New research confirms protections for whistleblowing ‘a must’

Posted by on 04/05/2017

The interim findings of the  world’s largest research project into whistleblowing by Griffith University reinforces the need for a stand-alone, ‘one-stop-shop’ Act for corporate whistleblowers claims Governance Institute of Australia, saying that regulator -specific provisions across many pieces of legislation do not provide the best protection for those exposing misconduct.

The research released today showed most organisations had systems for recording and tracking wrongdoing concerns, but:

  • 23% of organizations had no particular system in place, nor any particular support strategy for staff who raise wrongdoing concerns; and
  • over 80% did not have processes for providing compensation or restitution to whistleblowers if they suffer detrimental outcomes.

“If we want whistleblowers to come forward we’ve got to streamline the process,” says Governance Institute chief executive Mr Steven Burrell. “The whistleblower provisions in the Corporations Act are very narrowly focused and require whistleblowers to have a detailed understanding of whether the misconduct they are reporting is covered by corporate law or could relate to competition, tax, workplace health and safety, bribery or corruption or industrial relations, all of which are covered by different legislation and regulators.”

Governance Institute is one of 23 integrity, regulatory and professional organisations supporting the Whistling While They Work 2 research project led by researchers from Griffith University, Australian National University, University of Sydney and Victoria University Wellington.

“Regulators and policy-makers have quite rightly homed in on the important link between a good corporate culture and ethical corporate conduct.  And a robust and independent whistleblowing process that makes employees feel comfortable about fearlessly reporting wrongdoing is a critical asset in building the kind of positive, ethical culture that supports strong corporate outcomes,” Mr Burrell says.

“However, the Corporations Act as it currently stands requires company employees who receive information about corporate misconduct from a whistleblower to pass it on to regulators such as ASIC.  They cannot discuss how to stop the misconduct with their colleagues or take internal action to remedy or prevent it unless the whistleblower provides consent, which means the misconduct can continue and does little to foster sound corporate governance.  Impediments such as these need to be addressed, but again, what policy-makers need is reliable information to determine the best approach.”

Governance Institute argues that a whistleblower should be protected, irrespective whether the regulator or agency they initially approach refers the allegation to another body to investigate, claiming disclosures within the corporate sector should not be confined to the Australian Securities and Investments Commission (ASIC) or the Australian Taxation Office (ATO).

“We do not believe that a whistleblower should be required to have a nuanced knowledge of legislation to know which regulator or law enforcement agency they approach to qualify for protection. It is a strong disincentive to making disclosures if employees or concerned members of the public feel that they require legal advice before making any such disclosure,” Mr Burrell said. 

“A stand-alone Act that covers disclosure of any sort of misconduct — not just financial misconduct — and that provides protection regardless of which regulator the whistleblower discloses to is what we need. Australia should follow the lead of the United States and United Kingdom where there are general provisions for allegations of misconduct made in good faith, and which do not attract retribution. This is a much better option than one which mandates the same provision in multiple pieces of legislation.

“Whistleblowers should have protection providing it concerns disclosure of potentially illegal activities that ASIC or another regulator or law enforcement agency can investigate. Nor should disclosures of unlawful activity be confined to ASIC. Importantly, if this cross-referral recommendation is accepted, it is critical that the whistleblower has the same confidentiality protection they had when they first made the disclosure,” Mr Burrell concluded. 

For further information contact Viv Hardy on 0411 208 951 or Steven Burrell on (02) 9223 5744 or 0407 708 485.

About Governance Institute of Australia

Governance Institute of Australia is the only independent professional association with a sole focus on whole-of-organisation governance. Our education, support and networking opportunities for directors, company secretaries, governance professionals and risk managers are second to none.

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