The view from across the pondProfessor David Lewis recently asserted that he would “welcome criminal charges against companies that victimised whistleblowers” and voiced his support for rewarding whistleblowers for exposing wrongdoing, stating that this could help dissipate the feelings of isolation and trepidation felt by those contemplating blowing the whistle. This would put the UK whistleblowing policy further in line with that of the US. The Dodd–Frank Wall Street Reform and Consumer Protection Act was passed into US law in 2010 and features an incentivised whistleblowing procedure. Following its inception, several high profile cases such as Sherry Hunt of Citibank caused a rush of blood to the head and scramble of keys to the vault for businesses keen to protect profits and reputation and a raft of critics too to the internet, and to congress. Whistleblowing in the US is increasingly viewed as an extension of the ambulance-chasing culture that had further tarnished the insurance industry and become part of a litigation-happy culture across the pond. Critics also fear that the SEC’s whistleblowing site that was launched in 2011 and provides a convenient mechanism with handy navigation for “submitting a tip” and “claiming an award”, further diminishes the altruistic possibilities of reporting genuine misconduct for the protection of others. Concerned parties worry the advent of such mechanisms will encourage whistleblowers to bypass internal reporting processes, as outlined in IMA Statement of Ethical Professional Practice. The SEC has, of course, conceded such a possibility and asserts that they will consider accepting a claim that has already been reported internally if the report is submitted within 120 days.
These observations are not meant to trivialise the process that such whistleblowers go through, and even a cursory glance into Ms. Hunt’s case shows that there were significant grounds for investigation, incrimination and compensation. In many cases whistleblowing requires a high degree of tenacity and stamina in what can be an enduring and challenging process. Under Dodd Frank the amount paid to the whistleblower is in direct correlation with the sanctions ultimately imposed by the Commissions (SEC and Commodities Futures Trading Commission), providing they exceed $1,000,000 (between 10 and 30%). Clearly this is not a route that any chancer with a petty grievance would go down for an extra buck. In addition, it should be noted that Dodd Frank affords the whistleblower considerably more protection than the SEC. They are protected from employer counteraction and are able to bypass the traditional administrative process with the Department of Labour and bring action directly with the Federal District Court.
The Serious Fraud Office (SFO) does not offer financial rewards to whistleblowers, although this is not to say the UK is fundamentally against incentivising reporting of wrongdoing; the Office of Fair Trading offers rewards of up to £100,000 for companies or individuals who report illegal activity that leads to prosecution or fines. An added bonus is the possibility of immunity from prosecution; something not offered by the SFO’s own whistleblowing procedure. The Ministry of Justice is in the process of developing deferred prosecution agreements which some commentators feel could see a rise in companies self-reporting to negotiate a more favourable settlement, and therefore an opportune time to review incentivised reporting. Aside from corporate misdemeanours there are a number of other situations where a more open, accepted and incentivised culture of whistleblowing would be helpful; consider issues of national security, benefit fraud (if memory serves there used to be a £50 prize for ‘beating a cheat’ back in the 90s…) and considering the recent healthcare scandals a reward process could certainly find a useful home at the NHS.
In a utopic ideal we would not only have a world devoid of incentivised whistleblowing but we would not have the crime that warrants hotlines in the first place. One of the most clear-cut ways of letting someone know that they are being rewarded, or have done the right thing, is to give them money. Assuming that a financial reward will colour the motivations of whistleblowers overseas, or perhaps in the future, on these shores, shows little understanding of the tribulations surrounding the process. The benefits from encouraging personal ethics in the workplace or society and considering rewarding those for taking a stand should be up for discussion. Consider the possible ramifications a whistleblower might be subjected to; loss of earnings, promotion delay, sanctions, harassment and other moral and material damage. Organisations that foster whistleblowing as an integral part of their corporate governance strategy help protect themselves against fraud, bribery, corruption, malpractice and much more. Not to mention the highly embarrassing and costly media and public exposure such disclosures can result in. And let’s not forget protecting those who have blown the whistle and put others security and wellbeing above their own; who have risked career, associations and safety.
