On 13 December 2017, the Australian office of the international law firm: Ashurst, put out the following briefing. The authors were: George Cooper, Partner; James Clarke, Senior Associate; and Lucy Cameron, Graduate.

What you need to know

  • On 7 December 2017, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 was tabled in Parliament.
  • The Bill proposes to strengthen Commonwealth whistleblower protections in numerous ways, including expanding the definition of “eligible whistleblower” to include former officers, employees and suppliers of goods and services; a broad definition of potential misconduct that may be disclosed by a protected whistleblower; allowing for anonymous disclosures; enhanced protections, immunities and compensation available to whistleblowers; and a requirement that public and large proprietary companies create and make available internal whistleblower policies.
  • Key differences from the exposure draft legislation released in October 2017 include:
    • an expanded definition of “eligible recipients” so that a whistleblower may qualify for protection where he or she has disclosed conduct to an immediate manager or supervisor;
    • stricter conditions on when a whistleblower can make an ’emergency disclosure’ to a Federal, State or Territory member of parliament or a journalist; and
    • an expanded list of matters that must be addressed in internal whistleblower policies.

Road to reform

In recent times, Australia’s current whistleblower protections, including those in Part 9.4AAA of the Corporations Act 2001 (Cth), have been labelled as “largely theoretical”.

In September 2017, a Parliamentary Joint Committee tabled its highly anticipated report into whistleblower protections in the corporate, public and non-for profit sectors.  The report made 35 wide ranging recommendations to overhaul whistleblower protections (see our Alert dated 14 September 2017).

Shortly after, in October 2017, the Government released exposure draft legislation for public consultation, which addressed some but not all of the Committee’s recommendations (see our Alert dated 24 October 2017).

Now, reform is imminent, with the Government having tabled the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 in the Senate.

Key features of the Bill

The key features of the Bill include:

  • expanding the categories of people who will receive the benefit of protection when they blow the whistle, and people to whom protected disclosures can be made;
  • provision for protected ’emergency disclosures’ to members of Federal, State or Territory Parliaments or to journalists in limited circumstances;
  • a broad definition of potential misconduct that a protected whistleblower may disclose information in relation to.  This includes where a whistleblower has reasonable grounds to suspect that the information concerns misconduct or an ‘improper state of affairs or circumstances’ in relation to a regulated entity.  Importantly, the Explanatory Memorandum to the Bill emphasises that this may include conduct that is not in contravention of any particular law;
  • removing the requirement that a disclosure must be made ‘in good faith’;
  • protection for anonymous disclosures and the creation of an offence in relation to disclosing a whistleblower’s identity in certain circumstances;
  • improved access to compensation for whistleblowers and any person who suffers damage as a result of victimising conduct; and
  • a requirement for public companies and large proprietary companies to create, and make readily available, internal whistleblower policies.  A proprietary company will be defined as large for a financial year if it satisfies two of the following conditions:
    • the consolidated revenue for the financial year of the company and any entities it controls is $25 million or more; or
    • the value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $12.5 million or more; or
    • the company and any entities it controls have 50 or more employees at the end of the financial year.

See our Alert dated 24 October 2017 for further discussion about these key features.

Differences from the exposure draft legislation

Although the Bill is similar to the exposure draft legislation, more detail has been added in respect of some provisions.  Generally, this has resulted in increased protections for whistleblowers.

Some noticeable differences in the Bill include:

  • an expanded definition of ‘eligible recipients’.  A whistleblower may qualify for protection where he or she has disclosed conduct to a manager or supervisor at a regulated entity.  This is in addition to the availability of protection where a whistleblower discloses conduct to, among other persons, an officer, auditor, actuary or a person authorised by a regulated entity;
  • removing protection for a whistleblower where the disclosure is made to a member of the Australian Federal Police.  Instead, the relevant bodies are restricted to ASIC, APRA or any prescribed Commonwealth authority.  This suggests a shift in focus away from criminal conduct and towards corporate culture [TT comment: excluding disclosures to the Police sounds counter-intuitive, for a prospective whistleblower, who typically is not scrutinising the protective legislation when contemplating a disclosure and therefore this exclusion seems a counter-productive limitation on the effectiveness of the measure];
  • stricter conditions on when a whistleblower can make an ’emergency disclosure’  to a Federal, State or Territory member of parliament or a journalist.  In addition to the previous requirements (see our Alert dated 24 October 2017) the whistleblower must also provide written notice to ASIC, APRA or another prescribed entity that:
    • includes sufficient information to identify the previous disclosure; and
    • states that the whistleblower intends to make an emergency disclosure to a member of Parliament or a journalist (which is now defined);
  • an expanded list of matters that must be addressed in internal whistleblower policies. Policies must now also include information about:
    • how the company will investigate disclosures that qualify for protection;
    • the people to whom disclosures that qualify for protection may be made and how they may be made; and
    • how the policy is to be made available to officers and employees of the company.

Omissions from the Joint Parliamentary Committee’s recommendations

Despite the strengthening of some protections, there are still a number of features recommended by the Parliamentary Committee that have not been adopted.  These include:

  • introducing a bounty-style reward system for whistleblowers; and
  • establishing an independent oversight and investigative authority.  However, the Bill does allow protected disclosures to be made to a prescribed Commonwealth authority, which may  contemplate the future establishment of a new body or statutory officer to administer and investigate whistleblower disclosures.

See our Alert dated 14 September 2017 for further discussion of these recommendations.

Next steps

Further consideration of the second reading of the Bill has been adjourned to 5 February 2018, and the Government has committed to there being a Parliamentary vote on whistleblower reforms by 30 June 2018.

[Ashurst website: This Article; Related Tax Month article on introduction of the Bill; APH website: WhistleBlower – Digest, Bill and EM]

 

 

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