The cost of whistleblower victimisation: TerraCom's $7.5 million penalty

On 26 August 2025, the Federal Court’s decision in ASIC v TerraCom Ltd (No 3) [2025] FCA 1017 brings to an end the Australian Securities and Investments Commission's (ASIC) first prosecution of a company for contravening the current whistleblower protections under 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 as it admitted to contravening the prohibition against victimising a whistleblower under the Act.

The contravention admitted to by TerraCom is different to the contraventions alleged by ASIC in its proceedings against TerraCom's individual directors and officers which did not concern the whistleblower protections in the Act and were ultimately unsuccessful.

Agreed facts: the context of the Terracom whistleblower case

Justin Williams began 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 concerns with TerraCom’s CEO (Mr McCarthy) and CFO (Mr Boom) about a practice involving the manipulation of coal quality results. He alleged that shipping analysis reports were being amended without proper justification by ALS, TerraCom’s independent laboratory, to produce more favourable results in certificates of analysis, which were then used to invoice customers.

Following this, Mr Williams met with Mr Ransley, an adviser to TerraCom’s board, on 14 August 2019 to reiterate his allegations and provide supporting documents. TerraCom’s solicitors engaged PwC to investigate the claims, and a report delivered in December 2019 by PwC identified inconsistencies in coal quality reporting but could not determine the cause. The report did not exclude TerraCom’s involvement in the alleged conduct and did not conclude that Mr Williams’ allegations were unfounded.

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

On  24 February 2020, ALS released a statement to the ASX and the Australian Financial Review (AFR) published an article regarding allegations involving the manipulation of coal quality results without proper justification. The AFR article included the following 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 statement and article, TerraCom published the following announcements:

• an ASX announcement dated 24 February 2020 which stated, among other things, that Mr Williams' allegations were false, TerraCom had the conduct of its employees independently investigated and believed that the allegations made by Mr Williams were totally unfounded;

• an “Open Letter to TerraCom Shareholders” published in the Australian Financial Review and The Australian on 12 March 2020, which stated, among other things, that Mr Williams had initiated proceedings only once TerraCom decided not to meet his demands which included a request for a $5 million financial payment, that Terracom understood Mr Williams had been unsuccessful with similar allegations in the past about other coal mining companies for which he had worked, and that an independent investigation had found no evidence of wrongdoing; and

• an ASX announcement dated 3 April 2020 which stated, among other things, that Mr Williams' allegations were made only after he was dismissed as part of a company-wide redundancy program.

On 28 February 2023, ASIC commenced proceedings against TerraCom and certain of its current and former directors and officers. At that time, TerraCom announced that it would 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 where TerraCom admitted to contravening section 1317AC(1) of the Act (being the victimisation protections) by publishing, or causing to be published, the Announcements in circumstances where Mr Williams (who was an eligible whistleblower under the Act), made allegations of misconduct involving the manipulation of coal quality reports (which amounted to a protected disclosure under the Act, on the basis he had reasonable grounds to suspect an improper state of affairs or circumstances), to TerraCom’s board and subsequently ASIC.

TerraCom admitted that its Announcements caused detriment to Mr Williams in the form of hurt, humiliation, distress and embarrassment, and damage to reputation, by making a number of representations, including that Mr Williams was someone who:

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

• was willing to make unfounded accusations of serious wrongdoing for personal gain in circumstances where, contrary to what was published in the Announcements, the findings of the PwC Report at least partially supported Mr Williams’ allegations and did not conclude that his allegations were “unfounded”; and

• (in the case of the Open Letter) had initiated proceedings only after TerraCom decided not to meet his demands to be reinstated to his role at TerraCom and to be paid $5 million, when the reference to $5 million had been made in a confidential and privileged mediation conducted after he had filed a Fair Work Commission conciliation application.

Justice Jackman accepted that the detriment caused by the Announcements (hurt, humiliation, distress and embarrassment and damage to reputation) was within the concept of detriment as defined by the Act, and that the whistleblower protection provisions are clearly directed towards protecting whistleblowers from this type of harm.

Finally, it was agreed that TerraCom’s conduct in publishing the Announcements was motivated, at least in part, by its belief 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 against TerraCom in accordance with the penalty agreed between ASIC and TerraCom. This reflects ~30% of the maximum penalty that may have been imposed on TerraCom, which was ~$24.49 million (ie. 10% of TerraCom's annual turnover for the 12 month period ending February 2020).

The Court provided detailed reasoning as to why this penalty was appropriate (albeit at the higher end of the range of appropriate penalties), taking into account the seriousness of the contravention and the broader objectives of deterrence and accountability, including the following.

• Seriousness of the conduct: Justice Jackman emphasised that TerraCom’s conduct was deliberate and involved senior management, including the CEO and CFO. The contravention extended over a two-month period and caused significant harm to Mr Williams. However, there was no evidence that TerraCom derived any financial or other benefit from the contraventions, or that it intended to cause Mr Williams detriment.

• Deterrence: The penalty was designed to achieve both specific and general deterrence. Specific deterrence was necessary to ensure that TerraCom did not engage in similar conduct in the future. General deterrence was aimed at sending a strong message to about the importance of complying with whistleblower protections.

• Mitigating factors: The Court acknowledged several mitigating factors, including TerraCom’s eventual co-operation with ASIC, its agreement to a statement of facts and admissions, and its efforts to improve its whistleblower policy and corporate culture. This included TerraCom reviewing its whistleblowing policy annually and engaging legal advisors to review its whistleblowing policy and prepare training for TerraCom employees and Board members. These factors were taken into account in determining the penalty.

• Proportionality: Justice Jackman found that the $7.5 million penalty was appropriate, reflecting the seriousness of the contravention while considering TerraCom’s financial circumstances. Justice Jackman stated 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 also agreed to pay $1.0 million in respect of ASIC's costs of the proceedings.