Recently, the Human Rights Law Centre reviewed every whistleblower case to go to judgment in Australia. They found no successful judgment in favour of a whistleblower under our public or private whistleblower regimes. My case is no different, Tony Watson reports.
Last year was not a good year for whistleblowers in Australia.
In March, the South Australian District Court ruled that whistleblower protections for making public interest disclosures do not extend to conduct preceding the making of the disclosure. In gathering evidence, Richard Boyle allegedly taped private conversations and photographed taxpayer information.
In August, the Full Federal Court ruled that I am not entitled to protection under Australia’s current whistleblower laws, which commenced on 1 July 2019, even though I made protected disclosures after the law commenced and started my case in April 2022.
And in November, David McBride pleaded guilty in the ACT Supreme Court to stealing and disclosing Commonwealth property after his public interest defence was ruled unavailable. McBride had leaked information to journalists highlighting the intensive investigation of soldiers in combat.
Duty bound to hide a crime. Appeals Court paves the way for McBride “guilty” verdict
This inaccessibility of whistleblower protections continues a regrettable trend in Australia, but it should not be so.
Importance of whistleblower role
It is in everybody’s interest that we protect those who call out wrongdoing. Professor AJ Brown, Professor of Public Law and Policy at Griffith University and a Board member of Transparency International, appeared before the Parliamentary Joint Committee on Ethics and Professional Accountability on October 6th, 2023. Professor Brown said:
“Since I last appeared before this committee in 2017, we have certainly completed a lot more research which confirms that whistleblowing is the single most important and significant way in which wrongdoing comes to light…It does not matter which industry or which sector of the economy, or which institutions, we are talking about.”
We know that the best defence, and the best deterrent, against wrongdoing of all types is the whistleblower. Unsurprisingly then, our current whistleblower laws were introduced in 2019 amid much fanfare. Scores of politicians spoke of the importance of whistleblowing, and the strength and efficacy of today’s laws.
So what has gone wrong? Either the courts are failing to interpret the legislation properly, or, if the courts’ constructions are fine, it must be that something has gone wrong with the drafting.
Australia’s courts have emphasised that protective and beneficial legislation (like whistleblower laws) should be construed liberally, having regard to its underlying objectives. So, as far as possible,
protection of whistleblowers should be found and provided, rather than undiscovered and denied, given the mischief and the remedy at which the legislation is directed.
Following my loss in the Federal Court as to whether I am protected by today’s Whistleblower Laws, the Federal Court eviscerated my statutory claims against Lendlease and PwC, so that my sole remaining statutory claim is in s1317AD of the Corporations Act as it existed at 30 June 2019.
My issue is that s1317AD, as it stood on 30 June 2019, was repealed on 1 July 2019. In other words, the Federal Court has reversed the repeal legislated by the Government.
Changes to the law
The law is constantly changing, and no one has an immunity to these changes. Changes in family law are applicable not only to families which come into existence after the changes; they apply to existing families, even though the changes may not have been foreseeable at the time when individuals married or had children.
Similarly, a person who buys a house or a company that employs staff cannot expect the law governing the rights and responsibilities of homeowners and employers to remain unchanged throughout the period of ownership or employment. I have no right to use the repealed law.
One of the main principles underpinning the rule of law is that the law applies equally to all; when the law changes, uniform application of that change should generally be the preferred outcome. However, when entities like Lendlease and PwC can claim exemption from our current whistleblower laws (by claiming the repealed law has been ossified for their benefit) then this uniformity is delayed.
What emerges for a time is a different treatment of two groups of people, one for whom the law does not apply, and the rest for whom it does.
I have sought special leave to appeal to the High Court from the decision of the Federal Court.
Lendlease’s failure to disclose
Meanwhile, Lendlease has not disclosed the status of the audit by the ATO of the issues I raised in Lendlease’s retirement village business. In my view, Lendlease double-counted $869m of deductions by including the $869m in the cost base of its retirement villages and claiming a deduction for the same $869m.
The amount should not have been included in the cost base, and so Lendlease has under-reported its capital gains when it sold the villages. The tax benefit of double counting the $869m is the tax rate (30%) times the amount double-counted ($869m). So the tax benefit is $260.7m.
An examination of Lendlease’s accounts for the period 2011 to 2016 is illuminating. In those years, Lendlease booked to profit the following amounts, described in the accounts (I kid you not) as ‘Other Other Income.’
Lendlease Other Other Income 2011 – 2016
| Income Year | Other Other Income ($m) |
|---|---|
| 2011 | 13.1 |
| 2012 | 15.5 |
| 2013 | 70.7 |
| 2014 | 95.8 |
| 2015 | 94.2 |
| 2016 | 7.6 |
In the years 2013, 2014 and 2015, Lendlease booked a profit of $260.7m of undescribed income. Lendlease security holders could do well to ask the Lendlease Board precisely what those undescribed amounts totalling $260.7m are.
Lendlease security holders would also do well to ask the Lendlease Board to release a copy of all interactions between Lendlease and the ATO on this matter. They would also be illuminating. The ATO audit must be near finalisation.
Not too quick: Tax Office dithering on Lendlease scam puts whistleblowers at risk
Let’s hope that 2024 is a better year for whistleblowers and that some of us do, in fact, find the protections that we are looking for. Unlike U2…
“I have spoke with the tongue of angels
I have held the hand of a devil
It was warm in the night
I was cold as a stone
But I still haven’t found what I’m looking for.”
Editor’s Note: The Tax Office has had the billion-dollar Lendlease ‘double-dipping’ scam on its radar since 2018 when we first published here (original story below). Since then the ATO has issued a ruling which agrees with Tony Watson’s evaluation. Yet, Lendlease and its advisers PwC and Minter Ellison have thwarted a resolution. Much is at stake in a business sense but the protection of whistleblowers must be paramount, or else there will be no whistleblowers and that can only allow corruption to flourish.
Federal Attorney-General Mark Dreyfus has sought to reform Australia’s failed whistleblower regime but as yet whistleblowers remain in legal limbo, effectively persecuted, for doing the right thing.
Tony Watson is a whistleblower and former partner and tax specialist with Greenwoods & Herbert Smith Freehills. Watson exposed Lendlease for a $300m retirement village tax scam and is now fighting Lendlease for compensation in the Federal Court.