EFFECTIVE WHISTLEBLOWER PROGRAMMES AND THEIR IMPACT ON ETHICS, CULTURE AND CONDUCT
Sikellis: Could you explain why having a whistleblower programme has become so important for companies?
Schindler: Without proper protection and systems for whistleblowers, companies lose the early warning signal when a whistleblower spots that something is not right. The whistleblower charity ‘Protect’ was founded after the Clapham rail crash, the collapse of BCCI and the sinking of the Herald of Free Enterprise. In each case, employees had known that something was amiss but been too frightened to come forward. Indeed, in the case of Enron, Sherron Watkins wrote to the chief executive, Ken Lay, raising concerns about accounting irregularities in the firm’s financial statements and concerns that he was being deceived by several high-level subordinates. Instead of investigating, he buried her letter and inquired about how he could get her fired months before the company’s collapse. It is essential to have a culture backed up by proper policies and training to encourage people to come forward when they believe that there is wrongdoing. That is vital for the health and success of a business as it reduces risk exposure, including avoiding whistleblowing claims from those who blow the whistle but are retaliated against for doing so.
Rake: Time and again we see high-profile cases hitting the press, where significant financial and reputational damage has been caused to companies and institutions, because companies have not had an effective whistleblowing programme, where the culture within the organisation has resulted in people being afraid to speak up, or where the whistleblowing case has been mishandled. Shareholder value has been wiped out almost overnight, and law enforcement and regulatory scrutiny has resulted in significant censure and fines, as well as a flood of associated legal action. In the most egregious of cases, steps have been taken by senior management to suppress, hide or downplay the allegations made by the whistleblower, so that the board has not been made aware of the issues.
Apr-Jun 2021 Issue
Novartis
FTI Consulting
Withers