Chapter 2
Content of the bill
Harmonising whistleblower regimes
2.1
The current protections in the Corporations Act 2001 (the
Corporations Act) cover a current officer, employee, or contractor of the
company in question who makes a disclosure in good faith (and not, say, with a
personal grievance) about a breach of corporations law. The whistleblower must
provide his or her name.[1]
2.2
The protections include limited protection from civil or criminal
liability or contractual remedies for making the disclosure, prohibitions on
victimisation and the right to seek compensation for damage from victimisation,
and prohibitions on the revelation of the whistleblower's identity or the
information disclosed (with some exceptions).
2.3
The financial sector whistleblower provisions are generally similar, and
apply to disclosure concerning misconduct or impropriety in APRA-regulated
entities.
2.4
This bill brings the corporations and financial sector whistleblower
regimes into alignment (Schedule 3). The new arrangements in the Corporations
Act will cover whistleblowers in the corporate and financial sectors.
2.5
The bill also extends protection to entities regulated by the National
Consumer Credit Protection Act 2005 and the Financial Sector (Collection
of Data) Act 2001 (Schedule 1, item 2, s. 1317AA(5)(c)), which at present
do not include whistleblower protections.
Scope of disclosures that qualify for protection
2.6
At present the disclosures that are protected have to do with breaches
of the particular Act that governs the entity. This bill expands the scope of
disclosable matters.
2.7
Disclosable matters now include misconduct, or an improper state of
affairs or circumstances, in relation to the regulated entity, or to a related
body corporate (Schedule 1, item 2, s. 1317AA(4)). It applies to conduct that
is an offence against the Corporations Act, the Australian Securities and
Investments Commission (ASIC) Act, or the financial legislation that has been
brought into scope; and it also includes an offence against any other law of
the Commonwealth that is punishable by 12 months' imprisonment, or represents a
danger to the public or the financial system. The Explanatory Memorandum notes
that some of the conduct covered here may not in fact be a breach of a law.[2] The bill also allows for regulation to prescribe other conduct (Schedule 1,
item 2, s. 1317AA(5)).
Defining 'eligible whistleblower'
2.8
To be an eligible whistleblower, a person must have some relationship
with the entity about which they are making a disclosure. The definition is
intended to cover people who are likely to have information about matters which
should be disclosed.[3]
2.9
An eligible whistleblower is an employee, supplier (or employee of a
supplier) or associate of the entity; or a relative or dependant or spouse of
such a person. Importantly, the definition is widened to cover individuals who
are or have been in one of these relationships: thus, former employees and
associates are now also protected (Schedule 1, item 2, s. 1317AAA). The
bill allows for other categories of person to be prescribed by regulation.
2.10
In the case of superannuation entities, the bill also applies to
trustees, custodians and investment managers of the entity.
Recipients of disclosures
2.11
Disclosures may be made to ASIC or APRA, or another prescribed
Commonwealth authority, or to a lawyer for the purpose of obtaining advice
(Schedule 1, item 2, s. 1317AA(1) and (3)). The Explanatory Memorandum
notes that where legal advice is being sought, the individual may not be an
eligible whistleblower and the matter may not be a disclosable matter. This is
so that people can seek advice about whether they would be protected.[4]
2.12
Disclosures are also protected if they are made to an officer of the
entity, or an auditor or actuary of the entity, or another person the entity
has authorised to receive disclosures. They may also be made by an individual
employee to their supervisor (Schedule 1, item 2, s. 1317AAC). The bill
allows for other persons or bodies to be prescribed by regulation.
Emergency disclosure
2.13
The bill also provides for 'emergency disclosure' to a journalist or a
member of Parliament. Such disclosure will be protected only if the disclosure
has already been made to ASIC, APRA or a prescribed body and qualifies for
protection, a reasonable period has passed since it was made, and there is now
an imminent risk to public health or safety or to the financial system if the
disclosure is not acted on immediately. The discloser must give the original
recipient written notification of their intention to make an emergency
disclosure (Schedule 1, item 2, s. 1317AAD).
2.14
The bill defines a journalist to be one who is working for a newspaper
or magazine, a radio or television broadcasting service, or a similar service
operated commercially through the internet. This is intended to rule out
disclosures on social media or to 'self-defined' journalists.[5]
'Reasonableness'
2.15
At present, whistleblowers are required to make disclosures 'in good
faith'..
2.16
This requirement has been replaced by a reasonableness test which
requires that the whistleblower have reasonable grounds to suspect misconduct
or an improper state of affairs (Schedule 1, item 2, s. 1317AA(4) and (5)).
2.17
The requirement to act in good faith has been removed on the basis that
the Government wishes to encourage whistleblowers to come forward with
information that will assist law enforcement efforts, regardless of the
motivation of the whistleblower.
Confidentiality
2.18
The bill makes it an offence to reveal the identity of a whistleblower
without the whistleblower's consent, except to regulatory or law enforcement
authorities or in the course of investigation. The prohibition covers revealing
information which would identify the whistleblower, but this is qualified by an
exception where revealing the information is necessary for the investigation
(Schedule 1, item 2, s. 1317AAE). It is not an offence in general to
disclose information about the wrongdoing which has been disclosed by the
whistleblower.
2.19
A note to this section in the bill states that in a prosecution for an
offence the defendant 'bears an evidential burden'—that is, the burden of proof
is on the person accused of revealing a whistleblower's identity.
2.20
There is no longer any requirement that a whistleblower provide his or
her name in order to qualify for protection. Anonymous disclosures will now be
protected.[6]
What protection is offered to whistleblowers?
