Global Anti-Bribery Guidance

Best practice for companies in the UK and overseas

16. Whistleblowing

Guidance

16.1 Introduction

Advice and ‘whistleblowing’ or ‘speak up’ channels are one of the routes by which employees and others can seek advice and feel able to raise concerns about issues including bribery. Whistleblowing is the term for when an employee or other person sounds an alarm to reveal knowledge or suspicion of wrongdoing or negligence within a company’s activities.  The employee may also be raising concerns about one of the company’s third parties whose activities may negatively impact on the reputation of the company.  Note that as ‘whistleblowing’ is a pejorative term in many cultures, the term ‘speak up’ is preferred, as this also better conveys what staff are expected to do when confronted by concerning issues.

Speak up channels are important; those who use them have revealed significant corporate bribery and other corruption. Employees should be aware that it is their duty to report any concerns they may have to senior management about contraventions of the anti-bribery programme. The contract of employment may make this a formal requirement however, its application will be subject to the legal and cultural context. The company should aim to ensure that the advice and speak up channels support the communication and implementation of the anti-bribery programme and form a positive component of the way the company respects and builds the trust of its employees.

16.2 Openness & Trust

Advice and speak up channels succeed when there is a corporate culture of openness and trust and people feel able to seek advice and clarifications or to raise concerns without fear of retaliation. Openness means providing accessible channels and encouraging employees to use them and management being willing to respond to requests for advice. It also requires those dealing with requests to act with genuine commitment and ensure that action will be taken and carried through to conclusion.  Not every use of the channel will necessarily be appropriate (for instance it might be a personal grievance) and not every review will result in an outcome that validates the allegation or concern, but it is important for building trust that concerns are engaged with and not dismissed early on. 

Building trust in the channels will be supported by the tone from the top and positive behaviour from all management. This means:

 

  • A willingness to engage with employees on sometimes complex and difficult topics.
  • Building a track record built over time of a genuine commitment to the thorough treatment of requests for advice and speak up reports.
  • Ensuring that those who speak up are not harassed or penalised, but recognised or rewarded for their efforts.
  • Employees have positive attitudes based on their experience of using the channels.
  • Leadership review of the use of hotlines, how effective they are, the attitudes of users and the outcomes. This acts as a check that the procedures are working and also allows the leadership to understand the nature of the requests and concerns being raised.

Further, trust should be built by the company having a clear policy for advice and speaking up underpinned by a commitment that no employee will be penalised for speaking up. The policy and procedures for use of channels should be communicated and promoted within the company and appropriate training given to employees and management.

Finally, there is still a risk that employees view whistleblowing or speaking up negatively; as informing on colleagues, particularly in societies where informing on others is or was encouraged by repressive political regimes.  Emphasising the help or advice aspect can create a more favourable image in areas or sectors where these perceptions may be prevalent.

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16.3 Provide a Range of Channels

Employees should be offered and encouraged to use a range of routes to seek advice and discuss issues. Apart from hotlines, other channels can also be effective and may include:

  • Going to immediate line management.
  • Direct access (‘leapfrog’) to higher management.
  • Open door schemes for employees to voice concerns with management.
  • Advice from trusted people such as an ethics or compliance officer, a trusted employee or union or an equivalent representative body.

The company can also establish an advice or support network which can present a human face as opposed to a formal hotline or management channel. For example, GSK has established a network of regionally based anti-bribery and corruption specialists who spend a significant amount of their time in its markets, speaking to people, delivering training and conducting reviews with a cross section of senior management. They handle significant numbers of queries each year which range from straightforward questions to intricate inquiries. 

16.4 Effectively Manage Speak Up and Advice Channels

Trust in speak up and advice channels is built through the confidence employees have in the function that manages the channels. Responsibility can be assigned to an independent function, such as a compliance or ethics officer, who reports on the management of channels to senior management.  Reviews of the use of the channels and decisions made should be carried out (with appropriate controls implemented to protect identities of those using the channels).  The reviews will serve to check the quality and effectiveness of the use of channels, and protect the interests of users by making sure that systems are not open to abuse.

Speak up channels can be run in-house but a company may judge that employees would have greater confidence in the channel if it was provided by an independent professional firm. Whatever the assignment of responsibility, it must be ensured that the speak up and advice hotline conforms to the relevant policies of respect for the individual and data security and privacy.

The use of channels should be documented and a records retention policy applied for the period which documents are to be held. Documentation is important for several reasons:

  • Providing a trail in the event of an audit, investigation or a further action by the employee.
  • Recording timelines.
  • Allowing analysis for improvement of the advice and speak up channels.
  • Providing information for reviews by management and the board.
  • Providing data for use in public reporting.
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16.5 Importance of Advice Channels

Advice channels form part of the range of internal communication methods available to the company. Formal communications, such as the company's code of conduct, guidance handbook and detailed procedures cannot anticipate every situation or question; the implementation of an advice channel fills the gap by giving specific interpretation and advice. Countering bribery includes complex areas such as how to handle gifts and hospitality or decide when there is a conflict of interest and the company’s communications and guidance may not be able to deal with the nuances or dilemmas of particular circumstances.

