Targeting Whistleblowers: How the Pursuit of Individuals Will Affect the New Regulatory Regime

Controversial legal cases in Australia against whistleblowers and the associated raids on media outlets have had a detrimental effect on the country’s whistleblowing regime, according to two-thirds of participants in a Thomson Reuters Regulatory Intelligence (TRRI) poll.

Forty-four percent of the risk practitioners, lawyers and compliance professionals who took part in the survey said the pursuit of whistleblowers had been “strongly detrimental” to the new regulatory regime.

Australia’s corporate whistleblowing laws took effect on July 1, 2019. The corporate sector whistleblower reforms cover public companies, large proprietary companies and proprietary companies that are trustees of registrable superannuation entities. These entities must have a whistleblower policy available to their officers and employees by January 1, 2020.

At the same time, some high-profile whistleblowers have been subject to criminal charges. Richard Boyle, an Australian Taxation Office (ATO) whistleblower, is facing up to 161 years in jail if found guilty. David McBride, the Department of Defence whistleblower, is facing up to 60 years in jail if convicted.

Speakers on the TRRI webinar said people needed to feel confident about “speaking up” for the regime to work effectively.

Significant change of mindset needed

“There’s a fundamental change of culture and attitude that’s required before we get to the point where disclosures are made in what’s called a ‘speak-up culture’,” said Howard Whitton, founder at the Ethicos Group.

“Nothing will happen in terms of culture unless whistleblowers are, in practice, defended, supported, rewarded, encouraged. That will mean there needs to be a very significant change of mindset among directors and senior officials at companies, along the lines of recognising that whistleblowers are a kind of independent regulator, and an asset.”

– Howard Whitton, founder at the Ethicos Group

Sally McDow, partner at CPR Partners and a former whistleblower, said Australia was working toward a brighter future for whistleblowers despite the legal cases and raids on the media.

“I certainly think we are looking toward a brighter future. Whistleblowers are going to be much more educated on their rights and protections and I think there’s going to be some really positive attitudes and treatment of whistleblowers going forward,” she said.

RELATED: Webinar: Corporate Compliance in the Whistleblowing Era

New regulatory guide

The Australian Securities and Investments Commission (ASIC) has issued Regulatory Guide 270, on “Whistleblower policies”, to help companies establish policies that support and protect whistleblowers. It sets out the elements that a whistleblower policy must include to comply with the law.

“Robust and transparent whistleblower policies are essential to achieving sound risk management and corporate governance,” said John Price, ASIC commissioner.

“Whistleblower policies will influence behaviour and corporate culture in positive ways — for example, by encouraging greater disclosures of wrongdoing and by deterring people from doing the wrong thing. They play a crucial role in achieving a more fair and accountable corporate environment.”

Relief for small not-for-profits and charities

In addition to the release of RG 270, ASIC is granting relief to public companies that are not‑for‑profits or charities with annual revenue of less than $1 million from the requirement to have a whistleblower policy.

“We will provide relief to small not-for-profits or charitable companies from the whistleblower policy requirement because we understand that these entities may face a compliance burden that outweighs the benefits a policy might otherwise offer,’ Price said.

ASIC plans to review the whistleblower policies of a sample of companies next year to gauge compliance with the legal requirements.

The TRRI poll found that only three-quarters of respondents were certain their organisation would have a whistleblower policy in place by the January 2020 deadline.

More than half of the respondents said they believed Australian whistleblowers have traditionally been treated well only when they save their organisation money or avoid a loss.

Fifty-two percent of respondents said Australia needed to introduce a compensation or reward scheme for whistleblowers.

Legal Insight readers looking to view the 90 minute webinar on demand can do so via the Corporate Compliance in the Whistleblowing Era registration page.

Nathan Lynch is an experienced writer, public speaker, manager and technology enthusiast in the field of financial regulation and risk management. At Thomson Reuters, Nathan leads a team of experts who provide breaking news, deep analysis and practical guidance to risk practitioners in the global financial services sector.
Nathan manages Thomson Reuters’ award-winning Regulatory Intelligence team across the Asia-Pacific region, tracking developments in financial services law, regulation, financial crime and risk management.
Nathan has been involved in building innovative, tech-based businesses in the financial services “regtech” sector — including Complinet Australia and the Thomson Reuters Risk business.

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