Immunity in criminal and other
proceedings
2.21
A whistleblower is not subject to any civil, criminal or administrative
liability for making a disclosure, and no action can be taken against him or
her under a contract, for example an employment contract or a supply contract
with the company the disclosure relates to. Information that is protected by
this act will not be able to be used against the whistleblower in criminal
proceedings or proceedings where a penalty is imposed (Schedule 1, item 2,
s. 1317AB(1)). This clarifies and extends existing protections.
2.22
However, a note in the bill makes it clear that a person can still be
subject to civil, criminal or administrative liability for conduct that is
revealed by the disclosure.
Protection from victimisation
2.23
The bill makes it easier for a whistleblower to seek redress for
victimisation.
2.24
The bill allows for civil or criminal prosecutions for victimisation.
This occurs where the victimiser causes detriment to another person in the
belief or suspicion that the person, has made, or may make a disclosure. Thus
there is no requirement that the disclosure has actually taken place, nor that
the victimiser actually knows about a disclosure; nor is there a requirement to
prove that the victimiser intended to cause the detriment, nor that the
disclosure is the only reason for the detriment (Schedule 1, items 5–7,
s. 1317AC).
2.25
The detriment can be to another person: it does not have to be to the
whistleblower, but can also be to a colleague, supporter, friend or relative.
This is already the case in existing law.[7]
2.26
The bill provides that detriment includes dismissal, disadvantage or
discrimination in employment, harassment or intimidation, harm or injury
(physical or psychological), and any damage to a person including their
property, reputation or financial position. Detriment is not limited to these
categories of harm.
Compensation
2.27
By making it easier to prove victimisation, the bill makes it easier for
a whistleblower (or their associate) to seek compensation for loss, damage or
injury. In addition, a claim for compensation can be made without the offence
of victimisation having been proved. The claim can be against an individual or
a body corporate, and the body corporate can also be liable for conduct that
assisted or was involved in the victimising conduct (Schedule 1, item 9,
s. 1317AD).
2.28
As well as orders for compensation, a court can grant an injunction to
stop the victimising conduct, or an order requiring an apology or reinstatement
or exemplary damages, or any other order the court thinks appropriate.
2.29
The bill reverses the burden of proof in compensation claims. The
claimant for compensation simply has to point to evidence that suggests a
'reasonable possibility' that the victimisation has taken place. Once that is
done, the defendant entity which will bear the evidential and the ultimate
legal burden of disproving the claim—that is, that the defendant entity did not
believe or suspect that the whistleblower may have made a disclosure that
qualifies for protection, and that the belief or suspicion was not the reason,
or part of the reason, for the victimising conduct (Schedule 1, item 9,
s. 1317AE (2)). This will no doubt be a difficult onus for a defendant
entity to discharge, as it will have to prove a negative proposition concerning
its own state of mind. If the claim is made against a person and their
employer, there will be no order against the employer if it took reasonable
steps to avoid the victimising conduct (s. 1317AE (3)).
2.30
The whistleblower's identity is to be protected in court proceedings (s. 1317 AG).
2.31
The bill also removes the risk to whistleblowers of an adverse costs
order being made against them. The claimant cannot be ordered to pay the costs
of the defendant entity on a party-party basis, unless the claimant has
vexatiously initiated the proceedings or where the claimant's behaviour has
otherwise unreasonably caused the other party to incur costs (s. 1317 AH).
Whistleblower policy
2.32
The bill requires public companies, large proprietary companies and
companies that are trustees of superannuation entities to have a whistleblower
policy, and to make that policy available to officers and employees of the
company.
2.33
The policy has to set out information about the protections available to
whistleblowers and what disclosures are protected, how the company will support
whistleblowers and investigate disclosures, and how the company will ensure
fair treatment of employees who are mentioned in disclosures (Schedule 1, item
9, s. 1317AI).
Penalties
2.34
At present victimisation and disclosing a whistleblower's identity are
offences and a contravention has to be proved to the criminal standard, beyond
reasonable doubt. The bill maintains criminal liability for these offenses. It
reverses the onus of proof for the former in favour of the whistleblower, and also
makes both offences civil penalty provisions, with contraventions attracting a
maximum penalty of $200,000 for an individual and $1 million for a corporation
(Schedule 1, items 10 and 11, s. 1317E(1) and s. 1317 (G)).
Amendment of the Taxation Administration Act 1953
Overview
2.35
Part 2 of Schedule 1 of the bill amends the Taxation Administration
Act 1953 in ways that are broadly similar to the amendments to the Corporations
Act. It creates a regime to protect individuals who report non-compliance with
tax laws or misconduct in relation to an entity's tax affairs.[8]
2.36
A disclosure may be made by an eligible whistleblower to the
Commissioner of Taxation or to an eligible recipient. Eligible recipients
explicitly include internal auditors and registered tax agents and BAS agents.
The bill does not specify that a person who supervises or manages a
whistleblower is an eligible recipient.
2.37
There is no provision for emergency disclosure, largely because tax
affairs are confidential and the Commissioner of Taxation has indicated that
public disclosures would very likely compromise its investigation of a
whistleblower’s disclosure, but also because the time lags involved in tax
collection mean that the occasions when they might be justified do not arise.
2.38
While whistleblowers are not subject to liability or contractual action
for making a disclosure, there is no immunity from an assessment of the
whistleblower's own taxation if it is revealed by the disclosure. There can
also be an administrative penalty. However, the Commissioner may treat it as a
voluntary disclosure when assessing an administrative penalty.
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