Sir Howard Davies, the FSA's chairman, sees strong whistleblowing mechanisms as a deterrent to fraud. He wants firms to improve their own internal whistleblowing procedures. He said recently that the FSA "won't hesitate to consider making rules" about this "if the guidance we plan to issue in the new year does not lead to the higher standards we want to see."
Sadly, few firms are yet persuaded that such procedures are in their own best interests. In America at least, it is almost always thought cheaper to fire whistleblowers than to listen to them, despite years of legislation designed to achieve the opposite. "No matter how many protections whistleblower laws have created over the years," says Kris Kolesnik, director of the National Whistleblower Centre in Washington, DC, "the system always seems to defeat them."
There are a few companies, however, that realise there are benefits in encouraging whistleblowers: for example, Abbey National, a British bank. In 1993, Gary Brown was working in its marketing department when he noticed some fishy things going on. He reported them internally in May 1994, and the man suspected of wrongdoing was suspended. But the atmosphere in the department became so unpleasant that Mr Brown left the company to work elsewhere.
In June 1997, after an inordinately long delay and an eight-month trial, the thief was sent to prison for eight years for his part in stealing £2m ($3.3m). Mr Brown received a commendation from the judge, £25,000 from Abbey National and an invitation to rejoin the bank. Since his return in March 1998, he has been promoted three times. Abbey National now gives its employees regular advice on how to blow the whistle — including the suggestion that they contact Public Concern at Work, a charity manned by lawyers, should they not get satisfaction internally. That is a far more constructive approach than BP's.
Copyright © 2002 The Economist Newspaper and The Economist Group. All rights reserved.
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