To ensure and maintain confidence in the integrity of Australian board’s corporate governance, corruption, fraud and other unlawful acts within the public and private sector must be exposed and dealt with appropriately.
Everyone living in the post-GFC world rightly questions the legitimacy of ‘voluntary self-regulation’, especially when the likes of Alan Greenspan have acknowledged it doesn’t work.
According to the Australian Securities and Investments Commission (ASIC) website, people who possess information of corporate misconduct or dishonest or illegal activity, can notify relevant authorities and disclose the information with the expectation it will be dealt with appropriately.
Protections for such disclosures with respect to private corporations were first included in the Corporations Act 2001 in 2004 and will be the most applicable for financial services professionals. Similar provisions were included in the Banking Act 1959, Insurance Act 1973, Life Insurance Act 1995 and the Superannuation Industry (Supervision) Act 1993 in 2007.
In Australia, many of us were brought up with the mantra ‘no-one likes a dobber’, but there are some circumstances where our moral compass will not allow us to turn a blind eye. It is important to first determine whether you are protected from persecution, discrimination, liability and incarceration when considering whether to blow the whistle on conduct at the company for which you work or supply services. Next, you should seek independent legal advice. Government agencies (such as ASIC) are not independent, and are not able to give you independent legal advice. Further, it is important to appreciate that the government agency’s interest with respect to the information you disclose may not align with yours.
Here are some other issue to consider before whistleblowing:
Who is protected?
As a financial services professional, you must be one of the following:
- A director or company secretary of the company you are going to blow the whistle about
- A current employee of the company you are going to blow the whistle about
- A contractor, or employee of a contractor, who has a current contract to supply goods or services to the company you are going to blow the whistle about.
This will cover employed financial planners with respect to the conduct of both their employers and their Australian financial services licensees. However, it is important to obtain advice as to whether your employment and/or service contracts can allow you to meet the above descriptions.
Whom must I tell?
To be protected, you must disclose what you know to one of the following:
- The company’s auditor or a member of the audit team
- A director, secretary or senior manager of the company
- A person authorised by the company to receive whistleblower disclosures.
It is up to you to determine to whom you will disclose the information. Your decision will probably depend on those at the centre of the conduct. This decision should be properly considered, and is not be taken lightly.
Can I blow the whistle anonymously?
If you want to be protected under the act, you must give your name to ASIC or to the person to whom you are disclosing the information.
What type of conduct must I be disclosing to have protection?
You will be protected provided you have reasonable grounds to suspect the information you are disclosing amounts to the company or an officer of the company having breached the Corporations Act or the Australian Securities & Investments Commission Act 2001.
It is also possible that contraventions of other legislation will involve secondary offences under the Corporations Act or ASIC Act, because of falsified books and records intended to cover up the primary offence.
Your motivation is relevant
Any disclosure to a relevant authority or person must be made in good faith. This means your disclosure must be honest, genuine and motivated by desire to disclose the conduct, not to be malicious or for an unrelated reason.
What are the protections?
What you disclose must be kept confidential by the body to whom you disclosed it. This includes your identity, unless the recipient is authorised by law to release that information.
You are not protected from civil or criminal litigation being commenced against you. However, if proceedings are commenced against you for disclosing protected information, you are able to rely on the relevant sections of the Corporations Act as a complete defence. If you are required to defend yourself against these claims, you will incur the cost of doing so, which can be significant. Government agencies, such as ASIC, will not act to enforce your protections for you.
If a secrecy provision is included in your employment contracts, it is not enforceable. But again, if your employer seeks to rely on such a provision in proceedings against you, you will personally incur the costs associated with defending it. Obtaining independent legal advice is probably the best way to protect yourself from costs, and to position yourself to stand to get more of them back after any proceedings.
If your employment is terminated as a result of your disclosure, you can seek an order from a court of competent jurisdiction to reinstate you, either in your former position or in a comparable position.
It is a criminal offence for someone to victimise you because you have made a protected disclosure. You can also make a claim against the offender for any damages suffered as a result of such victimisation. The ASIC website notes that pursuit of such a claim will probably result in arguments before the court as to whether the offensive conduct was victimisation arising from the protected disclosure or from another cause. Again this is a personal right, and ASIC will not assist you in seeking to enforce this.
Beyond the specific protections for whistleblowers, there are other options available for dealing with instances of retaliation or bullying, such as suits for breaches of contract and torts, or legislative remedies like acts related to occupational health and safety, workers’ compensation and equal opportunity.
Am I obliged to blow the whistle?
Curiously, that can depend on your employment contract. Arguably, best practice contracts must include a requirement that the employee is obliged to do so. The company would then be prevented from taking action against an employee who blows the whistle.
TOPICS: asic, Corporations Act 2001, whistleblower
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