Supposed financial motivations aside, what does motivate people to blow the whistle? Wanting to do the right thing, a desire to see accountability and justice, a sense of responsibility, protecting colleagues, protecting revenue of employer (and therefore one’s own job) are all valid, prevalent and positive reasons for whistleblowing. Some individuals may balk at disclosing wrongdoing in larger organisations as they perceive their ability to influence change as limited at best. But history has shown on plentiful occasions that these heroic people can become a David that beats Goliath, whilst the latter was too busy polishing his armour. Clearly bad pennies do turn up; those who are blinded by the possibilities of media attention or focussed solely on retaliation for, perhaps, dismissal or the perception of unfair treatment. But submitting to such scepticism is reductive and unhelpful to whistleblowing as a process and area of study.
The vast majority of us hope to live in a society of fairness and accountability, and ultimately perceive ourselves as moral agents promoting these values. This idea of the individual as the driving ethical force is referred to as ‘virtue ethics’. Academics such as Thomas Alured Faunce see virtue ethics as a more appropriate and progressive framework for whistleblowing; that disclosure is more a reflection of one’s own moral character and actions, rather than those of society at large or that we are just passive beings, blindly adhering to prescriptive rules. When it comes to negotiating ethical quandaries, looking to ourselves to honestly gauge how we would handle situations affords a more productive perspective than judging others on our assumptions of their motivations.
In 2010 The National Whistleblowers Centre (NWC) submitted a report to the SEC entitled “Impact of Qui Tam Laws on Internal Compliance.” The report was in response to concerns voiced by SEC commissioners and corporations regarding Dodd Frank’s potential impact on existing corporate compliance programs. The study analysed cases filed under the False Claims Act from January 1, 2007 to present and found that whistleblower rewards have “no impact whatsoever on the viability of internal corporate compliance programs or the willingness of employees to report suspected violations to their employers.” 87% of these filed cases initially reported their concerns internally, either to supervisors or compliance departments. Just 0.9% of employees who would eventually file a qui tam case worked in compliance and did not initially contact their supervision prior to contacting the government.
David Harris has been the Head of Business Conduct at BAE systems since 2009 and is a Chartered Member of the CIPD. Prior to BAE he worked at Lockheed Martin for 12 years in a variety of roles including, most recently, Director of Corporate Responsibility & Ethics, Ethics Officer and HR Operations Manager. David’s specialities include business ethics, ethics and business conduct, HR management, people management, coaching and mentoring and programme management.
How has the culture of ethical business changed in the last 25 years?
I’m not sure it’s been a culture change per say, more a need to clean up some ways of “accepted” business and make them “acceptable”. Stakeholder expectations have increased dramatically. The speed and detail that business-related information is now available would have been unthinkable a lot less than even 25 years ago. This increased information and knowledge has enabled us to challenge the way that people act and business is done. It’s no longer about what we do; it’s how we do it. Another change has been the clear demonstration of how irresponsible business can so negatively affect the lives of individuals, with no direct connection between the two.
What are the greatest challenges ethical businesses face?
For me it’s creating and sustaining the right culture and knowing that you have it. For all the effort and creativity we put into codes of conduct, policies, compliance training et al, everything hinges on our employees acting as we want and expect them to act, including how they deal with dilemmas. Another challenge is satisfying the need for and variance of relevant and engaging information that stakeholder groups seek. Providing the right types of evidence to support your statements and for that evidence to enable others to trust the same statements is wholly necessary, if a bit tricky!
If you could set one piece of global legislation to make businesses work more ethically what would it be?
I’m not sure that more legislation is what we need because we are talking about behaviours of people and organisations (collections of people). Legislation, like policies and processes, has its place, but what determines how a business works and how its people respond to situations is culture – ethical culture built in an ethical environment on ethical values and principles. Rather than more legislation, how about effective enforcement of that which we already have? Perhaps then we would see any gaps.
In terms of ethics, what are your greatest fears for the UK business community?
I’m not sure I have too many fears other than perhaps a creeping complacency from watching the financial and media sectors taking a beating. Complacency based on a [mistaken] belief that it “could never happen” to them. I think the UK Bribery Act forced the debate around, and understanding of business ethics and how it differs to compliance. In recent years I have seen a dramatic increase in the breadth of industry sectors and businesses I come into contact with at conferences and network-events, and the discussions are very different now. The openness amongst those working in this area is both refreshing and encouraging; it’s almost camaraderie and one I rarely felt outside of my own organisation when in HR or engineering. What also allays my fears is that, across the UK business community, this area of work is attracting very talented individuals with broad expertise, skills and knowledge, me not included of course! People who have the courage and conviction to drive the changes where they are needed in their organisations.
