Whistle Blowing... Corporate Governance Issue?

Posted By: Admin, 17 Dec, 2012 - 03:59 pm


Whistle blowing is in the news. A whistleblower at Autonomy, the giant UK software group now owned by Hewlett Packard, has alleged that its value was inflated before the acquisition, leading to massive write-downs by HP. In Japan, a CEO whistleblower exposed high-level corruption at Olympus, the optical equipment company. The FSA has said that calls to its dedicated whistle-blowing desk jumped from 1293 in the year to May 2009 to 3733 in the same period this year. Whistleblowers have exposed failings in patient care in care homes and in the NHS.

Whistle-blowing is the disclosure of illegality or misconduct in an organization, usually by an insider but also sometime by an outsider. The term was coined in the 1970’s by Ralph Nader, as a better alternative to “informer”.

The law has sought to protect whistleblowers from victimization when they have honest and reasonable suspicion of malpractice. The aim of the Public Interest Disclosure Act 1998 is to ensure that staff are not deterred from raising exceptionally sensitive matters. It sets out those disclosures that are protected and makes dismissal for disclosure “unfair”. From May 2012 disclosures will only be protected if they are in the public interest and the Act doesn’t ban the blacklisting of those who go public although compensation can be paid for loss of earnings.

In the US the law encourages whistle-blowing. The tax authorities can pay up to 30% of collected proceeds resulting from a whistle-blowing action. USB banker Bradley Birkenfeld collected $104m after he revealed how the Swiss bank helped wealthy Americans evade tax.


The death in London of a Russian businessman who blew the whistle in a $230m money-laundering scheme is currently being investigated. Whistleblowers are rarely pressurised to thisextent but arm-twisting into settlement by employers who want details to remain private is easy enough.

In the UK, Public Concern at Work offers information and advice and fields around 2000 calls a year. Whistleblowers UK is a support group that aims to provide practical and psychological support and is campaigning for the positive encouragement of whistle-blowing.   

The CIPD says that employers should make clear to employees what to do if they come across malpractice in the workplace and that its preferable to deal with whistle-blowing separately rather than as part of a grievance policy.

The Institute of Chartered Accountants in England and Wales has pointed out that the audit committee should have a high level role in relation to whistle-blowing and although not responsible for establishing whistle-blowing policy can follow up if procedures are found to be ineffective. Establishing a policy on whistle-blowing is seen as part of the good governance of the organization.

Useful links:
https://www.gov.uk/whistleblowing/overview
http://www.pcaw.org.uk
http://www.acas.org.uk/index.aspx?articleid=1919

For Schools and NHS:
http://www.nhsemployers.org/employmentpolicyandpractice/ukemploymentpractice/raisingconcerns/pages/whistleblowing.aspx
http://www.ofsted.gov.uk/contact-us/whistleblower-hotline

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