Corporate whistleblowing: ASIC's performance
and issues with the current protections
Paragraph (e) of the terms of reference for this inquiry provides that
the committee should consider the performance of ASIC with regard to the
'protections afforded by ASIC to corporate and private whistleblowers'.
The importance of this aspect of the inquiry has been underlined by suggestions
that ASIC was slow and ineffective in responding to information provided by
whistleblowers at Commonwealth Financial Planning Limited (CFPL) about alleged
misconduct within the organisation.
This chapter provides:
an overview of the protections afforded to corporate and private
whistleblowers in Australia, and an explanation of ASIC's place within
Australia's corporate whistleblower framework;
an analysis of evidence received by the committee on the need to
reform Australia's corporate whistleblower protections, and an overview of
recommendations for reform made by witnesses; and
the committee's recommendations for improving Australia's
corporate whistleblowing regime.
Why is whistleblowing important?
In his submission, Professor AJ Brown provided the following definition
[W]histleblowing means the 'disclosure by organisation
members (former or current) of illegal, immoral or illegitimate practices under
the control of their employers, to persons or organisations that may be able to
effect action'...In other words, whistleblowers are organisational employees,
officers and other insiders—as distinct from customers, members of the public
or others who may have evidence or complain of organisational wrongdoing.
There was broad agreement from witnesses that effective and
appropriately broad corporate whistleblower protections were of fundamental
importance in ensuring good regulatory and corporate governance outcomes. For
instance, ASIC wrote that whistleblower reports provided it with 'important
information about the activities and the culture of the companies and other
entities we regulate'. It further noted that whistleblowers 'are often
particularly well placed to provide direct information about corporate
wrongdoing by virtue of their relationships or position'.
Systems that encourage would-be whistleblowers to make disclosures, and
that in turn protect whistleblowers from retribution, are important because
whistleblowers play a key role in preventing and detecting corporate
wrongdoing. Dr Bowden pointed to a 2009 PricewaterhouseCoopers survey on
economic crime (along with similar surveys and studies) to demonstrate this
point, noting that the survey found 'whistleblowers were the highest source for
identification of internal wrongdoing'.
Dr Bowden, also suggested that effective corporate whistleblower
protection regimes provide substantial financial and economic benefits, not
least because trusted organisations are more profitable and their costs of
The Blueprint for Free Speech reported findings from surveys suggesting
the Australian public recognises the value of measures that protect and
81% of Australians believe that people should be supported
for revealing serious wrongdoing, even if it means revealing inside
information. 87% of those surveyed in Australia, agreed that if someone in an
organisation has inside information about serious wrongdoing, they should be
able to use a journalist, the media, or the internet to draw attention to it.
CPA Australia, meanwhile, noted that whistleblowing was 'an effective
mechanism for the identification and rectification of wrongdoing'. At the same
time, CPA Australia stressed that the positive benefits of corporate
whistleblowing in Australia were contingent on the trust would-be
whistleblowers had in ASIC to act on the information they provided. That is,
would-be whistleblowers would be far more likely to actually make a report to
ASIC if they were confident that the information they provided was going be
taken seriously and addressed.
Dr Bowden made a related if broader point in an article he supplied to
the committee. In that article, Dr Bowden argued that the exposure of
wrongdoing by whistleblowers was not, by itself, sufficient to ensure that the
wrongdoing would cease. In his view, it was also necessary for a whistleblowing
support system to 'ensure that the allegation will be investigated, and that,
if found to be true, it will be stopped, and if a crime has been committed, the
perpetrator will be punished'.
Whistleblower protections in the Corporations
Since 1 July 2004, the Corporations Act has provided certain
protections to whistleblower activities. These protections are intended, as
ASIC notes on its website, 'to encourage people within companies, or with special
connections to companies,
to alert ASIC and other authorities to illegal behaviours'.
The protections were introduced by the Corporate Law Economic Reform Program
(Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9).
The protections in Part 9.4AAA of the Corporations Act were summarised
by ASIC in its main submission to this inquiry. They include:
...protection from any civil liability, criminal liability or
the enforcement of any contractual right that arises from the disclosure that
the whistleblower has made. Part 9.4AAA also includes a prohibition against the
victimisation of the whistleblower, and provides a right to seek compensation
if damage is suffered as a result of that victimisation. For example, under Pt
9.4AAA, a whistleblower whose employment is terminated, or who suffers
victimisation as a result of their disclosure, may commence court proceedings
to their job or to a job at a comparable level; and
for any victimisation or threatened victimisation.
The Corporations Act also includes a confidentiality protection for the
whistleblower, making it an offence for a company, the company's auditors, or
an officer or employee of that company to reveal the whistleblowers' disclosed
information or identity.
Part 9.4AAA outlines the types of information disclosures that attract whistleblower
protections under the Act; who can qualify as a whistleblower; who the
disclosure of information should be made to; and the conditions in which such a
disclosure must be made. In order to receive protection under the Corporations
Act as a whistleblower, the person disclosing misconduct within a company must
an officer or employee of that company; or
have a contract to provide goods or services to that company; or
be an employee of a person that has a contract to provide goods
or services to that company.
In order to be protected, the whistleblower must make the disclosure of
misconduct to ASIC, the company's auditor, or certain persons within that
The Corporations Act also provides that, in order to qualify for
whistleblower protection, the person making a disclosure cannot do so
anonymously. The discloser must make the disclosure in good faith and have
reasonable grounds to suspect that:
the company has, or may have, contravened a provision of the corporations
an officer or employee of the company has, or may have, contravened
a provision of the corporations legislation.
ASIC's role in relation to whistleblowers
ASIC has a central role in relation to whistleblowing in the Australian corporate
sector. As noted above, the Corporations Act prescribes that other than
internal disclosures and disclosures to a company's auditor, only disclosures
made to ASIC are covered by the whistleblower protections within the Act.
It appears that ASIC receives a substantial amount of information from
whistleblowers. Demonstrating this point, in its main submission ASIC noted
that it received 845 reports of misconduct in 2012–13 from people who could
potentially be considered whistleblowers under the Corporations Act. Table 20
in the submission provided a breakdown of the outcome for these reports—for
example, 129 were referred internally for further action, 105 were resolved and
115 were not within ASIC's jurisdiction.
While the Corporations Act establishes an explicit role for ASIC as a
receiver of whistleblower disclosures, a number of witnesses pointed to the
fact that the Act is silent on how the regulator should actually handle the
information it receives from whistleblowers. ASIC itself noted that the
...operate to protect and provide remedies for whistleblowers
against third parties rather than mandating any particular conduct of ASIC.
