ASIC warns of more legal action for whistleblower failures

The nation’s corporate watchdog has warned it will take action against companies which fail to manage whistleblower complaints.

ASIC has warned it will take action against companies which fail to manage whistleblower complaints. Picture: Brendan Radke

The corporate regulator has warned it would take court action against companies that fail to manage whistleblower complaints after wrapping up a review of some of Australia’s biggest companies.

In a report published on Thursday, the Australian Securities & Investments Commission noted its recent surveillance of whistleblower programs at some of Australia’s biggest companies had shown encouraging signs corporate Australia was taking disclosure requirements seriously.

Whistleblowing processes are intended to allow staff members of companies and government departments to raise issues regarding workplace practices in a safe and confidential manner, without suffering personal consequences.

The regulator said whistleblower programs with well considered and public systems to protect whistleblowers should be adopted across the corporate landscape.

ASIC said these well-designed programs, which protected those raising concerns, received better tip-offs about concerns and issues in the workplace.

The group reviewed whistleblower programs at ANZ, BHP, Australian Super, CBA, Netwealth, Treasury Wine and Woolworths.

The regulator said it would contact the firms to share “our observations on their whistleblower programs”.

“We encourage boards and board committees to reflect on whether they receive sufficient information to perform their oversight function and are providing informed oversight over the policy and program,” the report said.

But ASIC said companies which failed to handle whistleblower complaints properly risked being the subject of enforcement action.

ASIC commissioner Danielle Press said whistleblower programs were “a key part of a transparent, accountable and safe work culture”.

“Whistleblowers need to know that, when they have reasonable grounds to suspect misconduct or an improper situation involving a firm, they can raise the issue without being victimised,” she said.

“ASIC’s report reiterates the important role that whistleblower programs play in alerting entities and boards to changes necessary to help improve overall corporate performance and governance.”

The regulator said firms that entered into settlements with whistleblowers should not attempt to limit “any potential disclosable matters with a relevant regulator or agency” as part of their agreements.

“Some sample firms suggested that they are moving away from the practice of including confidentiality provisions in certain types of settlement agreements, including those that may relate to agreements with individuals who have previously made a disclosure,” ASIC said.

The latest review of whistleblower programs comes as ASIC’s latest round of surveillance of whistleblower protections.

Large companies and superannuation trustees have been required since January 2020 to have whistleblower policies and programs in place.

ASIC’s review of 102 whistleblower programs in 2020 uncovered several policies which fell short of its requirements, publishing an open letter to corporate Australia in late 2021 warning they were falling short.

“ASIC reminds entities that they are obliged to handle whistleblower disclosures confidentially and protect whistleblowers from detriment,” ASIC said.

The regulator’s report comes just one day after ASIC filed court action against coal producer TerraCom, the first time it has sued under laws protecting whistleblowers.

ASIC filed its case on Wednesday, alleging TerraCom’s management “harmed a whistleblower” after concerns were raised that the firm was falsifying coal export quality certificates.

The regulator alleges several of TerraCom’s current and former directors allowed false information to be published to the market, in a bid to quash the whistleblower’s allegations.

TerraCom denied the allegations at the time, and said it had conducted an independent investigation that found the allegations were “unfounded”, telling shareholders that the whistleblower made the allegations only after he had been made redundant from the company.