Legal experts see areas companies and bodies should look hard at and perhaps make submissions on
Legal experts are advising companies to prepare for strengthened whistleblower protection laws as a Parliamentary committee looks into the issue.
Parliamentary Joint Committee on Corporations and Financial Services began its Whistleblower protections in the corporate, public and not-for-profit sectors inquiry on November 30.
Submissions to it close on February 10, with a report due on June 30.
Road freight industries are not immune to such events.
Transport companies subject to high-profile whistleblower action in the past few years include Cootes, McCabe Transport and Blenners.
Lawyers with an interest in the issue note that stronger protections, including for companies, are likely by mid-2018, with the federal government looking to possibly add US-style bounty rewards to regulators’ legal and enforcement arsenals.
While the impetus may have been revelations of union and finance sector misconduct, the response is expected to be applied generally.
“While the existing corporate whistleblower protections in Australia do not allow for a US-style bounty rewards system, the potential for an Australian bounty rewards program is being considered under the inquiry that will be conducted by the Joint Parliamentary Committee on Corporations and Financial Services,” Clyde & Co regulatory and compliance lawyer Dean Carrigan advises.
“With the parliamentary inquiry into whistleblower protections and the government’s commitment to improving the existing corporate whistleblower regime through its recent undertaking, all signs are pointing to a significant overhaul of the current protections in the Corporations Act by the government.
“While the enhanced corporate whistleblower protections may not be identical to those which have already been passed by the government for union whistleblowers, they provide a flavour of what may be in store for the corporate sector, as the government has indicated that they will be treated as the minimum standard for the foreshadowed changes for the corporate sector.”
Corrs Chambers Westgarth litigation partner Richard Flitcroft notes that the Australian Securities and Investments Commission (ASIC) supports widening powers but believes the Parliamentary committee would need to look closely at:
- the impact that bounty payments may have in directing informants first to regulators, rather than the seeking to resolve issues internally – and whether that is a good thing;
- whether there should be any rules which govern a US-style practice where a law firm will package up the complaint to the regulator, in turn for a cut of any bounty that the whistleblower receives
- whether whistleblowers be able to profit from their own misconduct.
“Businesses should now be taking the time to consider these scenarios and establish whether your company (or industry association) wishes to make any submission,” Flitcroft writes.
Both lawyers note that new rules and protections will likely be based on those contained in Fair Work (Registered Organisations) Amendment Act 2016 (RO Bill), which is more comprehensive than the Corporations Act 201.
Among issues for consideration, Flitcroft includes:
- the implementation in the corporate, public and not for profit sectors of whistleblower protections – taking into account the scheme in the RO Bill
- the types of wrongdoing that a whistleblower protections regime should cover
- a consideration of the compensation regimes that apply in other jurisdictions – including the US-style bounty system – which allow whistleblowers to receive payments where they come forward with high quality original information that leads to successful enforcement action. The Securities Exchange Commission’s webpage provides some recent examples of those payments. The quantum of these payments is significant, so they operate as a real incentive to informants. For example, the most recent announcement, on 14 November 2016, identified a US$20 million (A$26.7 million) payment
- the definitions of prohibited detrimental or reprisal action against whistleblowers
- the obligations to ensure publication of, and application of, the procedures to support whistleblowers, and corporations’ liability if they fail to comply.
- the obligation on regulatory and enforcement agencies to ensure the proper protection of whistleblowers and investigation of whistleblower disclosures
- the circumstances in which disclosures to third parties or the media should attract protection.