Geographically, what are the most predominant areas for risk at present? And what is the nature of those risks?
I don’t feel too qualified to comment in detail or to single out any region or country. But what I do think is that it doesn’t really matter where you are or intend going – robust and effective risk management through your planning as well as execution phases is critical. Having a long-range risk radar that prevents you making assumptions against limited pieces of information or intelligence is a great help. Being able to collate often disparate pieces of data to build a picture that then informs and promotes the discussions amongst and challenges from senior leaders. If you can do this then it doesn’t matter if it’s a new joint venture in the EU or a new plant in Asia, the risks will be identified, qualified, quantified and managed.
The response to the Bribery Act from the business world has been well documented; but from your own point of view, what have been the most significant contentions and concerns with adhering to the legislation?
We welcomed the Act all along because we saw the need for something that helped create a level playing field for certain business activities and transactions around the world. I think what gave most people concern was the idea of needing “adequate procedures” without being told what they should look like. For us we continue to devise better ways of measuring and monitoring various processes and procedures to increase our confidence of “adequacy”. I’m not a lawyer, but personally I get a sense that the idea of self-disclosure is something that many are at best unsure of, at worst completely distrusting.
What are the aspects you most enjoy/like about working in business ethics?
I absolutely love the fact that everything we do has to be the result of data and information gathering; some process of analysis and synthesis to understand what is actually going on; the design, development and deployment of improvement interventions and then monitoring those to see if they had the impact you set out for. Through networking and benchmarking I see lots of companies and talented individuals doing great things and many new ideas emerging all of the time. But no-one can tell us what we need to do for BAE Systems, or how to do it – though some do try! It’s for us to decide and explain and although we find ways to test things out there is little if any room for failure.
And least enjoy?
Ironic – but not having a book that now again I could turn to that says “here’s the solution to your problem”! Not that I would want this often, but I do get a bit put off by the amount of academic research, opinion and direction out there that is almost impossible to translate into the workplace.
What has been the toughest challenge of your career? Moving from a career in engineering into HR management was a massive eye-opener for me. Until then I thought I knew people as well as a bit about the business. I wasn’t even close! So much change for me personally, at a time that the company I worked for was changing significantly too, meant that the first year remains the most sustained period of intense pressure I have faced. Having said that it is probably the most enjoyable because I learnt so much about myself, and it wasn’t all good either!
What do you consider to be your greatest achievement?
I don’t do questions like this very well as there is very little I have achieved without the help and support of others. From the workplace the thing I am most proud of is helping some of those I have been lucky to manage realise their own potential. To see people grow in capability and confidence to move on to and be successful in roles way beyond their early ambition gives me real satisfaction. Maybe one or two of my early managers feel that about me? Or maybe not!
As Europe and the world becomes more integrated, working practices change fast and often affect more than one country at a time how to you keep abreast of what affects you and your company?
Sometimes the amount of information and the volume of opinion can be overwhelming to the point where it would be easy to switch it all off. But it is essential to keep abreast and so I rely on one or two good sources of “summarised” reporting (I can go to the detail if I wish) and networking. I find that regular contact with well-chosen groups and trusted, like-minded individuals help in sharing ideas and practice and keeping me sane (being in an ethics role can become lonely!). We may be dealing with things differently, but most of us are struggling with exactly the same source-problems and I find that sense check really valuable. One of the things I would recommend anyone does is develop some effective filters for things you pick up. If it sounds like waffle or narrow opinion, drop it and leave it dropped. If it sounds like a real nugget you may want to refer back to, put it somewhere you will easily find it. But don’t become a squirrel, like cupboards even IT systems have their capacity limits!
How do you encourage best ethical business practice internationally?
The “must do” and “must not do” items of policy are simple, but they cover just a small percentage of what our employees are likely to face. One of my favourite quotes is “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck”. Almost everyone has intuition for when something isn’t right – that is the time to seek advice. If it does not fit with our values and expectations then it isn’t right, for us at least. And of course, having access to a confidential helpline that they can trust will encourage them to seek advice in difficult circumstances.
See David’s LinkedIn profile.
