Groundbreaking whistleblower developments – ASIC v TerraCom Limited ACN 143 533 537

On 26 August 2025, the Federal Court of Australia handed down a decision resulting in ASIC’s first enforcement outcome for contraventions of the whistleblower provisions of the Corporations Act  (Cth) 2001 (Corporations Act) in ASIC v TerraCom Limited ACN 143 533 537.

Background

TerraCom Limited ACN 143 533 537 (TerraCom) is a public company listed on the ASX and owned by Blair Athol Coal Mine in Queensland, through its wholly owned subsidiary, Orion Mining Pty Ltd (Orion).

TerraCom appointed ALS Limited (ALS) as the independent laboratory to sample the majority of shipments of coal from Blair Athol Coal Mine. Between May 2018 and August 2019, TerraCom received shipping analysis reports which showed the results of the coal quality testing done by ALS for particular shipments and included the net calorific value (NCV) results (Shipments). ALS sent TerraCom certificates of analysis for the Shipments which showed the NCV results and then TerraCom would issue a final invoice to the customer for the Shipments which stated the amount owing based on the NCV.

The Whistleblower

On 9 July 2019, Mr Justin Williams (Williams) commenced employment at TerraCom as General Manager – Commercial.

On 13 August 2019, Williams informed the CEO and CFO of TerraCom that he was concerned about actions he had observed between TerraCom and ALS. The actions involved the coal quality results that were recorded in the shipping analysis report for certain shipments that has been amended without proper justification by ALS. The amendments made the results more favourable. These results were then included in the certificate of analysis that was used to form the invoice that was issued to customers.

TerraCom terminated Mr Williams’ employment on 13 August 2019.

On 14 August 2019, Williams met with an adviser to TerraCom’s board of directors. At the meeting, Mr Williams alleged that the certificates of analysis prepared by ALS had been amended to appear more favourably to TerraCom and also to Noble Resources International Pty Ltd – Orion’s sales and marketing agent. Mr Williams also provided the representative with documents that he believed supported his allegations.

Mr Williams subsequently commenced legal proceedings under the Fair Work Act 2009 (Cth) against various TerraCom directors and officers in December 2019.

TerraCom and ALS’s Response

On 29 August 2019, TerraCom’s solicitors engaged PwC to investigate the allegations made by Mr Williams. On 16 December 2019, PwC provided its report which identified inconsistencies in the reported NCV in shipping analysis reports and the invoices issued to customers (PwC Report). These inconsistences were similar to those reported by Mr Williams.

On 12 February 2020, Mr Williams disclosed to ASIC the concerns he had raised to TerraCom on 13 August 2019.

On 24 February 2020, TerraCom made an announcement via the ASX that outlined the allegations made by Mr Williams and stated that TerraCom denied them as they were false and “totally unfounded”. The announcement also stated that Mr Williams had been made redundant and it was only after that process that he made the allegations.

On 12 March 2020, TerraCom published an Open Letter in the AFR and Australian newspapers. The letter indicated that Mr Williams had initiated court proceedings after a series of demands were not met and that Mr Williams has made similar allegations in prior roles.

On 2 April 2020, ALS released an announcement to the ASX that its independent investigation had found that almost half of the certificates of analysis had been amended without justification since 2007. In response, TerraCom made another announcement with the ASX that conveyed that TerraCom was taking the allegations made by Mr Williams seriously and had investigated them but found that the allegations were false.

The admitted contravention

In proceedings subsequently commenced by ASIC, TerraCom admitted to various contraventions and matters, including that:

1. the publication of the ASX announcements and the Open Letter amounted to a contravention of section 1317AC(1) Corporations Act – being a prohibition against victimisation;
2. Mr Williams was an eligible whistleblower under section 1317AA Corporations Act;
3. Mr Williams had reasonable grounds to suspect an improper state of affairs or circumstances and that the information was therefore a “qualifying disclosure” within the meaning of section 1317A Corporations Act;
4. the tone and content of the announcements caused detriment to Mr Williams due to the way the announcements represented him; and
5. between 24 February 2020 and 3 April 2020, it believed or suspected that Mr Williams had made a qualifying disclosure to TerraCom executives at a time that they were “eligible recipients” within the meaning of section 1317AA(2)(b) and section 1317AAC(1)(a) and section 1317AAC(1)(d) Corporations Act.

Decision

It its decision, the Court declared that between 24 February 2020 and 3 April 2020, TerraCom contravened section 1317AC(1) of the Corporations Act for publishing, or causing to be published:

• an ASX announcement dated 24 February 2020;
• an “Open Letter to TerraCom shareholders” published in the Australian Financial Review and The Australian on 12 March 2020; and
• an ASX announcement dated 3 April 2020.

Imposing a Penalty

The Court imposed a penalty of $7.5 million and considered numerous factors in determining whether it was an appropriate penalty.

In considering the seriousness of the offence, the Court noted that the conduct occurred over the course of three separate announcements, spanning a period of two months. The tone of the announcements caused detriment to Williams. The announcements were made in the aftermath of Mr Williams’ employment being terminated and after PwC provided its report.

The Court also considered the size and degree of market power held by TerraCom, and noted that it was clear that TerraCom’s conduct was deliberate and arose out of the conduct of senior management. It was also acknowledged that TerraCom had not previously been found by a court to have engaged in conduct of this nature.

The Court considered steps taken by TerraCom to facilitate a workplace culture conducive to compliance. For example, in 2021, TerraCom sought legal advice to review its whistleblowing policy and organised for training for staff and board members, with formal whistleblowing training provided to key leaders of TerraCom in May 2025.

The Court considered that overall, TerraCom had cooperated with ASIC throughout the proceedings by participating in mediation and agreeing to the statement of agreed facts and sparing the Court and ASIC from the expense and time of a contested hearing.

In determining the penalty, the Court considered the necessity for a penalty to provide specific and general deterrence, noting that it had “the necessary “sting”” and was not an amount that would be considered to be “a cost of doing business.”

A warning for industry

Whistleblower protection laws have been in place for a number of years without being truly tested. This decision is a powerful reminder of the importance for organisations to have in place appropriate procedures, mechanisms and safeguards to recognise qualifying disclosures and respond accordingly. ASIC have demonstrated that where organisations fall foul of their obligations to whistleblowers, that it is prepared to take strong action to seek meaningful penalties for contraventions.

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Authored by:
Daniel Maroske, Partner
Anna Fanelli, Senior Associate
Bailiejean Hohnberg, Graduate