Incentivising whisteblowers could be an easy first step for the Australian Government if it were to heed the call by the recent Senate Economics References Committee for a more pro-active approach to fraud.
Currently, Australia has no incentivised whistleblower programs. The prospect of a reward for whistleblowers would see a sharp rise in the number of whistleblowers across a range of industries.
If these laws come to pass, organisations will need to ensure that their internal controls and compliance programs are top-notch. A swift response to allegations and avoiding costly and potentially damaging questions being raised by regulators in the case of unjustified allegations will be important.
Interest in strengthening protections for whistleblowers in Australia has risen following high-profile developments in the US.
Last year, the US Securities and Exchange Commission awarded more than $14 million to a whistleblower for information that helped bring an enforcement action in relation to a large-scale investment fraud.
This was the largest reward made since new whistleblower rules were introduced in 2011. Given the size of recent US fines in relation to foreign corruption claims, the new US whistleblower program raises concerns that would-be whistleblowers will bypass internal fraud controls to report suspicious activity directly to the SEC.
The main lesson to be learnt from the US experience is that organisations need to ensure that their employees channel as many tips of reported violations through internal reporting mechanisms in the first instance. Smart organisations will also be cultivating a culture where employees trust the internal compliance program. This should be coupled with a comprehensive action plan for a rapid response to whistleblower tips.
10 questions an organisation should ask now:
- How robust are our compliance and whistleblower policies?
- Is the “message from the top” encouraging the prevention of fraud and corruption?
- Do our reporting programs encourage internal reporting versus leaking to the press or notifying regulators?
- Is our training program about the internal reporting up to date?
- Are our anti-retaliation policies against employees compliant?
- What plan is in place to undertake an investigation internally and how will we maintain privilege over documents?
- What organisational thresholds are in place before recovery actions are contemplated?
- Is it appropriate to offer incentives to employees for appropriate internal reporting of potential violations?
- Do we have a comprehensive action plan that will allow immediate responses to a whistleblower tip?
- Are our employee confidentiality agreements watertight?
Norton Rose Fulbright has a bespoke whistleblower planning solution to help organisations to actively and effectively engage with whistleblower procedures in a strategic and efficient way. Our Connection publication is a four stage roadmap for how whistleblower complaints should be handled across an organisation.