A major milestone was accomplished in December 2018 with the passing of new laws for whistleblower protections (part 9.4 AAA) in the Australian Corporations Act, overhauling the rules for big corporations including banks, that was influenced by Griffith research and Professor AJ Brown, from the School of Government and International Relations. He is a professor of public policy and law, a board member of Transparency International and was a member of the Commonwealth Government’s expert advisory panel on whistleblower protections in 2017/2018.
Professor Brown’s work with colleagues on the Australian Research Council project Whistling While They Work 2 (WWTW2): improving managerial responses to whistleblowing in public and private organisations, drew on the experiences of 17,778 individuals across 46 organisations in Australia and New Zealand. It uncovered that 42 percent of whistleblowers are treated badly by their organisations, and 81.6 percent of those who reported unethical behaviour, faced negative repercussions.
The November 2018 report is available now, Whistleblowing: New Rules, New Policy, New Vision. Whistleblowing processes – or processes for encouraging and protecting staff to speak up about wrongdoing concerns and integrity challenges – are vital to integrity and good governance systems in organisations. At the present time, around the world, this importance is being recognised not only in new rules, but new organisational policies – informed by a new vision of both the benefits and the responsibilities that accompany effective whistleblowing processes.
WWTW2 is thought to be the first empirical study designed to capture what happens when staff perceive and report wrongdoing, and how public and private organisations responded. The research informed the Australian Government’s Joint Parliamentary Committee on the ‘State of the Nation’ for whistleblowing when staff speak up in organisations. It was cited during the deliberation phase before the legislation was passed, and it confirmed the need for this legislative action.
“We formed a broad conclusion that although private and public companies support whistleblowing theoretically to maintain organisational honesty and integrity, the senior people in these organisations are generally not receptive to someone who comes forward,” said Professor Brown.
“These results indicate that detrimental outcomes are still very much a reality for a high percentage of people who come forward against organisational behaviour.”
“When the new whistleblowing laws passed, I was honoured to be invited to Parliament House on February 19 with Transparency International Australia Chair Fiona McLeod SC, Senator Rex Patrick (Centre Alliance), and Gerard McManus (Senior Strategy Adviser to Federal Minister for Employment, Kelly O’Dwyer) to celebrate,” said Professor Brown.
Professor Brown has been researching in the area of whistleblowing for many years and his advice to the federal government includes major submissions accepted by the 2017 and 2018 Parliamentary Joint Committees on Corporations and Financial Services, where his frameworks for whistleblower protections were considered for inclusion to the Corporations Act.
It has been known since 2016 (WWTW1 project), that people who report wrongdoers in public sector organisations, need protections from negative personal consequence and repercussions, after the research surveyed 118 public sector organisations and reported on whistleblower outcomes.
In the second phase of the research (WWTW2), Professor Brown’s team focussed on the adequacy of organisational responses to whistleblowing, by comparing employee and managerial experience in multiple organisations, across public, private and NGOs in Australia and New Zealand. In particular, the project identified the factors that influenced good and bad responses to whistleblowing.
“We found in the private sector, for those who report wrongdoing on more powerful people, managerial support made a bigger difference in reducing repercussions than in the public sector, on the preliminary analyses,” said Professor Brown.
“There may be something about public sector structure and hierarchy and the ability of senior managers to dig in, for this to result in worse outcomes for whistleblowers when compared to the private sector.”
“Another finding was, when there are big power or status differentials between the wrongdoer and whistleblower, it becomes harder to provide support and protection for the whistleblower. And the new laws are designed to counter balance this lack of support”
“Since the Corporations Act amendments passed in February, organisations are now required to support and protect the whistleblower, as they have a duty of care to the person speaking up about the misconduct,” said Professor Brown.
“Whistleblowers now have legal protections and recourse from this bill, and employers may be liable if they don’t have systems in place to protect whistleblowers.”
A central aspect to improving outcomes for whistleblowers is around improving the culture in organisations, and it is hoped that the new laws will be a driver for positive cultural change. If the laws can influence organisations to do the right thing for victims of misconduct who report their situation, then it should become easier for staff to reveal wrongdoing. With the new laws there is a fighting chance for corporate transparency and accountability to take hold in Australia.
