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Multinationals neglect whistleblowing risks

 

 

International law firm Freshfields Bruckhaus Deringer is urging multinational companies to move whistleblowing up their risk agendas as a global survey* of more than 2,500 middle and senior managers reveals high levels of corporate complacency.

The survey found that more than one in ten (12%) employees have blown the whistle, while almost half of employees (46%) would consider blowing the whistle. However, less than one in ten (7%) say whistleblowing is currently an important issue for their organisation and less than half (44%) say their companies either don’t have a whistleblowing policy or fail to publicise it if there is one.

Commenting on the study, Caroline Stroud, global practice group leader for Freshfields’ employment, pensions and benefits group and a member of the firm’s global investigations team, said: ‘Despite a recent spate of high-profile whistleblowers and an increase in the number of instances leading to global investigations and fines, companies are ill-prepared to deal with concerns raised by their employees.’

‘Corporates need to adopt sufficient internal reporting systems to recognise and manage these matters more effectively. Given the high-level nature of whistleblowers’ issues such as financial mismanagement, corruption or criminal activities, and the related major reputational risks, adequate whistleblowing procedures are clearly a board-level issue.’

The survey data also shows that employees continue to fear reprisal for blowing the whistle. More than one third (37%) of all employees surveyed believe senior management at their organisation would either treat them less favourably or look for ways to terminate their employment if they blew the whistle. Four in every ten (40%) employees say their organisation discourages or actively discourages whistleblowing. 

Caroline Stroud further commented: ‘It’s surprising that employees continue to fear unfavourable treatment. In many countries, including the UK, the right to blow the whistle on particular violations without suffering detriment is protected by law. Boards need to create a culture in which employees are not only protected but genuinely encouraged to make disclosures to their superiors.’

Although more than half of respondents (53%) said they would primarily encourage employees to go to their direct boss if they saw wrongdoing within their company, one in four employees (25%) said they would go directly to a regulator, external organisation or the media. 

Adam Siegel, Freshfields’ US regional managing partner and co-head of the firm’s global investigations practice, said: ‘Robust whistleblowing policies bolster a company’s argument that it has implemented adequate procedures to guard against bribery. They also make it more likely that concerns will be raised internally rather than falling under the scrutiny of external regulators or damaging a company’s reputation.’ 

‘Furthermore, whistleblowing policies are required in various countries. In the US, for example, public companies must have procedures for employees to submit concerns about accounting or auditing matters without fear of suffering reprisal. In other countries where there is no legal requirement for whistleblowing policies regulators still expect companies to have appropriate policies in place,’ Adam added. 

Cathy James, chief executive of whistleblowing charity Public Concern at Work, also commented on the report: ‘As an organisation that seeks to support whistleblowers as well as encourage organisations to see that this is in their own best interests, the fact that whistleblowing is overlooked in so many businesses is a depressingly familiar story. Getting this right can make the difference between damage prevented or disaster averted. We need to challenge the perception that to speak up requires courage because of the risks, or is somehow futile. A good starting point would be to champion and celebrate those who question wrongdoing, risk and malpractice. While this requires some imagination and a bit of work, it is not expensive or difficult. Just having a policy is not enough though. If boards of organisations started to ask themselves whether their arrangements are working in practice and sanctioned those who treat whistleblowers badly, then we might see a shift in attitudes.’

ENDS

For more information contact: Alexa Highfield PR Manager,
E alexa.highfield@freshfields.com T +44 20 7785 2998

Notes for editors
* Freshfields Bruckhaus Deringer and Censuswide conducted a survey between September and October 2014 of 2,502 middle and senior managers within large organisations based in the US, UK, Hong Kong, Germany and France. The first half of the survey asked respondents to answer from their perspective as an employee. The second half of the survey asked senior-level employees to answer from their perspective as an employer.

The Freshfields team was led by: