UK firms failing to provide adequate whistleblowing channels

UK
firms are neglecting early-warning signs of corporate wrongdoing, the Work
Foundation says.

It
claims UK companies are neglecting vital safeguards that could prevent the same
illegal or unethical business behaviour that has plunged corporate America into
crisis.

The
Foundation’s latest survey finds that many employers here are failing to
provide adequate internal ‘whistleblowing’ channels for their employees to
raise concerns about bad behaviour – such as fraud or other financial
malpractice – at work.

The
survey of 281 organisations, released today, the third anniversary of the
Public Interest Disclosure Act, shows that even among organisations with
whistleblowing policies, many are suspicious of employees contacting prescribed
external regulators with their concerns – although this is expressly protected
by the law and encouraged by statutory bodies, such as the Financial Services
Authority.

The
research found that:


Almost half of organisations (48 per cent) surveyed had not introduced formal
whistleblowing policies, three years after the Public Interest Disclosure
Act. 


Only one-in-three (32 per cent) private sector firms have introduced formal
whistleblowing policies, compared to three-quarters (75 per cent) of
organisations in the public or voluntary sectors.


Although more than two-thirds of organisations with policies said that their
policy described a way for the raising of concerns outside of the organisation,
specific mentions of regulatory bodies was low – with 29 per cent of public
sector organisations and a mere 4 per cent of private sector organisations
mentioning them in their policies.

Theo
Blackwell, chief policy specialist at The Work Foundation, said: "We would
like to see the DTI taking the lead in promoting whistleblowing policies as an
effective tool for corporate governance. As the recent spate of scandals to hit
the US reveal, employees can play a vital role in upholding good corporate
governance, highlighting potential problems and maintaining organisational
ethics.

"Transparent,
well-run organisations will have nothing to fear by providing their employees
with an encouraging environment in which they can raise their concerns. It is
high-time organisations learnt to support, and not suppress such participation
as an early-warning against the corporate governance failings witnessed in the
US."

The
Public Interest Disclosure Act 1998 (PIDA) protects employees and others from
victimisation if they blow the whistle inside and – if there is good reason –
outside their organisation to a prescribed regulator. It provides for full
compensation and covers concerns like financial misconduct, price-fixing,
environmental dangers, regulatory non-compliance, breach of contract, crimes
and cover-ups.

Organisations
are also encouraged to establish their own internal reporting channels. The
whistleblowers in recent US cases – WorldCom, Enron and FBI – were not
protected under US law, but would have been under UK law if they had been
victimised.

Most
organisations – whether public or private – preferred their concerns to be
raised internally to designated HR (62 per cent) or senior management (61 per
cent).

By Quentin Reade

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