View BAE’s Corporate Social Responsibility Pages.
Read our interview with Philippa Foster Back Back, Director of the Institute of Business Ethics.
David Lewis is Professor of Employment Law at Middlesex University and convenor of the International Whistleblowing Research Network. He has published articles on whistleblowing in both law and management journals in several countries and has contributed to and edited three books on this subject.
In this fascinating Q and A he discusses whistleblowing policy, the future of whistleblowing, domestic and international legislation and more.
What’s your opinion of the state of play of whistleblowing in the UK?
Whistleblowing procedures are now very common in the public sector but less so in the private sector. However, this may change rapidly as a result of the Bribery Act 2010 which provides a complete defence to the charge of failing to prevent bribery if an organisation can prove that it had “adequate procedures”.
Research conducted by Public Concern at Work shows that many people are unaware that there is some employment protection for whistleblowers so greater efforts are needed to publicise and explain the legislation. Despite the fact that the relevant statute has been in force since 1999, I suspect that many potential whistleblowers are still choosing to remain silent about serious wrongdoing. This cannot be in the public interest.
And overseas?
Other countries are increasingly introducing legislation. Some of this is modelled on the UK but quite a few statutes are more sophisticated. For example, the UK only aims to protect whistleblowers whereas elsewhere there are attempts to encourage disclosures and to ensure that concerns are properly investigated. A statutory obligation on employers to maintain whistleblowing procedures is becoming more common. Research in the US demonstrates that in practice rewards promote whistleblowing so some Governments have started to make provision for them.
Do you think whistleblowing works?
Although the process of whistleblowing is often seen as problematic, we should bear in mind that there is evidence from a large scale research project in Australia that whistleblowing can be successful. The main reasons people give for being unwilling to report wrongdoing are fear of retaliation and a belief that raising a concern will make no difference. If employers can create a positive culture by committing to a confidential reporting procedure which complies with good practice and can demonstrate that they value disclosures and will protect disclosers, there is no reason why internal whistleblowing should not work. Inevitably, things will go wrong occasionally so employers need to contemplate external disclosures. Again, if this is managed properly, for example by suggesting appropriate recipients of information, it should be possible to avoid destructive media or internet disclosures.
Do you think the legislation in place (Public Interest Disclosure Act) is robust enough to encourage and protect whistleblowers?
As previously mentioned, the legislation in this country only seeks to protect workers who choose to blow the whistle. It does not require employers to have a whistleblowing procedure and does not normally oblige workers to raise concerns. If we want to encourage disclosures about wrongdoing there needs to be more emphasis on the message rather than the messenger. At present the “good faith” requirement may deter some important disclosures because potential whistleblowers may be uncertain about whether or not they will be protected. The legislation also contains other expressions that are undefined and problematic, for example, “substantial truth” and “exceptionally serious failures”.
What advice do you have for organisations that have adopted a whistleblowing policy?
In my opinion top management needs to demonstrate a commitment to a culture of openness and should ensure that their organisation has a procedure that complies with good practice as set out in the 2008 BSI Code. For example, it should indicate what concerns should be raised, how and with whom; it should guarantee confidentiality as far as possible and give undertakings about retaliation; it should provide for investigations where appropriate and for a discloser to receive feedback about the outcome. Procedures should be introduced after consultation with union or other worker representatives, be well publicised and regularly reviewed.
What problems are caused by the portrayal of whistleblowers in the media?
We need to bear in mind that successful whistleblowing is rarely newsworthy, except perhaps when an individual receives a large reward. A particular problem so far as I am concerned is that the media have failed to convey the fact that some external whistleblowing is protected by UK legislation whereas it is highly unlikely that internet disclosures will be covered.
What changes do you see happening in the next 12-18 months?
As a result of the changes in the unfair dismissal provisions, many commentators are expecting that more whistleblowing claims will be brought. Apart from discrimination complaints, workers who lack two years’ service will have no other mechanism of having their dismissal case heard. Because it is an issue of enlightened self interest, I anticipate that more employers will introduce whistleblowing procedures and ‘hotlines’ and will publicise their arrangements on websites.