These protections do not deal with how ASIC is to treat whistleblowers and
documents relating to whistleblowers.
Similarly, while the Corporations Act establishes protections available
to whistleblowers, it does not mandate or enable ASIC to act on behalf of
whistleblowers to ensure their rights as whistleblowers are protected. Indeed,
as ASIC noted in its submission, where a whistleblower:
...seeks to rely on the statutory protections against third
parties, they will generally have to enforce their own rights or bring their
own proceedings under the relevant legislation to access any remedy. The
legislation does not provide ASIC with a direct power to commence court
proceedings on a whistleblower’s behalf.
While the Part 9.4AAA whistleblower protections do not mandate any
particular conduct by ASIC in relation to whistleblowers, ASIC noted that the
ASIC Act nonetheless requires it to:
...protect any information provided to us in confidence, from
all reports of misconduct, whether or not the confidential information is
received from a whistleblower or any other person.
However, ASIC also points out that while it seeks to prevent the unauthorised
use or disclosure of information provided to it by whistleblowers, current
legislation does not provide additional protections for documents that contain
whistleblower information, including information that might reveal a
whistleblower's identity. Moreover, ASIC has had past difficulties 'resisting
applications for the production of such documents during litigation'.
This is a cause for concern for ASIC, and as such one of its recommendations
for regulatory change (as noted below) is to amend the legislation so that ASIC
cannot be required to produce a document revealing a whistleblower's identity
unless ordered to do so by a court or tribunal.
The need for whistleblower reform
Overwhelmingly, those witnesses who addressed the issue of Australia's
corporate whistleblower framework were of the view that reform was needed in
the area. ASIC itself, as discussed in the next section, argued for modest
to enhance whistleblower protections.
Admittedly, not all submissions received by the committee supported the
case for whistleblower reform. Most notably, the Corporations Committee of the Law
Council of Australia's Business Law Section maintained that there was 'no
serious defect in [the Part 9.4AAA] provisions or the way they have operated in
This view, however, proved an exception, with most witnesses regarding the
current whistleblower regime as, in varying degrees, out-of-date and inadequate.
Areas of particular concern included: the Corporations Act's overly narrow
definitions of who might be considered a whistleblower and the type of
disclosures that could attract whistleblower protections; the absence of any
requirement in the Act for internal whistleblowing processes within companies; and
the fact that the Act does not mandate a role for ASIC in protecting
In making the case for reform, several witnesses suggested that the
current legislation had proven ineffective in protecting the interests of
The Rule of Law Institute focused its criticism on ASIC specifically,
contending that it had failed to protect whistleblowers from reprisals.
CPA Australia, meanwhile, wrote that 'recent high profile cases appear to have
undermined ASIC's reputation in regards to managing whistleblowing disclosures'.
In the CFPL matter, the decision of Mr Morris and the other CFPL
whistleblowers to blow the whistle on the misconduct at CFPL ultimately proved
very costly for each of them on a personal level. Professor Brown told the
committee that stories like Mr Morris's:
...are not unusual, and they have not been unusual for quite a
long period of time. People have been going to regulators with information; it
is just that they then become quiet collateral damage and walk away from it,
much as often happens in the public sector.
Professor Brown suggested there was a lack of empirical evidence
'regarding the incidence, significance, value and current needs and challenges'
with respect to the management of whistleblowing in Australia. While
acknowledging this 'knowledge gap', Professor Brown also argued that 'Australia's
legal regimes for facilitating, recognising, and responding appropriately to
public interest whistleblowing in the corporate and private sectors are patchy,
limited and far from international best‑practice'. He added that given the
deficiencies in the primary national private sector statutory provisions on
whistleblowing, 'it is not surprising that ASIC's track record as a key agency
responsible for whistleblowing is generally regarded as poor'.
In addition to the need to make specific improvements to the
Corporations Act, Professor Brown also identified a need for a comprehensive
approach to corporate whistleblower protections across jurisdictions in
As pressure builds for more effective whistleblower
protection in the corporate and private sector, failure to take a comprehensive
approach may well result in a proliferation of separate whistleblowing
requirements on business in different areas of regulation, leading to
heightened complexities, confusion and cost for Australian businesses and
Dr Bowden made a similar point, arguing that Australia should avoid
adopting a whistleblower protection scheme for each industry, as the United
States has done. The complexity of the US approach, he argued, served to
discourage would-be whistleblowers from reporting misconduct, as it often was
not even clear who they should make a disclosure to or which legislation
covered their disclosure.
The Governance Institute of Australia argued that there appeared to be a
'disconnect between the regulatory framework in place for protecting corporate
and private whistleblowers and the way in which it operates in practice'.
The Governance Institute, therefore, recommended a targeted review of:
...the regulatory framework for corporate and private
whistleblowing which recognises the involvement of multiple regulators in the
process of investigating and prosecuting corporate and private whistleblowing.
The Governance Institute pointed to what it regarded as the technical
and narrow operation of the Corporation Act's whistleblower protections. The
Institute suggested that while ASIC is 'doing its best' within the constraints
of the legislation,
a need remains for:
...a much broader whistleblowing protection that applies to all
people who bring complaints in good faith to the attention of all regulators,
whether they are the ACCC, ASIC, the ATO, the Federal Police or state based
The 2004 parliamentary committee report
on CLERP 9
Even when the current corporate whistleblower protections were added to
the Corporations Act in 2004, observers suggested that it was likely that
further reform would be needed. Indeed, the Parliamentary Joint Committee on
Corporations and Financial Services' (PJCCFS) report on the Corporate Law
Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2003 (the
CLERP 9 Bill), characterised the whistleblower protections in the Bill as
'sketchy in detail', even if their intention was clear. The committee concluded
that the whistleblower protections would ultimately require
Specific concerns raised by the PJCCFS included the limited scope of the
definition of protected disclosures, the lack of any requirement that companies
establish internal processes to facilitate whistleblowing, and the fact the proposed
protections were silent on what role, if any, ASIC had in preventing reprisals
against whistleblowers or acting to protect whistleblowers when reprisals took
The PJCCFS also criticised the fact that the whistleblower protections did not
extend to cover anonymous disclosures, and recommended removing the requirement
that a whistleblower be acting in 'good faith'. The PJCCFS concluded that the proposed
whistleblowing provisions were a step in the right direction, but 'only a first
step' and 'not ambitious' at that.
