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Monday, August 29, 2016

Transparency? You can't handle the transparency!

 NOTE: As usual, I have have changed the articles reported below, leaving material out, rearranging, and paraphrasing, to suit the purposes of this blawg. The obvious purpose here is the need to have adequate and effective transparency regimes in order to have and maintain good governance, in procurement as well as other aspects of government. You must read the full articles at the links to get the accurate version of the story.

Americans pay millions to whistleblower at BHP; we hound them out of their jobs
In Australia, those who flag corruption inside companies receive limited or no protection and are often sacked or mistreated, while in the United States, which paid for evidence that exposed alleged bribery by BHP Billiton, whistleblowers are encouraged to come forward. The calls for reform are being made as Fairfax Media can reveal new details of another whistleblower case that suggests serious ethical failings by a top Australian businesswoman and ABC board member, Kirstin Ferguson.

A Fair Work Commission complaint filed by the whistleblower alleges he was "victimised as a result of the disclosures" he made to Dr Ferguson about alleged corruption at mining services giant Thiess. Dr Ferguson is a director at Thiess' parent company, Leighton Holdings (now named CIMIC), and is responsible for company ethics as ethics committee chairwoman. Dr Ferguson declined to comment on detailed questions sent to her by Fairfax Media.

Key MPs Nick Xenophon, Jacqui Lambie and Andrew Wilkie, as well as the Greens and shadow attorney-general Mark Dreyfus have all said they will push in Parliament for stronger whistleblower laws to encourage reporting of corporate corruption.

In May, the US corporate watchdog, the Securities and Exchange Commission, revealed it would pay a bounty "to a company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing". Legal sources have confirmed that the whistleblower was a BHP Billiton insider, paid US$3.75 million (about $4.96 million). The former employee provided detailed information to US investigators about the mining firm's activities overseas several years ago. The allegations remain the subject of an active Australian Federal Police bribery investigation.

It is the first time an employee of an Australian company has received a US whistleblower bounty. Under the US Sarbanes-Oxley Act, the SEC can reward whistleblowers by giving them a cut of a fine extracted from a company, with payouts often reaching many millions of dollars.

In May 2015, BHP Billiton agreed to pay $US25 million to the SEC to settle an inquiry into trips to the Beijing Olympics that the company gave to government officials. The officials represented countries where the miner was operating, and where it was sometimes seeking government permits. BHP Billiton said in a statement that, during that inquiry, the SEC had made no findings of bribery or corrupt intent against the company, and that the US Department of Justice had investigated but took no action. The company said it was not aware of the involvement of any whistleblower as part of either investigation. "We respect and fully support protections for all whistleblowers, and the importance of providing confidential avenues for reporting," the statement said.

Senator Lambie, who has taken up the cause of a Defence Department whistleblower, said she wanted "world's best practice" whistleblower laws which would "strengthen our democracy, prevent and uncover official corruption, decrease government waste, save lives, money and prevent damage to our environment".

Shadow attorney-general Mark Dreyfus said private sector employees should enjoy the same whistleblower protection as people in the public sector because their information is "just as valuable to our community, and they should not be treated differently under the law".

"Recently a string of brave private sector whistleblowers have come forward with valuable information, including those who have exposed wrongdoing in our banking sector. They deserve our protection," Mr Dreyfus said.

Mr Day says there was merit in compensating whistleblowers, although he cautioned against aspects of the US scheme. Senator Nick Xenophon has told Fairfax Media that "whistleblowers in the US get rewarded and protected, but here they get punished and ruined". Andrew Wilkie, who was recently elected as an independent MP in Tasmania, said Australia had a cultural problem in which whistleblowers were scorned as untrustworthy dobbers, or unhinged: "In the US whistleblowers are celebrated, but in Australia they're often vilified," he said.

"Greater whistleblower protection is one of the building blocks of a healthy democracy and ... of a healthy corporate culture."

ASIC executive Warren Day believes new whistleblowing laws could provide far greater clarity and protection for employees who wanted to report a range of misconduct, spanning financial crime and environmental or health and safety breaches although he cautioned against aspects of the US scheme. Minister for Financial Services Kelly O'Dwyer said the government was looking at strengthening Australia's corporate whistleblower regime. Minister O'Dwyer said that, as it looked to strengthen legislation, the government would "follow usual process, and will consult publicly".
The 'naively noble' man who could not get his voice heard
The words, coming from the chairwoman of the board's ethics committee, were intended to be reassuring: "I'm really glad to have you in that role. I really am," she said. Dr Kirstin Ferguson was speaking to "David" (not his real name) who for more than two years had been working to stamp out alleged corruption and misconduct within his company. David was suffering stress and anxiety because he feared - with good reason - that his boss was cutting him loose.

