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

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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

  1. 1. Managing Whistleblowing: Risks andResponsibilitiesOctober 2012Toby Webb, Founder, Ethical Corporation and Stakeholder Intelligence. Lecturer,Corporate Responsibility, Birkbeck College, University of /
  2. 2. 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)
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. Process is one thing… (PwC report)
  10. 10. 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?
  11. 11. 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
  12. 12. 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…
  13. 13. 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
  14. 14. 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
  15. 15. 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 various articles 2005-12