Tellingly, the PJCCFS foreshadowed the future need for a comprehensive review
of Australia's whistleblower framework:
Once the proposed whistleblower provisions come into
operation, answers to the questions that it poses may become clearer. Indeed
the longer term solution may be found in the development of a more
comprehensive body of whistleblower protection law that would constitute a
distinct and separate piece of legislation standing outside the Corporations
Act and consistent with the public interest disclosure legislation enacted in
the various states.
Is Australia lagging behind the world on whistleblower
Highlighting the lack of progress on whistleblower reform since 2004,
a number of experts on whistleblowing suggested that Australia's corporate
whistleblower framework had fallen behind those in other parts of the world.
Several submitters noted that high profile corporate failures had driven
moves in other countries to improve systems to encourage and protect corporate
whistleblowers. For example, Professor AJ Brown noted that the United States
had been progressively developing and strengthening its corporate
whistleblowing regime since several high-profile corporate collapses in 2000
and 2001, which led to
a strengthening of the corporate whistleblower regime by the Sarbanes-Oxley Act
of 2002. The global financial crisis prompted a second wave of reform of the
US whistleblower framework, with the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 including provision for a whistleblower
bounty program. Professor Brown noted that while the Australian reforms of
a 'partial response' to the first of the two waves of reform, Australia had
made no further reforms since.
Other witnesses tended to agree that Australia's corporate whistleblower
protections compared poorly to those in other countries. Dr Bowden was
unequivocal on this point:
We are behind the rest of the world—simple—and it is a shame
that we are. As I said, I am looking for this committee to change it and bring
us into the 20th century—not the 21st century, just the 20th century.
Treasury's 2009 review of corporate
The current corporate whistleblower protections were the subject of a
2009 Treasury options paper, Improving protections for corporate whistleblowers.
In a foreword to the paper, the then Minister for Financial Services,
Superannuation and Corporate Law, the Hon Chris Bowen MP,
acknowledged that the current corporate whistleblower regime did not appear to
be working as intended:
The importance of protecting corporate whistleblowers has
been recognised for many years. However, while legislative protections have
been provided under the Corporations Act 2001 since 2004, they appear to
have been poorly regarded and rarely used. At the time this paper was written,
only four whistleblowers had ever used these protections to provide information
Despite the Minister's criticisms of existing protections, the review
process stalled in early 2010 after a brief series of consultations on the
issues raised in
the options paper. In its submission, Treasury reported that the comment
received on the option's paper 'provided no strong consensus on reforming
protections for whistleblowers, and the issue was not taken further by the
Public Interest Disclosure Act 2013
In contrast to the lack of reform in relation to corporate whistleblowing,
Australia's public sector whistleblower framework recently underwent a major
reform process. These reforms were given effect by the Public Interest
Disclosure Act 2013 (PIDA). Several witnesses suggested that PIDA
represented a best-practice approach to whistleblower legislation, and
recommended that it be used as a template for corporate whistleblower reform.
For example, the Blueprint for Free Speech wrote that PIDA was a 'world-leading
protection regime for whistleblowers' in the public sector.
The Blueprint for Free Speech argued that key elements of the protection regime
for public sector whistleblowers that might be considered in some form for the
private sector regime included:
the requirement for government departments to have a designated
'disclosure officer' to receive disclosures;
better and easier access to compensation for whistleblowers in
cases where they suffer reprisals;
extension of whistleblower protections to allow external
disclosures (for example, to the media) in situations where the whistleblower
believes that an internal or ASIC investigation was inadequate;
cost protections, so that in instances where a whistleblower seeks
to enforce their rights through legal action, the costs of that action are only
payable by the whistleblower where the action was brought vexatiously;
protections for anonymous whistleblowers; and
the existence of a dedicated Ombudsman with powers to investigate
and hear the complaints of whistleblowers.
Dr Sulette Lombard made the point that whereas PIDA provided some
guidance to whistleblowers and others as to what happens with information
provided by whistleblowers, the Corporations Act was silent on this.
While by no means rejecting the value of PIDA-like arrangements in the
private sector, Professor AJ Brown cautioned that 'detailed consideration'
would need to be given to how such arrangements may need to be adjusted so that
they operated effectively in the private sector.
ASIC made a similar point. It suggested, on the one hand, that there
might be 'some elements' of the public sector reforms that could be considered
in a review of the corporate whistleblower protections. However, ASIC added
...there may also be some different considerations applying to
disclosures about private institutions than public institutions, including the
greater need to balance privacy and confidentiality considerations.
The committee believes a strong case exists for a comprehensive review
of Australia's corporate whistleblower framework, and ASIC's role therein.
The fact that momentum appears to have been lost following the release
of the 2009 Treasury options paper is unfortunate. In that paper, the then
Minister for Financial Services, Superannuation and Corporate Law described the
corporate whistleblower protections in the Corporations Act as 'poorly regarded
and rarely used'. The committee has heard from a number of whistleblowers in
the course of this inquiry, including one of the CFPL whistleblowers, whose
experiences suggest that this very much remains the case. The committee notes
that progress on the issue stalled in early 2010 because, as Treasury puts it, there
was 'no strong consensus on reforming protections for whistleblowers'. Even if
this were the case, the committee believes reform remains necessary. A
comprehensive review process would help build the consensus necessary to
deliver this reform.
The committee notes that PIDA includes whistleblower protections that
are widely regarded as world's best-practice. As such, the committee believes a
comprehensive review of Australia's corporate whistleblower should have regard
to the provisions in PIDA and give detailed consideration to whether these
provisions might have valuable application in the private sector.
ASIC's revised approach to handling whistleblower disclosures
At various points during the inquiry, ASIC acknowledged that one of the
key learnings from the CFPL matter was that it needed to improve its
communication with whistleblowers and better utilise whistleblower information.
Specifically, ASIC acknowledged that it:
...could have and should have spoken to the whistleblowers
earlier, sought more information from them and, within the limitations [imposed
by ASIC's confidentiality obligations or the need to ensure the appropriate
administration of justice], provided them with some assurance that ASIC was
interested and active in the matter, that their report was being dealt with
seriously and that something was being done.
ASIC informed the committee that as a result of these learnings, it had enhanced
the way it identifies and communicates with potential whistleblowers. ASIC
explained in its main submission that this approach seeks to ensure that ASIC:
appropriate training and expertise in all stakeholder and enforcement teams for
the handling of whistleblower reports;
a coordinated, centralised procedure for the tracking and monitoring of all
appropriate weight to the inside nature of the information provided by
whistleblowers in our assessment and ongoing handling of the matter;
prompt, clear and regular communication to whistleblowers to the extent
possible and appropriate during our investigations; and
the confidentiality of whistleblowers within the applicable legal framework.
In his submission, Professor AJ Brown noted that ASIC has only put in
place 'operational systems to support its limited role in whistleblowing in
very recent times, despite [the whistleblower provisions in Part 9.4AAA of the
Corporations Act] having been in place for almost 10 years'.
However, during his appearance before the committee, Professor Brown
acknowledged that the recent changes ASIC had implemented to improve its
interactions with whistleblowers and how it handles the information they
provide represents a substantial step forward. In this sense,
he implied that ASIC's handling of its interactions with the CFPL
whistleblowers could be viewed as historical rather than current problems.
Professor Brown suggested:
...we already know that ASIC's performance on the question of
managing whistleblowers has changed enormously since some of the circumstances
which contributed to the inquiry and the circumstances as they stand today. So,
to the extent that there might be justifiable criticism of ASIC's performance
in relation to whistleblowers in 2008 or 2009, we already know that we are
dealing with a completely different landscape now, because of the fact that
ASIC, as the major corporate regulator, has clearly woken up to and is
responding to whistleblowing as an issue in its jurisdiction in very distinct
and clear ways, from which other regulators and other agencies probably can
already start to learn.
For its part, the Governance Institute welcomed 'the steps that ASIC is
taking to improve its handling of whistleblowers', but reiterated that 'ASIC
can only do so much in the narrow legislative regime that it has at the moment'.
As such, the Governance Institute emphasised the need for:
...a more extensive regime giving much, much better protection
not only to the regulator, which I think is what ASIC is focused on, but also
to the whistleblower concerned.
The committee welcomes the steps ASIC has recently taken to improve how
it interacts with whistleblowers and handles the information they provide. At
the same time, the committee believes that more substantive legislative and
regulatory changes will likely be required to improve Australia's corporate
ASIC's recommended options for legislative and
In addition to reporting on the steps ASIC has taken to improve its
handling of whistleblowers and the information they provide, ASIC's main
submission also provided three recommendations for regulatory and legislative
change in relation to whistleblowers. These recommendations, reproduced below in
Table 14.1, relate
to the definition of 'whistleblower', the scope of disclosures covered by
whistleblower protections and clarifying when ASIC may resist orders for the
production of information that might reveal a whistleblower's identity.
Table 14.1: ASIC's options for
change regarding whistleblowers
change options for consideration by government
The definition of 'whistleblower'
does not cover all of the people who may require whistleblower protections
the definition of whistleblower in Pt 9.4AAA of the Corporations Act to
include a company's former employees, financial services providers,
accountants and auditors, unpaid workers and business partners
The whistleblower protections
do not cover information relating to all of the types of misconduct ASIC may
the scope of information protected by the whistleblower protections to cover
any misconduct that ASIC may investigate
The whistleblower protections
are not sufficiently clear as to when ASIC may resist the production of
documents that could reveal a whistleblower's identity
whistleblower information—amending the legislation so that ASIC cannot be
required to produce a document revealing a whistleblower's identity unless
ordered by a court or tribunal, following certain criteria
ASIC, Submission 45.2, p. 13.
ASIC's recommendations did not prove contentious. To the extent that
witnesses commented on the recommendations, it was simply to suggest that they
were a good starting point for reform. For instance, Professor AJ Brown
supported ASIC's recommendation that the protections in Part 9.4AAA be
extended to information indicating a contravention of any legislation that ASIC
can investigate, including breaches of relevant criminal law, rather than
simply the corporations legislation. However, he also suggested that the
extension and clarification of the definitions should be done in a way that not
only aligns with ASIC's investigate jurisdiction, but also achieves the purpose
of encouraging and protecting disclosures.
The committee believes ASIC's recommendations in relation to
whistleblowers are a sensible and measured response to broadly recognised
deficiencies in the current whistleblower protections. The committee recognises
that the definition of 'whistleblower' in the Corporations Act is currently too
as is the scope of information that can attract whistleblower protections.
The committee also agrees that there would be value in clarifying when ASIC can
resist the production of documents which might reveal a whistleblower's
While the committee believes the changes suggested by ASIC would be of
benefit, it views the proposed changes as first steps in a broader reform
Other potential areas for reform
As noted earlier, most witnesses who addressed the issue of Australia's
corporate whistleblower framework argued that there was a need to strengthen
current arrangements. Ideas for reform suggested by one or more of these
extending corporate whistleblower protections to cover reports
from anonymous whistleblowers;
removing the requirement that whistleblowers need to make their
disclosure in 'good faith';
legislative and regulatory changes to encourage or require better
systems within Australian corporations for encouraging and protecting internal
extending whistleblower protections to cover external disclosures
(for example, to the media) in certain circumstances;
providing for a clearer and fairer system for compensation to
whistleblowers in cases where the whistleblower protections have not worked and
the whistleblower has suffered as a result of making a disclosure;
the possible introduction of reward-based whistleblower
incentives or qui tam arrangements, similar to those that exist in the United States;
enhancing or clarifying ASIC's ability to act as an advocate for
strengthening the penalties that might be applied against persons
or companies that disadvantage or seek to disadvantage a whistleblower; and
measures that would enhance ASIC's ongoing contact with
whistleblowers, and recognise the importance whistleblowers generally place on
being informed of actions undertaken in relation to matters they make a
Each of these ideas is set out below. Several of these ideas were
addressed in the PJCCFS's 2004 report on the CLERP 9 Bill; where this is the
case, it is noted
to provide policy context.
Protecting anonymous disclosures
The PJCCFS's 2004 report on the CLERP 9 Bill recommended that the government
consider extending whistleblower protections to cover anonymous disclosures. It
argued that a requirement that a person making a disclosure must have 'an honest
and reasonable belief' that an offence has or will be committed (the PJCCFS's
preferred alternative to the 'good faith' test that was ultimately legislated)
would provide a safeguard against vexatious anonymous disclosures.
The government of the day rejected the PJCCFS's recommendation, arguing
that extending the whistleblower protections to cover anonymous disclosures:
...may encourage the making of frivolous reports, and would
generally constrain the effective investigation of complaints. Allowing anonymity
would also make it more difficult to extend the statutory protections to the
Professor AJ Brown argued for the extension of whistleblower protections
to anonymous whistleblowers, suggesting this would not:
...raise practical difficulties, since the protections and
other obligations are only triggered if or when the identity of the
whistleblower is subsequently revealed, and confirmed to be within the
statutory definition above.
Mr Jeffrey Morris explained to the committee that part of the reason the
CFPL whistleblowers elected to make an anonymous report was that they lacked
confidence in ASIC's 'ability to keep a secret'.