David's faith in his company was first shaken in November 2011. As one of Thiess' more senior figures, David came across a document, signed by his boss Bruce Munro more than three years earlier, as part of the company's 2008 tender for a $5.5 billion mining concession in India.

It quickly became clear that the deal might have had at its heart a corrupt arrangement. Documents and key emails suggested that Thiess' business partner in India would be paying $12 million to powerful Indian government officials - an apparently illegal payment under Australian law.

But two weeks after speaking to her, Ferguson's reassurances meant nothing. David was given three months' notice and told to go immediately on "garden leave".

The company was Thiess, part of Leighton group, which has been implicated in among the most serious foreign bribery and corruption cases in recent Australian history. David's boss was then Thiess managing director Bruce Munro, who later left the company under a cloud.

As for the ethics committee chairwoman, Dr Ferguson: she is still there, and still in the top integrity role at the firm, since renamed CIMIC. She has since scored one of the most high-profile jobs in Australia - she was appointed by the Coalition government as a director of the ABC board, where she is a member of its audit and risk committee, the body in charge of overseeing ethical behaviour.

David declined to speak to Fairfax Media, but his full story can now be told for the first time through documents held by Thiess and CIMIC, and leaked by a source close to both firms.

In the United States, someone who came forward with information about corporate malfeasance might be paid millions of dollars. In Australia, speaking out is a shortcut to dismissal, despair and unemployment. And so far in this country, whistleblowers cannot even console themselves that the bad guys will be held to account for the deeds exposed, given the difficulty often facing police or the corporate regulator in investigating, prosecuting and punishing large companies.

Inside Leighton, some were concerned the company might have a deep ethical problem. So a new confidential internal review, Project Mango, was ordered into whether Leighton might be exposed to corruption issues elsewhere. It turned up about 100 payments made by Thiess employees in Indonesia to the country's government, military and policing officials. Not everyone appreciated the revelation.

David's boss was then Thiess managing director Bruce Munro, who later left the company under a cloud. Munro was concerned that risk and compliance activities were cramping the style of those whose job it was to win contracts in difficult markets.

"I want you to ... have a look and tell them [senior management] that there is nothing to see here ... We are tying people up in paperwork. Our processes have gone too far".

In court documents linked to the whistleblower's case, it's alleged that Munro explained to the whistleblower that the sticklers for good process inside the firm would have "never let me sign it [a deal with the Indian partner]". Alarmed at what he had seen, David escalated the emails and Leighton senior management ordered an external investigation. It was codenamed "Project Orange."

When the Project Orange investigation was completed, it suggested Leighton may need to inform the Australian Stock Exchange of a foreign bribery matter. Munro had breached the company's code of ethics and internal policies, the report found. However, there was not yet enough evidence for criminal charges.

n March 2014, as Project Mango was underway, Leighton was taken over by a Spanish group and eventually renamed CIMIC. But if anyone hoped the change of management would lead to a more open culture, those hopes were quickly snuffed. The senior executives who had commissioned Project Mango were sacked and the new bosses wanted it shut down. The story about the payments to Indonesian soldiers was reported, via a leak, in Fairfax Media. But instead of performing a mea culpa, an internal witch hunt for the leakers began.

After that, precisely nothing happened. The market was not informed. Munro kept his job.

In July 2014, Dr Kirstin Ferguson, a former flight lieutenant in the air force, an expert in safety, a lawyer, a PhD in corporate governance and a professional company director, became the head of CIMIC's ethics committee.

Two weeks after her appointment, David rang her. He wanted to meet for coffee. He asked if she knew about what had happened in India, if she was aware of Project Orange. "If I were in your position, I would want to know this," he said of the "biggest ethical issue the company has and would be the biggest ever in Australia."

"I do. I really do," she replied, adding reassuringly: "I'm really glad that we have you in that role."

But a fortnight later, David received a call from the "manager of people" at CIMIC. He was told he "hasn't made it in the restructure". He'd lost his job, and was sent immediately on three months gardening leave.

Two days later, Dr Ferguson sent David a text. To a person humiliated, isolated and sacked for trying to report wrongdoing in front of him, the message rubbed salt into his wounds.

"Hi - just wanted to let you know I have been following up on your call and will be sure to call you when done," Dr Ferguson wrote. It might take another couple of weeks, she said.

David's lawyers later argued his conversation with Ferguson should have been a "protected disclosure" under Australia's flawed whistleblower regime.

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