If you would like to find out more about how confidential whistleblowing hotlines can help your business please contact scott.bridgen@expolink.co.uk
As part of our commitment to promoting good corporate governance and ethics across the global business world, we are delighted to be sponsoring the Institute of Business Ethics Masterclass on Building a Speak up Culture, facilitated by Lori Tansey-Martens of the International Business Ethics Institute, Washington DC. Our Hotline Manager, Scott Bridgen, will be attending to contribute to the discussion on how whistleblowing hotlines can play a vital role in every business’s corporate governance strategy.
The course takes place on Friday 18th May 2012 in London. For more information on the IBE website click here or contact either events@ibe.org.uk or scott.bridgen@expolink.co.uk.
The awards season is nearly upon us and with it the thrill and promise of those deserving, or otherwise, being recognised for outstanding contributions and $600k dresses. Never to be ones to miss out on a good party, we at Expolink have compiled our own whistleblowing awards.
While by no means an exhaustible list we have gone some way to honouring (and dishonouring) some of the folks who make the world of whistleblowing a more interesting place.
At 15, Enron was just a teenager when, as US’s seventh largest company, it employed 21,000 staff in 40 countries. This success, it transpired, was based on a premise of false accounting and fraud. Sherron Watkins, VP of Corporate Development at Enron was the first on the scene, alerting CEO Kenneth Lay to other whistleblowers and the seismic holes in the company reports. Critics say that Watkins’ actions don’t necessarily constitute whistleblowing as she simply gave her boss a nifty escape route from the impending meltdown – either way, she went on to become one of Times People of the Year, 2002, alongside two other whistleblowers Cynthia Cooper of WorldCom and Coleen Rowley of the FBI.
Among Enron’s dubious accolades of largest audit failure and bankruptcy re-organisation in US history at that time, the play by Lucy Prebble, based on the scandal won a plethora of international awards – so, worked out well for some.
Manning was arrested in May 2010 and charged two months later for supplying an estimated 250,000 diplomatic cables to Wikileaks which were duly republished by several left-leaning papers and on the Wikileaks website. An acquaintance, Adrian Lano, subsequently blew the whistle on Manning, proving that one good turn deserves another. It is unclear whether Manning had any kind of personal relationship with Wikileaks high priest Julian Assange, but his organisation has been vocal in support of Manning’s actions saying he has “single-handedly changed hundreds of thousands of people’s lives for the better.” Conversely, the White House branded his actions as “terrorism”. Assange for his part is embroiled in a legal battle of his own for alleged sexual assault -
Manning’s trial continues…
It seems a little unfair to award one of these prized trinkets to an established actor, but back in July 2011 we were thrilled to discover that Grant had enjoyed a chance encounter with News of the World reporter Paul McMullan and secretly taped admissions of wide-spread phone hacking at the paper. Grant went on to charm all at the Levenson Enquiry and despite being branded as a “screechy, sanctimonious little (bleep)” by the not-at-all screechy Piers Morgan, seems to be enjoying some nice, credible PR and perhaps a little more peace from the press.
Jeffrey Wigand’s whistleblowing endeavours were immortalised in the Russell Crowe vehicle, The Insider. Whilst working at a large tobacco manufacturer Wigand discovered his bosses were manipulating their product blend to increase its addictive capacity. Wigand told all on the US TV show, 60 Minutes, and his employers responded with a law suit to prevent him testifying in open court. The company and others of its ilk were left fuming (ahem) when various states began their own litigations to recoup losses to public health initiatives caused by tobacco-related illness.
See also: Linda Tripp of Clinton/Lewinsky fame. More of a sticky beak than a whistleblower, but makes this list for inciting a hugely divisive argument regarding her motivations for revealing details about the affair. The movie deal it is claimed she was anticipating for her part in the scandal is yet to materialise…
Mark Felt, the whistleblower and former FBI agent was the infamous informant of Washington Post journalists Carl Bernstein and Bob Woodward, whom together brought down the Nixon administration. Bernstein and Woodward published a series of articles on the Watergate scandal revealing corrupt activity in the Nixon stable, later a book and inevitably a film, All The President’s Men. Felt’s disclosures lead to Nixon’s resignation and jail sentences for a number of senior White House employees. Felt went by the codename ‘Deep Throat’ and enjoyed anonymity until 2005 when he confessed all in an interview with Vanity Fair, 31 years after Nixon’s resignation.
