Managing Whistleblowing, risks and responsibilities
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Managing Whistleblowing, risks and responsibilities

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Presentation given to anti-corruption conference in Delhi, October 2012, organised by the Indian Centre for CSR

Presentation given to anti-corruption conference in Delhi, October 2012, organised by the Indian Centre for CSR

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  • Thanks for sharing, Toby.

    We often quote the PwC report at InTouch MCS. Especially the point on slide 7 - 'The provision of effective whistleblowing facilities is widely considered to be a key element of adequate procedures for most organisations' - which is our specialism. In fact, we have clients in India using our whistleblowing services.

    All the best.
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Managing Whistleblowing, risks and responsibilities Managing Whistleblowing, risks and responsibilities Presentation Transcript

  • Managing Whistleblowing: Risks andResponsibilitiesOctober 2012Toby Webb, Founder, Ethical Corporation and Stakeholder Intelligence. Lecturer,Corporate Responsibility, Birkbeck College, University of LondonToby.webb@stakeholderintel.com / tobywebb.blogspot.com
  • Whistleblowing, a brief history Origins in the British police: „Blowing the whistle‟ First seen in law: 1863. US “False Claims Act” (revised in 1986), tried to combat fraud by suppliers of US Govt during the Civil War: Offered incentives to reveal fraud Early 1970‟s Ralph Nader advocated term, over „snitching‟ US: big cases in 1970s (Nixon, Serpico) gain public interest(Sources: Financial Times, Wikipedia, NY Times)
  • Whistleblowing, major legal variations globallyIndia: The Whistleblowers Protection Bill, 2011was passed by the Lok Sabha on 28 December2011 Bill introduced in Rajya Sabha on 29 March 2012 by V. Narayanasamy, Minister of State for Parliamentary Affairs The Bill is currently pending in the upper house of Parliament, Rajya Sabha for discussion and further passageSource: Wikipedia
  • Whistleblowing, major legal variations globallyUSA: The US has no general employmentprotection legislation. But has a whistleblowers‟ombudsman (appointed Sept 2012) Outlaws victimisation of those who report infringements of particular statutes, including environmental, health and safety measures. Federal laws reward whistleblowers who help the government claw back money lost through fraud, and allow for others to share in fines levied by its regulators
  • USA: Dodd-Frank Act 2010Dodd-Frank Act offers whistleblowers significant incentives andincreases protection for whistleblowers in the SEC whistleblowerprogram: SEC can reward those who provide information concerning violations of the federal securities laws Strengthens whistleblower protection provisions of the False Claims Act, contains one of the strongest confidentiality provisions for whistleblowers ever enacted: For the first time, whistleblowers can initially report fraud anonymously by filing a claim through an attorney Prohibits employers from retaliating against whistleblowers. Employers may not fire, demote, suspend, threaten, harass, or discriminate against a whistleblower
  • United Kingdom: 1999 and 2010 ActsUK law specifically protecting whistleblowers in Britain cameinto force in 1999 and is: Integrated into the country‟s employment laws Requires the whistleblower to be acting in the public interest, allows for unlimited compensationand, in theory, voids gagging clauses But unlike US, British law focuses on employment status of the whistleblower, not the message UK Bribery Act 2010 now makes whistleblowing systems and protection vital for companies subject to UK law
  • United Kingdom“In the UK, the proposed enactment of the Bribery Actcreates a corporate offence of failing to preventbribery.In order to defend a charge of failing to prevent bribery,an organisation must be able to demonstrate that it hadadequate procedures in place.The provision of effective whistleblowing facilities iswidely considered to be a key element of adequateprocedures for most organisations”"Striking a balance: Whistleblowing arrangements as part of a speak up strategy“ PwC,2011
  • What are the impacts on Whistleblowers? In many modern cases, whistleblowers have suffered greatly In a recent Financial Times article („The Whistleblowers Club‟, 14/12/12) the depth of their personal suffering was detailed. Many lost homes, relationships and thought of suicide Much of the recent legislation has come as a result But for business, you cannot rely on the law alone. A culture of openness is needed to get people to speak up
  • Process is one thing… (PwC report)
  • But cultural change is anotherSo how do we change culture, towards openness? CEO and top level leadership: Bosses must lead from front Ethics champions: Devolved networks who spread the word Constant training: Online, offline Dilemmas databases: Case studies of what to do, and when Demonstrating action: Taking action, and reporting publicly Cash incentives: Can they work for your organisation?
  • Encouraging openness: Case study, Severn Trent Series of ethical incidents (false information to regulator) led to serious crisis. New top management from 2005 Senior management team visited sites. Involved groups of 50 or so employees in open, honest dialogue about guilt and change Employees fearful of consequences & senior managers‟ motives Coaching, mentoring techniques & external ethics/dilemmas training
  • Encouraging openness: Case study, Severn Trent Changed compensation structure: existing & new executives Leadership development: Big focus on ethics and honesty: Published revised code of conduct AND whistle blowing policy 20 key performance indicators linked board member’s efforts to performance and values Won leading industry award by 2009. Programme continues…
  • Encouraging openness: Case study, Siemens Huge corruption scandal, resulting in $1.6bn in fines in 2008 Company has re-organised as a result, better reporting and world class anti-corruption processes Forced by World Bank to spend spend $100 million on anti-corruption awareness initiatives world-wide Understand ethics is as important as legal compliance Batches of Siemens managers spend time at the Panchgani campus of the global NGO, the Initiatives of Change, headed by the Mahatma‟s grandson Rajmohan Gandhi
  • Conclusions: Whistleblowing is one of the hardest challenges to manage It is very hard to demonstrate that careers will not be ruined as a result of whistleblowing Leadership is vital: Companies must celebrate and promote them from the top, if they are to be successful But general culture also matters hugely. Processes can help take away opportunities for misconduct, but engaging ALL employees, constantly, is the secret to a more open culture There is no magic bullet: But culture and process combined, can hugely reduce risk
  • Sources and resources: "The Price Whistle-Blowers Pay for Secrets", New York Times, 21/09/12 "Sustainability & INDIA INC: Siemens", The Economic Times, Mumbai, 19/04/12 Wikipedia: "Whistleblowing", accessed 5/10/12 "The Whistleblowers Club", Financial Times, 14/09/12 "Striking a balance: Whistleblowing arrangements as part of a speak up strategy“ PwC Report, 2011 www.ethicalcorp.com: various articles 2005-12