It can be expected that over the next year Australia’s corporate whistleblowing laws will be significantly improved, with Treasury consultation and a further Senate enquiry taking place in the first half of 2017.

Some of the more significant improvements to the corporate whistleblowing laws are likely to include:

  • broadening the categories of persons who are protected by whistleblowing laws;
  • extending the reach of the whistleblowing laws to any breach of law;
  • removing the requirement that whistleblowers are only protected if they make disclosures in good faith;
  • improving access to justice for whistleblowers where retaliation has occurred;
  • imposing sanctions on companies that are found to have engaged in retaliation.

The most contentious issue to be considered this year is whether Australia should introduce a system of financial rewards for whistleblowers to create the game changing environment that has been experienced in the United States in recent years.

Through the SEC office of the whistleblower, bounties of between 10% to 30% of the penalty imposed can be awarded to a whistleblower by the SEC if a successful enforcement action results from information provided that results in a penalty imposed of greater than US$1 million. Approximately US$50 million was paid by the SEC to whistle blowers in 2016 and the regime is clearly having a significant impact on the quality and amount of information being received by the SEC. Importantly the US regime explicitly encourages and rewards internal whistleblowing.

For the director it is timely to consider whether internal whistle blower arrangements should be modernised and reconfigured.

While the vast majority of Australia’s major companies have internal whistleblowing procedures, more can be done to improve the effectiveness of those programs as well as to ensure that more independent and thorough attention is given by the board to internal reports of wrongdoing. Some of the measures to consider include:

  • setting the right tone at the top by more clearly communicating that the board and senior management take the issue very seriously and are committed to investigate any information received that suggests improper conduct has occurred within the organisation;
  • stronger communication of a commitment to treat whistleblowers with respect and adoption of more extensive procedures designed to prevent unconscious bias or retaliation where information is provided;
  • more effective training programmes with practical guidance on how to internally report concerns and more specific provision of examples of what types of conduct should be reported;
  • facilitation of anonymous whistleblowing and adoption of measures to protect confidentiality, including greater use of independent dedicated phone lines and email addresses;
  • creation of a senior independent whistleblowing champion (who might be a non-executive director) who reports concerns received directly to the board and has the resources to undertake appropriate and independent inquiry;
  • annual reporting to the board of reported concerns with detailed analysis of how the concerns were resolved.