Whistle blowing Notes

Whistle blowing is the reporting of misconduct of an employee or superior.

By encouraging a whistle blowing culture, the organization promotes transparent
structure and effective, clear communication. More importantly, whistle blowing
can protect the organization's clients.

Whistle blowing can occur in any organisation whether it is large or small, public
or private, government or non-governmental. Whistleblowers often face an uphill
battle to be heard in large organisations (especially where the misconduct they
are attempting to expose is wide-spread or systemic) and without the protection
of robust whistle blowing policy, can often face significant reprisal from within the
organisations that they seek to serve. Whistleblowers come into the picture
wherein they bring to the notice of the relevant stakeholder’s issues related to
violations of corporate governance and misconduct. Indeed, the term
whistleblowers literally mean people who “blow the whistle” on ethical and
normative violations.

A Whistleblower program shows your commitment to develop a ‘speak up’ culture

that values employees. The tone is set at the top – illegal behaviour and
wrongdoing will not be tolerated.

“In a recent study, it was reported that over 38% of employees witnessed
wrongdoing in the workplace and decided not to report due to a lack of belief
‘anything would be done about it’.”

Although it’s too early to state this definitively, you could say that the 2010 – 2020
decade is shaping to be the decade of the whistleblower. New websites such as
wiki leaks have risen to prominence by providing whistleblowers a vehicle to
distribute information. In addition to this, social networking sites like face book,
have been partially credited with enabling whistle blowing and organisation of
protests on such a scale that it has led to the displacement of multiple
governments in North Africa. Prime examples of how important whistle blowing
can be for an organization are the past scandals of Enron, WorldCom, and
the Bernie Madoff scandal of 2008. Reflecting on the WorldCom accounting
scandal and whistle blowing’s role in the matter, one Fortune magazine article
stated, “If [Cynthia] Cooper had been a good soldier, the whole incredible mess
might have been concealed forever.” In simple words, had Cynthia not spoken up,
the inappropriate behavior would have continued and, as a result, cause even
more damage than the scandal did when it surfaced to the public.

NOTE:

When Time magazine editors named WorldCom's Cynthia Cooper and Enron's Sherron
Watkins two of their People of the Year for 2002, they were acknowledging the importance of
internal whistleblowers—employees who bring wrongdoing at their own organizations to the
attention of superiors.

At WorldCom, Cooper pushed forward with an internal audit, alerting the Board of Directors
Auditing Committee to problems, despite being asked by the company's CFO to postpone her
investigation. According to Fortune magazine, "If Cooper had been a good soldier, the whole
incredible mess might have been concealed forever." At Enron, accountant Sherron Watkins
outlined the company's problems in a memo to then-CEO Kenneth Lay.

But by the time Watkins and Cooper blew the whistle, much damage had already been done,
and the shareholders and employees were the ultimate losers. So the question is, How does an
organization create a culture that encourages employees to ask questions early—to point out
issues and show courage in confronting unethical or illegal practices? And then how can a
company ensure that timely action is taken? In other words, how does an organization
encourage internal whistleblowing?

However, in the “Decade of the Whistleblower” all companies should consider

putting in place at least a basic policy and process. There are many benefits
of doing so, just some of which include:

1. Provide protection to the people in your own organisation who have the
courage to speak up about matters that concern them
2. Avoid unwanted publicity in the event that some of your staff are engaged
in unscrupulous behaviour
3. Generate positive publicity from a social responsibility perspective
4. Reinforce a culture of values-based leadership and senior management
accountability
 5. Increase confidence in the quality of leadership being demonstrated across
all locations in the company (especially in companies that operate across a
geographically diverse area).

Drawbacks of Whistle Blowing

As with most matters, there are positives and negatives. Whistle blowing, too, has
some negative aspects.

For instance, in a 1972 case, an arbitrator told a whistle-blowing employee that

the employee could not, “Bite the hand that feeds you and insist on staying on the
banquet.” If the entire organization does not have the same positive attitude in
regards to whistle blowing, employees may fear speaking up.

A second consideration includes employees taking advantage of whistle blowing.

