At the QUT Business Leaders’ Forum lunch at the Sofitel in Brisbane on Monday, NAB CEO Andrew Thorburn was subjected to a tough line of questioning from the forum moderator, veteran ABC journalist Kerry O’Brien. Thorburn generally performed well, although some of his claims were unconvincing. The Australian Financial Review’s Rear Window column observed yesterday:
Thorburn squirmed after a few questions, agreeing there had been a failure of leadership. There was even an audible gasp from the assembled when Thorburn said his bank did all it could to help whistleblowers.
I was one of the assembled making the audible gasp.
Kerry O’Brien had suggested to NAB’s CEO that, in Australia, anyone with knowledge of corporate wrongdoing would be very reluctant to report it, given that reporting it would be a career killer. This reflects the weak legal protection given to corporate whistleblowers in Australia. Sydney Morning Herald journalist Adele Ferguson, a strong advocate of a Royal Commission into the banks, has pointed to disturbing examples of whistleblowers, such as a whistleblower at IOOF, who have lost their jobs after courageous disclosures (see this SMH report). The limited protection for whistleblowers is appalling, given that whistleblowers have been essential to uncovering the scandals associated with the banking industry in recent years.
It is widely agreed that Australia’s whistleblower protection laws are weak, especially compared with those in the US and some other countries. In 2014, in its report on the performance of ASIC, the Australian Senate Economic References Committee recommended an overhaul of Australia’s corporate whistleblower laws, so corporate whistleblowers would receive protection similar to public sector whistleblowers, which would include the protection of anonymous disclosures, among other additional protections (see Recommendation 15 in Chapter 14 of the Report). Currently, under the Corporations Act, whistleblower protection does not extend to people making anonymous disclosures.
The Committee also recommended consideration of “reward-based incentives for corporate whistleblowers, including qui tam arrangements”. Qui tam is Latin for “who as well”, and under these arrangements whistleblowers could receive part of any fines or settlements against companies that have done the wrong thing. In a position paper published earlier this year, Transparency International suggested qui tam provisions may be desirable as they:
“…incentivise corporate employees to disclose fraud and wrongdoing by providing rewards of up to 25 per cent of recovered damages, such as in the US where US$6 billion was recovered in 2014 through the federal False Claims Act.”
Some commentators may be concerned about the possibility of vexatious claims arising from reward-based incentives, but, by linking the reward to recovered damages, a qui tam approach may avoid this issue.
Given the high level of community concern regarding the behaviour of our banks, which are just one more scandal away from a Royal Commission, the reform of whistleblower protection is long overdue and should be progressed by the Australian Government as a matter of urgency.
This is a tough one. Problem is mud tends to stick. This is part of the reason defamation laws exist so to protect entities from damage from vexatious untrue claims. If a whistleblower does make a vexatious claim against a corporation what is the punishment to the individual for potential damage to the corporations reputation? Generally a corporation can not sue an individual (at least in NSW), save for a few exceptions. So there is no redress to loss of revenue, shareholder value, future contract wins, etc. from vexatious claims by a whistleblower. Perhaps a ‘fair’ solution is to allow a cooperation to sue an individual where they have made a vexatious complaint in addition to enhancement of whistleblower protection.
Thanks for the comment and suggestion, Alistair. Yes, it will be tough to get the policy settings right for whistle blowing.