August 12, 2016

The (Somewhat Sad) State Of Whistle-Blowing In Australia

- Brian Hood, Former Company Secretary [ Note Printing Australia ]

brian hood

Australia is in danger of becoming a dumping ground for dirty money, particularly from Asia. Funds stolen from government projects in PNG, Malaysia and China via bribery and fraud are invested with relative ease in Sydney, Melbourne and other property markets...

Protecting Whistle-Blower Identity

Metadata laws passed last year in Australia mean that phone companies and internet service providers must keep details of communications between journalists and whistleblowers for two years. This information can be obtained by a range of law enforcement agencies, thereby compromising journalists' promise to protect the identity of confidential sources and potentially discouraging whistle-blowers from coming forward.

The leak of emails from Unaoil, the Panama Papers, and Edward Snowden's revelations illustrate the power of public interest journalism backed by strong documentary evidence. If it weren't for diligent and persistent efforts of investigative journalists and some whistle-blowers, many scandals would never have been brought to the attention of regulators, law enforcement agencies and the public.

In Australia, whistle-blowers have been instrumental in exposing corporate wrongdoing in National Australia Bank, the Commonwealth Bank's financial planning businesses and its Comminsure life insurance business, 7-Eleven, IOOF, bank-bill swap rate rigging in ANZ and Westpac, foreign bribery in the Reserve Bank of Australia's banknote subsidiaries... and many more.

In response, Fairfax Media have very recently introduced two processes whistle-blowers can utilise to confidentially pass on information. The "Securedrop" platform allows messages and files to be passed securely to journalists using an anonymous network, encryption and a clean operating system. The communications trail is wiped out, so information doesn't exist anywhere for long enough to be searched.

The second method, "JournoTips" by Whispli, encrypts all communication and effectively scrubs the IP address of the informant.

Fairfax is embedding the two links in stories by its investigative reporters on The Age (Melbourne) and Sydney Morning Herald newspapers.

A major research project

"Professor AJ Brown of Griffith University is leading a huge and ambitious research project focussed on identifying current and potential best practices in organizational management of whistleblowing..."

In another positive development, Professor AJ Brown of Griffith University is leading a huge and ambitious research project focussed on identifying current and potential best practices in organisational management of whistle-blowing, based on comprehensive evidence drawn from a wide cross section of Australian and New Zealand private and public sector organizations.

The project is believed to be the largest in the world to date. Launched in late April 2016, the project is led by researchers from Griffith University, Australian National University, University of Sydney and Victoria University Wellington, supported by 21 integrity, regulatory and professional organizations, including CPA Australia, the Commonwealth Ombudsman, Transparency International Australia, the Governance Institute of Australia, and the Australian Securities and Investment Commission (ASIC).

Every Australian public sector agency - federal, state, and local, and all 32,600 listed, unlisted and large proprietary companies have been formally approached to participate in the project and its surveys. Organizational responses will be confidential and individual responses anonymous. It is anticipated that results at jurisdictional, sectoral and organisational levels will provide unprecedented evidence of what is currently working, and why and why not, in the management and encouragement of whistle-blowing.

The evidence will help organizations get it right and help law reformers set appropriate standards.

All organizations with more than 10 employees are encouraged to participate and help tackle the challenging issues of corporate culture, public integrity and social responsibility. More information is available at www.

Political (In) Action

Meanwhile... a high-profile Senate Committee has called for a major overhaul of Australia's corporate whistleblower laws, saying current protections are "unacceptable" and do little to help or encourage whistle-blowers to come forward. Australian laws lag well behind those of other OECD countries, including the USA and UK, especially in the private sector. A Senate economics committee in 2014 called for it to be made a criminal offence to take or threaten a reprisal against a whistle-blower - but the current federal government has not acted on this recommendation. The corporate regulator ASIC has been strongly criticised for failing to act properly on a number of whistle-blower warnings. It is widely felt that ASIC has a record of lamentable failure when it comes to investigating unethical or illegal conduct in the corporate sector.

In the foreign bribery case involving RBA banknote subsidiaries, ASIC refused to investigate board members or parent organization personnel for serious governance failings and refused to publicly explain its reasons for refusing to investigate.

Corporate misdeeds and unethical behaviour have emerged as a key federal election issue in 2016, with the Opposition calling for a Royal Commission into the banking sector. The Senate committee found that no one has ever been prosecuted under existing laws for victimising a whistleblower in Australia despite a significant number being sacked or bullied because of their whistleblowing.

In the current government's three years in office, the corporate regulator ASIC has lost 14% of its staff, the Australian Tax Office 16% and the Australian Competition and Consumer Commission 10% of its staff. The federal government announced cuts of $120m to ASIC's budget in 2014, severely curtailing its surveillance activities. This was despite a Senate inquiry in 2014 concluding that ASIC was a "timid, hesitant regulator, too ready and willing to accept uncritically the assurances of large institutions that there were no grounds for ASIC's concerns or intervention".

Silencing Whistle-Blowers

In one of the more disturbing developments for whistleblowers, the Australian Border Force Act 2015 has farreaching and disturbing consequences for the scrutiny of immigration detention centres and the treatment of asylum seekers by the media, professional groups, international human rights bodies and non-government organizations. The Act seeks to regulate and control access to information about asylum seekers in immigration detention.

Under the Act, it is a criminal offence, punishable by imprisonment of up to two years, for any person working directly or indirectly for the Department of Immigration and Border Protection to reveal to the media or any other person or organization anything that happens in detention centres like Nauru and Manus Island.

The effect will be to deter individuals such as doctors, counsellors, and others who have voiced publicly their concerns about the appalling conditions and human rights abuses endured by asylum seekers in detention centres from collecting information and then raising their concerns in the community via the media and other platforms.

The Act not only criminalises whistle-blowers but those such as medical professionals and teachers who believe they have an ethical duty to report physical and mental harm that occurs in a systemic fashion.

Reputational Damage

Australia has slipped from 6th to 12th position on Transparency International's worldwide corruption perception index since 2012. The Australian Federal Police have struggled to file charges in several high-profile foreign bribery probes and are ill-equipped and under-resourced to face existing challenges. Charges were laid against RBA subsidiary companies, Securency and NPA, and some of their executives and those cases continue through the courts.

In response to the decline, Transparency International (Australia) have called for establishment of a Serious Fraud and Corruption Office to tackle corporate crime.

In its submission to an ongoing Senate inquiry into foreign bribery, the Law Council said "It should not be assumed that bribery of foreign public officials involving Australian corporations does not take place". "Australia's enforcement record lags well behind that of comparable Western countries and Australia is not meeting its international obligations".

A recent survey by accounting firm Deloitte found one third of all companies operating in high risk jurisdictions had uncovered suspected bribery or corruption in the past 5 years.

The Consequences

Australia is in danger of becoming a dumping ground for dirty money, particularly from Asia. Funds stolen from government projects in PNG, Malaysia and China via bribery and fraud are invested with relative ease in Sydney, Melbourne and other property markets.

Corruption is one of the greatest scourges of the developing world. Bribes and rorts entrench power in the hands of a few. Underhand deals are a fraud on nations, their economies, and their people. Corruption fortifies power and ill-gotten wealth where it is least deserved while reinforcing poverty, inequity and injustice elsewhere. A nation whose companies are lax about integrity issues will lose its reputation and fall prey to the crooks of the world. Corruption is a concern for all of us - it tears at the fabric of society. Australia is currently lacking much-needed leadership in this area.

Disclaimer - The views expressed in this article are the personal views of the author and are purely informative in nature.

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