The Australian, Friday 16 December 2016

By John Price

ASIC gets its intelligence on where to investigate from a few sources. Often, it is from our surveillances; often it's from people reporting information and often it's from the media. Many times, the most valuable information is from people inside organisations who see wrongdoing every day and take the brave decision to call it out.

These people are whistleblowers and they are playing an important role in our regulatory system. But all too often whistleblowers can find themselves risking their jobs or even their careers.

There are a number of discussions happening on how the law and businesses can better encourage and protect whistleblowers, and how ASIC can better treat the whistleblowers that come to us. These are important debates, and ASIC is taking part.

On working with whistleblowers, ASIC has set up an Office of the Whistleblower to better ensure we appropriately record and action the matters people bring to us.

We are grateful for the people who have alerted us to misconduct and recognise their courage and the difficulties they face in coming forward. And we have used their information in a number of current and historic enforcement cases.

Our policy is that if you are still employed by an organisation, your identity and the fact you have disclosed information to ASIC will be kept private and confidential even if you subsequently leave your job. For more information see asic.gov.au.

But this position does not cover every type of whistleblower and ASIC supports changing laws to strengthen protections so whistleblowers do not suffer detriment as a result of coming forward. For instance, where there is potential detriment and where the company in question is fined or penalties eventuate, then ASIC believes consideration needs to be given to compensating whistleblowers.

This is in contrast to the US system where whistleblowers may be paid a bounty which is a percentage of fines etc levied as a result of successful regulatory action against the firm subject of a whistleblower complaint.

In the past, ASIC has also suggested reforms to:

• expressly extend the definition of people protected, such as former employees and to include certain types of advisers;
• extend the types of disclosures protected, to include possible misconduct under a range of laws, rather than just breaches of the corporations laws, and
• provide ASIC with the power to resist production of documents where to do so would expose a whistleblower's identity.

ASIC has also helped fund Griffith University to undertake one of the most detailed and comprehensive pieces of whistleblower research worldwide. The research, funded jointly by 16 state, federal and New Zealand ombudsmen and anti-crime commission bodies, will review the experience of whistleblowers and management response to whistleblowing to date, to see what worked well and what can be used across organisations to inform future policy.

We think it is important research that will help build the evidence to assist future considerations.  If you are interested in participating go to asic.gov.au

In 2015, ASIC wrote to 30,000 organisations about this project seeking information and help. The survey received many responses, and earlier this month Griffith University research staff released preliminary analysis of the first phase of data.

To date, 89% of respondent organisations have indicated that they have formal whistleblower procedures and processes, which shows that Australian business is taking the issue seriously.

But while whistleblower law reform and other initiatives are already being advanced, we should recognise any changes may raise complex issues with unintended consequences.

For instance, if whistleblowers get monetary payments (either as compensation for income loss or through a US-style bounty payment) that may lead to people automatically going to regulators rather than first resolving issues with the relevant company.  But going to a regulator first – is that good or bad?

In the US, intermediaries have emerged - often law firms - to ‘package up’ whistleblower complaints to regulators for a fee. Should there be any rules around this?

Many people, including regulators, may hold an unstated view that people should not profit from their own misconduct and payments to whistleblowers may well challenge this assumption. Is this something we are comfortable with? And how, if at all, should malicious or unfounded disclosures be discouraged?

Make no mistake, the difficulty of these issues is not an argument for inaction – but it underscores the need for an informed and thoughtful discussion. And it is a discussion that needs to happen and that ASIC will be involved in.

John Price is a commissioner with the Australian Securities and Investments Commission.

* This article appeared in The Australian on Friday 16 December 2016.