Why British whistleblowers need a safety net to protect them from blacklisting
Whistleblowing can take you to a desolate place. The reward for speaking out against unethical behaviour is often isolation and financial ruin. And yet, the still, small voice of an uneasy conscience convinces many people that speaking up is still the right thing to do.
In an ideal world, anybody who sees wrongdoing should be able to report it without fear of recriminations. In reality, taking a stand can destroy your career. The threat of being placed on a blacklist or denied a reference is often enough to enforce silence.
Professor Kate Kenny, of the National University of Ireland Galway, who has conducted a study on whistleblowers, says: “As long as we as a society play along and turn a blind eye to the whistleblower’s plight, the organisations, who are in reality the true transgressors, will continue to have their way.”
Ms Kenny was the co-investigator on a report compiled by Professor Marianna Fotaki, of Warwick Business School, which looked at the fate of 25 whistleblowers from the UK, Europe and the US.
It makes depressing reading. The whistleblowers lost their jobs. Some were fired, while others faced psychological pressure that made them quit.
But it doesn’t have to be like this. We might be able to learn something valuable from across the Atlantic.
Andrew Patrick, from Harrogate, is supporting a campaign to introduce US-style rewards for UK whistleblowers to encourage more of them to come forward.
In 2018, the law firm Constantine Cannon LLP announced a more than $900,000 settlement on behalf of Mr Patrick in a lawsuit against Pure Collection Ltd, a Harrogate-based e-retailer of luxury cashmere and apparel goods.
This lawsuit was one of the first to be brought by a UK whistleblower in which the US Government intervened and successfully resolved the whistleblower’s False Claims Act (FCA) allegations. Mr Patrick has been awarded 18 per cent of the total settlement.
The qui tam, or whistleblower, lawsuit alleged that since 2007 the defendants had fraudulently and systematically avoided paying US customs duties on its goods shipped from the United Kingdom to customers in the United States. The defendants neither admitted nor denied liability.
Mr Patrick worked for Pure Collection from 2010 to 2014, first as a sales representative in its UK call centre and then in its UK packaging department. He brought his allegations to the attention of US Customs and Border Protection in 2014, and later filed a whistleblower submission with the US Internal Revenue Service in 2015.
After the two initial unsuccessful attempts to alert US authorities, Mr Patrick approached Richard Pike, a solicitor-advocate and partner in Constantine Cannon’s London office, who specialises in advising whistleblowers under US whistleblower programmes.
Mr Patrick filed his whistleblower suit in 2016 in a federal court in Maine.
Mary Inman, Mr Patrick’s lawyer, said: “Mr Patrick is the first British whistleblower to expose a UK company for evading US import duties and only the second to receive a financial reward under the whistleblower provisions of the False Claims Act.”
Ms Inman, who is partner at Constantine Cannon, believes the formation of a new parliamentary group could be the start of a new era in whistleblower protection.
The prospect of a Government-backed reward would certainly encourage more people to take the brave first step of confronting their employer’s bad behaviour. It is hoped the newly created All Party Parliamentary Group on Whistleblowing will consider the case for a new US-style reward system for whistleblowers.
Ms Inman said: “Whistleblowers are vital watchdogs guarding against frauds in the commercial and financial services sector.”
However, UK and European papers are full of stories about whistleblowers whose personal and professional lives have been ruined by their efforts to expose wrongdoing in the public interest.
Ms Inman said: “The prospect of such devastating economic consequences deters many whistleblowers from coming forward. In my practice here in the UK, I regularly see whistleblowers who know of frauds that are negatively impacting the public interest of both the US and the UK Governments.
“However, because the UK does not offer the prospect of financial rewards for whistleblowers, whereas the US does, they are unwilling to take the risk of reporting to the UK regulators because of the lack of financial security that the prospect of an award provides.
“Whistleblower reward systems like those in the US and Canada seek to compensate whistleblowers for such career detriment and, in so doing, seek to provide a safety net to encourage whistleblowers to take the plunge, despite the barriers, and report wrongdoing.
“In this way, instead of being called rewards, whistleblower financial incentives could more aptly be described as insurance.”
In the UK, whistleblowers bear all the costs of reporting wrongdoing and the public reaps all of the rewards.
Ms Inman added: “Insurance, in the form of monetary whistleblower rewards, helps raise public awareness of the importance of speaking out, improves the perception of whistleblowers as civic-minded truth-tellers and removes the stigma of whistleblowers as snitches.”
Since the formation of the SEC whistleblower programme nine years ago, the SEC Office of the Whistleblower has been tracking data on the number of whistleblowers outside the US who are supplying tips to the SEC.
Ms Inman said: “From the nine years’ worth of data collected thus far, the United Kingdom leads the pack as the country with the most whistleblowers filing submissions under the SEC programme, followed by Canada, China and Australia.”
She added: “Anecdotally, we began to see a similar trend in our whistleblower law practice in the US, with a growing number of British whistleblowers contacting us about making use of the US whistleblower programmes to report concerns and potentially earn financial rewards.”
Mr Patrick is supporting the calls for reform.
“The Americans have a very different system to the UK,’’ he said. “UK whistleblowers, in general, seem to be penalised for providing information that should be important to the public.”
He hopes regulatory changes will ensure that more UK whistleblowers can do their duty without fear of the consequences.
Mary Inman is a supporter of the new All Party Parliamentary Group on Whistleblowing because she believes it could shape a legal framework that protects courageous individuals who want to stop illegal behaviour.
The group, which was founded six months ago, is currently in “evidence gathering” mode.
The fact that such a large number of Britons have made use of the US whistleblower programme indicates that many people would speak out if they had the right support.
Ms Inman said: “It was this trend that prompted our firm to move me from San Francisco to our London office almost two years ago to officially launch our international whistleblower practice.
“Since launching our international practice in July 2017, we have been overwhelmed by the large number of British and European whistleblowers reaching out to us.
“In our first year (2017-18), we were approached by more than 60 international whistleblowers, 80 per cent of which were from the UK.
“When we tally the numbers for our second year, we expect to exceed that number by a wide margin.
“As a result of this volume, we have increased our whistleblower staff here in London to keep up with the demand. Having started with two attorneys, we have doubled our capacity to four.”
Tim Martin, the CEO of WorkInConfidence, which helps organisations to improve staff feedback, also believes the current protections for whistleblowers fall well short of ideal standards.
He said: “The system is heavily weighted against the whistleblower, which is why so few people put in this situation will feel able to speak up.
“When legal processes drag on for a long time it is hugely stressful for the individual; stress which the organisation does not have.
“Much more needs to be done to come up with faster processes, which cannot be deliberately slowed down by the organisation.”