International Law

Integrity could benefit from twice promised ALRC review of private sector disclosures

Ross Gittins in Integrity flourishes in openness  in the Sydney Morning Herald found an eye-opener in a new book, The Economics of Integrity, by the New York journalist Anna Bernasek, published by HarperCollins: markets and everyday transactions are based on mutual trust and confidence. It's a point that's also true about dealings with government. And a reminder that kicking around somewhere within government are terms of reference, initially promised before the end of last year, for an Australian Law Reform Commission inquiry into private sector disclosures.

 Gittins says despite all the cynicism

there's actually a lot of integrity in the world. Indeed, the economy is built on it. And it's made a major contribution to our prosperity. Economists tend to emphasise the role of competition in making the economy more efficient, and the importance of the individual. Unfortunately, they underplay the role of co-operation and the way we depend on each other. Bernasek says integrity has two components. The first is being trustworthy - following the rules, telling the truth and being careful on the job. The second is having trust in others. So integrity refers to relationships of mutual trust.

Disclosure means a systematic effort to share facts openly. When behaviour is hidden, the temptation to deal dishonestly can be too great to resist. Formal systems for feedback between buyers and sellers encourage people to behave well. Norms means a carefully developed set of rules about acceptable behaviour. Rules that are as clear as possible and are regularly updated and refined to keep them relevant and credible. Accountability means policing the rules and punishing offenders, thus creating considerable confidence that cheating the system doesn't pay.

"the Government will (later this year) provide the Australian Law Reform Commission with a reference to consider whether FOI should be extended to, or another disclosure regime provided for the private sector."

To ensure the reform package delivers effective change, provision is made in the bill for the act to be reviewed two years after the commencement of the reforms. The government will also consider further improvements and will ask the Australian Law Reform Commission to inquire into whether the FOI Act or another disclosure regime should apply to the private sector."

"..whistleblowers can make an invaluable contribution to the protection of investor interests and the preservation of market integrity. However, whistleblowers must be shielded from the risks they face in coming forward."

Full post as published by Open and Shut on March 25, 2010 (boomark / email).