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

1. Managing Whistleblowing: Risks and
Responsibilities
October 2012
Toby Webb, Founder, Ethical Corporation and Stakeholder Intelligence. Lecturer,
Corporate Responsibility, Birkbeck College, University of London
Toby.webb@stakeholderintel.com / tobywebb.blogspot.com

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. Whistleblowing, major legal variations globally
India: The Whistleblowers' Protection Bill, 2011
was passed by the Lok Sabha on 28 December
2011
 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 passage
Source: Wikipedia

4. Whistleblowing, major legal variations globally
USA: The US has no general employment
protection 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. USA: Dodd-Frank Act 2010
Dodd-Frank Act offers whistleblowers significant incentives and
increases protection for whistleblowers in the SEC whistleblower
program:
 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. United Kingdom: 1999 and 2010 Acts
UK law specifically protecting whistleblowers in Britain came
into 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. United Kingdom
“In the UK, the proposed enactment of the Bribery Act
creates a corporate offence of failing to prevent
bribery.
In order to defend a charge of failing to prevent bribery,
an organisation must be able to demonstrate that it had
adequate procedures in place.
The provision of effective whistleblowing facilities is
widely considered to be a key element of adequate
procedures for most organisations”
"Striking a balance: Whistleblowing arrangements as part of a speak up strategy“ PwC,
2011

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. Process is one thing… (PwC report)

10. But cultural change is another
So 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. 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. 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. 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. 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. 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