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Whistleblowing and self-reporting

Whistleblowing

Are whistleblowers protected in your jurisdiction?

Yes, Section 47B of the Employment Rights Act 1996 protects workers from suffering detriment or being dismissed as a result of making a “protected disclosure”. Any disclosure of information which reveals, in the reasonable belief of the worker making the disclosure, that a crime or breach of some other legal obligation – which an infraction of the Bribery Act 2010 could easily constitute – has been committed, is being committed or is likely to be committed constitutes a protected disclosure if the worker reasonably believes that the disclosure is in the public interest (Section 43B of the Employment Rights Act). The individual must demonstrate that in making the disclosure, he or she had a reasonable belief as to the crime or other breach in question. Those who have suffered detriment as a result of making a ‘protected disclosure’ can bring a claim in the Employment Tribunal for unlimited compensation, including an award for injury to feelings.

For institutions regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA), whistleblowing obligations are more onerous. They must have a whistleblowing champion, who is responsible for overseeing internal whistleblowing policies and procedures, and for reporting to the board annually on their efficacy. The FCA and PRA have established the concept of ‘reportable concerns’ (defined in the FCA Handbook), which will trigger firms’ whistleblowing arrangements for matters that may not be protected disclosures under the Employment Rights Act. The two types of reportable concern are:

  • a concern held by any person in relation to a breach of the firm’s policies and procedures; and
  • behaviour that harms or is likely to harm the reputation or financial wellbeing of the firm.

There is no specific incentive regime for whistleblowers (unlike in the United States) and it is unlikely that the United Kingdom will adopt one in the near future.

Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

The benefits of proactively bringing matters to the attention of enforcement authorities are potentially significant. There is no guarantee that notifying issues to enforcement authorities will lead to a lenient approach; however, the early disclosure of potential wrongdoing maximises the chances of a favourable outcome (eg, by obtaining a deferred prosecution agreement (DPA) and securing discounts on any fines payable).

One factor when determining whether a DPA is appropriate is whether a company self-reported previously unknown offending (see the DPA Code of Practice).

When Sir Brian Leveson approved the first DPA between Standard Bank and the Serious Fraud Office (SFO), one of the key factors when considering whether to enter into a DPA was the short timeframe between the discovery of relevant conduct and it being reported to the SFO.

Although Rolls Royce did not self-report, it remained eligible for a DPA due to its ”extraordinary cooperation” with the authorities once it was contacted by the SFO. Rolls Royce reported on issues that the SFO was aware of, but also provided information on wrongdoing of which the SFO was unaware. The SFO confirmed that this level of disclosure meant that the lack of a self-report was not fatal to the DPA. Rolls Royce also:

  • provided access to over 30 million documents and to witness statements and witnesses;
  • provided witness interviews on a limited waiver basis;
  • agreed to the interviews being audio recorded when asked by the SFO; and
  • allowed the SFO to interview witnesses before they were interviewed by the company.

Leveson acknowledged that a self-report is usually “highly relevant” in considering whether a DPA is an appropriate resolution. He was also satisfied that the internal changes made by Rolls Royce demonstrated a genuine intention to change the culture and ensure that historical problematic practices no longer took place. The company paid the UK authorities a £497 million penalty, including £240 million in fines and £257 million in disgorgement of profits earned through the alleged corruption. It avoided paying an extra £238 million in fines due to its cooperation.

Since the Rolls Royce judgment, the SFO has stressed that self-reporting remains a significant step to qualifying for a DPA. SFO Director David Green has explained that if a company reports misconduct, the “odds are” that it will be offered a DPA; however, if it does not, it will be prosecuted. He has also expressed the hope that his successor will convey a similar message.

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