Encouraging people to reveal wrongdoing can be challenging, as organisations and companies are not always known for supporting whistleblowers. In many publicised cases, it’s often the wrongdoer who is supported and protected due to their high status and position, or their economic value to the organisation, or the cost and reputational damage that might occur if illegal or immoral practices were revealed.
It takes a brave and courageous person to reveal wrongdoing, e.g. Banking Royal Commission Whistleblower Mr Jeff Morris, who was a former CBA financial planner who says his life was threatened and ruined after he revealed his experience with misconduct, and he fought for many years for a parliamentary inquiry and for the banking royal commission.
“With the new laws any ‘detrimental’ acts or omissions can result in an employer’s liability for compensation, including a failure to prevent such impacts, by having no protection policy or by failing to implement it,” said Professor Brown.
“The scope of who is covered, has also been widened to include not only former employees, but former employees, contractors, volunteers and their spouses, and dependants of employees.”
“The amendments start to address the problem that until now, only deliberate, direct criminal ‘victimisation’ of whistleblowers could ever be punished – and something that’s almost impossible to prove.”
“This is a good start, and part of the answer is still a whistleblower protection authority, which everyone agrees is needed, and it might become a national anti-corruption body with whistleblowing powers when the government decides,” said Professor Brown.
The new Corporations Act laws represent a welcome overhaul of the private sector whistleblower protections, that have been starting and stopping since 2009, and then gained momentum in 2016 when moved forward by the federal government minister for financial services, Kelly O’Dwyer. These whistleblowing reforms really outline the hopes and risks for Australian Politics.
They were successful due to parliament’s unanimous support, and they had bipartisan underpinning from the government and opposition. This is good news for leaders looking to restore Australia’s reputation on anti-corruption and integrity, as this perception had taken a fall due to the banking royal commission and other scandals around political donations, lobbying and foreign bribery.
Professor Brown advised the bill is world leading in two respects, “firstly legal protections do not only kick in after a whistleblower starts to experience reprisals. All public and large proprietary companies are required to have whistleblowing policies which spell out how they will ‘support and protect’ those that speak up before they begin to experience detrimental effects.”
“And secondly, the company can now be held liable if it fails in its duty to prevent detrimental acts or omissions – such as having no support plans or neglecting to implement them. Also granting whistleblowers the right to sue for such failure is a world first,” said Professor Brown.
“In 2009 Labor’s assistant Treasurer, Chris Bowen started a review on the laws, but never finished it. In 2016 it was minister for financial services, Kelly O’Dwyer who took a government thought-bubble about protecting tax whistleblowers, and began dealing properly with years of inaction.”
“The new corporations and taxation law amendments are just the first step in implementing a political consensus reached in last year’s landmark parliamentary inquiry – but they are a big one,” said Professor Brown.
“Eventually inquiries into the performance of ASIC and the cases leading to the banking royal commission triggered a complete overhaul.”
Back in 2014 when Australia hosted the G20 Summit, a joint assessment of the whistleblowing laws initiated by Transparency International Australia, outlined the weak state of the nation’s private sector whistleblowing protections, that was on par with Russia and Saudi Arabia at the time.
The Transparency International Corruption Perception Index has also seen Australia sliding back since 2012, but this overhaul of the private sector whistleblower protections provides some hope that bipartisan integrity reforms are possible.
This year the G20 leaders have announced that whistleblowing is one of the main priorities of the G20 Anti-Corruption Working Group (ACWG), and the G20 Summit will be held in Osaka Japan, from June 28 to 29, 2019. If G20 leaders can adopt and implement a strong whistleblower high-level principle, this will assist to guide the member countries into taking similar actions.
“Australia’s reforms have set the bar for the ACWG, giving the whole G20 a unique opportunity to ‘walk the talk’ and show their commitment with those who speak up against corruption,” said Professor Brown.
“The European Union would do well to follow this example, as it puts the finishing touches to its ground-breaking EU-wide directive on whistleblower protection.”
“Some EU countries are still arguing that employees must always blow the whistle internally first, or risk forfeiting all protection,” said Professor Brown.
“Transparency International and many other partner countries are calling on the European Union to follow the lead of countries like Australia, and allow whistleblowers to report directly to law enforcement agencies, without the risk of losing protection.”
For more information about the new Australian whistleblowing rules, policies and regulations, please contact Professor AJ Brown.