Blowing the Whistle on Protection for Corporate Whistleblowers: A Lacuna in New Zealand Law

Abstract

With the memory of the finance company failures and several high profile cases involving corporate wrongdoing by directors still fresh, the question of whether New Zealand has done enough to prevent a repetition of these events in the future needs to be addressed. The current review of securities law being undertaken by the Ministry of Economic Development which, amongst other issues, addresses the problem of adequate enforcement of breaches of directors’ duties in New Zealand, is certainly a step in the right direction. This article seeks to raise awareness about another aspect crucial to an improvement in the regulation of the corporate sector – the benefits of offering protection to corporate whistleblowers in cases involving breaches of directors’ duties.

Overseas experience has shown that whistleblowers from within corporations have helped to expose emerging corporate scandals earlier. Further damage has been prevented and the legal proceedings following the scandals conducted successfully. Mindful of this experience, we examine the current whistleblower protection provided in New Zealand and identify existing shortcomings in the legislation, particularly in terms of whistleblower protection within the private sector. Demonstrating the actual need for whistleblower protection in a company law context, we then propose different solutions for how such protection could be incorporated into the current legal system.