The value of whistleblower victimisation: TerraCom’…

On 26 August 2025, the Federal Court’s resolution in ASIC v TerraCom Ltd (No 3) [2025] FCA 1017 brings to an finish the Australian Securities and Investments Commission’s (ASIC) first prosecution of an organization for contravening the present whistleblower protections below the Corporations Act 2001 (Cth).

In accordance with a Statement of Agreed Facts and Admissions reached between ASIC and TerraCom Ltd, the Federal Court imposed a $7.5 million penalty on TerraCom because it admitted to contravening the prohibition towards victimising a whistleblower below the Act.

The contravention admitted to by TerraCom is completely different to the contraventions alleged by ASIC in its proceedings towards TerraCom’s particular person administrators and officers which didn’t concern the whistleblower protections within the Act and have been in the end unsuccessful.

Agreed info: the context of the Terracom whistleblower case

Justin Williams started working at TerraCom as General Manager, Commercial, on 9 July 2019, and his employment was terminated on 13 August 2019. On the day his employment was terminated, he raised issues with TerraCom’s CEO (Mr McCarthy) and CFO (Mr Boom) a few apply involving the manipulation of coal high quality outcomes. He alleged that delivery evaluation experiences have been being amended with out correct justification by ALS, TerraCom’s impartial laboratory, to supply extra beneficial leads to certificates of research, which have been then used to bill prospects.

Following this, Mr Williams met with Mr Ransley, an adviser to TerraCom’s board, on 14 August 2019 to reiterate his allegations and supply supporting paperwork. TerraCom’s solicitors engaged PwC to analyze the claims, and a report delivered in December 2019 by PwC recognized inconsistencies in coal high quality reporting however couldn’t decide the trigger. The report didn’t exclude TerraCom’s involvement within the alleged conduct and didn’t conclude that Mr Williams’ allegations have been unfounded.

In December 2019, Mr Williams commenced separate proceedings towards TerraCom below the Fair Work Act 2009 (Cth). On or about 12 February 2020, he disclosed the identical issues he had raised with Mr McCarthy and Mr Boom to ASIC.

On  24 February 2020, ALS launched a press release to the ASX and the Australian Financial Review (AFR) printed an article concerning allegations involving the manipulation of coal high quality outcomes with out correct justification. The AFR article included the next response.

“The Australian Financial Review can reveal a former commercial general manager at miner Terracom has started litigation alleging that his old company and ALS were involved in such a scheme.”

Following the publication of this assertion and article, TerraCom printed the next bulletins:

• an ASX announcement dated 24 February 2020 which acknowledged, amongst different issues, that Mr Williams’ allegations have been false, TerraCom had the conduct of its staff independently investigated and believed that the allegations made by Mr Williams have been completely unfounded;

• an “Open Letter to TerraCom Shareholders” printed within the Australian Financial Review and The Australian on 12 March 2020, which acknowledged, amongst different issues, that Mr Williams had initiated proceedings solely as soon as TerraCom determined to not meet his calls for which included a request for a $5 million monetary fee, that Terracom understood Mr Williams had been unsuccessful with comparable allegations previously about different coal mining corporations for which he had labored, and that an impartial investigation had discovered no proof of wrongdoing; and

• an ASX announcement dated 3 April 2020 which acknowledged, amongst different issues, that Mr Williams’ allegations have been made solely after he was dismissed as a part of a company-wide redundancy program.

On 28 February 2023, ASIC commenced proceedings towards TerraCom and sure of its present and former administrators and officers. At that point, TerraCom introduced that it might vigorously defend the allegations that it had contravened the Act.

However, on 26 May 2025, ASIC and TerraCom filed a Statement of Agreed Facts and Admissions the place TerraCom admitted to contravening part 1317AC(1) of the Act (being the victimisation protections) by publishing, or inflicting to be printed, the Announcements in circumstances the place Mr Williams (who was an eligible whistleblower below the Act), made allegations of misconduct involving the manipulation of coal high quality experiences (which amounted to a protected disclosure below the Act, on the premise he had affordable grounds to suspect an improper state of affairs or circumstances), to TerraCom’s board and subsequently ASIC.

TerraCom admitted that its Announcements brought about detriment to Mr Williams within the type of damage, humiliation, misery and embarrassment, and harm to repute, by making various representations, together with that Mr Williams was somebody who:

• had been made redundant, when he believed he had been terminated for whistleblowing;

• was keen to make unfounded accusations of significant wrongdoing for private achieve in circumstances the place, opposite to what was printed within the Announcements, the findings of the PwC Report at the very least partially supported Mr Williams’ allegations and didn’t conclude that his allegations have been “unfounded”; and

• (within the case of the Open Letter) had initiated proceedings solely after TerraCom determined to not meet his calls for to be reinstated to his function at TerraCom and to be paid $5 million, when the reference to $5 million had been made in a confidential and privileged mediation performed after he had filed a Fair Work Commission conciliation utility.

Justice Jackman accepted that the detriment attributable to the Announcements (damage, humiliation, misery and embarrassment and harm to repute) was inside the idea of detriment as outlined by the Act, and that the whistleblower safety provisions are clearly directed in direction of defending whistleblowers from this kind of hurt.

Finally, it was agreed that TerraCom’s conduct in publishing the Announcements was motivated, at the very least partly, by its perception or suspicion that Mr Williams had made a qualifying disclosure.

Reasons for the penalty: deterrence and accountability

Justice Jackman imposed a $7.5 million penalty towards TerraCom in accordance with the penalty agreed between ASIC and TerraCom. This displays ~30% of the utmost penalty that will have been imposed on TerraCom, which was ~$24.49 million (ie. 10% of TerraCom’s annual turnover for the 12 month interval ending February 2020).

The Court supplied detailed reasoning as to why this penalty was acceptable (albeit on the increased finish of the vary of acceptable penalties), making an allowance for the seriousness of the contravention and the broader aims of deterrence and accountability, together with the next.

• Seriousness of the conduct: Justice Jackman emphasised that TerraCom’s conduct was deliberate and concerned senior administration, together with the CEO and CFO. The contravention prolonged over a two-month interval and brought about vital hurt to Mr Williams. However, there was no proof that TerraCom derived any monetary or different profit from the contraventions, or that it meant to trigger Mr Williams detriment.

• Deterrence: The penalty was designed to attain each particular and basic deterrence. Specific deterrence was essential to make sure that TerraCom didn’t interact in comparable conduct sooner or later. General deterrence was geared toward sending a powerful message to concerning the significance of complying with whistleblower protections.

• Mitigating components: The Court acknowledged a number of mitigating components, together with TerraCom’s eventual co-operation with ASIC, its settlement to a press release of info and admissions, and its efforts to enhance its whistleblower coverage and company tradition. This included TerraCom reviewing its whistleblowing coverage yearly and fascinating authorized advisors to assessment its whistleblowing coverage and put together coaching for TerraCom staff and Board members. These components have been taken into consideration in figuring out the penalty.

• Proportionality: Justice Jackman discovered that the $7.5 million penalty was acceptable, reflecting the seriousness of the contravention whereas contemplating TerraCom’s monetary circumstances. Justice Jackman acknowledged that the penalty had “the necessary “sting” and is not an amount that is likely to be viewed as a cost of doing business.”

TerraCom additionally agreed to pay $1.0 million in respect of ASIC’s prices of the proceedings.