2024ii26, Monday: Blown.

2024ii26, Monday: Blown.
Pic courtesy of Wikipedia.

There’s a fundamental philosophical difference between official attitudes to whistleblowers here and in the US. (Or at least it’s sometimes intimated that it’s “philosophical”. I’m far from convinced.)

In the US, various statutes enable the compensation of whistleblowers. At federal level, the main one is the False Claims Act, which permits whistleblowers to sue in the government's name in relation to fraud committed against the federal purse and keep some of the damages that ensue.

Here, we frown on that. In response to a call for research made by the Parliamentary Committee on Banking Standards (established after the 2008 financial crash), the PRA and FCA published a report in 2014, which found “no empirical evidence” that compensating whistleblowers made any material difference to regulatory outcomes. They also said it only helped a small number of people, led to legal bills (which, obviously, I deplore…) and created perverse incentives for malicious reporting and entrapment. It also, in what I have to say is a triumph of circular reasoning, suggested that paying whistleblowers who report on appalling financial services behaviour would only cement public mistrust about that behaviour.

They also said it was “contrary to public policy norms in the UK”, which simply means “we haven’t done it before, so we shouldn’t.” Or possibly, and I think this is closer to the truth: “People should do the right thing out of the goodness of their hearts, and they’re somehow tainted if we pay them.

Well, goodness. Dearie me. How terrible. Honestly, though: anyone who really thinks that the chance - and it’s never more than a chance - of a payout might persuade people to put themselves through a process which may end up destroying their careers, their relationships and on occasion their lives is self-deluding to a degree.

And that is what generally happens. My own personal experience of investigations and litigation would lead me to this conclusion; and there's US research by NYU Law School’s Program on Corporate Compliance and Enforcement from a couple of years ago which confirms it. It found that the majority of US firms didn't investigate whistleblowing reports properly, and retaliated against about four out of five whistleblowers. Further, it found that whistleblowers routinely experience significant (getting on for 10%) falls in annual income as much as 10 years after the event.

I find it very hard to imagine that things have got better since then. Or that things are terribly different here in the UK.

Against that background, some kind of recompense frankly seems not only reasonable, but necessary if - as we should - we want people to do the right thing.

How about the idea that a financial incentive will encourage people to act maliciously? Honestly, it doesn't pass the giggle test. All investigators have come across plenty of examples of malicious reporting. The incentives to drop your enemy in it are plentiful already. I can't see how cash will change that.

I recognise that historically things have looked different. At various times in the UK's history, a tradition of "paying informers" has tended to lead to injustice. Workers' revolts. The United Irishmen (and probably the next couple of centuries on the island of Ireland too). Many more. And there's good reason to be sceptical about the value of information from those who are paid to "grass".

But this isn't a proper comparison to make. You only have to talk to a couple of whistleblowers. Sometimes they're just wrong. Sometimes they seem a bit bonkers - although the ghastly experience of blowing the whistle, often against indifference at best and outright enmity at worst - is going to cause a degree in paranoia in almost anyone. But out for what they can get? Rarely. And those ones, if their allegations are properly investigated, are pretty easy to spot.

So as always with these things, it comes down to the pros and cons. From my perspective, the former significantly outweigh the latter.

And better minds than mine agree. For the first time, we now have a leader of the Serious Fraud Office who feels the same way: in a speech earlier this month, Nick Ephgrave (who's also the first SFO Director not to be a lawyer, although I don't know if that's relevant) backed paying whistleblowers in a speech to RUSI.

Time for a rethink? Absolutely.

Is that the only thing about whistleblowing that needs some reworking? No. It's about time we revisited the laws protecting whistleblowers here in the UK as well.

Again, I'm late to this party: Protect, a charity set up to encourage and defend the rights of whistleblowers, has long said that Part 4A of the Employment Rights Act 1996 (ERA) - the statutory provisions created by the Public Interest Disclosure Act 1998 (PIDA) - was groundbreaking in its day, but now risks falling well behind the pace.

Particularly given the EU Whistleblowing Directive, which - unlike the provisions introduced by PIDA - protects whistleblowing concerning a much broader range of wrongdoing, a wider variety of people (such as volunteers and the self-employed, not just paid workers), and compels companies over a certain size to set up whistleblowing channels. It also sets mandatory timeframes for providing feedback to whistleblowers, and requires countries to establish support and advice services for them as well as having regulators assist them against retaliation.

Like most people who carry out investigations into workplace issues, I've seen how PIDA/ERA's limitations can impact people. I can think of one investigation where I was compelled to conclude that someone making a report of suspected wrongdoing didn't fall within PIDA's protection. I'm confident this person believed that their report was true, and that they were acting in the public interest. They just didn't thread the PIDA needle, and ultimately the evidence didn't substantiate their allegation either. (I suspect that an anonymous account which has been mildly trolling me when I mention whistleblowing may be connected to this person. It's a bit annoying, not least because confidentiality obligations mean I can't respond to specific incidents. But I can appreciate their frustration.)

And inevitably some investigations take far longer than three months. The directive does recognise this. The requirement is to give feedback within three months, and regularly, not to conclude the matter in that time. I fully support this: whistleblowers are in a difficult enough position without being kept in the dark, although privacy and data protection considerations will always limit what, in fact, they can be told.

Of course, post-Brexit that directive doesn't bite on the UK (although it affects UK organisations with big enough intra-EU operations). But I think there's a lot we can learn from it.

There is, in fact, an ongoing government review of the UK's whistleblowing regime. Evidence-gathering is set to conclude in the autumn of 2023. But its terms of reference are sharply limited, looking really only at the pros and cons of the current framework, not at whether it should be widened or strengthened. Given this government's proclivity for announcing reviews and then doing nothing about them for ages,* and given that we're less than a year from an election, I don't have any confidence that the current administration will do anything with the results.

But the next one might. I live in hope.

*Such as the "call for evidence" about whether the identification doctrine was up to scratch, which ran from January to March 2017. An expansion of that doctrine to cover "senior managers" as well as those representing the "directing mind and will" of an organisation currently appears as clause 16 of the Criminal Justice Bill, in its Report Stage in the House of Commons. It has yet to reach the Lords, and I doubt it'll make it onto the statute books before the election. Seven years and counting.