BOARDROOM scandals and scams are as old as time.
But over the last decade and a half, policymakers have tried to find a more effective way of stopping corporate misconduct from throwing the global economy into crisis.
The best approach is to support those employees who have witnessed misconduct and want to stop it. Those on the front-line are well-placed to blow the whistle on illegal and unethical behaviour which could cause misery for us all.
Unfortunately, few people are willing to stick their heads above the parapet. The reasons for this are made painfully clear in a report from Professor Marianna Fotaki, of Warwick Business School.
She found that organisations demonise whistleblowers, and sometimes portray them as mentally ill, in an attempt discredit their claims.
Prof Fotaki’s interviews with 25 whistleblowers from the UK, Europe and the US, reveal that whistleblowing is not for the faint-hearted.
Whistleblowers are protected by law in the UK so they shouldn’t be treated unfairly or lose their job. However, Prof Fotaki’s study found that whistleblowing can have terrible consequences for the person who has the courage to speak out, and their families.
The study found that the whistleblowers lost their jobs, either by being pressured out of the organisation, or fired. Many suffered from depression. Ms Fotaki said: “The stigma surrounding mental illness can be used as a weapon intended to defame and neutralise a person who discloses wrongdoing..The mental health of litigants can be used by organisations in defending allegations, and can result in diverting attention away from the seriousness of the disclosure, and discrediting the whistleblower.”
Co-investigator Kate Kenny, of Queen’s University Belfast, said: “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.”
Whistleblower retaliation - in which the company isolates or punishes whistleblowers, whether by demoting them, worsening their working conditions or sacking them – was part of every one of the 25 cases studied by Prof Fotaki and Dr Kenny.
A whistleblower named Georgia said that the bank she worked at reacted by bullying her husband, who worked for the same employer, and demanding he pay his mortgage immediately.
“They wouldn’t give him the finance to finish the houses….then they sacked him, so he didn’t have a source of income,” she says. “And they were threatening him, because obviously if you don’t have any money, you can’t pay the mortgage.”
These findings are shocking and shine a light on the dark heart of the corporate world. All of the individuals who contributed to the study had good reasons for speaking up. However, as a reward for their courage, they were victimised, and in some cases, their health and finances were ruined.
As Prof Fotaki observed, whistleblowers’ disclosures save public money and protect the public interest. After the traumas caused by the financial crises and scandals of the last decade, there was the usual hand-wringing and cries of “never again”. But Prof Fotaki’s analysis shows why these types of scandals could – and probably will – happen again, because we have allowed a business culture to develop that allows principled individuals to be bullied and psychologically broken by those who want to keep their own misconduct secret.
By failing to protect whistleblowers, we have created a climate of fear and self-censorship that morally taints us all.
It reminds me of Ed Murrow, who signed off a broadcast about the menace of McCarthyism by quoting Shakespeare’s Julius Caesar: “The fault, Dear Brutus, is not in our stars, but in ourselves.”