Whistleblowers - Truth Defence

DAMAGE CONTROL: Blowing the whistle on the whistleblowing support industry

Whistleblowing

The act of disclosing wrongdoing – is fundamentally a public good. Without it, we would know much less about systemic corruption in the banking sector, massive off-shore tax evasion, expansive state surveillance regimes, the true human cost of wars, and abuses of power of all kinds and in all types of organisations and institutions. In an age when corporate and government business is increasingly conducted without any formal paper trail, the act of truth telling by insiders is more essential than ever in order to meaningfully hold the powerful to account.

But this fundamental democratic and public interest function of whistleblowing is under threat. Since 2010, both the US and UK governments have adopted increasingly reactionary and repressive measures in a bid to contain and deter whistleblowing, especially from within the military and security state. Both countries have been accused by UN officials of treatment amounting to torture.

Sadly it is not just the full force of the state or their employers that whistleblowers often have to contend with. This exclusive report lifts the lid on serious conflicts of interest within organisations that claim to support them, compounded by a troubling lack of transparency.

Though whistleblowers often face significant financial hardship as a result of their disclosures, including the loss of their livelihood and career, whistleblower ‘services’ have become a billion-dollar industry fuelled in particular by US legislation that has introduced various forms of ‘bounty’ for state-sanctioned whistleblowing.

There are broadly two sides to this coin. First, specialist commercial law firms have capitalised on the range of financial rewards that are on offer for particular types of whistleblowing in particular circumstances. In some cases, legal actions against employers can be effectively underwritten by the state. Second, and partly in response to this increased legal liability faced by employers, there’s been a huge growth in software companies that produce and license internal whistleblowing systems, aimed at least partly at preventing disclosures from being made public.

There is not necessarily anything intrinsically wrong with companies profiting from such services, and there is no question they have been effective in supporting the cause of some whistleblowers and some types of whistleblowing. But therein also lies the problem: there are serious concerns that this system effectively rewards and legitimates particular acts of whistleblowing whilst undermining others, including those that are arguably more fundamental to the public interest and democratic function of whistleblowing.

In the US, statutory protections for whistleblowers and provisions for compensation and reward heavily favour white collar whistleblowers, especially those within the financial sector. And they risk distorting incentives for whistleblowing in ways that could skew attention away from public interest disclosures. Commercial law firms are also more incentivised to take on the cases of relatively senior employees who blow the whistle compared to frontline or rank and file workers, as well as offer them relatively favourable fee structures. This is because commercial law firms take a cut of any awards for damages and these are usually pegged to the extent of the employee’s salary loss. By contrast frontline workers – who are often uniquely placed to witness some of the worst excesses and abuses of power – face a double financial jeopardy. Their potential financial risk of blowing the whistle is relatively high to begin with, but is effectively increased by a system that disproportionately benefits those with higher salaries.

Existing legislative frameworks – especially in the UK – are also heavily skewed in favour of those who blow the whistle internally and, to a lesser extent, those who report wrongdoing to a regulator or ombudsman. They offer relatively little protection for those who choose to make their disclosures public. This works effectively against the disclosure of systemic wrongdoing and limits protections and support for those who report ‘bad apples’: relatively isolated acts of ethical or criminal transgression.

Yet recent history is littered with examples of systemic corruption in sectors including the banking industry, the media and the arms trade. In such circumstances it would make little sense for an employee to blow the whistle internally if they believe that senior management and even regulators may be complicit in the very wrongdoing they are seeking to expose. Not only does the public have an inherent right to know about such systemic failings, but it is usually only when such failings come to public attention that there arises any prospect of meaningful accountability or reform.

Consequently neither the law – nor internal whistleblowing systems provided by commercial software firms – offer meaningful protections for whistleblowers arguably when they most need it: in publicly disclosing widespread corruption or cover up. They also offer no meaningful protections for whistleblowers from within the military and security state. The UK’s Public Interest Disclosure Act, for instance, excludes disclosures that fall foul of the Official Secrets Act, widely regarded as one of the most draconian state secrecy regimes in the democratic world.

These structural imbalances are compounded by the fact that commercial interests have become immersed in the academic community as well as the non-profit sector and entrenched in frontline efforts to lobby for legislative reforms that further their interests still. Perhaps as a result, there has been comparatively little critical attention in the scholarly literature to the problems of either bounty-hunting or internal whistleblowing systems, with notable exceptions. One recent experimental study, for instance, suggests that financial incentives risk not only undermining the moral imperative of whistleblowing, but can (paradoxically) have an inhibiting effect on whistleblowing in certain contexts.1 In regard to internal whistleblowing hotlines, these are said to amount to a practice of ‘speaking truth through power’ in ways that can serve to constrain and ultimately neuter the public good effects of whistleblowing.2

Our report focuses on one whistleblower support organisation in the UK that is at the centre of lobbying efforts for legislative reforms and which has relatively opaque links to US-based corporations that profit from whistleblowing. Since 2018, Whistleblowers UK (WBUK) has been the secretariat of the All Party Parliamentary Group on Whistleblowing but we have gathered evidence pointing to potentially endemic conflicts of interest and a troubling lack of transparency, especially in regard to the organisation’s funding.

This evidence raises serious questions about the efficacy and integrity of the wider whistleblowing support network and suggests an urgent need for reforms that ensure adequate protections and support for whistleblowers who are financially disadvantaged. Above all, our report highlights the need for a major policy rethink on how to protect those who seek to genuinely disclose information in the public interest, especially in relation to systemic failures and including those from within the military and security state.

1. Berger, L., Perreault, S., & Wainberg, J. (2017). Hijacking the moral imperative: How financial incentives can discourage whistleblower reporting. Auditing: A Journal of Practice & Theory, 36(3), 1-14.
2. du Plessis, E. M. (2020). Speaking truth through power: Conceptualizing internal whistleblowing hotlines with Foucault’s dispositive. Organization, 1350508420984019.