Leakers, whistleblowing and money

Monday, 27 July 2015, 9:55 am
Article: Chen Palmer

Leakers, whistleblowing and money

Anthony Russell, Principal – Chen Palmer, New Zealand Public and Employment Law Specialists

The leaking of information can often perform a public service. The Pentagon papers about the war in Vietnam played a crucial role in changing the American public’s perceptions of the war. The secret informant named ‘deep throat’ (later revealed to be an Associate Director of the FBI) most famously leaked information giving rise to the Watergate scandal, and no-one seems to dispute the public good that such achieved, even though (or perhaps because) its fallout included the downfall of a US President. The debate currently circling around Ed Snowden and his continued release of sensitive intelligence information he obtained as a contractor for the US National Security Agency brings into sharp focus the competing considerations operating. There is no consensus on the rights or wrongs of his releases, with opinion sharply divided, as to whether he is a hero or a traitor.

In this neck of the woods, the Labour Party has recently caused a stir after it used leaked information in an attempt to quantify the prevalence of off-shore Chinese speculation in Auckland’s residential property market. A real estate agent was promptly identified as the source of the leak and was dismissed following an investigation by Barfoot and Thompson. In reacting to the dismissal, Labour Party MP and Housing Spokesperson Phil Twyford expressed his disappointment saying the ‘whistleblower’ he worked with wanted to shine a light on what is a very real issue for New Zealand.

It still remains uncertain from whom the Labour Party received the information from, but under New Zealand law there are reasonably strict requirements as to who may receive protection as a whistleblower. The Protected Disclosures Act 2000 is designed to do what title suggests; protect those who release information about wrongdoing from retribution for doing such. However the Act is premised on the disclosure of “serious wrongdoing”. Information about the purchasers of residential real estate, even in the heated Auckland property market, cannot, on any sensible interpretation, amount to revelations of “serious wrongdoing”. In order to gain protection under the Act, the procedures stated in the Act have to be rigorously followed. Failure to follow any of the steps contemplated invalidates any protection the Act can provide. Needless to say, such steps were not followed in the case of the real estate data leak, nor would they have been applicable in the first place.

The Act had a long gestation, which commenced in 1993 when mental health nurse Neil Pugmire (the whistleblower) made revelations about a patient to Labour Party MP Hon Phil Goff. Mr Pugmire considered that the patient, who had a history of sexual offending against boys, continued to represent a serious threat to the community and should not be released from the secure mental health facility he resided in. Good Health Wanganui took disciplinary action against Mr Pugmire for making the revelations as they constituted amongst other things, a breach of privacy for patient and a breach of the employer’s policies. The disciplinary action was successfully challenged at an interim stage and an eventual settlement was reached with Mr Pugmire (with him retaining his job).

Interestingly, however, Mr Pugmire would not have the protection of the Act for which his disclosure was a catalyst. Disclosures under the Act have to be made to an “appropriate authority” and Ministers of the Crown and Members of Parliament are specifically excluded from being such. This exclusion appears to be premised on an “appropriate authority” having investigatory powers and being capable of conducting formal investigations into serious allegations of wrongdoing, which politicians do not. This may also constitute an implicit acknowledgment that politicians will invariably seek to make political capital out of such disclosures.

The Act remains largely underutilised in New Zealand. According to the Office of the Ombudsman Annual Report for 2013/14, since the Act came into force in 2001, the Ombudsman has received an average of only 10 requests per year for guidance and assistance in relation to possible protected disclosures. Arguments and cases about the Act’s application are also scarce. The strictures around what is “serious wrongdoing” under the Act may be responsible. Despite this admittedly high threshold, it is not clear why the Act is not used more often. It could be due to a lack of awareness of the Act, or a perception that the protections are inadequate. It may also be a reflection of the fact that New Zealand enjoys low levels of corruption, as has been recognised in New Zealand’s ranking on international transparency and corruption indexes, or this may just be wishful thinking.

Wishful thinking or not, New Zealand could actively encourage the disclosure of serious wrongdoing by financially incentivising whistleblowers to make protected disclosures. In the US, the False Claims Act enables whistleblowers to receive a significant portion (typically between 15 to 25%) of any damages recovered by the federal US government as a result of their whistleblowing. This Act is geared towards disclosure of fraudulent financial practices committed against the government and hence the emphasis on damages, with the amount of such being quantified as up to treble the amount of damage actually suffered by the government. Obviously, this represents a potential windfall for any whistleblower. It is reported that between 1987 and 2013 the federal government recovered $38.9 billion under the False Claims Act, with $27.2 billion being as a result of whistleblowers. The Act has been so successful at recovering money for the federal government, that other countries, including the United Kingdom, are now considering introducing similar legislation. May be NZ should follow suit.

ENDS

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Chen Palmer

New Zealand Public And Employment Law Specialists

Chen Palmer was the first public law firm in New Zealand. Our reputation is for delivering a result. We don't just advise on public and employment law problems, we fix them, and we do so quickly. Our depth of experience and unique approach makes us leaders in our field. Our approach is based on Thomas Edison's words: "There must be a better way - find it!"

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