In addition to whistleblower protection provisions, interviewees were asked whether a cartel informant system should be introduced in Australia. This system offers monetary rewards for those who have cartel information to come forward and reveal
213 Interviewee 2 (Sydney, 22nd July 2013) 17. 214 Ibid.
215 Ibid. 216 Ibid.
217 Interviewee 10 (Sydney, 29th July 2013) 22. 218 Ibid.
219 Interviewee 13 (Sydney, 22nd July 2013) 21-22. 220 Ibid 22.
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that information to the competition authority. This idea is currently being experimented in the United Kingdom, South Korea and Hungary.221
Along with cartel recidivism and the whistleblower protections, the discussion surrounding a cartel informant system ranked as one of the most significant and divisive issues.
Those in favour of the introduction of such a system believed that positive rewards should be given for pertinent information. This idea, according to one interviewee, made ‘a lot more sense’ then ‘than just relying on people to figure that they might get in trouble and that squealing on themselves and their colleagues will prevent them from getting into trouble.’222
Many interviewees in favour of the informant system believed this should only be extended to those who were not directly involved in the cartel and this was primarily for ‘moral reasons’.223
One interviewee acknowledged that the concept of a paid informant system was derived from American approaches and was supported in the literature.224
However, there was concern that this system may not ‘sit well’ with Australian culture, in the same way that the Immunity Policy does not. In response to this, one interviewee did make the point of stating that a cartel informant system would be more ethical then the granting of immunity to ‘somebody who could have been really seriously involved (who) gets off Scot free.’225
The interviewee felt that any cultural resistance to this idea is likely to be gradually accepted and that a cartel informant system may be a necessary component of an anti-cartel enforcement regime. The interviewee believed this even though they personally felt that such a system should not be necessary.226
One of the strongest arguments made in this context was that cartel informant systems are a commonly accepted practice in other forms of police work and criminal activity and that there is no clear reason that cartels should be treated any differently:
221 See eg, Korean Fair Trade Commission, ‘KFTC’s launch of Reward System for Informants’ Press
Release (March 2005). Available: http://www.ftc.go.kr/data/hwp/rewardsystem.doc.
222 Interviewee 1 (Sydney, 9th July 2013) 16. 223 Ibid 19.
224 Ibid 20: For more see Chapter VII, Cartel Informant System – Financial Incentives for
Whistleblowers, pg 312.
225 Ibid. 226 Ibid.
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Interviewee: Well, look, the police give rewards in all sorts of situations, as you know, missing persons or murders, the police offer rewards and rewards have been around for as long as I can remember, hundreds, maybe not hundreds of years but certainly a long time and it’s been a very common practice in many jurisdictions to offer rewards for information and I don’t see really why this should be treated any differently. And in America they have, whistleblowers are paid 10 per cent of the compensation, which is recovered. There was an extraordinary case just by the by I think a couple of years ago where I think an individual came forward to the Department of Justice in the United States and gave them enough information whereby they were able to uncover a serious fraud involving hundreds and hundreds of millions of dollars, in fact it may have been in the billions, and this person who was, to some extent, involved and had knowledge of it received 10 per cent of the total. So he walked away with about $150 million this fellow.227
The interviewee acknowledged the potential for misuse of such a system through false or exaggerated claims but felt that appropriate caveats could be placed within the system to ensure that these are complied with before any money is paid. It was stated that such potential misuse was no different to the problems associated with the Immunity Policy.228
There was a general feeling shared by those in favour of such a system, that now that cartel conduct is a crime, then it is more acceptable to introduce policies, such as a cartel informant system.229
The ACCC was questioned about the possibility of introducing such a system, and again it was requested that this issue be written in a submission and submitted to the ACCC. Once again this issue did not appear in any of the subsequent discussion papers or the revised Immunity Policy.230
The ACCC did say that the idea of a cartel informant system was something that had been ‘thrown about’ in discussion but nothing has been finalised.231
Many of the interviewees, who were against introducing a cartel informant system, had first reactions relating to their ‘gut instincts’ and appeared to be against the idea on the basis of moral or ethical reasons. One interviewee stated: ‘I don’t believe in paying whistleblowers even in tax. My gut reaction is against it in any field.’232
Many interviewees even felt these ‘instinctive’ feelings towards to notion of
227 Interviewee 5 (Sydney 25th July 2013) 18. 228 Ibid 19.
229 Ibid 18; Interviewee 8 (Sydney, 15th July 2013) 21. 230 Interviewee 11 (Sydney, 19th August 2013) 38. 231 Ibid 39.
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paying people who have not been involved in the cartel, as they believed there was a risk of ‘distorting motivations’ as ‘I think you start to distort motivations and you know, positive rewarding rather than not punishing I think you start to qualitatively get into a different arena there….’233
There was a sense that the introduction of a cartel informant system is overstepping the mark and that is ‘not where we should go.’234
The strongest argument put forward by those who were against the system was concerned with credibility. There was a suggestion that there is already sufficient incentive provided for people to come forward and reveal their misconduct, such as the prospect of gaol, and that those who are not involved should simply be ‘good Samaritans’:
Interviewee: (It) encourages exaggerated and overblown claims, allegations and I suppose people should be more abiding anyway when it happens.
PM: … the idea of a Good Samaritan? Interviewee: Mmm.235
There was much scepticism about the quality of evidence that a person will give in exchange for payment, given the unlikeliness that someone with valuable information in relation to a cartel’s operation would not have actually been involved in the cartel themselves.236
Furthermore, some interviewees argued that there is no demonstrated need for such a system to be introduced, as there have already been a number of cases where people, such as suppliers, have come forward and revealed cartel conduct because they have felt aggrieved. In these situations, there has been no need to pay these people to come forward and thus there is no real need for an additional system to be put in place:
Interviewee: We’ve never had a problem, again it’s this whole problem of 1 out of 7, but we never had a problem with suppliers who felt that they’ve been ripped off coming in when they thought they had some evidence, coming and telling us about it because they felt aggrieved. We didn’t have to pay them. I think it just introduces sort of a notion of, I don’t
233 Interviewee 2 (Sydney, 22nd July 2013) 18. 234 Ibid.
235 Interviewee 10 (Sydney, 29th July 2013) 21-22. 236 Interviewee 6 (Sydney, Unrecorded, 23rd July 2013).
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know how to describe it but look, you know, you can hear my instinctive reaction which is that it’s going too far and if you say that giving immunity some people think it’s gone too far because it is freeing people from prosecution who engaged in the activity, then paying people to do it goes even further.237