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It is ten years since Britain passed a law giving protection to whistleblowers… employees who felt something was wrong in their workplace and told the bosses about it. However given the revelations of malpractice which have emerged with the current Banking Crisis the question may reasonably be asked “Where were the whistleblowers?”

The Public Interest Disclosure Act 1998 (PIDA) was brought into effect as part of the recommendations of the Nolan Committee on Standards in Public Life whose report is quoted in the introduction;

“All organisations face the risks of things going wrong or of unknowingly harbouring malpractice. Part of the duty of identifying such a situation and taking remedial action may lie with the regulatory or funding body. But the regulator is usually in the role of detective; determining responsibility after the crime has been discovered. Encouraging a culture of openness within an organisation will help: prevention is better than cure. Yet it is striking that in the few cases where things have gone badly wrong in local public spending bodies, it has frequently been the tip-off to the press or the local Member of Parliament – sometimes anonymous, sometimes not – which has prompted the regulators into action. Placing staff in a position where they feel driven to approach the media to ventilate concerns is unsatisfactory both for the staff member and the organisation.”

Committee on Standards in Public Life
Second Report, Cm 3270 -1 (May 1996) p. 21

To achieve such a balance which allowed for organisational openness, the Act sets out a framework for public interest Whistleblowing, which protects workers from reprisal because they have raised a concern about malpractice. Though the Act is part of employment legislation, its scope is wide and no qualifying periods or age limits restrict the application of its protection (s.7).

Only a disclosure that relates to one of the broad categories of malpractice can qualify for protection under the Act. These include (s.1, s.43B) concerns about actual or apprehended breaches of civil, criminal, regulatory or administrative law; miscarriages of justice; dangers to health, safety and the environment; and the cover-up of any such malpractice. Cast so widely, and with its emphasis on the prevention of the malpractice, and with the guarantee of full compensation, the Act requires the attention of every employer in the UK.

The new law shielded employees from victimisation, and it followed several highly publicised cases where fear apparently blocked the revelation of eventually fatal shortcomings in public or private organisations.

The background to the Act lies in the analysis by Public Concern at Work of a spate of scandals and disasters in the 1980s and early 1990s. Almost every public inquiry found that workers had been aware of the danger but had either been too scared to sound the alarm or had raised the matter in the wrong way or with the wrong person.

Examples of the former included:

• the Clapham Rail crash (where the Hidden Inquiry heard that an inspector had seen the loose wiring but had said nothing because he did not want ‘to rock the boat’),
• the Piper Alpha disaster (where the Cullen Inquiry concluded that “workers did not want to put their continued employment in jeopardy through raising a safety issue which might embarrass management”), and
• The collapse of BCCI (where the Bingham Inquiry found an autocratic environment where nobody dared to speak up).

Examples of where the concern was raised but not heeded included:

• the Zeebrugge Ferry tragedy (where the Sheen Inquiry found that staff had on five occasions raised concerns that ferries were sailing with their bow doors open),
• the collapse of Barings Bank (where the regulator found that a senior manager had failed to blow the whistle loudly or clearly), and
• the Arms to Iraq Inquiry (where the Scott Report found that an employee had written to the Foreign Secretary to tell him that munitions equipment was being unlawfully produced for Iraq).
• Similar messages have come out of the inquiries into the abuse of children in care (over 30 reports of concern were ignored about the serial sex abuser Frank Beck) and investigations into malpractice in the health service. Two recent examples from the NHS are the Kennedy Inquiry into the high mortality rate amongst babies undergoing heart surgery at the Bristol Royal Infirmary and Dame Janet Smith’s Inquiry into the serial killer Dr Harold Shipman.

Most organisations make curious assumptions about the shared goals of their workforce. Then new faces at the top are far away, the corporate change of strategy is a lurching change of direction, messages about new priorities are “cascaded” through the email system so that eventually they percolate through to the people at the bottom …otherwise known as the people who spend their daily life in contact with the customers, where things really matter.

Whistleblowing is one of the checks and balances organisations put in place to try to keep themselves honest. Whistleblowing hotlines are mandatory under the Sarbanes-Oxley accounting rules rushed in by the US authorities after the corporate scandals (such as Enron) at the beginning for the 2000s.

Whistleblowing can of course be effective; publicising a hotline is a constant reminder of the decency at the heart of a company which can be appealed to when things go wrong. But the need for a hotline sheds some light on the nature of organisations …the way that being “organised” detaches ordinary people from the normal responsibilities and decencies and turns them into corporate persons with loyalties mainly to their immediate superiors…the straight line relationships on the organisation chart. Organisations replace human good behaviour with corporate good behaviour, and it is not quite the same thing.

How can the world’s main banks have got engaged in such an orgy of destruction as we have seen in the past few years?

It must have been more than just stupidity.

The trend in organisations is to chip up the tasks into bits that prevent sensible questions being asked about their purpose: the banks and building societies used to find the money, arrange the mortgage and live with the loan until it was repaid, with oversight of the whole process. Then they thought they could streamline the process into component (and outsourced) parts: retailing loans, parcelling them up, selling them to investors, buying them in bulk. In this way they held the real world at bay, created a machine, and chopped up loan arranging into such tiny pieces that overall oversight was removed from the process, along with any grounding in the real world.

Banks created a machine that disabled the oversight and the responsibility mechanism that used to be at the heart of what they did.

And nobody blew the whistle on it.

Whistleblowing is a necessary part of running a modern organisation. But organisations have to be built so that when someone blows the whistle, they know how to respond.

Some Whistleblowing dos and don’ts


• Keep calm
• Think about the risks and outcomes before you act
• Remember you are a witness, not a complainant
• Look for advice


• Forget there may be an innocent or good explanation
• Become a private detective
• Use a Whistleblowing procedure to pursue a personal grievance
• Expect thanks

Original on Blogger;

David Caldwell

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