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This is Part Two of our four-part series on the impact of the findings and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Senate Inquiry into whistleblower practices
In 2004, legislative protections for whistleblower activities were introduced into Part 9.4AAA of theCorporations Act (the Act).2 These protections are designed to encourage employees or others connected with a company to alert ASIC and other authorities of illegal behaviour. However, Australia’s private sector whistleblower laws lag behind other countries including the UK and the USA.3
The Committee has outlined a broad range of potential reforms to Australia’s whistleblower framework, including:
Although the extent of the Committee’s recommended reforms will not be known until its final report is published (in August 2016), it is clear that the Committee views the current whistleblower framework as unacceptable: “[n]o-one should be forced to decide between exposing corporate fraud and misconduct and protecting their careers and broader wellbeing.”5
Strengthening of whistleblowing laws is part of a broader effort by the Government and its enforcement agencies to clamp down on bribery and corruption by closing legal loopholes6 and providing significant additional funding to agencies for the specific purpose of increasing their enforcement capacity.7
ASIC receives, assesses and investigates whistleblower disclosures.8 In 2014, it established the Office of Whistleblower to ensure that it gives appropriate consideration to the information it receives.9
ASIC is also focussed on encouraging corporate employees to approach the regulator with information concerning dishonest or illegal activities occurring within organisations.
Chairman Greg Medcraft has warned Australian businesses that they need to have whistleblower policies in place that their employees can have trust and confidence in.10 Last week, ASIC, in collaboration with Griffith University, sent letters to 30,000 companies in Australia inviting them to participate in a project designed to improve managerial responses to whistleblowing in private sector organisations.11
Fostering corporate culture: getting ahead of the regulator
A whistleblower protection program supported by a corporate culture that encourages disclosure and observance of governance obligations are important elements to detect corrupt or illegal behaviour:
Organisations that operate robust whistleblower programs are more likely to root out potential corruption and crime before it occurs or becomes reportable to ASIC and, where reporting is required, should enable companies to avail themselves of ASIC’s co-operation policy.
Where to from here?
The Committee is now seeking input from stakeholders on its Issues Paper and suggestions for other whistleblower reforms worthy of consideration.
The Committee is due to report on its findings to the Senate by 31 August 2016.
1Griffith University Centre for Governance and Public Policy, Whistling While They Work (2016) available at http://www.whistlingwhiletheywork.edu.au.
2Corporations Act 2001 (Cth), Part 9.4AAA, available at https://www.legislation.gov.au/Details/C2015C00336.
3Public Interest Disclosure Act (1998) in the UK and Dodd-Frank Act (2010) in the USA: Senate Economics References Committee, above at footnote 1, at 2.
4Senate Standing Committees on Economics, Issues Paper Corporate whistleblowing in Australia: ending corporate Australia’s cultures of silence (21 April 2016) (21 April 2016) at 3-5.
5Ibid, at 2.
6Refer to our previous update, Australia tightens up its bribery laws (December 2015).
7The Hon Scott Morrison MP, Treasurer of the Commonwealth of Australia, Turnbull Government bolsters ASIC to protect Australian Consumers (20 April 2016).
8Australian Securities and Investments Commission, Information Sheet 52: Guidance for whistleblowers (August 2015), available at http://asic.gov.au/about-asic/asic-investigations-and-enforcement/whistleblowing/guidance-for-whistleblowers/#ASICsroleandthelimitationsofourrole.
10ABC Radio, ‘CommInsure probe now a priority for corporate watchdog’ (21 March 2016) (I Medcraft and M Brissenden)
11Australian Financial Review, ASIC backs project aimed at encouraging corporate whistleblowers (15 April 2016) available at http://www.afr.com/brand/chanticleer/asic-backs-project-aimed-at-encouraging-corporate-whistleblowers-20160414-go6jhv