For a long time, whistleblowers all over the world have received inadequate protection, especially at the government level. Europe is planning to change that trend.
So, who is a whistleblower? A whistleblower is an individual who exposes any form of activity or information that is considered unethical or illegal within the confines of any organization.
Therefore, whistleblower protection is very important when it comes to revealing and preventing wrongdoing at major institutions. Panama Papers, Cambridge Analytica and Luxleaks are examples of scandals that were caused by a lack of transparency, and have subsequently been able to demonstrate how whistleblowers can play a significant role in uncovering activities that damage the public interest and welfare of citizens and society.
This is exactly how the European Commission explains the reasoning behind their proposal for the development of new standards to enhance whistleblowing activities as well as to protect whistleblowers.
Challenges and Opportunities for Whistleblower Protection
Misconduct is usually not exposed internally, but rather, is normally exposed in the public domain which tends to wreak havoc upon the organization that has been exposed. Therefore, whistleblowing can be challenged for the following reasons.
Internally, people are reluctant to speak up because of fear of retaliation. It’s common to find that whistleblowers are subjected to criticism. Even worse, they are sometimes terminated from employment without benefits, and often blacklisted as unemployable because most organizations fear whistleblowers.
Whistleblowers may have an instinct or insight that something is going wrong in the organization but may not have the access to information required to categorically expose the misconduct.
The culture of an organization also affects whether information can be exposed, meaning does the leadership encourage their people to speak up in case of being witness to illegal or unethical activity.
The challenges listed above are some of the reasons why it is essential to offer a safe space for employees and stakeholders towards exposing organizational wrongs.
Evidence Substantiating Organizational Whistleblowing
The European Commission published a report in 2017 whose purpose was to estimate the economic benefits of whistleblowing protection in public procurement. The report concluded that there is a strong economic case for whistleblower protection.
Out of all the countries studied, it emerged that organizations stood to benefit more from recovering misused funds rather than remain content with the costs of setting up and maintaining such systems in the area of public procurement alone.
In Ireland, for example, the potential benefit was valued at twice the cost involved in setting up and maintaining a public procurement system. In Romania, the benefit was a whopping 300 to 500 times the cost.
The Association of Certified Fraud Examiners reported in 2018 that organizations lose an average of about 5% of their annual revenue to fraud every year. As a solution, the Association of Certified Fraud Examiners listed a sound whistleblower system as the optimal solution to internal fraud. The same organization listed in their report that fraud losses were 50% lower in institutions that had a whistleblower hotline. However, recommendations and trends are towards online whistleblowing systems rather than the traditional telephone hotline.
Proposed Legislation for Whistleblower Protection
As the move for whistleblowing and protecting whistleblowers is steadily gaining traction in organizations all over the world, crafting legislation should be the core driver for change.
In 2018, the European Commission came up with proposed new EU-wide standards. These are aimed at improving and increasing whistleblower protection.
The proposal includes an obligation for all organizations to include safe channels through which whistleblowers can expose illegal and unethical wrongdoings internally.
Organizations with over 50 people or those with an annual turnover of over EUR 10 million will be obligated to set up an internal procedure to address whistleblower reports.
State and regional administration, as well as municipalities with over 10,000 inhabitants, will also be covered in the proposal.
The European Parliament Committee on Legal Affairs has a draft report on the proposal for whistleblower protection. The report states that provisions for anonymous exposing or revelation shall be in place. Additionally, anonymous disclosure or reporting shall not be prohibited. This is good news for whistleblowers.
Trustworthy Whistleblowing System and Its Role
For whistleblowing to work properly, it needs a trustworthy system. Therefore, organizations need to make sure that:
- The whistleblower has the option to be anonymous and the system is easy to use.
- Data or information in the system should be treated with the highest and utmost level of privacy. This is to protect personal data and sensitive information. Therefore, online systems must be GDPR compliant.
- There should be an external, autonomous case handling organization. This should be clearly defined as well as the process for the third-party’s involvement.
- The system and processes should all be in accordance and compliant with the law.
- The system should be well communicated and implemented.
The ultimate objective of a trustworthy system is to ensure that all the interests of a whistleblower are protected. This ranges from their privacy, tenure, integrity, and more importantly, their well-being. Such a system, coupled with the proposed legislation, is likely to become the kind of change that will be emulated in many countries all over the world.