Interestingly, when asked if the lack of protections in Part 9.4AAA for
anonymous disclosures gave him and his fellow whistleblowers cause to
reconsider making their disclosure to ASIC, Mr Morris said
it did not, because:
...if ASIC had acted on the information we had given them, the
whole matter would have been resolved and we would never have needed to have
Asked if whistleblower protections should be extended to cover anonymous
disclosures, ASIC responded:
We understand that potential whistleblowers may wish to
remain anonymous for fear of reprisal, reputational damage or other negative
consequences of their whistleblowing. Nevertheless, it can be important for
ASIC to know the identity of a whistleblower for practical purposes, including
to substantiate their claims and progress the investigation. However, ensuring
that whistleblowers' identities can be protected from disclosure to third
parties is a different and significant issue. In our submission to the Senate
inquiry, we suggested providing ASIC with greater scope to resist the
production of documents revealing a whistleblower's identity, in order to
better ensure the protection of this information.
The 'good faith' requirement
As noted earlier, in order to qualify for the whistleblower protections
in the Corporations Act, a discloser must make the disclosure in good faith. In
the course of the inquiry, a number of witnesses questioned the value of the
'good faith' requirement, and argued for its removal.
The PJCCFS's 2004 report on the CLERP 9 Bill recommended that the 'good
faith' requirement be removed, arguing the protections should be based on the
...the veracity of the disclosure is the overriding
consideration and the motives of the informant should not cloud the matter. The
public interest lies in the disclosure of the truth.
The then-government did not accept the recommendation, responding that
the 'good faith' requirement would help minimise vexatious disclosures and
ensure persons making disclosures did not have 'ulterior motives'. The removal
of the 'good faith' requirement could, it argued:
...give rise to the possibility that a disgruntled employee
might attempt to use the [whistleblower] provisions as a mechanism to initiate
an unnecessary investigation and thereby cost the company time and money.
Professor AJ Brown argued that the 'good faith' requirement is 'out of
date and inconsistent with the approach taken by Australia's public sector
whistleblowing legislation, as well as best practice legislative approaches
For several reasons, 'good faith' is not a useful concept to
appear at all in whistleblowing legislation. Motives are notoriously difficult
to identify and may well change in the process of reporting, for example, when
an internal disclosure is ignored or results in the worker suffering reprisals.
Because it is such a subjective and open-ended requirement, the likely effect
of a good faith test is negative—that workers simply choose not to report their
suspicions about wrongdoing, because they are unsure whether or how this test
would be applied to their circumstances.
Professor Brown suggested that the only proper test was that which
applied in PIDA: that a disclosure must be based on an honest belief, on
reasonable grounds, that the information shows or tends to show defined
wrongdoing; or does show or tend to show such wrongdoing, on an objective test,
irrespective of what the discloser believes it to show.
Similarly, the Blueprint for Free Speech suggested that the 'good faith'
requirement had the unhelpful effect of shifting the focus from the importance
of the information disclosed to the motives of the whistleblower.
Dr Bowden explained why he believed the 'good faith' requirement should
be removed by way of example:
[I]f you were under a supervisor who consistently pushes the
envelope on his ethical behaviour and eventually you end up by blowing the
whistle on something that you think is going to get through, are you acting in
good faith or not? It is hard to tell. But if you pointed out a wrongdoing,
that is enough for me. My own belief is that the good faith requirement should
be scrapped entirely. It is whether they have revealed a wrongdoing and a clear
wrongdoing at that, a provable wrongdoing at that.
Dr Brand supported Dr Bowden's reasoning, telling the committee that the
issue was the 'quality of the information' rather than the motive for providing
that information. Dr Brand's colleague, Dr Lombard, added that while it was
to want to prevent vexatious whistleblowing, there were better ways to achieve
this than the current 'good faith' test.
Professor Brown explained that all the research on why people became
whistleblowers indicated that a decision to make a disclosure basically
involved a judgement on whether anybody was going to be interested in receiving
the information, and whether the discloser would receive support and recognition
for making the disclosure. Professor Brown explained that 'those very basic
...are influenced very strongly as soon as you introduce things
like a good faith requirement. The classic example was that, previously, I
think in around 2007 or 2008, on the ASIC website there was specific guidance
to anybody who was seeking to use part 9.4AAA that they would have to reveal
the information in good faith. At that time, the advice on the ASIC website was
to the effect that that would not include information that was malicious. All
good investigators—and I have my own investigation background—know that
information that is provided for malicious reasons can be just as useful and
important and revealing as other information. It does not mean that it is not
information which should be revealed.
According to Professor Brown, the lack of precision as to what was meant
by 'good faith' left whistleblowers vulnerable to accusations that they had an
ulterior motive in making a disclosure. As such, would-be whistleblowers might
conclude that it was not worth making a disclosure on the grounds that no one
would take them seriously.
In response to a question on notice, ASIC declined to take a position on
the merits of the 'good faith' requirement, suggesting this was 'ultimately a
policy question for government'. Nonetheless, in declining to take a position
on the subject, ASIC made the general point that:
...if there are any deficiencies identified in the current
whistleblower protections that may be proving to be an impediment to potential
whistleblower disclosures, these should be carefully reviewed and change
Protecting disclosures to third
parties, such as the media
Professor Brown argued that the fact that the Part 9.4AAA protections do
not extend to corporate whistleblowers who take their disclosure to the media
or other third parties is a 'major gap'. There were circumstances, Professor
Brown argued, in which it was widely accepted that this approach was reasonable;
for example, where an internal disclosure or disclosure to the regulator was
not acted on, or where it was impossible or unreasonable to make an internal
disclosure or disclosure to ASIC.
Asked whether the whistleblower protections should be extended to cover
external disclosures to the media in certain circumstances, ASIC responded:
There may be circumstances where a person suffers reprisal
following their making external disclosures to third parties, such as the
media, and it may be useful to consider extending the whistleblower protections
in such a situation. However, ultimately, this is a policy question for
Improving internal disclosure
Several witnesses argued for the introduction of a regulatory
requirement for companies to establish internal whistleblower systems. Such an
approach, these witnesses suggested, could improve corporate governance
outcomes while reducing the regulatory burden on ASIC.
The PJCCFS's 2004 report on the CLERP 9 Bill recognised the importance
of internal corporate disclosure systems. The PJCCFS recommended that:
...a provision be inserted in the Bill that would require
corporations to establish a whistleblower protection scheme that would both
facilitate the reporting of serious wrongdoing and protect those making or
contemplating making a disclosure from unlawful retaliation on account of their
In making its case, the PJCCFS noted that in the United States the
Sarbanes‑Oxley Act requires that every public company in the United
States establish mechanisms which allow employees to provide information
anonymously to the company's board of directors. Sarbanes-Oxley also stipulates
that disclosures made through this internal reporting mechanism constitute
protected whistleblower activity.
The then government did not accept the recommendation, on the basis
Prescribing particular systems which all companies must
implement in order to facilitate whistleblowing could prove to be overly rigid
and unsuitable for particular companies in the Australian market.
Professor Brown explained to the committee that the overwhelming
majority of whistleblower complaints in the private sector (over
90 per cent) where made internally in the first instance. In cases
where an internal disclosure was dealt with quickly and properly, Professor
Brown reasoned, the entire whistleblower system worked more efficiently and the
burden on ASIC was reduced.
Professor Brown added having a requirement for companies to have internal
whistleblower arrangements in place could work in the interest of a company. In
fact, Professor Brown suggested that such a requirement should:
...incentivise businesses to adopt whistleblower protection
strategies by offering defences or partial relief from liability, for itself or
its managers, if the business can show (a) it had whistleblower protection
procedures of this kind, (b) that the procedures were reasonable for its
circumstances, and (c) that they were followed (i.e. that the organisation
made its best efforts to prevent or limit detriment befalling the
Professor Brown also noted that this positive approach appeared to be
working in the United States.
The lack of a 'mandated requirement for Australian corporates to institute
internal structures to facilitate whistleblowing' was a key point of concern in
the submission made by Dr Brand and Dr Lombard. Such a requirement, they argued,
would encourage rates of whistleblowing, with evidence suggesting that 'the
level of whistleblowing activity in a corporation is positively associated with
of internal support for whistleblowing'. Also, rather than increasing the
regulatory burden on ASIC, good internal systems 'have the potential to ensure
tips are "screened", thus reducing pressure on the public regulator (i.e.
ASIC) and preserving resources'.
Dr Brand and Dr Lombard further noted that PIDA appears to recognise the
advantages of internal reporting systems, inasmuch as external disclosures are
generally only permitted after an internal disclosure has been made. In this
...PIDA offers a model for increased activity within
corporations in relation to whistleblowing handling and response, with the
possibility of concomitant increases in the level of whistleblowing activity,
and the potential for reduced demand on ASIC's resources.
Discussing the potential regulatory burden of a requirement for
to establish and maintain internal whistleblower systems, Dr Brand emphasised
that the internal compliance requirements that might be imposed on companies
should be 'part of a positive message', and undertaken in a 'light touch'
manner. Such an approach might include:
...saying the directors' annual report needs to refer to
whether there is an internal whistleblowing system and whether there was ever
an occasion in a given 12-month period where the timelines for response were
not met, or where the matter was referred externally because the whistleblower
was not happy with the response they got, which is the public interest
disclosure model. We think even a little thing like that could make a big
Asked to comment on recommendations from witnesses aimed at improving
the internal systems within corporations to encourage and protect
whistleblowers, ASIC responded that this was a matter for government. At the
same time, ASIC indicated that it would 'support consideration of any reforms
that improve companies' governance arrangements to ensure that they support and
meet their obligations towards whistleblowers'.
Compensation for whistleblowers
In his submission, Professor Brown argued that the compensation
provisions in Part 9.4AAA of the Corporations Act are limited and vague,
providing no clear guidance about how an application for compensation can be
the potential relief from costs risks, the situation regarding vicarious
liability, the burden of proof, and so on. Professor Brown recommended that the
compensation entitlements be amended so that they were consistent with PIDA.
incentives and qui tam arrangements
A number of witnesses, including Mr Morris, told the committee that
consideration should be given to introducing rewards or other monetary
incentives for corporate whistleblowers. Mr Morris told the committee that a
system that rewarded whistleblowers, like the system in the United States, would
help to improve compliance in the Australian financial services industry:
I think what would clean up this industry overnight would be
some form of financial compensation for whistleblowers that would allow them to
move on with their lives and would encourage people to come forward, as we did.
In [the CFPL] case, the compensation paid to victims so far is in the order of
$50 million. If the institution at fault, as part of whistleblowing provisions,
then had to pay the whistleblower, say, a certain percentage based on the
actual compensation paid to victims—so that is established malfeasance, I suspect
you would have a lot more whistleblowers coming forward. I would suspect you
would find the institutions would have to improve their behaviour overnight if
literally any employee could bring them down when they were doing the wrong
thing with some sort of incentive—not necessarily a huge incentive, like in the
United States, but some reasonable basis to allow people to move on with their
Asked if he was advocating an incentive based scheme to reward
whistleblowers who disclose malfeasance, Mr Morris answered that he would like
to see either incentives or a compensation scheme introduced:
The last time I saw the person at ASIC he basically said to
me in as many words, 'Thanks for sacrificing yourself.' It is not a very
attractive prospect for anybody else to want to emulate what we did.
Professor Bob Baxt AO told the committee that while any
reward-based system would need appropriate safeguards, careful consideration
should nonetheless be given to whether would-be whistleblowers in Australia
might be encouraged through monetary rewards. He suggested that with proper safeguards,
it was likely:
...the regulators will get better results which means that
people will get better recovery regimes and the government will get a bit of
money, because it will recover fines.
Professor Baxt also discounted the notion that a reward-based system
would somehow be inconsistent with Australian culture. At the very least, he
argued, the merits of such an approach should be subject to careful assessment
before being rejected.
In his submission, Professor Brown highlighted the success of qui tam
or reward-based disclosure incentives in other countries, including the United
in helping detect corporate wrongdoing. Allowing a whistleblower a percentage
of the amount of money recovered from fraud or of the penalty imposed had, he
suggested. 'been at the heart of a significant expansion of attention on
whistleblowing by the United States Securities and Exchange Commission'.
Professor Brown concluded that qui tam should be considered if
Australian corporate whistleblower protections are to be best practice.
Dr Bowden similarly argued that Australia should consider the adoption
of a rewards scheme for whistleblowers similar to that in place in the United
He noted the monies recovered through fines and levies paid by US companies
to the US Government as a result of qui tam cases.
In his view, concerns that a rewards scheme would negate the moral position of
the corporate whistleblower were not necessarily well-founded, as the 'ultimate
result is that the wrongdoing is stopped'.