Forbes.com cites an example of Douglas Durand. As vice president of sales at TAP
Pharmaceutical Products, Durand suspected the company was conspiring with
doctors in overcharging Medicare. Instead of gathering evidence and blowing the
whistle, Durand spent 7 months gathering information, quit, and then filed a
lawsuit against TAP. Durand spent the next 8 years in cooperation with the
government in order to build the case. Durand received $126 million in the case
settlement. Trouble surfaced after the settlement, when prosecutors filed criminal
fraud charges against TAP executives. Durand’s story fell apart as defense
attorneys poked holes in his claims. Durand’s example shows the ugly side of
whistle blowing resulting from greed.

Although these two negative aspects of whistle blowing can be quiet unsettling,
both can be curbed. By promoting a whistle blowing culture within the
organization, employees will feel comfortable speaking up when necessary.

Here are some tips for promoting a whistle blowing culture:

 Create and publicize a whistle blowing policy.

 Emphasize communications about bans on retaliation for whistle blowing
activities.
 Top Management must demonstrate the inclusion of whistle blowing in the
culture.
  The organization’s commitment to whistle blowing must be emphasized and
promoted.
 Follow through with a complete investigation after a whistle blowing event.
 Discuss with employees their personal thoughts on topics to make sure
everyone has a similar mindset.

Clear communication is key to building an organization where employees feel

comfortable raising their concerns. In the resulting positive work environment,
organization goals are foremost, allowing employees to focus on the success of
the organization and its members.

Whistle blowing is an essential tool for an organization. Without it, fraud,

misconduct, and failure may dominate an organization. By promoting clear
communication and keeping the organization’s goals in focus for everyone, one
can minimize their chances of being the next Enron.

However, here are some tips on developing and implementing a whistleblower

policy at your organisation:

1. Ensure that the procedure enables whistleblowers to remain anonymous if

possible
2. Design the process in such a way that it minimizes or eliminates the risk of
detrimental action or reprisal against whistleblowers
3. Ensure that there are clear processes in place for dealing with complaints
that are found to be unfounded or untruthful
 4. Consider utilizing independent companies to administer the process (to
ensure that complaints could be made about all employees irrespective of
their seniority in the organisation)
5. Ensure that you embed reporting processes that enable you to track the
performance of your organisation over time
6. Be clear on the “scope” of the policy. The types of issues that should be
raised via this policy should be very clear. General grievances and
complaints should not normally be dealt with via a whistleblower process.
7. Ensure that you also have a robust “fair treatment” and “EEO complaints”
procedure in place. If you fail to do so, you may find that your
whistleblower process will uncover a range of complaints that are more
effectively investigated via another process
8. Ensure that your process clearly lays out roles and responsibilities
9. Since a whistleblower policy is often opened up to public scrutiny it would
also be valuable to benchmark the investigation process against external
best practice and to potentially engage an external consultant to conduct an
independent review prior to launching

How Many Corporates Deal with Whistleblowers?

Any complaint by the whistleblowers must not be dismissed, and at the same
time, they must also be not hyped up. Indeed, how well corporatess deal with
whistleblowers is often a reflection of how well they manage corporate
governance and discrimination issues.

For instance, many CORPORATES often deal with GENDER DISCRIMINATION by

setting up hotlines that provide the complainants with the much-needed
anonymity and confidentiality, and this is the way to go as far as treating and
dealing with whistleblowers is concerned. Further, there are many corporates that
first record the complaints and then ask the whistleblowers to go public with their
allegations. Once this is done, then the whistleblowers are required to submit
proof of their allegations, and after that, the decision makers and the regulators
take over.

Conclusion
It is also the case that when the whistleblowers allege wrongdoing at the highest
levels, then it creates a stink that is difficult for everyone to handle.
This is what happened in the case of Infosys where wrongdoing at the highest
level was alleged, and the way in which the whole issue was handled reflects
poorly on a venerable organization such as Infosys.
To conclude, it is better for all corporate norms to be followed, and in case, there
are any complaints, they must be treated with the respect they deserve.