Recent Victorian experience has highlighted the significance of organisational culture in dealing with corruption including the reporting of wrongdoing.

Although Australia has had whistleblowing legislation for several decades, it’s not long ago that the idea of a whistleblower was contentious being synonymous with a “workplace-dobber” according to Professor AJ Brown from Griffith University, Queensland.

In a recent podcast, IBAC spoke with Professor Brown, who has done extensive research into whistleblowing. “The original reason for recognising and protecting whistleblowers was the evidence that people like police officers knew about corruption in various inquiries but didn’t speak up about it,” Professor Brown explained. “Similarly, around the world there was lots of evidence that people weren’t speaking up about serious wrongdoing that was then being exposed in later inquiries. The theory was that people weren’t speaking up because they were too scared of the potential reprisals. So a lot of that first legislation was about trying to make it safer. Since then we’ve learnt a lot about the many other things that it takes to get people to speak up as well.”

It’s now recognised that almost anybody could end up being a whistleblower. And the value of whistleblowing and the role it plays in exposing wrongdoing is much better recognised.

Organisations are putting more effort into systems to protect people who make disclosures. There has been improvement to proactively manage prevention of reprisals and ensure investigations are done properly.

Despite this, just last year many Victorians reported being too scared to report corruption and 2014 research found a quarter of surveyed public service organisations weren’t meeting their protected disclosure obligations.

Whether it translates into more formal whistleblower complaints is yet to be seen – but anecdotally integrity branches within departments are now receiving more inquiries than ever.

Staff are encouraged to speak out – and organisations see it as being in their best interest for staff to speak out about concerns. This acts as an early warning system about the health of an organisation and allows management to intervene before a scandal worsens or goes public.

IBAC reported on 26 May 2016: “Recent changes to Victoria’s integrity system legislation support IBAC’s work to prevent and expose corrupt conduct and misconduct in the public sector. With most introduced on 1 July 2016, the changes strengthen IBAC’s ability to detect and investigate allegations of public sector corruption and misconduct, including misconduct in public office. They also help inform IBAC decisions to investigate by introducing preliminary inquiries, and seek to protect the identity and rights of witnesses and other people involved in our investigations.

“A new requirement for the public sector to mandatorily notify IBAC of suspected corruption will commence on 1 December 2016. Guidance is being prepared to assist state department secretaries and council CEOs (among other principal officers) to meet this new reporting obligation.”

Posing the question whether the wrongdoing would have been uncovered earlier if an effective whistleblower process had been operating, Stephen Hipkin (Director Forensic at Vincents Chartered Accountants) cites the following examples of wrongdoing uncovered by a fellow employee:

• The financial controller, who was able to divert payments to their own bank account by setting up ghost employees in the payroll system… undetected for seven years.
• The consultant employed on a six month contract submitted invoices (for unidentified services) and received payment… in excess of $5m over a two year period.
• The property manager in a financial institution, who was able to jettison an incumbent cleaning contractor and replace them with a “related party” provider… $2m benefit.
• The IT manager, who by-passed corporate procurement procedures, in order to negotiate “non-arm’s length” contracts with their own preferred suppliers… value in excess of $500k.

As part of its response to IBAC criticisms, the Department of Education and Training established an integrity division to build a strong reporting culture by creating and socialising a new whistle-blower framework to ensure staff can easily and confidently report inappropriate conduct and concerns about culture. “In exposing corruption, the hearings also exposed weaknesses in Department systems and problems with our culture, which allowed this conduct to occur.” Departmental Secretary Gill Callister said.   “IBAC has laid the foundations for organisational reform and cultural change.”

Establishing whistleblower processes outside the organisation and improving staff awareness can increase rates of reporting, according to Stephen Hipkin. An external whistleblowing function enhances the confidence that the report will be actioned and managed confidentially – and reduces the fear of reprisals. Various private sector organisations offer outsourced whistleblower management functions. And for the Victorian public sector, IBAC is an option for reporting corruption for staff who aren’t comfortable reporting to their own organisation.

A serious corruption scandal is an effective catalyst for fundamental organisational change – but having strong whistleblower procedures in place might avert the scandal and reduce the extent of wrongdoing.

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Further reading:
Whistleblowing management pros and cons by Stephen Hipkin

Picture: Image used under license from Shutterstock.com