Momentum gathers for whistleblower reforms
Speaking at the Corporate Conduct and Class Actions Symposium in Sydney last month, Andrew Watson MAICD, head of class actions at Maurice Blackburn, said the current laws do not provide enough protection for whistleblowers and that they are often left open to retribution.
Watson has overseen some of the nations biggest class actions including the first Australian shareholder class action recovery case against GIO Insurance. He said it is in the interest of all Australians to ensure proper standards of corporate behaviour.
“The overwhelming majority of our interactions will be with relatively large corporations, regardless of whether that is as employees, consumers or as shareholders,” he said. “Ensuring those proper standards of corporate behaviour are adhered to is primarily the responsibility of boards and executives of those corporations.”
Highlighting current failings with the way whistleblowing activity is handled, Watson said that too often internal mechanisms break down and that shareholders are often kept in the dark regarding misconduct. He added that strong and functioning regulators are needed.
“We know all too well the limitations of regular activity, mostly driven by budgetary constraints,” he said. “We need strong protections and incentives for whistleblowers and a strong, active role for private enforcement through class actions.”
Last year, Watson raised the prospect of modest reform relating to whistleblowers along the lines currently used in the UK. However, he is now calling for reforms that are far more far-reaching. “It is not just about protecting them, but also incentivising them in a way that is similar to the Securities and Exchange Commission (SEC) Whistleblower Program running in the US.”
US whistleblowing expert Jordan Thomas, a partner at New York-based law firm, Labaton Sucharow was also a guest speaker at the symposium. Labaton Sucharow was the first US firm to establish a practice focused exclusively on protecting and advocating for SEC whistleblowers through its Whistleblower Representation Practice.
Under the rules of the program, the SEC is required to pay eligible whistleblowers 10–30 per cent of the monetary sanctions collected as a result of a successful SEC enforcement action or actions in which the sanctions exceed US$1 million. The scheme also provides anonymity, which Thomas said is key to people coming forward.
A SEC whistleblower can be almost anyone, he says. “The violations they’re reporting can occur anywhere in the world, and in addition to the significant financial incentives, recognising that fear of retaliation is a serious obstacle to reporting wrong doing, SEC whistleblowers are entitled to significant employment protection and can submit their tips anonymously, if they are represented by an attorney.”
Since the practice’s inception it has received more than 14,000 whistleblower tips from across the US and approximately 100 foreign countries. This is a 30 per cent increase in the number of tips since the office opened for business almost five years ago.
Data61 and AICD collaboration
Cybersecurity is one of most significant and fast-growing challenges for today’s boards. Most directors now recognise that cyber-crime sits alongside all of the more traditional risks that the board must oversee. But many remain unsure as to the approach they need to take to protect both their organisation and their own reputation.
In response to this concern, the Australian Institute of Company Directors (AICD) and CSIRO’s data innovation group, Data61, have agreed to collaborate in lifting the digital and cyber literacy of directors and boards across Australia. The partnership reflects the AICD’s commitment to good governance and to ensuring directors and governance leaders have access to the most up-to-date and relevant tools with which to manage increasing cyber-threats and to mitigate all of the other risks associated with the rapid pace of digital change.
Managing cyber-risk and protecting enterprise assets from theft or accidental loss demands increasingly complex decision-making. Today’s boards must also have the insight required to lead the company to take advantage of opportunities for investment, innovation and growth.
Together, Data61 and AICD will develop a cybersecurity education and training program designed to improve directors’ understanding of cybersecurity. The program will equip directors with knowledge that will allow them to ask appropriate and probing questions of management and external consultants. The program will also provide access to the resources directors need to meet and exceed their obligations, and to govern with confidence in turbulent times.