Blowing the Whistle on Fraud

DOIhttps://doi.org/10.1108/eb025705
Publication Date01 March 1995
Pages185-186
AuthorRinita Sarker
SubjectAccounting & finance
Journal of Financial Crime Vol. 3 No. 2 Prosecution and Investigation
Blowing the Whistle on Fraud
Rinita Sarker
Employees who blow the whistle at work on
serious fraud and malpractice out of concern for
public interest, are to be afforded new protection
against reprisals and unfair dismissal in the
Whistleblower Protection Bill, introduced in Par-
liament on 28th June, 1995, with all-party support.
MPs Dr Tony Wright and Derek Fatchett, who
unsuccessfully tried to introduce a similar bill
limited to the National Health Service three years
ago,
now cite a wider list of frauds which whistle-
blowers could have prevented had they been pro-
tected by the law.
These include the Pipa Alpha disaster in 1988,
where 167 people died following an oil platform
explosion. The inquiry found that, 'workers did
not want to put their continued employment in
jeopardy through raising a safety issue that might
embarrass management'.1 These comments appear
with striking regularity in other disaster inquiries
such as the
Herald
of
Free
Enterprise,
in 1987, where
193 people died, the 1993 misdiagnosis of 43 can-
cer cases at the Birmingham Royal Orthopaedic
Hospital and the 1994 Dorset canoeing tragedy,
where four children died. The collapse of the Bank
of Credit and Commerce International in 1991, in
a £2bn fraud, might have been avoided had there
not been a management culture that made employ-
ees fearful of speaking out and if the lone internal
auditor who did raise concern had not been made
redundant.
A compelling pattern is revealed of employees
who know more about what is going on inside an
organisation than anyone else but who are pre-
vented through fear and insecurity from speaking
out when they discover malpractice. This is the
view taken recently by the Nolan Committee in its
recommendations on the civil service and by the
Audit Commission, which identified information
from staff as by far the single most important
factor in exposing corruption in the NHS. The
Government has even inserted a whistleblowing
clause into the current Pensions Bill, in the wake
of the Maxwell fraud, to put a duty on auditors
and actuaries to speak up about misconduct to the
regulatory authorities. So while the public interest
in whistleblowing is manifest, as yet, there has
been no effective protection from recriminations
for whistleblowers.
The new bill aims to remedy the situation by
giving whistleblowers new rights to seek compen-
sation for loss of earnings/stress, obtain injunctions
to halt threats of punishment and claim unfair dis-
missal at an industrial tribunal even if they have
been employed for less than the two-year mini-
mum.
MP Tony Wright stressed that the bill was
'emphatically not a whingers' or malcontents' char-
ter'2 and that 'employers have a right to loyalty and
confidentiality, but it is unacceptable to punish or
ignore people who raise a legitimate concern in
good faith. More accountability will make people
think twice before sweeping malpractice under the
carpet'.3 The bill seeks only to protect public inter-
est whistleblowers, who, without hope of personal
gain, have already raised their concerns internally,
unless there are compelling reasons for not doing
so.
Thus by safeguarding their interests it is hoped
that the public at large will be protected from fur-
ther tragedies.
Those who would potentially qualify for the
new protection range from fairground workers
concerned about the safety of rides, a charity
worker who suspected money was going into the
pockets of another employee, a sales supervisor
Page 185

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