TerraCom Limited has been imposed with a substantial penalty of $7.5 million due to allegations of victimizing a whistleblower, following legal action initiated by the Australian Securities and Investments Commission (ASIC). This case marks ASIC’s first significant enforcement action regarding breaches of whistleblower protections.
The legal proceedings were centered on two announcements made by TerraCom on February 14, 2020, and April 3, 2020, along with an open letter directed to shareholders, published in prominent Australian publications on March 12, 2020. In these statements, TerraCom claimed that the allegations made by the whistleblower were untrue and indicated that the company had conducted an independent investigation into the conduct of its employees.
However, TerraCom later conceded that these public announcements had adverse effects on the whistleblower, causing feelings of hurt, humiliation, distress, and embarrassment. It acknowledged that its statements had tarnished the whistleblower’s reputation by portraying him as someone who made baseless accusations for personal benefit, even though the independent investigation had at least somewhat validated his claims.
In addition to the penalty, TerraCom has been mandated to cover ASIC’s legal expenses amounting to $1 million. This case serves as a significant reminder of the legal protections afforded to whistleblowers and the potential ramifications for organizations that fail to uphold those protections.