Authors: Janelle Watts, Kaitlin Edleman
Often hidden through complex transactions and falsified documents, corporate and financial crimes are notoriously difficult to detect and prosecute. As a result, the Australian government relies on those working within the industry to report such crimes and has created whistleblower regimes to incentivise and protect those who do so. The Corporations Act, the Banking Act, the Insurance Act, the Life Insurance Act and the Superannuation Industry Act (Whistleblower Acts), each contain a whistleblower regime, but they are inconsistent across sectors. As an attempt to consolidate the current laws and to create a more robust and uniform whistleblower regime, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Whistleblower Bill) was introduced to the Senate on 7 December 2017.
If the Bill is passed by the Senate, the changes are proposed to commence on 1 January 2019, and will bring Australia’s whistleblower regime into line with many other OECD countries.
The amendments proposed by the Whistleblower Bill fall into four major categories:
expanding the type of entities and conduct about which a qualifying disclosure may be made;
expanding the definition of individuals who can make a qualifying disclosure;
expanding the definition of eligible recipients who may receive a qualifying disclosure; and
strengthening protections and remedies for whistleblowers.
Entities and Conduct
While many of the protections and remedies contained in the Whistleblower Acts are similar, they contain numerous disparities across sectors and are often industry specific.
The Whistleblower Bill proposes to consolidate disclosures concerning entities covered by the Whistleblower Acts under the Corporations Act. Additionally, the proposed law expands the type of entity that may be the subject of a disclosure that qualifies for protection. Disclosures regarding companies, banks, life insurers, general insurers, superannuation entities and trustees of superannuation entities will all be covered by the new consolidated whistleblower regime.
The Whistleblower Bill also seeks to encourage more disclosures from whistleblowers by broadening the type of conduct by a regulated entity that may be the subject of a qualifying disclosure. Whistleblowers would be eligible for protections if they disclosure actual or suspected conduct by a regulated entity that is:
misconduct, or an improper state of affairs or circumstances in relation to a regulated entity;
contravention of any law administered by ASIC and/or APRA;
conduct that represents a danger to the public or the financial system; or
an offence against any other law of the Commonwealth that is punishable by imprisonment for a period of 12 months or more.
In addition, public companies, large proprietary companies and proprietary companies that are trustees of registrable superannuation entities must have or implement a whistleblower policy that is to be provided to officers and employees of the company by 1 January 2019.
Currently, whistleblowers are only eligible for protections if the whistleblower has a current relationship with the regulated entity (e.g. current officers, employees or contractors). Whistleblowers must also make the disclosure in good faith and provide their names prior to making the disclosure.
The Whistleblower Bill seeks to expand protections to a wider class of individuals and will eliminate the requirement that whistleblowers have a current relationship with the regulated entity (meaning former officers, employees, contractors etc would be protected). Additionally, whistleblowers would be eligible for protections regardless of their motivations for making the disclosure and will no longer be required to identify themselves (see section below on “Protections and Remedies”).
The Whistleblower Bill also expands the definition of eligible recipient (being people to whom disclosures can be made) to include the manger or supervisor of the whistleblower. A concept of ‘emergency disclosures’ will also be introduced, allowing a whistleblower to receive protections under the regime if they make a qualifying disclosure to a member of Parliament or a journalist, under certain circumstances. Whistleblowers would also be eligible for protections when making disclosures to legal practitioners to obtain legal advice or representation.
Protections and Remedies
The Whistleblower Bill will also strengthen protections and remedies for whistleblowers to encourage more disclosures. Whistleblowers will no longer be required to identify themselves when making disclosures and the regulator and other persons are not permitted to disclose the identity of whistleblowers to a court or tribunal without a court order. Further, information disclosed by whistleblowers is not admissible against them in prosecution.
If a whistleblower is being victimised by a regulated entity or an individual in relation to the disclosure, the proposed law adds a civil penalty option for the prosecution of victimisation and expands the definition of victimisation. A court will be able to issue a broad range of orders to those suffering victimisation, including orders for reinstatement of employment.
Link to the Bill: Parliament of Australia
About the Authors
Janelle Watts is the Corporate Development Manager at Hamilton Locke. Janelle is an experienced corporate and commercial lawyer, specialising in private M&A and venture capital.
She has worked within large national and global firms, and prior to joining Hamilton Locke, worked in-house at Telstra, looking after the Telstra Ventures portfolio and
muru-D (Telstra’s start up accelerator).
Kaitlin Edleman is a New York-admitted attorney and has advised clients on a range of corporate, real estate and New York State licensing matters. She previously worked at a boutique corporate law firm in New York City with a focus on the food and beverage sector.