It is about time. As a nation we need to protect corporate insiders who risk everything to expose wrongdoing for the good of the public. CBA whistleblower Jeff Morris helped bring change to the financial planning industry. Credit:James Brickwood With the government slashing the budget of ASIC, Australia needs to step up to the plate on whistleblowers and encourage more to expose misconduct. Whistleblowers make a difference From personal experience, the whistleblowers who have come to Fairfax Media have had a profound impact on the company, industry, the law and the lives of victims.

The 7-Eleven whistleblower has helped bring change to the company, including an independent panel to pay compensation for wage fraud, change the business model and move towards a more open and transparent culture. Likewise, CBA whistleblower Jeff Morris helped bring change to the financial planning industry. Victims of shoddy advice have so far received compensation of more than $50 million. The NAB whistleblower brought huge change and the IOOF whistleblower has triggered an ASIC inquiry. The list goes on. But how many other corporate employees are sitting on scandals but too concerned to come forward? Fear holds them back

Earlier this week I received an email that reminded me of what we are potentially missing out on. The email was written by a current employee of a big financial institution offering information that would "provide parliamentary and governmental bodies with the power to take unprecedented action against ....". The sticking point was fear of losing his job and the financial consequences. "If I make this information available to you and the public, I will be terminated and my career will be dead in the water." He asked for compensation for his information. Like most media outlets, Fairfax Media doesn't pay for stories, so he opted to stay silent. "While I would be ensuring that customers (people I do not know) are appropriately compensated I would be self-imposing financial hardship on myself. I am not in a financial position to do this," he said.

American system works In the United States whistleblowers are better protected and rewarded for their information. Depending on the agency and the crime, whistleblowers can earn up to 30 per cent of the penalties or legal costs of the misconduct exposed. It enabled one whistleblower to earn a record $US30 million in 2014. Not surprisingly, the US has far more whistleblowers than Australia. Since amendments to the False Claims Act were introduced in 1986, more than $US44 billion has been recovered through lawsuits filed under the act. Whistleblowers have been paid more than $US4.7 billion for their role in assisting with the recoveries. In Australia, whistleblowers suffer stress, isolation, anxiety and a potentially huge financial cost in terms of lost income if they lose their job. The do it because their sense of justice outweighs everything else. The truth is if we want whistleblowers to provide information, they need to be treated as heroes instead of pariahs.

As Medcraft said in his speech to the Parliament: "If somebody is doing the wrong thing, that affects your brand. Then, frankly, you should be rewarding the whistleblower. The person doing the wrong thing is potentially attacking the fundamentals of your business." Change should come Hopefully the discussion paper on whistleblowers to be released by Senator Dastyari later this year, along with the strong comments by ASIC's Medcraft, will result in change. But if change is to come and compensation is to be paid, there also needs to be stiffer penalties for corporate misconduct. Perhaps a fund set up, similar to what the SEC has done with its investor protection fund, "established by Congress at no cost to taxpayers or harmed investors". According to an SEC press statement "The fund is financed through monetary sanctions paid by securities law violators to the SEC. Money is not taken or withheld from harmed investors to pay whistleblower awards."

The discussion paper will trigger fierce debate about the merits and pitfalls of compensating whistleblowers. In the US a popular line of argument is the one prosecuted by a senior executive at the US Association of Corporate Counsel: "that bounties create a risk that whistleblowers are actually working against the interests of compliance because their motivation doesn't become, 'Let's fix it', or 'This is wrong'. It becomes 'How can I collect?'." It is too simplistic an argument, steeped in vested interest, but arguments are needed if change is to come. Whistleblowers are sacked IOOF highlighted the need for change.

Months before coming to Fairfax Media, an employee at IOOF outlined his allegations to the company secretary, who was also responsible for the whistleblower policy in the company. He told the head of investigations and followed up his concerns with three directors on the board. He went on stress leave then lodged a bullying and harassment claim with the Fair Work Commission. This claim's allegations included requests by his boss to cheat on compliance modules, front-running and faulty research reports. During the Fair Work process, IOOF sacked him on the grounds of "serious misconduct" including "vexatious allegations" against his boss within the meaning of the IOOF No Bullying Policy. He then became the subject of a vicious smear across the investment community as well as background briefings to the media. The smear campaign was designed to diminish his credibility and therefore what he was alleging, despite rock solid evidence in the form of internal documents. "Some reports I have heard from credible sources suggested that I was an extortionist; a kidnapper; not a whistleblower; a thief; a cat burglar who somehow knew that sensitive information existed and broke into the office of ... and stole them. These claims are currently being investigated by ASIC and I hope there is some closure on the matter," the IOOF whistleblower said.

I received correspondence from a senior IOOF representative which canvassed similar allegations about the whistleblower. For the whistleblowers at NAB and 7-Eleven who went straight to the media, bypassing the regulators and the company, their identities have been protected yet they managed to help bring huge change. In the discussion on how to improve the protection of corporate whistleblowers, the role of the media should not be overlooked or shut down. It is too important in airing scandals, righting wrongs and improving transparency. Know more? Email: aferguson@fairfaxmedia.com.au