Advice lines are important as they allow sensitive questions to be raised in confidence. The employee or third parties may be reluctant to ask a manager for advice on a topic because although it may not concern an instance or suspicion of corruption, it may relate to a sensitive issue such as a potential conflict of interest involving a relative. The primary role of an advice channel is to be a point to which employees or others may turn to for advice but it may also be used as a route for receiving comments and suggestions for improvements to the anti-bribery programme.

16.6 Encourage Issues to be Raised Internally

A company should encourage and facilitate employees to seek guidance or raise issues internally rather than seeking external recourse such as legal action or making a report to the media. Internally managed issues usually follow a set procedure but once an employee feels unable to trust the company to resolve an issue and goes outside, the path and resolution become unpredictable and can lead to adverse results for the company. This could result in a missed opportunity, both for the company and the whistleblower, to address the matter in a structured way with a proper review structure in place.

Employees should be informed of the company’s policy regarding channels through communications and training. Employees should be aware of the advantage of using internal channels as well as their rights if they whistleblow externally. For instance, in the UK, the law provides that an employee may make a whistleblowing disclosure externally without losing their rights under the relevant law. In relation to external disclosures of this type, one option is to make the disclosure to a "prescribed person" (commonly a regulator, professional body or MP).

16.7 Security

The company must offer adequate protection to those who use whistleblowing or advice channels. Concerns about bribery are often sensitive and so the company should provide the option of reporting anonymously.  The security provisions will vary according to the laws of local jurisdictions. In some countries such as the US, speak up channels must have the option that users be anonymous while others countries do not permit anonymity but require that they are suitably confidential and secure.

The process for handling whistleblowing should include provision for dealing with false and malicious allegations. This requires careful management as this may permit a review to be undermined or result in a whistleblower being penalised. The legitimate use of whistleblowing mechanisms must not provoke retaliation. 

16.8 The Legal & External Context

Unfortunately, it remains common for those who speak up to be penalised and harassed by way of dismissal, stalled promotions, victimisation, non-payment of bonuses or attempts to restrict whistleblowing by terms in their employment contract. In such situations, the employee may need to bring the issue to the attention of the authorities.

Recognising the unique and beneficial role of whistleblowing in exposing wrongdoing, some countries have introduced laws to protect and encourage whistleblowers.  Many however do not have such protections; for instance, a Transparency International 2013 report on whistleblowing legislation in European Union countries found that that only four countries had advanced legal frameworks for whistleblower protection, 16 had partial legal protections and the remaining seven countries had either very limited or no legal frameworks.[1] 

Seven OECD countries encourage whistleblowing by providing financial incentives. [2]  In the United States, the US Dodd-Frank Act and the False Claims Act provide for substantial rewards for whistleblowers. The Foreign Corrupt Practices Act also provides for rewards to whistleblowers up to 30 percent of the recoveries but only one award is believed to have been made under this provision, and the details have not been made public by the Securities and Exchange Commission (SEC).

Case study: Whistleblower penalised by management but ultimately rewarded by the law. Click here

There is growing public awareness and support for whistleblowing, partly driven by continuing disclosures through leaks exemplified by the WikiLeaks, Panama Papers and Unaoil disclosures.  In 2015, the US SEC received nearly 4,000 whistleblower tips, a 30 percent increase over the number of tips received in 2012.[3]

 

[1] Whistleblowing in Europe: Legal protections for whistleblowers in the EU, Transparency International, 2013.

[2] Committing to Effective Whistleblowing Protection in the Public and Private Sectors, OECD, March 2016

[3] 2015 Annual Report to Congress on the Dodd-Frank Whistleblower Program, U.S. Securities and Exchange Commission.

16.9 Case Studies

16.9.1 Whistleblower Penalised by Management but Ultimately Rewarded by Law

In 2016 Tenet Healthcare resolved criminal charges and civil claims relating to a scheme to defraud the United States and to pay kickbacks in exchange for patient referrals.  The Tenet scheme was to pay kickbacks to a medical facility to induce them to refer over 20,000 expectant mothers from the illegal immigrant community to Tenet medical facilities so Tenet could bill Medicare and Medicaid. The Tenet scheme was exposed by a whistleblower who was a subsidiary’s chief financial officer.  When he discovered the scheme, the CFO voiced his concerns about the fraudulent arrangement to company leaders but was then fired without reason. 

Of the total fine of $513 million, $368 million related to the civil settlement made under the federal and Georgia False Claims Acts.  The Acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery. Ultimately the whistleblower was rewarded by the law, and his share of the combined civil settlement amount was approximately $84.43 million. 

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