.2

With the strengthening of anti-corruption laws and growing domestic and international pressure for reform, as well as Australia's reputation as a transparent and low-corruption business and regulatory environment, there is every chance that Australia will seek to lead the way in the region by spearheading a reform to strike a balance between protecting whistleblowers, disincentivizing corruption, and protecting legitimate corporate confidentiality.

Recent Consultation

In line with the global movement against anti-corruption and bribery, the Australian Federal Government has stated its focus to combat corporate misconduct through the introduction of stronger whistleblower protections and compensation schemes. The Australian Federal Parliament has referred an inquiry in relation to protections for whistleblowers to the Joint Parliamentary Committee on Corporations and Financial Services. The Committee's report is expected by mid-August 2017.

Whistleblowing on Breaches of Corporate Legislation

In recent years notable scandals have been brought to light due to whistleblowers' making disclosures in Australia. The most notorious scandals are the underpayment of 7-Eleven employees by franchisees, which has resulted in $110 million compensation, and an investigation into the questionable financial planning advice given by the Commonwealth Bank of Australia's financial planners, resulting in $29 million compensation being paid to victims. In both instances, existing legislative protections have been criticized for their failure to offer sufficient protection to the whistleblowers. The weaknesses of Australia's current system has been highlighted by the media which has reported that Jeff Morrison, the key whistleblower who brought the Commonwealth Bank's financial advice scandal to light, lost his job and endured death threats. That narrative may have been different if Mr Morrison was able to make an anonymous disclosure and there had been adequate legislation to compensate and protect him from reprisal.

What Disclosures Are Protected?

Under current Australian legislation, in order for a whistleblower to make a protected disclosure, the following requirements must be met:

  • the whistleblower must be a current officer, employee or contractor of a company;
  • the whistleblower must provide their name (anonymous disclosures are not protected);
  • the disclosure must be made to Australian Securities and Investment Commission (ASIC), the company's auditor or to specified officers of the company;
  • the disclosure must be made in "good faith;" and
  • the whistleblower must have reasonable grounds to suspect that officers or staff of an organization have breached a relevant provision of the legislation.

If a whistleblower satisfies the above criteria, they can be protected from civil or criminal litigation as a consequence of making a protected disclosure. However, the protections must be relied upon as a defence to prosecution or a claim by a whistleblower, meaning that a whistleblower is on the back foot and will have likely already suffered the fall-out for making the disclosure. Further, a whistleblower's disclosures in some cases can be referred to other parties, including the Federal Police or Australian Prudential Regulation Authority (APRA). Given that the disclosure cannot be made anonymously, a whistleblower's disclosure often leads to rapid escalation of events completely outside of the whistleblower's control.

Misconduct Relating to Unions and Employer Organizations

Recent amendments were enacted by the Australian Commonwealth Parliament to allow employees to make protected disclosures to government bodies in relation to breaches of union and employment laws. Although the scope of this reform is limited, these amendments are significant as they have done away with the need for a disclosure to be made in "good faith."

Whistleblowers – Tax Fraud

Disclosures by whistleblowers relating to tax fraud or misconduct to the Australian Tax Office (ATO) are not currently protected, given that only certain disclosures relating to employment law or corporate law misconduct can be protected under the current legislation. Given the government's crackdown on tax evasion and fraud, it is expected that proposed amendments may include the ability for financial advisers to make protected disclosures to the ATO regarding their corporate clients' tax affairs. However, such reforms are likely to be hotly contested and vigorously opposed by industry and professional groups.

Protected Disclosures

It is also expected that the federal government will seek to implement provisions that will allow for former employees, officers and contractors to make protected disclosures, similar to recent amendments to employment related disclosures. The current regime, by allowing only current employees, officers and contractors to make protected disclosures, fails to take into consideration that these parties will suffer reprisal and career damage if knowledge of their disclosure became public. Under existing Australian legislation, if a whistleblower who is no longer employed by a company took part in any breach of corporation legislation themselves, they are not currently protected from prosecution or civil action. To bring Australia's corporate whistleblower scheme in line with best practice international laws and encourage disclosures, it is expected that it will be proposed for the "good faith" requirement to be dispensed with. Currently, for a corporate whistleblower to be entitled to protection for making a disclosure relating to corporate misconduct, their motive for making the disclosure must not be malicious or for a collateral purpose. The "good faith" requirement is considered to deter potential whistleblowers, given that it creates uncertainty of whether they will be protected after they make the disclosure.

Bounty-Style Compensation

The Australian Federal Financial Services Minister Kelly O'Dwyer has suggested that the Australian Government would be seeking to introduce a "bounty-style" reward system similar to that of the U.S. Such a system would reward whistleblowers who disclose high-quality information that results in a conviction or monetary penalty. It is suggested that a rewards scheme would take into account the financial consequences that whistleblowers endure from disclosing information. This "bounty-style" rewards scheme is based on U.S. law which rewards whistleblowers with 10 to 30 percent of money recovered, where sanctions exceed $1 million. However, by international standards, fines imposed on Australian companies are relatively low. For such a scheme to be successful in Australia, there will need to be a substantial increase in the fines. Further issues under consideration include whether disclosures made to media should be protected, given that in recent years the media has been instrumental in revealing substantial corporate misconduct. How Businesses and Companies Can Prepare The impending reforms seem to have been broadly accepted by the Australian corporate sector. Many industry sectors are attempting to prepare themselves. Businesses are able to prepare by:

  • arranging for an independent and external review of their current whistleblower policies;
  • permitting anonymous disclosures internally, such as by hotline or email;
  • if appropriate, engaging an external investigator to investigate disclosures and conduct;
  • implementing specific procedures for investigating and dealing with disclosures;
  • educating officers and employees about internal policies and protections offered to whistleblowers and how to handle disclosures;
  • ensuring that suppliers are contractually bound to have minimum standards of whistleblower procedures; and
  • committing to compensation or relocation arrangements for staff who are targeted for reprisals after making a disclosure.

Lawyers and in-house counsel representing clients conducting business in, or in connection with, Australia and throughout the Asia Pacific region should flag the potential reform of whistleblower protections to ensure they are not caught off guard. While reform is never a certainty, the key to preparing for such reforms will be ensuring that employees are offered suitable options for whistleblowing and that suitable procedures and processes for dealing with complaints are well known throughout the company. Failure to adopt such an approach could result in significant financial and reputational damage to the company.

Footnotes

1 Australia's first Open Government National Action Plan 2016-18

2 Whistleblower Protection Laws in G20 Countries Priorities for Action: Final Report 2014

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 Mondaq.com.

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

Authors
Murray Thornhill
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Australia
 
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”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Australia
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions