Steve Young, Banque Lombard Odier & Co Ltd
This is an extract from the third edition of GIR's The Practitioner’s Guide to Global Investigations. The whole publication is available here.
21.1 Initial considerations
Most whistleblowing policies provide several channels for staff to raise concerns. These often include the staff member’s line manager (or a more senior manager), human resources, audit, legal, compliance or dedicated ethics, or integrity, departments.
The desired culture of any corporate must be that staff feel entirely comfortable raising concerns with their immediate line manager, who in turn will escalate the issue to the appropriate department. Should whistleblowers prefer not to go to their line manager, they should feel able to approach someone in the organisation they trust. The culture corporates should aspire to must be one where employees may raise concerns with the full confidence they will be treated with respect, will be taken seriously and will suffer no retaliation in any form.
From an in-house perspective, it is always an initial concern that an employee has not had sufficient confidence in the organisation to raise the concern via internal personnel in the normal course of business. Resorting to the whistleblowing channels sends a message itself, and more so if the employee has chosen to remain anonymous. Monitoring and analysing whistleblowing cases can provide a measure of the organisation’s culture and confidence levels for raising concerns. While much depends on the nature of the concern, the tone from the top and creating a culture that speaking up is the right thing to do are imperative. Many organisations now include questions in employee opinion surveys to try to gauge the level of confidence staff have in raising their concerns. Some other initial considerations are pointed out below.
Culture: Creating a culture in which staff have confidence to raise concerns internally is becoming increasingly important as some regulatory authorities now mandate regulated firms to include regulatory whistleblowing hotline numbers and email addresses in corporate whistleblowing policies, for example at UK branches of overseas banks. Additionally, proposals to extend the scope of whistleblower awards, for example the US Securities and Exchange Commission’s proposal to allow awards based on deferred prosecution agreements and non-prosecution agreements entered into by the US Department of Justice, if adopted, raises the possibility of direct reporting to regulators bypassing internal reporting channels.
Anonymity: Anonymous whistleblowers can deny the investigator the opportunity to open a constructive dialogue to seek further information, put matters into context and limit feedback. A key challenge for the investigator is why the whistleblower wished to remain anonymous. It can be helpful to simply ask the question if there is a communication channel, such as webmail, open with the whistleblower.
The nature of the allegation and motive for reporting: While investigators should always keep an open mind, the motive of the whistleblower often becomes apparent as the facts are established. If a dialogue with the whistleblower exists, they can be asked their motive for reporting.
Duration: How long the alleged conduct has been taking place is material. Aged issues can present problems such as records retention periods. In addition, because of staff turnover, accessibility to ex-employees can be a problem.
Existing knowledge from another source: Investigators should check corporate records, such as audit, risk, legal and compliance, to check if the alleged activity is known and was previously or is currently the subject of investigation.
Need for external counsel: Investigators should lean towards caution during the initial review of a whistleblower allegation and take legal advice at an early stage. Assessment of the legal risks by an internal or external lawyer will prevent problems arising later if the investigation uncovers serious wrongdoing.
The welfare of the whistleblower and duty of care: Investigators should keep in mind the welfare of the whistleblower. For most it will not have been an easy decision to speak up. Stay mindful of health and performance impacts – and the legal risk of these to the organisation.
Protecting the whistleblower from retaliation: In the event that a whistleblower is identified, immediate steps may need to be considered to prevent retaliation. These could include moving the whistleblower to another part of the organisation, or transferring to an alternative line manager. Much depends on the nature of the case.
21.2 Identifying legitimate whistleblower claims
Given the wide range of concerns raised by whistleblowers, distinguishing between legitimate and non-legitimate allegations should be dictated by the facts gathered during the the investigation. In some cases, a prompt review of the matters alleged by a subject-matter expert can quickly point to whether something is ‘off-target’ or requires further investigation. During the normal course of document examination, email reviews, staff interviews and data analysis generally the allegations can be substantiated or disproved. While some allegations will always be inconclusive, more frequently in human resources cases, generally a determination can be reached on the facts. Whistleblowing cases that contain multiple allegations require a detailed breakdown of each allegation as some parts may prove substantive while others will be off-target. Whistleblowing allegations are never suited to a one-size-fits-all approach and much depends on the nature of each case.
On receipt of a whistleblowing allegation, first steps should include checks to ascertain if the matters raised are known or the subject of an ongoing or previous investigation.
Generally, allegations can be split into three categories:
- Material allegations that expose the corporate to regulatory action, civil claims or criminal investigation. These require experienced legal advice and depending on the jurisdiction investigation by external counsel to preserve privilege and advise the corporate accordingly.
