Demonstrate you are fulfilling your statutory obligation

Whistleblowing is a means of demonstrating by Directors, Officers and Management that they fulfilled their statutory obligation to be proactive in taking all reasonable steps to reduce OHS risk. An effective whistleblowing program can tap into vital information provided through the eyes and ears of employees who are at the coal face and those with whom business is done i.e. vendors, suppliers and customers etc.

The Australian Standard AS8004-2003 Whistleblowing Protection Programs for entities lists nine different reportable conduct types. These include dishonesty, fraud, corruption, illegal (e.g. theft, drug use/sale, violence and criminal damage), breach of Commonwealth/State legislation or local authority by-laws (e.g. Trade Practices Act or Income Tax Assessment Act), unethical, unsafe workplaces and causing financial or non financial loss detrimental to the interests of the entity.

Directors, Officers and Managers have the ultimate Duty of Care to prevent a breach of the relevant legislation.

Whilst the officers of  large companies with locations across Australia cannot be held responsible to personally control all health and safety systems they must be satisfied that the company has taken reasonable steps for them to be established.  An effective reporting system is a critical component of that system.

The Work Health and Safety Act (which came into effect on 1 January 2012 and adopted by all States and Territories except for Victoria), demonstrates the magnitude of the penalties and fines the Courts may impose.

Hefty penalties can be imposed for breaching occupational health and safety obligations with a maximum penalty of $3.0 million for a corporation, $600,000 and/or 5 years imprisonment for officers and $300,000 and/or 5 years imprisonment for workers.

The nature and extent of wrongdoing and reportable conduct is endless. These include  breaches of the Trade Practices laws, such as misleading advertising, deceptive conduct, price fixing and market share which can occur through dealings with consumers or interaction with competitors and which you, in your capacity as  Director, Officer or Manager, may be unaware until it is reported to you.

In the eyes of the law, price fixing is considered as theft and individuals and companies will pay. The recent air freight investigation by US regulators revealed price fixing, which saw nine international airlines, including Qantas pay $1.25 billion in penalties.

Laws on harassment and other forms of discrimination apply to all personnel  of a company. The legal doctrine of vicarious liability means employers are legally responsible for the illegal  acts of their employees. The ramifications can be significant as evidenced in March 2008 when former PricewaterhouseCoopers (PwC) partner Christina Rich reached a secret out of court settlement in her $11 million sexual harassment case against PwC.

CEOs and CFOs must make a written declaration to the Board that the financial statements are in accordance with the Corporations Act 2001 and Accounting Standards, that the statements present a true and fair view of the company’s financial position and that the company’s financial records have been kept in accordance with the Corporations Act 2001.

Employee theft or fraud is directly related to Directors’ and Officers’ responsibility, and capacity, to create the right culture and environment with adequate and effective company protection controls in place.

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