Partner Mary Inman discusses whistleblowing, blackballing and the role of compliance in ComplianceLine webinar "Whistleblowing: Defending the Accuser and the Accused"
On 25 August 2020, Constantine Cannon partner Mary Inman joined Charlie Middleton, an international tax whistleblower, and Roy Snell, co-founder of HCCA and SCCE, on a panel moderated by Nick Gallo, CEO of ComplianceLine, during a webinar entitled “Whistleblowing: Defending the Accuser and the Accused,” which discussed the challenges that reporting of wrongdoings poses for whistleblowers and companies.
The speakers opened up the webinar by discussing the most commonly-encountered concerns of whistleblowers when they are faced with the decision whether to disclose wrongdoings. As a former whistleblower, Charlie Middleton noted that whistleblowers are not initially aware of the repercussions that their reporting can have on their careers. Mary Inman added that many individuals do not even consider themselves as whistleblowers until they find themselves in difficult circumstances and get silenced. Mary explained that companies often have an auto-immune response to whistleblowers and emphasized that whistleblowers are in fact the good bacteria that companies need. Mary also discussed the importance of financial rewards for whistleblowers and explained that the various U.S. programs (CFTC, SEC, IRS, and the False Claims Act) exist precisely to encourage individuals to step forward and cushion the blow for “taking the career suicidal role of becoming a whistleblower.”
The webinar continued with a discussion of internal reporting systems within organizations. Snell noted that whistleblowing poses problems for both the accused and the accuser and organizations should build greater awareness of the topic and foster a culture where reporting is commonplace. Snell emphasized the importance of education on the topic and that any negative treatment of whistleblowers ought to be condemned by senior management. Middleton added that whistleblowers are often discredited by being labeled as disgruntled employees and that this is a common tactic that can have a chilling effect on future whistleblowers. Mary highlighted that data from the SEC program demonstrates that over 80% of whistleblowers first report their concerns internally – i.e. whistleblowers normally give their employers the chance to correct any wrongdoing and will only report externally if their concerns are repeatedly ignored. As such, if organizations create an environment that is safe for employees to report their concerns, for example by allowing anonymous reporting, employers can address those issues before they become too big to handle.
The webinar ended with a debate about the role of compliance officers. Snell stated that compliance officers are hired to prevent and fix ethical and regulatory problems and acknowledged that they should be separate from a company’s legal team, as individuals cannot report wrongdoing to the legal department which is in place to defend the company. Mary also highlighted the issue that whistleblowers are often faced with a dilemma, as they do not know if they can disclose their concerns to the legal department that, in turn, reports to the CEO or the board (who might themselves be implicated in wrongdoing). Mary further underlined the vital role that compliance officers play within organizations, noting that “compliance officers are emotional intelligence to become whistleblower whisperers – if they can hear what [whistleblowers] are saying, then they can help placate and re-steer the energy to ensure things get corrected at an early stage.” Compliance officers are in effect whistleblowers themselves, who regularly tell companies “bad news.”
Therefore, companies have to increase the credibility of their functions by not discrediting and retaliating against whistleblowers, and by taking a positive step in trying to encourage truth-tellers within their organizations. If companies wish to improve, they need to be more willing to hear what their own employees have to say, especially when they raise important issues.
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