It is not always the high profile cases that have, or should have, the most enduring legacy. ‘Though Leslie Chapman was well known throughout Britain in the ‘70s, regrettably he is little remembered to this day. As a government employee he took the exceptional step of breaking Civil Service convention, if not the Official Secrets Act, and speaking out through a series of books about waste and extravagance in the British Civil Service. He then broadened his area of concern to local government and nationalised industry and, despite undoubtedly, putting a few noses out of joint along the way, he was deliberately placed on the board of London Transport as a result of his first book of revelation, tasked with rooting out abuses there. The recent raft of MP expenses scandals shows that such activities are still rife, making it all the more unfortunate that Chapman’s legacy is not secured in our national and political psyche and that decent governance systems have not always prevailed.
How has the culture of ethical business changed in the last 25 years?
I am not sure it has actually changed. Companies have simply recognised the need to be more explicit about doing business ethically.
Major developments have been that companies now, in the main, provide guidance to staff about expected behaviours, ways of handling certain situations and so forth, usually in the form of a code of ethics/business practice. This has happened because the ‘job for life’ syndrome where one would learn alongside another employee about how the company worked no longer is the case. People switch careers or companies more frequently and have more diverse backgrounds than 25 years ago, so they need to understand more quickly how the company operates.
What has been the toughest challenge of your career?
The toughest challenge has been to do the right thing even if it meant I went out on a limb! It is rewarding though when doing so is recognised subsequently as having been the right thing to do.
What do you consider your career high points and/or your greatest achievements?
Finding myself at the Institute of Business Ethics which combines my interest in business, seeing it run successfully with education and encouraging people to share best practice – all within a charitable not-for-profit organisation.
If you could set one piece of global legislation to make businesses work more ethically what would it be?
I think if companies had to state in their memorandum and articles of association when they set themselves up how they are going to conduct their business (not just what the company is going to do), a benchmark would be set to measure that company’s performance.
What are the main factors that attract people to working with the IBE?
We are a small, friendly team who work closely with our subscriber base and others who share an interest and passion for the subject. Every day is different so there is no time to get stale!
In terms of ethics, what are your greatest fears for the UK business community?
I fear that cynics will never acknowledge the good that business does and the way, in the majority of cases, that businesses behave. Businesses and companies are human societies in themselves, with well and poorer behaved individuals making up the whole. Sadly, there are some rotten apples but to judge all by the few is unfair.
And your greatest hopes?
My hope is to prove the cynics wrong through businesses providing goods and services and conducting themselves in an open and fair manner that earns the respect and trust of the wider community.
How has the IBE utilised new technologies to progress its work and message?
We have Twitter and Facebook pages and regularly update and review our website; always looking for new ways to improve communication with our subscribers and others interested in the subject. During 2012 we will be introducing webinar events to reach out to those unable to attend our events in person.
The response to the Bribery Act from the business world has been well documented; but from your own point of view, what have been the most significant contentions and concerns with adhering to the legislation?
The legislation, for the most part, is common sense if you wish to stamp out bribery and corruption, which the business world needs to do as it is so corrosive. The most difficult element is how to say ‘no’ to a facilitation payment when you are at the front line and a lot hinges on whether you pay or not. This can be made worse if the payment made actually equates to the official’s salary as the local government knows they can get away with such practice.
Do you think the communications regarding the Bribery Act from the MoJ et al have been adequate?
In general, yes, though clearer practical guidance regarding facilitation payments would have been helpful. The SFO has now issued further guidance on this.
What do you see as the IBE’s main responsibilities when it comes to the Bribery Act?
Ensuring that experiences and practical solutions that companies have, relating to the Act, are shared for the benefit of all.
IBE has always fostered strong academic partnerships – how do you hope this will evolve in the future?
We will continue our annual student essay award, which for the last three years has had an Olympics theme of Ethics, Business and Sport, co-sponsored by the Pierre de Coubertin Committee.
We are also doing research into the Teaching of Business Ethics, an initiative co-led with the Institute of Global Ethics, to encourage the standard setters to include a larger element of teaching business ethics in their criteria for evaluation.
Thirdly, we are encouraging higher education institutions to establish codes of ethics, following up from a publication we did with the Council for Industry and Higher Education a while back. This was picked up on again by Lord Woolf in his recent report on the LSE where he concluded that such institutions should have a code of ethics.
