Just 40 per cent of UK businesses have measures in place to accommodate potential whistleblowers, according to the Grant Thornton International Business Report.
In fact, UK businesses do not even make the top ten list of countries that accommodate whistleblowing, coming 16th out of 33 countries.
Brazilian businesses top the list, with 85 per cent making some provision for staff who report business malpractice.
Scandinavian economies Denmark and Sweden follow, while even countries such as the Philippines and Armenia have a better rate of whistleblower support.
Whistleblowing has been in the spotlight recently due to the Chancellor’s plans to provide greater powers to the Financial Services Authority (FSA), allowing increased protection for whistleblowers.
This resulted in part from the HBOS share price drop in March, which occurred when false rumours about the bank were circulated by a London-based hedge fund in order to make money from share dealing.
This situation may have been avoided had employees felt comfortable informing bosses of the malpractice taking place.
Increasing the powers of the FSA will aim to change attitudes towards whistleblowing and act as a preventative measure against corruption.
Alysoun Stewart, head of Grant Thornton’s Entrepreneurial Advisory Group, comments; “UK businesses currently adopt a reasonably weak stance on whistleblowing. Yet informants that report illegal or wrongful activities including rule breaking, criminal activity, cover-ups and fraud can save businesses millions.”
Whistleblowers in the UK are currently protected by the Public Interest Disclosure Act 1998 which protects against dismissal and discriminatory treatment providing the whistleblower has acted in good faith and has not gained personally from the disclosure.
Coming bottom of the table are Greek and Taiwanese businesses, both with just 18 per cent dealing with whistleblowing, closely followed by Hong Kong (20 per cent).
Comparatively the US takes a more stringent stance to whistleblowing than the UK, with 58 per cent of US businesses setting measures in place to accommodate potential whistleblowers.
The variation between US and UK attitudes may be explained by the greater amount of US legislation on whistleblowing.
The Whistleblower Protection Act has been in force since 1989, and after the Enron and WorldCom scandals the Sarbanes-Oxley Act added further protections to corporate whistleblowers.
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Further, under the US False Claims Act, whistleblowers are given a financial incentive to speak out. Informants that disclose information leading to the recovery of proceeds of crime against the US Government are entitled to a percentage of the recovered sum.
“Businesses can greatly benefit from introducing measures to accommodate potential informants within their organisation. The first step is to provide a secure environment in which whistleblowers will feel safe discussing their suspicions. Without sufficient measures in place, whistleblowers can be victimised as informants or traitors rather than a valuable early warning system which can save money and reputations,” Stewart concludes.
