Firms benefit from whistleblowing

Have you ever wondered why corporate crime, fraud and abuse on a major scale can take place, when the employees of the...

Have you ever wondered why corporate crime, fraud and abuse on a major scale can take place, when the employees of the organisation involved must know it is going on? The answer is that most do not have a whistleblowing policy that allows employees to raise concerns about malpractices within the organisation - employees have...

to risk their careers in order to tell the truth. As a result few are willing to come forward. On the other hand, if organisations were asked to adopt a code of conduct for whistleblowing policies, more employees would be willing to come speak up. This would have a twofold effect: it would work to the advantage of the employers in preventing employees engaging in external whistleblowing which, if it happened, could undermine the credibility of the organisation; and it would protect whistleblowers. The Public Interest Disclosure Act 1998 was introduced to protect employees who blow the whistle on misconduct at work. It came into force in July 1999. The Act encourages people to come forward and expose malpractice within their organisations. In order for a disclosure to be protected it must be made in good faith and the whistleblower must have a reasonable belief that the information and allegations are substantially true. The charity Public Concern at Work has produced a checklist which is being adopted by a growing number of organisations that prefer to channel whistleblowing energy to their own advantage. It suggests:

  • Explaining the issues
  • Practising what you preach
  • Being open to concerns
  • Responding to a concern.

The Financial Services Authority published a consultation paper in 2001 to draw attention to model whistleblowing arrangements. It recommends:

  • Having a clear statement that the organisation takes malpractice seriously
  • Spelling out what is regarded as malpractice
  • Respecting the confidentiality of a whistleblower
  • Giving staff a chance to raise concerns outside the line management structure
  • Making sure staff know how to raise concerns outside the organisation.

A number of organisations have been identified in the Public Interest Disclosure Act (Prescribed Persons) Order 1999 as those to whom qualifying disclosures can be made, for example, the Health and Safety Executive and the Inland Revenue, and the Financial Services Authority.

The main purpose of the act is to instill confidence in employees by encouraging employers to set up a system that would ensure they act on reports of malpractice rather than against the whistleblower.

Unfortunately it has largely been ignored, either because it is seen as being a source of trouble, or simply because it takes too much time to implement.

Nothing is compulsory at this stage and a radical change in business culture is needed before organisations will follow this lead in any numbers.

Michael Clinch is partner at Picton Howell.

What qualifies as protected information?
The information must be of such a nature that it tends to show one or more of the following:

  • That a criminal offence has been, is being or is likely to be committed
  • That a person has failed, is failing or is likely to fail to comply with a legal obligation
  • That a miscarriage of justice has occurred, is occurring or is likely to occur
  • That the health and safety of an individual has been, is being or is likely to be endangered
  • That the environment has been, is being or is likely to be damaged
  • That information tending to show any matter falling within any one of the above has been, is being or is likely to be deliberately concealed.

There are a few qualifications to these rules, however. It is immaterial whether the relevant failure occurred, occurs or would occur in the UK or elsewhere, or whether the law applying to it is that of the UK or any other country or territory.

Who to talk to
The Act provides that the whistleblower may use several different methods to deliver the qualifying information:

  • Disclosure to employer or other responsible person
  • Disclosure to legal adviser
  • Disclosure to minister of the Crown
  • Disclosure to a prescribed person.

Special arrangements may apply for disclosure in other cases, such as disclosures of exceptionally serious failure.

Read more on Hackers and cybercrime prevention