For further info about the IBE visit www.ibe.org.uk
View our interview with David Harris, Head of Business Conduct at BAE Systems.
Expolink is delighted to announce the appointment of Val Lodge as the new Business Development Executive for our Whistleblowing Hotline. Val comes to Expolink with a wealth of experience in a variety of business sectors including real estate, further education and luxury consumer goods. Val’s experience affords our clients with top level support services and her understanding of disparate business markets makes her well placed to explore new prospective business opportunities, and help maintain Expolink’s standing as Europe’s Whistleblowing Hotline market leader.
In the next in our series on international whistleblowing and corruption we focus on the fascinating Republic of Cuba. From Batista through the revolutions of Raúl and Fidel Castro to more recent crackdowns on white collar or guaybera crime, Cuba has been, and will undoubtedly remain, a compelling study in politics and political change.
I have a mixed view of reality television; namely that I would like to see many of the phenomenon’s producers, commissioners and ‘stars’ placed into an industrial mixer. But one series did catch my eye recently and that was Channel 4’s Undercover Boss. For those not familiar with the premise, a CEO or person of similar standing within a high street brand goes ‘back to the floor’ to discover why their business is failing. They don’t get the nous of the fiery-headed Mary Portas or the like, but they do tend to come away with a raft of extremely useful insights and recommendations on how they can improve operations, thanks to their ground floor staff who face the brunt of these issues every day.Decentralised organisations are hardly rarities in today’s global business culture where the span of control is as wide as the country areas covered, but fundamental to the success of any business is that strategy and communication are maintained throughout. Decentralised organisations enjoy the input of multiple stakeholders and are often subject to the conditions of many different international laws. Each department will have requisites relating to its own operations and, with Expolink’s Hotline service, it is important that each is consulted from a very early stage. With multiple stakeholders involved, you must ensure all parties are engaged and understand the importance of their contribution to the success of the Hotline.
Of the many advantages of maintaining a decentralised business one of the greatest is the scope for collaboration and input across the board. The challenge is to ensure that by having so many contributing agencies your message and strategy does not get diluted as the information percolates throughout.
As your trusted whistleblowing service provider we would like to offer some advice when considering how best to manage the service in a decentralised organisation.
In the next in our Q&A series we get the benefit of Fraser McLaren’s considerable expertise on risk management in the global market place, compliance, the ubiquitous Bribery Act and more. Fraser McLaren is Head of Business Risk at Centrica.
Tell us more about the challenges a global organisation with suppliers all over the world face in terms of risk management.
Centrica has an increasing portfolio of supply and service arrangements in offshore country locations such as India, South Africa, Poland and Portugal. Offshoring carries a number of risks including exposure to political risk, natural disasters or breakdown of critical infrastructure. The impacts of these risks can be varied, but could include supply shortages, price increases or damage to the company’s brand and reputation. We manage risk at all stages of the supply chain from checking whether potential suppliers meet our corporate responsibility criteria, ensuring adequate contingency arrangements are in place during the contractual phase and monitoring them through news feeds, country alerts and other third-party and supplier intelligence.
We regularly review country risk and have contingency plans in place to ensure that, at a potential time of chaos, we’re able to protect people and, financial and physical assets in the supply chain. We also take a very proactive approach to supplier risk, particularly in light of global economic conditions, including regular financial health-checks of our key outsourcing partners. We’re also recognised as thought leaders in the development of outsourcing/offshoring best practice by the National Outsourcing Association and have picked up three awards in the last three years. The latest award came at the European Outsourcing Summit, where we were presented with the ‘BPO Contract of the Year Award’ for our partnership with our outsourcing partners EXL.
What compelled you to employ a confidential, independent Whistleblowing Hotline, and in particular, Expolink’s?
Centrica is committed to operating professionally, fairly and with integrity wherever we work in the world and we have a set of business principles which set out the behaviour and standards we expect from all employees. If employees do have any concerns about any possible improper, unethical or illegal practice within the organisation, we want to know about it as soon as possible. While we encourage staff to raise any concerns in the first instance with their line manager, we recognise this might not always be possible and that’s where Expolink comes in. We officially launched the service back in 2007; since then I’ve worked with the Expolink team as we’ve changed the way we transfer data between the two parties and also developed a number of new and innovative ways of keeping the service visible.
