The release of a report from Melbourne and Griffith Universities has revealed that Australia’s private sector whistleblowing protection laws are amongst the weakest amongst G20 nations.
The report entitled Whistleblower Protection Laws in G20 Countries – Priorities for Action (Report) includes the results of independent research conducted by international experts. It assesses the success of the G20 nations’ 2010 and 2012 commitments to improve protection for whistleblowers by putting adequate measures in place ‘to provide them with safe, reliable avenues to report fraud, corruption and other wrongdoing’. The Report states that, on the whole, ‘much remains to be done to meet this important goal’.
The Report has been released in the lead-up to an Anti-Corruption Working Group meeting in Paris in October and the G20 Leaders’ Summit being held in Brisbane in November. Its timing might precipitate action by local government and regulators before the Summit to improve Australia’s progress in implementing its anti-corruption commitments to the rest of the G20.
Benefits of whistleblowing
The G20 commitment to protect whistleblowers was first endorsed in Seoul in 2010 with an Anti-Corruption Action Plan for its members to enact and implement whistleblower protection rules by the end of 2012. The timing of this anti-corruption mandate was later extended until November 2014. The Report acknowledges the G20’s recognition in 2010 of ‘the crucial value of “insiders” to government and companies as a first, and often best, early warning system for the types of poor financial practice, corruption and regulatory failure now proven as critical risks to the global economy’. Whistleblowing has ‘grown in importance’ since 2010 as both:
- a corporate governance and regulator tool; and
- a protection for the rights and interests of citizens and communities across diverse economies.
According to the Report, whistleblowing is now considered to be ‘among the most effective, if not the most effective means to expose and remedy corruption, fraud and other types of wrongdoing in the public and private sectors’.
It is somewhat concerning then that the whistleblower frameworks of most G20 countries still fall measurably short of those they pledged to achieve by now.
How did Australia perform?
The Report measured each G20 member’s whistleblower regime against 14 ‘Best Practice Criteria’ in both the public and private sectors. Australia has ‘fairly comprehensive’ protection rules in place for the public sector for example, the new legislative regime introduced under the Public Interest Disclosure Act 2013 (Cth). The level of protection for public officials who disclose information about wrongdoing makes Australia one of the leading G20 countries in this sector, along with the US, Canada and Korea. However, Australia’s legislative protections for the private sector are ‘considerably weaker’.
The primary source of protection for whistleblowers in the private sector is the whistleblowing regime under the Corporations Act 2001 (Cth) (Corporations Act). However this regime is not without its faults. The Report lists the following issues with the current Corporations Act regime:
- the scope of wrongdoing covered is ill-defined;
- anonymous complaints are not protected;
- there are no requirements for internal company procedures;
- compensation rights are ill-defined; and
- there is no oversight agency responsible for whistleblower protection.
None of the above criticisms will be new to ASIC, the regulator responsible for the administration of the Corporations Act whistleblowing regime. The Report highlights one of the key issues with the current whistleblowing structure, being that ASIC is not technically ‘responsible’ for whistleblower protection as it is not obliged to take up a whistleblower’s cause and protect them from victimisation.
In our previous blog about an unfair dismissal case lodged by a former employee of Pepperstone Financial relating to his tip-off to ASIC about alleged insider trading activity between employees of the Australian Bureau of Statistics and National Australia Bank, we referred to The Senate Economics Committee’s (Committee) report on ASIC’s performance. That report acknowledged the importance of encouraging whistleblowers and the need for legislative reform. The report also included a scathing critcism of ASIC’s approach to whistleblowing.
The Pepperstone example highlights some of the failures which the Report discusses. In particular, the requirement for a whistleblower to unilaterally enforce their rights for protection and reinstatement or compensation if they believe that they have been victimised as a result of their disclosure.
The Report’s analysis reveals that there are three common areas of greatest challenge for G20 countries to address in their whistleblower protection laws. These highlight the need for clear rules:
- for when whistleblowing to the media or other third parties is justified or necessitated by the circumstances;
- that encourage whistleblowing by ensuring that anonymous disclosures can be made, and will be protected; and
- for defining the internal disclosure procedures that can assist organisations to manage whistleblowing, rectify wrongdoing and prevent costly disputes, reputational damage and liability, in the manner best suited to their needs.
According to the Report, the role of the G20 in addressing these challenges is clear. The G20 countries have a special responsibility to build sustainability into financial systems and practices due to their significant role in shaping them.
Despite the failure of many G20 countries to implement sufficient whistleblower protections before the 2014 deadline, this delay might have unintended benefits for those lagging behind. The Report points out that although the US has the most comprehensive whistleblower protections, they are ‘notorious for multiplicity, inefficiency and fragmentation’. Other countries such as Saudi Arabia, Mexico and Italy who have not yet moved comprehensively to implement whistleblower protection can thus learn from these mistakes when developing their own protection regimes.
In the meantime, the importance of private organisations having their own internal whistleblower systems in place cannot be underestimated. Employees are more likely to report misconduct, fraud and corruption, if they are confident that they will be protected.
While the latest geopoliticial developments may pose a distraction for some G20 members who might otherwise be intending to improve their whistleblower protections before the meeting in Brisbane, Australian organisations don’t have to wait for the government to take steps to better protect themselves and those who report corrupt practices. Australian Standard AS 8004:2003 Whistleblower Protection Programs for Entities provides a governance framework which will assist the implementation of appropriate procedures in organisations – meaning the private sector can take its own action to improve protection for whistleblowers.
How can CompliSpace help?
CompliSpace has a range of Governance, Risk and Compliance policies and products to help organisations implement an effective whistleblowing policy that works.
CompliSpace’s comprehensive range of cost effective human resources policies, procedures, training and testing modules, ensure that managers and staff know what is expected of them and have key tools and information at their fingertips at all times. This enables a business to meet its workplace relations obligations while building a positive corporate culture, capturing knowledge and saving time. For more information, contact us on the details below:
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