The Blueprint for Free Speech also suggested that consideration should
be given to qui tam remedies, such as those which exist in the United
The committee explored this point with ASIC during the public hearings. Mr Medcraft
acknowledged that a reward system for whistleblowers might provide would-be
whistleblowers with some comfort by knowing that, if they lost their jobs or
damaged their careers as a result of their disclosure, they would nonetheless
receive some compensation. At the same time, Mr Medcraft explained that before
an effective bounty reward system for corporate whistleblowers could be
implemented in Australia, it would likely be necessary to revise upwards the civil
penalties Australian corporations were subject to:
Senator, on your question about the payment of a bounty, one
of the issues, when we looked at it, is that the penalties are really low in
Australia and the way that the system works in the States is that you get a
percentage, and so would it actually be meaningful to have that? I guess it is
a bit of a chicken-and-egg situation. If the penalties were more realistic then
paying a percentage of them actually might then become an incentive. So I think
you need to look at the issue with the penalties in mind as well.
Mr Medcaft added that ASIC had also considered whether a
reward-based system would be consistent with Australian culture:
Are we a bounty hunter culture? Is it the Australian ethos to
go after money in the same way? That is really a matter for community debate.
But certainly, as you say, in America is seems to work quite
effectively—getting a bounty. But I think you need to look at the issue from a
cultural perspective and then, secondly, the incentive—and making sure that it
does give them that comfort, that they will have that financial security.
ASIC's role as an advocate for
whistleblowers and the penalties for victimising a whistleblower
A key finding to emerge from the committee's consideration of the
protections afforded by ASIC to corporate and private whistleblowers is that
ASIC does not appear to have a clear substantive role in protecting the
interests of whistleblowers. Indeed, as noted earlier, ASIC stated that
whistleblowers 'will generally have to enforce their own rights' if seeking to
rely on the statutory protections.
Asked if it was fair to conclude that ASIC does not have a substantive role as
an advocate for corporate whistleblowers, ASIC agreed that the current
'do not either require or empower ASIC to treat whistleblowers or the
information they provide in any particular way'.
One of the more troubling pieces of evidence received from Mr Morris was
that the CFPL whistleblowers were effectively reconciled to losing their jobs
as a result of their decision to make a disclosure to ASIC. In his first
submission, Mr Morris recalled that when the whistleblowers met with ASIC
for the first time on 24 February 2010 (16 months after providing
ASIC with an anonymous report) they were told by an ASIC official that from
that day forward they had whistleblower protection, but that 'wouldn't be worth
Asked about this comment, Mr Morris told the committee that he believed the
ASIC officer in question was 'just being frank' about the limitations of the
[T]he whistleblower protection basically, as he said, [are]
not worth much. But I think we had made a decision. We recognised at the outset
that we would be giving up our jobs by what we were doing.
On the CFPL whistleblowers' expectations regarding ASIC's role in
protecting them, Mr Morris also told the committee:
...I do not think at the outset we seriously expected ASIC to
protect us. If you look at their whistleblower protections, there are a lot of
weasel words in there and it is very, very limited. I suspect, if a company
wants to get rid of a whistleblower, they never do it because you are
In an article by journalist Adele Ferguson, Mr Morris indicated that he
was essentially left to negotiate his own exist from the CBA when he raised
concerns with ASIC about death threats he believed had been made. He reported
...I was told by my ASIC contact in a rather offhand manner,
'It's probably bullshit, but if you're worried, go to police.'
This issue is by no means new. In fact, in its 2004 report on the CLERP
9 Bill, the PJCCFS noted that while the Bill made causing, or threatening to
cause, detriment to a whistleblower a contravention of the Corporations Act:
...it does not specify whether ASIC or the company have a role
in preventing reprisals from taking place and if they do what action they
should take. In other words, it is unclear whether the onus rests solely on the
whistleblower who has been subject to unlawful reprisal to defend his/her
interests or whether the agency receiving the report should assume some
responsibility for protecting the whistleblower.
In light of this, the PJCCFS recommended that 'a provision be inserted
in the Bill that would allow ASIC to represent the interests of a person
alleging to have suffered from an unlawful reprisal'.
However, the PJCCFS's recommendation was not accepted by the government of the
day. The government argued that in instances where a company violates the
whistleblowing provisions, whistleblowers could pursue compensation under the
Existing section 50 of the ASIC Act already provides ASIC
with the ability in certain circumstances to commence civil proceedings in a
person's name to recover damages. Where it is in the public interest, this
would generally permit ASIC to represent a whistleblower in a claim for
damages. However, this provision would not permit ASIC to conduct a criminal
prosecution or to represent a whistleblower in an action for reinstatement. The
Government considers that an ability for ASIC to represent a person in this
sort of action is not necessary.
Several witnesses suggested this current state of affairs was
unacceptable. Professor Brown, for example, argued that ASIC needed the ability
to investigate and remedy alleged reprisals regardless of whether the primary
alleged wrongdoing is being investigated.
In his appearance before the committee, Professor Brown underlined the
importance of this issue:
[T]he crucial question is: whether or when or which
Commonwealth regulator, whether it is ASIC or whether it shared, should have a
responsibility for being able to, more or less, intervene and seek remedies or
take injunctions or step in in the management of and in the fates of individual
whistleblowers before it gets any worse. Or if it has already got to the stage
of being something which is compensable damage, stepping in to make sure that
the action is taken that would lead to that compensation being paid. So the
questions are about who should provide the real glue in the system to make
protection and/or compensation real. Those are very important questions.
Somebody has to do it, otherwise it will not happen.
Professor Brown subsequently explained that in the absence of an
overarching system for protecting all corporate whistleblowers, ASIC should
have a responsibility to protect its own whistleblowers. However, he suggested
there was ultimately
a need to:
...think about creating an infrastructure whereby that responsibility
can be satisfied more effectively, whether it is by the Fair Work Ombudsman or
through the Fair Work system, or more generally, or a separate office that
covers whistleblower protection right across all employers, so that ASIC does
not have to do it and can retain its core focus on corporate regulation and
enforcement of corporate law.
14.100 Professor Brown
recommended that, consistent with the approach taken in PIDA, the victimisation
of whistleblowers in circumstances of deliberately intended detriment should be
a criminal offence.
The need to keep whistleblowers 'in
14.101 Mr Jeffrey Morris
told the committee that one the frustrations of the CFPL whistleblowers was
what he referred to as the 'one-way flow of information'. This was a reference to
the lack of information from ASIC about how it was acting on the information
provided by the whistleblowers.
14.102 The Blueprint
for Free Speech wrote that for whistleblowers, who often risk their jobs and
even their long-term careers to reveal wrongdoing, it is very important to know
that something is being done about the wrongdoing they have disclosed.
