Protections for corporate whistleblowers look set to expand, following the release of an options paper by the Federal Government flagging a number of shortcomings with the current legislative scheme.
One of the key issues raised by the paper is that the current protections, contained in the Corporations Act 2001, do not cover the scope of persons who might have relevant information about illegal corporate activity.
Of particular concern is that the legislation currently does not afford protection to former employees, who the paper points out are "particularly well placed to act as informants" because they face fewer risks of victimisation than current employees. Other groups not covered include volunteers (who are prevalent in the not-for-profit sector), and other financial services providers, professionals or business partners who are not in a contractual relationship with the individuals concerned.
One of the options put forward by the paper is that the scope of protections be expanded to include any member of the public who comes forward with relevant information.
Speaking to Lawyers Weekly, Blake Dawson partner Robert Todd said that this would be a sensible reform, bringing Australia in line with other jurisdictions.
"There's nothing novel in that - that's the approach taken elsewhere in the world, and ... if a member of the public became aware of a breech, why should they be protected?" he said.
Current legislation also contains a requirement that disclosures must be made in "good faith", the objective being to minimise the risk of vexatious claims being made out of malice or for personal benefit. The paper raises the option of removing this "good faith" requirement, pointing out: "If a whistle blower has information concerning corporate misconduct, it seems in the public interest to have it disclosed, regardless of the whistleblower's motive".
Blake Dawson's Todd agreed that this would also be a beneficial reform, pointing out that an absence of "good faith" doesn't preclude a person from having relevant, accurate information about corporate misconduct. "The stance that the Government is taking these days is that a lot of these corporate crimes are very significant crimes, and the question of good faith is not to my mind relevant in the assessment of that issue, if it [results in] the exposure of facts that lead to a revelation of some kind of illegal conduct," he says. He adds that a person's motive still could be something considered by a court when assessing the truth of the information being given.
Another shortcoming of the current legislative protections is that it only covers disclosures of information relating to specifically to breaches of the Corporations Act, and not other illegal corporate activity. For example, the paper points out, it does not cover breaches of the State Crimes Act, which accounted for approximately 10 per cent of ASIC enforcement activities in 2007-08.
"It seems anomalous that there are matters which a whistleblower would not be protected for disclosing, but which are significant enough to warrant investigation by ASIC," the paper notes.
"This suggests a clear need for the scope of protections to be expanded, at least to include disclosures on any matter which ASIC can investigate".
The paper goes one step further, however, and floats the possibility of extending protections to disclosure of "misconduct" which may not account to illegality. The paper itself highlights some of the potential problems with this course of action, mainly surrounding the vagueness of the term "misconduct". "It is unclear how the term 'misconduct' ... will be interpreted by the court, let alone members of the public," it states.
Todd too believes the term 'misconduct' could give rise to uncertainty, and would need to be very carefully defined. "If a corporation has a boozy party ... it may not amount to illegal conduct but some people might consider that a form of misconduct - why should that [disclosure] necessarily get protection? If you're going to give protection to whistleblowers, it needs to be given [only] to very serious matters, and not applied to trivialities," he says. "The other problem with it is that we'd be tied up in the court for eons trying to work out what misconduct is."
The Government is currently seeking feedback on the paper, with submissions accepted until 21 December 2009.
- Zoe Lyon