In each issue of Making Headlines, we monitor and report on developing legislation touching on issues of financial crime and the implications for business. In this issue we look at legislation that will amend the Criminal Code Act in relation to foreign bribery and the Corporations Act in relation to whistleblower protection.
Accessing super to recover for the victims of crime
The Minister for Revenue and Financial Services, Kelly O’Dwyer, announced that the Government is pursuing changes to superannuation legislation to grant victims of serious crimes access to perpetrators’ superannuation.
Joined by two child exploitation victims’ advocates, O’Dwyer drew on an example of a “very prolific case” in which “a convicted paedophile who has very significant assets in his superannuation account” had “taunted” victims by saying they would not be able to access compensation as his assets were safe in his super. FCX will keep subscribers informed of this important development as it progresses.
Crimes Legislation Amendment (Combatting Crime) Bill 2017
The Crimes Legislation Amendment (Combatting Crime) Bill 2017 was tabled in the Senate in December 2017, at which time, it was referred to the Standing Committee on Legal and Constitutional Affairs Legislation Committee. This Committee (the Committee) reported to the Senate, as required, on 20 April 2018.
The Committee’s report made the following 4 recommendations,
- Recommendation 1 – The committee recommends that as part of the public consultation on the minister’s guidance that is to be issued on adequate procedures, the government consider publishing an exposure draft which allows corporate stakeholders a four week period to provide comment.
- Recommendation 2 – The committee recommends that the government include internal corporate whistleblowing systems as part of any recommended adequate procedures designed to prevent foreign bribery by its associates.
- Recommendation 3 -The committee recommends that as part of the public consultation on the draft Deferred Prosecution Agreement Code of Practice, the government consider publishing an exposure draft which allows corporate stakeholders a four week period to provide comment.
- Recommendation 4 – The committee recommends that the bill be passed.
The Combatting Crime bill, if passed as drafted, will significantly strengthen Australia’s foreign bribery laws and introduce a Deferred Prosecution Agreement (DPA) scheme for resolving corporate criminal misconduct. The bill creates a new strict liability offence for companies who fail to prevent foreign bribery, and establishes new arrangements for a DPA scheme in connection with breaches of the foreign bribery provisions of the Commonwealth Criminal Code.
Australian corporations engaging in business in foreign markets will need to carefully consider the provisions of the new legislation and install appropriate measures to prevent bribery of foreign public officials. They will necessarily include an awareness raising program for all personnel and analysis to look for, and identify transactions that are suggestive of payment of foreign public officials. The introductions of DPA’s will provide a significant incentive for companies to self-report and proactively cooperate with Australian enforcement agencies in relation to investigations into serious corporate crimes. The significance of these proposed changes to Australia’s foreign bribery laws means that the Bill, if passed, will shape future foreign bribery prosecutions, whilst also guiding internal corporate frameworks and policies with respect to best practice in foreign bribery safeguards and compliance.
We reported in the December issue of Making Headlines that the Treasury Laws Amendment (Enhancing Whistleblower Protection) Bill 2017 was before the Senate during the last parliamentary sitting week for 2017 and that the bill would be further considered by the Senate and then by the House of Representatives in 2018. On 8 February 2018, the senate referred the bill to the Economics Legislation Committee for inquiry. The committee reported back to the Senate on 22 March 2018. The report can be found at:
The bill has not yet been further considered by the Senate and therefore the government has not been able to introduce the legislation by the originally forecast date of 1 July. The bill will be further considered by the parliament in the second half of 2018 but there is currently no indication as to when it will become law.
The following is a brief summary of the major changes that will be introduced by the new act when it is passed:
- No requirement to provide name in order to be protected – under the current Corporations Act, there is a requirement at Section 1317AA (1) (d) that the discloser provides his / her name in order to be protected
- Disclosable matter includes “misconduct or an improper state of affairs or circumstances” under Section 1317AA (4) and (5) – under the current Corporations Act, there is a requirement at Section 1317AA (1) (d) that the conduct the company or a person associated with the company “breached the Corporations Legislation”
- Disclosure can be made to supervisor / manager of the discloser – under the current Corporations Act, protected disclosures could only be made to ASIC, auditor, director, secretary or senior manager or a person authorised to receive such disclosures (Section 1317AA) while under the bill (Section 1317AAC) this has been expanded to include a supervisor or manager of the individual
- The discloser needs to have a “reasonable grounds to suspect” – in the current Corporations Act, the discloser needed to be acting in Good Faith (Section 1317AA (1) (e)) (good faith is defined in the Explanatory Memorandum as going to the motivation of the whistleblower, so therefore under the new legislation it is not relevant that the whistleblower is motivated by a ‘personal grievance’.
- Compensation will be payable by the corporation as well as the person engaging in victimising conduct – under existing Corporations Act, compensation was only payable by the “person in contravention” of the whistleblower protection provisions (section 1317AD) while under the bill, at Section 1317AE, the “person’s employer” can also be ordered to pay compensation to the whistleblower (severally and jointly with the person).
- Emergency disclosure of information where not acted upon – under the bill, a whistleblower will be protected if her / she discloses a disclosable matter to a member of the Commonwealth Parliament or to a journalist provided: previous disclosure has been made that qualified for protection, a reasonable period has elapse since the previous disclosure, there is reasonable grounds to believe that there is an imminent risk of serious harm or danger to public health or safety of to the financial system and that the body to which the previous disclosure was made has been given written notification that the discloser intends to make an emergency disclosure (Section 1317AAD).
When the legislation is passed, entities that are captured by the law will need to comply with the legislation and that will be the approach of many Australian organisations. Corporations should however consider the business case for having a strong whistleblower protection program. Such a program would include the following features:
- Develop and regularly communicate a whistleblower policy that is approved and endorsed by the board and senior management. The policy should set out the benefits of the program and the organisation’s commitment to investigating reported concerns. The policy should also allow disclosures from a range of individuals, not just from employees, and a broad range of issues should be able to be reported and investigated.
- Assign responsibility for overseeing the program to an appropriately senior and suitably qualified resource.
- Establish a Whistleblowing Steering Committee which convenes when potentially serious or sensitive matters are reported. Such a Committee could include senior executives from Legal, Human Resources and the business unit where the matter originated.
- Implement a variety of internal and external independent communication channels and a variety of mechanisms (e.g. phone, website or email) to report concerns. The program should also provide for anonymous disclosures.
- Provide mandatory training to all employees and specific training to senior management and staff responsible for key elements of the program such as those involved in receiving, assessing and investigating disclosures.
- Provide acknowledgment and a unique reference number to whistleblowers when a disclosure is made to facilitate the provision of additional information and feedback. Where appropriate, keep the whistleblower updated during the investigation process and advise of the final outcome.
- Introduce effective measures to protect whistleblowers from reprisal.
- Clearly articulate processes for assessment, investigation and escalation of disclosures as well as processes for the reporting, investigation and monitoring of retaliation towards the whistleblower.
- Provide whistleblowers with a contact within the organisation to access confidential advice and support.
- Develop periodic reporting to board and audit committees.
- Monitor and assess the effectiveness of the program on a regular basis.
For up-to-date information about the progress of the Treasury Laws Amendment (Whistleblowers) Bill 2017 go to: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=s1120