Where does the Hotline fit in with your compliance strategy and what benefits have you noted?
Compliance is just one strand of our overall business principles that set out the standards we expect and which all employees must work to at Centrica. We actively encourage staff to share their opinions, ideas and concerns, be it through team meetings, briefing sessions, at events or even through suggestion schemes. Overall, I think that staff do feel they can do so openly and our internal employee engagement scores and high entries in externally Best Place to Work competitions suggest we’re getting things right. The hotline is another method open to employees to raise any concerns they might not feel comfortable raising through another channel. The outcomes of the investigations into any allegations raised via the hotline have also led to a number of business changes including improvements to security measures and a review of some sales and expenses processes.
How do you communicate/market the Hotline service throughout Centrica?
In line with best practice outlined in the Whistleblowing Code of Practice, we regularly promote awareness of the hotline. Examples are displaying posters, articles on our internal intranet, reminders on plasma display screens throughout our calls centres, making sure the hotline is covered in our employee induction material, printing the hotline number on name badges and carrying out periodic surveys to test people’s awareness of and confidence in the hotline arrangements and then publishing those results. We also took the opportunity to raise awareness of the line and promote the value through our anti-bribery communications programme.
As a global organisation what impact do you think the Bribery Act could have on Centrica?
If anything, the arrival of the Bribery Act has underlined the importance of the hotline. The first of Centrica’s business principles deals with ‘integrity in corporate conduct’ which commits us to implementing anti-corruption policies and procedures. Our second business principle ‘ensuring openness and transparency’ commits us never to engage in bribery, any form of unethical inducement or payment including facilitation payments and ‘kickbacks’. We expect employees to report actual, potential or suspected corruption in Centrica or by any individual or organisation Centrica does business with.
Section 7 of the new Bribery Act which introduces the offence of failing to prevent bribery has implications for all commercial organisations. Although as an organisation we always endeavour to operate ethically, the new legislation resulted in a significant piece of work taking place in developing adequate procedures. Centred on the 6 principles outlined in the UK Government guidelines this included embarking on a detailed risk assessment programme across the business, updating group policies, introducing even more stringent due diligence processes, especially concerning supply chain and mergers and acquisitions, and reaffirming our measured approach to gifts and hospitality. An eLearning training package was also developed and successfully delivered.
What are the key tools for identifying business risk in the energy sector?
There isn’t one key tool for risk identification, and these identification methods aren’t unique to the energy sector; there are a number of different methods of identifying risk. These might include workshops, brainstorming exercises, interviews with key stakeholders, the use of checklists or benchmarking with other organisations. More recently, and perhaps linked to the pace of change in the external environment, for example events in Japan and North Africa and well-publicised cyber attacks, we’re tasked with bringing more of an external challenge to our risk profile. This can be done in a number of ways, for example reading news articles or attending industry benchmarking or discussion groups.
As Europe becomes more integrated, working practices change fast and often affect more than one country at a time. How do you keep abreast of what affects you and your company?
It’s important that Centrica gives proper consideration to the risks inherent in sourcing services from a variety of locations around the globe, not just in Europe. We try to ensure processes are in place to monitor potential threats to the delivery of products or services to our customers. This includes monitoring elections, changes in executive and legislative power, labour union activities, internal politics and regulatory stances, as well as international relations. We also have a cross-group committee that meets regularly to discuss emerging risks and to develop a consistent approach to managing supplier risk in the company. The increasing focus on our corporate responsibility obligations and commitment are also drivers for building a cohesive approach.
What is the split between energy regulatory compliance risk management and generic operational risk? And has this changed over the years?
Centrica and the energy sector in general, are subject to significant levels of regulatory oversight covering issues such as retail competitiveness and energy market reform. The picture can be even more confusing in North America where legislation or regulation can vary by state and province. To help mitigate these risks, we develop internal policy, and externally, engage with government, regulators, parliament and media to help build knowledge and understanding among our key stakeholders. Compliance risks are picked up as part of our wider operational risk process, but they also receive additional scrutiny from the general counsels of each of our main business units.
If you could give one bit of advice to a counterpart in risk, what would it be?
Keep the process simple. The real value of risk management comes not from the process itself or any complicated assessment methodology, but from the conversations that take place to review these risks.
