Bounty rewards for whistleblowers: inquiry

Financial Services Minister Kelly O'Dwyer in Melbourne today. Picture by Wayne Taylor 24th July 2017.
Financial Services Minister Kelly O'Dwyer in Melbourne today. Picture by Wayne Taylor 24th July 2017.

The Turnbull government should set up a new body to oversee whistleblowing allegations against corporates, protect whistleblowers against reprisals, and offer them bounty-style financial rewards for coming forward, according to a federal inquiry.

The idea of bounty rewards for those who blow the whistle on corporate corruption or unethical behaviour had earlier this year been flagged as a possibility by Financial Services Minister Kelly O'Dwyer.

Now, the Joint Parliamentary Committee on Corporations and Financial Services, which held an inquiry into whistleblower protections in the corporate, public and not-for-profit sectors, agrees a reward system is needed.

The committee, chaired by Liberal MP Steve Irons, on Wednesday released its final report and gave 12 main recommendations, including that the government introduce a new Whistleblowing Protection Act with far greater protections for whistleblowers.

A new Whistleblower Protection Authority would have far-reaching powers to support and protect whistleblowers, and conduct investigations.

Its powers would override confidentiality clauses in employer-employee agreements or settlements, and it would give annual reports to Parliament.

The committee noted that since investigations would likely involve cases of serious misconduct, such as fraud and corruption, far greater whistleblower protection was required.

The new laws would explicitly allow, and provide protections for, anonymous disclosures of corporate misbehaviour.

A test that whistleblowers act in "good faith" would not be required. Instead, people would need to have a reasonable belief of the existence of misconduct to receive protection.

The authority would ensure bounties were awarded in successful cases. In the United States that can range from 10 per cent to 30 per cent of the money collected in a case.

The committee suggests in Australia the reward amount be determined by the courts, which would need to consider a number of factors including the degree to which the whistleblower's information led to the penalty and the timeliness with which the disclosure was made.

Motives would be considered when deciding on rewards, including if the whistleblower disclosed the protected matter to the media without telling a law enforcement agency first.

It would also consider whether the whistleblower had already received compensation for adverse action taken against them by their employer.

Any involvement by the whistleblower in the conduct for which the penalty was imposed, would also be considered. If the whistleblower had been involved in criminal conduct they may get immunity or a reduced penalty, instead of a financial payout.

The committee recommended separate public and private whistleblower protection legislation, but noted that it was the preference of Labor and Green committee members that a single act be proceeded with in the first instance.

Sally McDow, founder of advisory firm, CPR Partners, was the first whistleblower in Australia to bring a legal action in the Federal Court of Australia in 2016 using whistleblower protections under the Corporations Act. She was a former senior compliance officer at Origin Energy.

She said corporations have for too long swept whistleblower accusations under the carpet. "The proposed introduction of bounty style rewards for whistleblowers will provide significant incentives for whistleblowers to come out of the shadows," she said.

"Bounties will likely result in a huge increase in whistleblower reports based on the experience seen in the US."

The committee also proposed the government establish a Fair Work style tribunal to hear individual's whistleblower complaints. "This will dramatically even the playing field for individual whistleblowers," Ms McDow said.

"Existing measures require individuals to use the Australian state and federal court system to enforce their rights which after hiring solicitors and barristers can cost hundreds of thousands of dollars and is out of reach of 99 per cent of the population."

The committee also recommended that the federal government examine whether the Commonwealth can have lower thresholds for disclosable conduct that would adequately protect whistleblowers, such as those involved in scandals in the financial service sector in recent years.

Australian Securities and Investments Commission's John Price has previously cautioned against going down the path of US-style bounties without first introducing stronger penalties for corporate crime and effective compensation and protections for whistleblowers.

This story Bounty rewards for whistleblowers: inquiry first appeared on The Sydney Morning Herald.