14.103 As noted
earlier, ASIC claimed that one of the lessons it has taken from the CFPL matter
is that it needs to improve the way it communicates with whistleblowers.
According to ASIC, it has already implemented a new approach to how it manages
whistleblowers and the information it receives from them (as outlined earlier).
14.104 Dr Brand and Dr
Lombard noted that the Corporations Act provides little or no guidance in terms
of keeping a whistleblower informed of actions taken in relation to the
information they provide. This serves, they argued, to dissuade would-be
whistleblowers from making disclosures. By contrast, PIDA outlines how
disclosures should be dealt with and imposes a general obligation to
investigate disclosures. Further, where a decision is made not to investigate a
...creates a statutory requirement to inform the whistleblower
of the reasons why, and requirements are imposed in relation to the length of
any investigation, as well as an obligation to give the whistleblower a copy of
the report of the investigation.
14.105 When asked about
Dr Brand and Dr Lombard's suggestion, ASIC responded that whereas PIDA was
directed towards the inherent public interest in the transparency of public
institutions, different considerations may need to be weighed in regard to the
private sector. ASIC acknowledged the interest whistleblowers have in how ASIC
has acted on the information they have provided, and reiterated that it had
updated its approach to communicating with whistleblowers. At the same time,
ASIC told the committee that there were limitations on the amount of
information it could provide to whistleblowers:
Whistleblowers are not themselves subject to confidentiality
obligations, and they may have different or additional motives to those of
ASIC. In general, it can be difficult for ASIC to be as open about our
investigations as we would like to in all cases, including because this could
jeopardise the success of the investigations or future legal proceedings. These
factors would all need to be considered in deciding whether to include such
requirements in Pt 9.4AAA.
14.106 The committee
believes there is merit in a number of the recommendations for whistleblower
reform made by witnesses during the inquiry.
14.107 The weight of
evidence received by the committee would suggest that Australia's corporate
whistleblower protections should be extended to cover anonymous disclosures.
The committee also believes the 'good faith' requirement serves as an
unnecessary impediment to whistleblowing, and should be removed from the
Corporations Act. The committee received some evidence suggesting that the
whistleblower protections should be extended to cover external disclosures to
third parties, such as the media, in certain circumstances. On the face of it,
this would seem a sensible reform. However, the committee believes that further
consideration of the issue is required.
14.108 The committee
acknowledges the importance of internal whistleblower systems, and believes
that consideration should be given to mechanisms that encourage or require
companies to implement such systems. The benefits of any regulatory requirement
that companies implement such systems should, however,
be weighed against the regulatory burden this might impose on Australian
14.109 The committee
notes that most witnesses who addressed the issue of compensation or rewards for
whistleblowers felt that consideration should be given
to introducing a reward-based or qui tam scheme for corporate
This would represent a fundamental shift in approach to corporate law
enforcement in Australia, and the committee is mindful of concerns that such an
approach might be considered by some to be inconsistent with Australian
culture. Nevertheless, the committee agrees with witnesses that reward-based or
qui tam systems do seem
to improve rates of whistleblowing, and by extension the detection of corporate
misconduct. As such, these approaches should be given careful consideration as
part of a broader review of Australia's corporate whistleblower arrangements.
14.110 Another aspect
of the current whistleblower protections in the Corporations Act that concerns
the committee is that ASIC does not appear to have a clear role in actually
ensuring that the protections are applied. At the same time, the committee is
not convinced that ASIC currently has the expertise or resources necessary to
act as an effective advocate for whistleblowers. Therefore, the committee
believes that, subject to a broader review of Australia's corporate
whistleblower arrangements, an 'Office of the Whistleblower' should be
established within ASIC. The office could provide a dedicated point for all
whistleblowers to contact ASIC, ensuring that specialist staff are managing and
protecting whistleblowers. The office could also undertake work
to encourage whistleblowers to come forward, and would be advertised in a prominent
place on ASIC's website. An Office of the Whistleblower could also help improve
ASIC's communication with whistleblowers and ensure that they are kept 'in the
loop' regarding any action taken in relation to the matters raised by their
disclosures (subject, of course, to ASIC's confidentiality obligations and the
need to ensure the appropriate administration of justice). In this sense, the
office would help embed and advance the work ASIC has recently undertaken to
improve its ongoing communication with whistleblowers.
14.111 Finally, the
committee notes Professor Brown's concern regarding
the adequacy of penalties that can be imposed if a whistleblower is victimised.
While little evidence was received on this point, the committee believes this
issue should be considered as part of a broader review of Australia's corporate
14.112 The committee
recommends that, consistent with the recommendations made by ASIC, the
government develop legislative amendments to:
expand the definition of a whistleblower in Part 9.4AAA of the Corporations
Act 2001 to include a company's former employees, financial services
providers, accountants and auditors, unpaid workers and business partners;
expand the scope of information protected by the whistleblower
protections to cover any misconduct that ASIC may investigate; and
provide that ASIC cannot be required to produce a document
revealing a whistleblower's identity unless ordered by a court or tribunal,
following certain criteria.
14.113 The committee
recommends that an 'Office of the Whistleblower' be established within ASIC.
committee recommends that the government initiate a review of the adequacy of
Australia's current framework for protecting corporate whistleblowers, drawing
as appropriate on Treasury's 2009 Options Paper on the issue and the
subsequent consultation process.
committee recommends that, subject to the findings of the broader review called
for in Recommendation 14, protections for corporate whistleblowers be updated
so that they are generally consistent with and complement the protections
afforded to public sector whistleblowers under the Public Interest
Disclosure Act 2013. Specifically, the corporate whistleblower framework
should be updated so that:
anonymous disclosures are protected;
the requirement that a whistleblower must be acting in 'good
faith' in disclosing information is removed, and replaced with a requirement
that a disclosure:
is based on an honest belief, on reasonable grounds, that the
information disclosed shows or tends to show wrongdoing; or
- shows or tends to show wrongdoing, on an objective test,
regardless of what the whistleblower believes;
remedies available to whistleblowers if they are disadvantaged as
a result of making a disclosure are clearly set out in legislation, as are the
processes through which a whistleblower might seek such remedy;
it is a criminal offence to take or threaten to take a reprisal
against a person (such as discriminatory treatment, termination of employment
or injury) because they have made or propose to make a disclosure; and
in limited circumstances, protections are extended to cover
external disclosures to a third parties, such as the media.
14.116 The committee
recommends that, as part of the broader review called for in Recommendation 14,
the government explore options for reward-based incentives for corporate
whistleblowers, including qui tam arrangements.
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