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Martin WoodsHermes Forensic Solutions Limited
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Whistleblowing: Good Practice - Advice - Support - Guidance

August 13, 2011 by Martin Woods 6 Comments

Whistleblowing's not for everyone! In the event you are thinking about joining the whistleblowers union, you may wish to read some of the material within this blog; ask questions of people who have themselves blown the whistle; secure an understanding of the potential impact upon you, your family, your health, your wealth and understand how it may damage your future career prospects. There are not many places where potential whistleblowers in the financial services industry can draw upon advice, guidance and, in the event they become a whistleblower, support. Hopefully this blog and those who contribute to it can serve this purpose.

Simultaneously we would like to work with and support firms, banks and compliance officers who are seeking to implement an effective and robust whistleblowing programme, which of itself will benefit potential whistleblowers, customers and shareholders.

Background

The world or regulation is changing, is your firm changing with it? The global financial crisis has revealed a number of instances of fraud, mismanagement and abuse, indeed excessive fraud. This has caused regulators and legislators to take another look at how this happened and what needs to be done to stop it happening again. One of the significant changes is a reassessment and refocus upon whistleblowing.

This interactive blog will give participants and members an opportunity to assess the whistleblowing programmes within your own organisations against those experienced by a high profile whistleblower, whilst simultaneously evaluating the potential impact of legal changes, which may need to be factored into ever evolving programmes.

US legislation

The US have enacted the Financial Reform Bill, sponsored by Senators Dodd and Frank this Bill now mandates the provision of substantial rewards to whistleblowers (up to 30% of a fine applied or funds recovered). So what does this mean for your firm? Quite simply, the impact is highly significant; the Bill has considerable extra-territorial reach. In essence the Bill covers all US publicly traded companies, their international branches and subsidiaries as well as all US securities. Individuals, firms and banks which trade on the US markets and undertake business with US publicly traded companies are now all subject to the provisions of this new legislation.

A failure to react to this Bill may actually present your firm with genuine difficulties, problems, even prosecution and conviction. The incentive of a substantial reward may lead to your employees by-passing the internal whistleblowing process and in doing so they will deprive the firm of an opportunity to take any remedial action before the onset of regulatory or indeed criminal investigation and prosecution.

History

Historically the majority of whistleblowers have suffered detrimental treatment and their lives have suffered severe negative impact, this Bill has the potential to change this and in doing so the Bill will facilitate the release and distribution of information and warnings from whistleblowers. No longer will it be in a firm’s interest to pay lip service to whistleblowing, warnings of wrongdoing will need to be reacted to, information will not be suppressed.
Tragically the failure to listen to whistleblowers has resulted in the deaths of thousands of people and arguably the devastation of our economies.

What makes a person blow the whistle?

Through this blog participants/readers can derive an improved understanding of the issues which motivate and impact a whistleblower, whilst alerting them to potential changes and proposing enhancements to their own firms’ whistleblowing programmes. Some firms will offer rewards to their own employees in order to promote confidence within their governance, risk management and whistleblower protection programmes. Others will encourage the reporting and rewarding of good work in order to create an environment where employees believe in the governance and culture of their firm and senior management.

So what is it that makes a person blow the whistle? Perhaps more importantly what is it that prevents other from doing so? Whereas in the past the whistleblower has often been perceived to be the trouble maker, the problem, in the future may actually be seen to be those who fail to speak out who are identified as the parties who allowed the trouble to go unreported and simultaneously grow into a much bigger problem. It is a clear understanding of very basic rights and wrongs which often drives a whistleblower, but it is fear and an absence of confidence which prevents many from raising their concerns.

As stated above, there are far too many well documented historical cases of whistleblowers who have suffered as a result of their actions and this has not encouraged others to become a whistleblower.

The thoughts and perspective of a whistleblower

My name is Martin Woods and I am one of a very small number of people who did blow the whistle. Thus I am a whistleblower, there is no past tense here as it is never a case that a person was once a whistleblower. Having blown the whistle there is no turning back and time never actually changes or in any way diminishes the status of the whistleblower. At a prior Offshore Alert Conference in 2010 I told my story; why I did it; how I did it and why I would seek to avoid doing it again. Within this blog I hope to be able to articulate the lessons to be learnt from my experience, for all parties, in particular those charged with managing a firm’s whistleblowing programme. I will identify the correlation between a formal grievance investigation and blowing the whistle; how not to provoke a whistleblower; the roles to be played by HR, legal, corporate security and the media as well as the need to manage other members of staff.

Objectives

The blog will seek to identify potential areas for the enhancement of a firm’s whistleblowing programme, how to interview a whistleblower, how to investigate a whistleblowing report or a grievance. What to ask; what not to ask and critically, how to ask it.

A robust, effective and efficient whistleblowing programme is a core element of a firm’s systems and controls designed to ensure compliance with all applicable laws, regulations, policies and procedures. In essence it is an early warning radar system, but if it is not functioning the warning will not be transmitted and the consequences may be far more devastating.

In promoting this blog it is hoped readers/participants may identify an opportunity to further encourage staff and policy makers to ask some soul searching questions:-

  • ‘Is your firm proactively looking for information/knowledge or are senior management sat back waiting for it to come to them? - Do they even want it?’
  • ‘Is knowledge power or contamination?’
  • ‘Is this a critical early warning system or meaningless charade?’
  • ‘Is this a risk manager’s favourite control or a risk manager’s most irritating procedure?’
  • Over the coming weeks and months we will post a number of short, but simple cases studies of both success and failure.
  • The links with grievances
  • Exit interviews – Are we interested?
  • Policies, procedures, practices
  • How to make a report
  • Internal reports, external reports and the media
  • How to investigate a report
  • Lessons learned and potential enhancements

As an administrator of this blog I will draw upon my own experiences, past and present to share with others in order to improve the chances of survival for tomorrow’s whistleblowers and to encourage others to embrace and work with whistleblowers in a positive and constructive way. I look forward to inviting participants to introduce themselves, indicate whether they hold a managerial or supervisory position and to share their experiences and ideas.