- Allegations of wrongdoing, including internal fraud and breaches of the code of conduct or policies and procedures. These generally can be investigated by internal corporate investigators, or external forensic firms with internal or external legal advice and oversight if required.
- Behavioural allegations such as bullying, harassment, inappropriate relationships, etc., which can generally be investigated by human resources or independent line management.
21.3 Employee approaches to whistleblowers
A key component of any corporate whistleblowing policy must include a zero-tolerance approach to any retaliation against a whistleblower. Retaliation or perceived retaliation against a whistleblower raises cultural and legal risk, and undermines the effectiveness of a whistleblowing programme. Frequently during whistleblowing investigations, especially ones involving allegations of wrongdoing by senior management, interviewees speculate as to who the whistleblower might be. Ideally, in the absence of a legal obligation to do so (e.g., in litigation or in some jurisdictions) it is preferable that there is no such disclosure.
Speculation among staff should be discouraged, as it can increase the risk of retaliation.
Retaliation against whistleblowers can take many forms; examples include silence, isolation, inappropriate remarks, threats and work sabotage. In the event that a staff member or number of staff members are acting inappropriately towards a whistleblower, action will need to be taken.
Good investigation process separates the collection of facts and evidence gathering from decision-making to determine outcomes. This is particularly important when an investigator is putting forward information concerning retaliation against a whistleblower. As a general rule the investigator should not be involved in the sanctions or enforcement actions against retaliators – it is a separate legal and HR issue.
If the whistleblower’s identity is known, dialogue should take place about the treatment the whistleblower is receiving and whether he or she has disclosed to anyone that they have raised the matter. Special care is required if the retaliation is by a line manager. The whistleblower should be given an opportunity to express his or her expectations and view as to what could be done. Investigators should be mindful that the organisation will generally have a duty of care and the whistleblower could take action against the organisation in the future.
Frequently whistleblowers experiencing retaliation or those believing they are being treated differently suffer health problems, such as stress leading to time off work. In these circumstances, referrals via human resources to confidential staff welfare support schemes should be considered. In determining the action to be taken against staff involved in retaliation against a whistleblower, the investigator should consult with human resources, legal, compliance and business management functions for the next steps, which could include disciplinary action up to and including dismissal.
Appropriate action taken against those who retaliate against whistleblowers can send a strong message to reinforce the culture of the organisation.
21.4 Distinctive aspects of investigations involving whistleblowers
Corporates with in-house investigation departments generally have investigation procedures in place that also apply to whistleblowing cases. The substantive difference is how the matter was raised. Investigators should proceed with the protection of the whistleblower as a top priority. Thought should be given to lines of enquiry or staff interviews that could identify the whistleblower. The general rule to note is that it is the matter under investigation that is the issue, not how the matter came to the organisation’s attention.
Investigators should check if local law requires disclosure that the matter was raised as the result of a whistleblower. It is generally not a requirement in law to disclose to those facing allegations that the matter under investigation was raised by a whistleblower.
A good example of an exception is France, where it is generally required that accused persons be informed of whistleblowing allegations made against them so they may respond to them. They also have protection against malicious allegations. In this respect investigators should be mindful that, in the rare cases of malicious allegations, the alleged party, or the employer, may consider legal action against an identifiable whistleblower.
Equally, as with many investigations, consideration must be given to the collection and recording of personal data. Legal advice should be taken on data protection obligations, as again, in some jurisdictions such as France, an accused person may be informed of the accusation and have a right of challenge when his or her personal data is recorded during a whistleblowing investigation.
With the protection of the whistleblower and disclosure obligations at the top of the investigator’s priority list, it is important the internal investigation proceeds as with any other investigation to establish the facts. Establishing a dialogue with the whistleblower, if possible, allows for further information, context and feedback to take place. It can be that allegations are raised in good faith but are off-target owing to facts unknown to the whistleblower.
In the event the allegation, or allegations, are substantiated and lead to regulatory enforcement action, litigation by way of civil claims or criminal investigation, or all three, it may be that the identity of the whistleblower, if known, must be disclosed. Investigators should be mindful not to give whistleblowers definitive commitments of non-disclosure, even if authorities have whistleblower protections in place. In serious cases, this aspect requires early legal advice when the allegation is first received and assessed, as the legal risks will require consideration.
Everyone involved in the whistleblowing investigation and management process should remain aware that whistleblowers are free to speak to whomever they wish and this can include law enforcement, external regulators and taking their own external legal advice.
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