In November, we reported on the passage of the Fair Work (Registered Organisations) Bill 2014 (RO Bill) and the significant changes it was making to the whistleblower regime as far as unions were concerned.
The legislation’s passage was part of a deal reached with minority senators; one which would require this more robust regime to apply to government and Australian corporations more widely. Part of the deal was that there would also be a Parliamentary Committee given the task of reviewing Australia’s whistleblower regime. On this occasion, we’re only considering the regime insofar as it would apply to corporations.
The Parliamentary Joint Committee on Corporations and Financial Services has been given that task. It is required to provide a report by 30 June 2017 on a range of issues including those outlined below. Submissions close on 10 February 2017.
This is an area where change – and significant change – is a near certainty. These changes will also have impacts on business’ day-to-day operations, and their risk management and compliance procedures.
This issue also has attracted ASIC’s attention. The current regime under the Corporations Act, which applies to all corporations, only gives cover for disclosures of breaches of the Corporations legislation. At a recent seminar, Commissioner John Price stated ASIC’s support for a widening of the whistleblower scheme to cover a wider scope of misconduct, and identified that real issues for consideration include:
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; and
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. Here’s where we see the key issues for your organisation to focus on:
The implementation in the corporate, public and not for profit sectors of whistleblower protections – taking into account the scheme in the RO Bill (we set out below some of the differences between the RO Bill scheme and the scheme under the Corporations Act).
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 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.
Substantive differences between the RO Bill scheme and the existing Corporations Act scheme
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.