In 2013, a dying man, Noel Stevens, was refused an insurance payout after a Commonwealth Bank teller and financial planner fraudulently switched his policy.
As he wasted away with pancreatic cancer, his family was forced to run two court actions against the bank, which was found to have engaged in “misleading and deceptive” conduct.
But CommBank financial planner Jeff Morris, watching this unfold, knew it was not an isolated case.
Years before, Morris had contacted the corporate watchdog, the Australian Securities and Investments Commission, blowing the whistle on the bank’s aggressive sales culture and doctoring of documents.
A few “bad apples” were weeded out, but by 2014, frustrated at the lack of industry oversight, Morris contacted investigative journalist Adele Ferguson.
Together, they worked on a series of award-winning articles and television programs about malfeasance in the banking sector which eventually led to the creation of the Banking Royal Commission.
Like other whistleblowers, Morris was severely punished for doing the right thing.
Since then, the public has been shocked to hear of the widespread misconduct of some of our biggest financial institutions, which have taken fees from dead people, charged fees for no service and falsely denied insurance payouts.
For decades, the major banks have engaged in fraud and other misconduct on an industrial scale. Thousands of bank employees were aware of what was going on but only a handful spoke up. They were being rewarded for behaving badly with large bonuses and were all too keenly aware that to do the right thing would entail severe punishment.
In Australia’s B-grade corporate governance culture, the equation is simple. Whistleblowers are laggers and laggers must be deterred. That culture has been fostered by the ineptitude and neglect of ASIC, which has too often failed to launch investigations and prosecute violations.
To be fair, ASIC’s neglect did not occur in a vacuum.
It has been encouraged in its approach by the prevailing political orthodoxy over recent decades that venerated the critical economic role of the banking and financial services industry and light touch regulation.
As recently as 2016, then Treasurer Scott Morrison described ASIC as a “tough cop on the beat”.
Australia’s private sector whistleblower protections, set out in the Corporations Act, are moribund. They have never been successfully invoked. Instead of being rewarded and encouraged for their contribution, whistleblowers are routinely punished.
An organisation’s usual response to an internal critic is to protect itself by expelling and demonising the dissident. The recent experiences of women calling out workplace sexual harassment are merely the new frontier of whistleblowing. Those experiences are not positive.
Last June, Minister for Revenue and Financial Services, Kelly O’Dwyer, proclaimed that the federal Government was ‘determined to change our whistleblower laws to better protect people like Jeff Morris’. In the same speech, Ms O’Dwyer also outlined that it ‘is clear that Australia’s corporate whistleblower framework lags international best practice’, saying the Government was ‘determined to get the whistleblower settings right so we can uncover corporate and tax misconduct early and deal with it decisively’.
International best practise is not hard to find. In the wake of the global financial crisis, the US Congress enacted legislation to establish the US Securities and Investment Exchange (SEC) Whistleblower program. The US program offers financial compensation to those that uncover fraudulent acts.
It also contains comprehensive employment protections and criminal penalties to deter retaliatory action. It prohibits employers from acting in a way that would discharge, demote, suspend, threaten, harass or discriminate against whistleblowers who provide information to the SEC, assist with investigations or make disclosures required or protected by law.
Canada has adopted a similar scheme.
Here in Australia however, the Federal Government has dragged its feet on strengthening private sector whistleblower laws. A Bill, introduced in March, was rejected by the Senate as completely inadequate.
Unsurprisingly, the Bill did not feature a rewards scheme for private sector whistleblowers. Unsurprising because large companies who have made huge profits from businesses by engaging in tax evasion, fraud, wage theft and foreign bribery, have much to lose. It can be safely assumed that they have been fiercely lobbying against an effective whistleblower protection scheme.
Kelly O’Dwyer has had a change of ministerial portfolio and so the ball has been passed to assistant treasurer Stuart Robert. Last week, he said the government will try to get reworked legislation through parliament in the final sitting weeks of this year.
His spokesman said the changes would “strengthen the protection given to whistleblowers” but declined to give further details.
Many of the employees in banks and financial services companies have had knowledge of the vast range of misconduct that has been exposed by investigative journalists and the Hayne Royal Commission. These employees are a critical component of proper corporate governance standards.
As Lord Low of Dalston so eloquently once told the UK parliament: “…we now have to rely on the whistleblowers as our last defence against the corporate culture which thrives on malfeasance”.
We will only be able to rely on them if we encourage them to speak up and protect them when they do.
Josh Bornstein is the national head of Maurice Blackburn Lawyers’ Employment Law team.