Through this blog we hope to encourage participants to indicate whether they have ever investigated a whistleblowing report.

Followed by, do you know of any person who has made a whistleblowing report?

The structure of the blog is one of simple interaction, through which we welcome and encourage debate, contribution and participation. The objective being to ensure that firms identify and maximise the benefits from a well thought out and well managed whistleblowing programme.

For context and to provoke debate and dialogue, I will provide some details of my own background both as an investigator and more latterly a whistleblower.

This will be followed by a brief look at some of the history and the ongoing evolution of whistleblowing, including some reference to cases, leading to changes in laws and regulations.

There will be some interaction around well known case studies to identify the critical issues which resulted in success or failure, in particular, the communication and the way in which this was dealt with by peers and supervisors.

Cases include:-

  • NASA – Space shuttle Challenger
  • Mercx – Vioxx
  • BP
  • Thalidomide
  • Madoff
  • Wachovia

In examining and discussing policies, procedures and practices we will seek to identify some of the problems that often materialise and how to avoid them. We will identify and highlight some of the good practice within existing policies of big multi-national firms, published on their web pages, such as BHP. At the same time we will be aiming at generating ideas from the participants and members.

Discussions will include:-

  • The route of a whistleblowing report – the nature and objective of a policy
  • The governance of investigations
  • The desired outcome
  • The prevention of bad news travelling up the management chain
  • Notes and records
  • Evidence and evidence handling
  • How to make a report - Verbally, written, informal, formal, line management or not?
  • What qualifies as a report?
  • How to investigate a report
  • Who should be informed about a whistleblowing report? Is there a programme for protecting the whistleblower?
  • Lessons learned – potential enhancements?
  • Independence of an investigation, be that internal or external
  • Positive reporting – catch someone doing something well – create and develop data and intelligence
  • Encouraging people to report, reward good work by those making the report and those subject of the report
  • Endorsement of the whistleblowing programme
  • Training of staff.

Conclusion

Through the blog we hope to be a ‘go-to’ for individuals and firms. It is not my intention to recruit or coach whistleblowers, I believe there is more value and a better outcome to be achieved working with firms to develop and implement whistleblower programmes which engender staff confidence. Of course we can and we will advise and support. As a whistleblower I know only too well the feelings of isolation and despondency, so we should help people. Whistleblowing is not for everyone and we will not be applying any pressure to any individuals to become one.

There are downsides to whistleblowing for individuals, firms, governments and others, but ultimately whistleblowing can serve as a check and balance to firms, governments and society as a whole. If we can have a positive impact upon this we will have collectively achieved something which is very rewarding and beneficial to all of us.

I am very much looking forward to interacting with you and getting to know you over the coming weeks, months, who knows, maybe even years. Comments and contributions from fellow whistleblowers are most welcome.

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6 COMMENTS

  • X1
    By X1on Friday, November 09, 2012 12:41:08 PM

    How many whistle - blowers win? I guess people pay them off because they are a pain and cheaper than court cases.

    • X1
      By X1on Friday, November 09, 2012 12:38:35 PM

      So why is this forum so out of date - I guess Whistle blowing has been and gone as most whisle blowers break the law...

      • X1
        By X1on Friday, November 09, 2012 12:25:28 PM

        So the whistle blowers are no better than criminals they use the position of trust. To create a personal situation and hide behind the law for their actions. It is really a shame to create mayhem.

        • X1
          By X1on Thursday, November 08, 2012 10:33:39 PM

          9th November 2012:- HMRC probing HSBC clients due to a whistle-blower - what motive do these people have? Whistle-blower "no way" the person is just a "thief" who stole bank details. Whistle-blowing should not be seen as a reason to committ a crime When will these people learn about trust - I guess he just wanted to change his job and went out with a bang. IMHO

          • Martin Woods
            By Martin Woodson Monday, August 22, 2011 9:52:08 AM

            To some people whistleblowers are viewed as courageous people who took on risk and at the same time stood up for what they believed in. To others whistleblowers are seen as traitors, people who let others down, self serving people who do not fully understand relevant issues. They are people who fail to see and support the efforts of others, in particular their bosses. Where do you stand? Do you know a whistleblower? Was he/she full of their own self importance? Did you ever work alongside someone who blew the whistle? In the event they blew the whistle and you did not, what did they see that you didn't? In the event you may rhave eadily accepted the status quo, why did the whistleblower not do so? Give me your thoughts, let's debate the issues and perhaps come to a better undersatnding.

              Replies(2)
              • X1

                Debate why you are so righteous and not a idiot

                • X1

                  Sorry whistle blowers are fraudsters - weak people who try and create a situation that gets them out of jobs that have trust and credence. They have no standing in the real world.

                • David Marchant
                  By David Marchanton Wednesday, August 17, 2011 6:02:58 PM

                  Fascinating story in The Guardian about a whistleblower at Rupert Murdoch's company. View at http://www.guardian.co.uk/media/2011/aug/17/whistleblower-murdoch-empire. A life unravelled … whistleblower who incurred wrath of the Murdoch empire Relentless legal pursuit of ex-News Corp employee likened to 'Rambo tactics'