As a sport loving society, we are so accustomed to seeing the umpire or referee blow their whistle to rectify the transgression of one player against another or a breach of the rules of a game of sport. Yet in our professional lives the concept of ‘blowing the whistle’ doesn’t seem to hold the same allure and for some compelling reasons.
Whistleblowing is defined by Transparency International as “the disclosure of information related to corrupt, illegal, fraudulent or hazardous activities (including perceived or potential wrongdoing) being committed in or by public or private sector organisations – which are of concern to or threaten the public interest – to individuals or entities believed to be able to effect action.”
One fact remains, effective whistleblowing is essential in “fostering integrity and accountability while deterring and exposing misconduct, fraud and corruption”.There are remarkable whistleblower stories such as the story of Toni Hoffman, an Australian nurse who exposed, through a whistleblower program, the medical malpractice of surgeon Jayant Patel. As a result, Hoffman received the 2006 Australian of the Year Local Hero Award and an Order of Australia Medal for her role as a whistleblower. While there are several positive examples of whistleblowers in Australia, such as the story of Toni Hoffman, Australia’s whistleblower protection laws have long been criticised for leaving whistleblowers feeling vulnerable rather than protected.
Having been involved in a large number of investigations where whistleblower information has led to the discovery of significant fraud, corruption and in one case abuse, it has always concerned us that whistleblower protections are often inadequate and expose the whistleblower to potential fallout resulting from the investigation. In one case, the whisteblower, a Government executive, had their employment terminated on the spot because of their disclosure.
This is especially so in the private sector where protections are limited. In one case, we had to recommend a private sector whistleblower be placed under protective surveillance for a period of time, costing the client significantly. However, change is on the horizon.
Following the passage of the Treasury Laws Amendment (Enhancing Whistleblowers Protections) Bill 2018 (Whistleblower Bill) through Parliament on 19 February 2019, new Federal whistleblower legislation was enacted on 19 March 2019. After modification on 4 April 2019, the new legislation took effect on 1 July 2019.
The new whistleblower legislation amends and enhances the:
The whistleblowing provisions in the Banking Act 1959, the Insurance Act 1973, the Life Insurance Act 1995 and the Superannuation Industry (Supervision) Act 1993 have been repealed, and replaced by the new provisions in the Corporations Act.
Key features of the new whistleblower regime include, but are not limited to:
Whistleblowers are an important source to detect cases of fraud and misconduct in the workplace and they often provide pivotal evidence for a successful prosecution. By promoting a whistleblowing culture, the company encourages transparency and integrity in the workplace.
However, in practice, there are limitations to having anonymous disclosures given that the information can be dismissed by virtue of perceived unreliability. In some cases, the information provided is too broad or ambiguous such that investigating the disclosure would require following up the whistleblower. This can be challenging or even impossible in some cases if the company has no means of contacting the person directly to provide additional information regarding the disclosure. This is why having a sound whistleblower program in place is extremely important to ensure that all disclosures can be properly investigated whilst protecting the anonymity of the person.
Companies should update their respective policies to reflect the significant changes made to Australia’s whistleblower legislation prior to the 1 January 2020 deadline. Under the new legislation, all public companies and large proprietary companies must have a policy containing:
In addition, whistleblowers must know where, how, when to report; and that their identity as a whistleblower will be kept confidential. Raising awareness of the importance of whistleblowers can promote a ’speak up’ culture and de-stigmatise the disclosure of wrongdoing. Therefore, businesses will need to implement comprehensive training across the organisation to ensure that whistleblower protections are recognised and dealt with upmost confidentially.
For information about how BDO can assist you with implementing these changes, please contact us.