The year of the whistleblower?

By John Wilson

January 16, 2017

Referee red card and whistle

“Sunlight,” eminent American judge Louis Brandeis once mused, “is said to be the best of disinfectants.” Yet while transparency is now a popular political buzzword, Australia remains an unfriendly place for those who dare to let the light shine on corruption and maladministration. The words of former NSW police commissioner Tony Lauer – that “nobody in Australia much likes whistleblowers” – continue to ring true.

While the enactment of the federal Public Interest Disclosure Act in 2013 introduced long overdue protections for public sector whistleblowers, complementing a patchwork of similar legislation at state-level, this reform has been largely ineffectual. The absence of a comprehensive whistleblower scheme in the private sector only exacerbates a prevailing atmosphere of hostility towards those who report governmental or corporate wrongdoing.

Unlike some jurisdictions where whistleblowers are adequately protected from retaliation, able to seek financial rewards and even empowered to initiate lawsuits when regulators fail to act, whistleblowers in Australia face severe personal and professional consequences. A Fairfax headline last year said it all: “Americans pay millions to whistleblower at BHP; we hound them out of their jobs”.

A ray of sunlight?

Political developments last November provide hope that change could be imminent. The Derryn Hinch and Nick Xenophon cross-bench deal to pass the government’s union regulation legislation came in return for strong protections for union whistleblowers, and the promise that similar laws will be introduced in other sectors. A parliamentary inquiry will report by June, with the objective of implementing “an equal or better whistleblower protection and compensation regime in the corporate and public sectors” by mid-2018. It has even been suggested that an American-style system of bounties or financial rewards for information could be established.

Long-time observers of whistleblower protection laws in this country will not hold their breath. The federal Public Interest Disclosure Act, which although flawed represents a consideration step forward, took two decades, six parliamentary committees and three unsuccessful bills before finally being passed in 2013. Nevertheless, the prospect of improved whistleblower protections for public servants and the introduction of a private sector equivalent is enticing.

Encouraging disclosures

The most controversial element of the proposed reform will undoubtedly be that of financial rewards for whistleblowers. This must be distinguished from the possibility of damages where a whistleblower has been retaliated against and suffered loss, which is already compensable under the Public Interest Disclosure Act. In a scheme based on the American model, whistleblowers would be eligible to receive financial rewards where the information they disclose leads to a prosecution or penalty.

To some, such an approach seems repugnant. For instance, David Green QC, the head of Britain’s Serious Fraud Office, told the Sydney Morning Herald: “In this country and most of the Commonwealth, it is the citizens’ duty [to blow the whistle]. To incentivise it seems slightly distasteful.” However, the American system has proven highly effective in encouraging whistleblowers and directly led to a range of investigations, including one against BHP Billiton which saw a USD$25 million settlement paid by the mining giant. The Australian whistleblower who provided information in that case received USD$3.75 million. Thus a forthcoming report by the International Bar Association argues that “the United States’ experience is unequivocal. Whistleblower reward programs work, and work well.”

The need for reform in the public sector context, whether through the introduction of American-style bounties or otherwise, is amplified by defects in the current legislation. To receive compensation for harm suffered as a result of making a disclosure, the onus is on public servant whistleblowers to demonstrate causation between the disclosure and the reprisal. Establishing this nexus can be plagued by difficulties given the workplace setting, and the absence of case law means there is presently no judicial guidance (only one case concerning the Public Interest Disclosure Act has been determined to date, which was dismissed as the alleged disclosures were made two decades prior to the legislation’s enactment). Reversing the onus of proof may be one way to overcome this issue.

Whistleblowers help ensure a public administration free from corruption and assist in exposing corporate wrongdoing. They are important precisely because corruption and wrongdoing are typically concealed from prying eyes. Without the efforts of whistleblowers, many scandals of global significance would never have come to light.

While Australia lags behind other jurisdictions in protecting whistleblowers, there are reasons for optimism. The introduction of the federal Public Interest Disclosure Act, although flawed, was a momentous development, and expected reforms to it and the establishment of a private sector equivalent would be hugely significant. These reforms will help Australia’s abundant sunlight shine into the darkest corners.

John Wilson is managing legal director at Bradley Allen Love. He acknowledges the assistance of his colleague Kieran Pender in the preparation of this article.

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