Part 2 – Whistle blower behaviour and managing retaliation risk
In part 1 of this series of three blogs, we looked at what the new EU Whistle Blowing Directive (EU 2019/1937) (“the Directive” or “EUWBD”) has changed – and what hasn’t changed.
In this three-part series, written in collaboration with seasoned compliance professional Ezekiel Ward from North Star Compliance, we will look at the Directive from the perspective of multinational organisations. The Directive offers a great deal to unpick and observe over the coming years.
Below we go a little deeper into how whistle blower behaviour might be influenced by the Directive. And how organisations can best handle the risk of retaliation – both to individual whistle blowers and to the organisation itself.
Will this change the behaviour of whistle blowers?
The Directive includes explicit rights and protections for whistle blowers that are easy to establish in its clean text.
But whistle blowers have already crossed psychological and social thresholds to get to where they are. That is not an easy process, and the promise of rights and protections might not enter the equation as heavily as “what will my colleagues, friends and family think?” or “what will be the consequences for me personally in spite of my rights?”
What do whistle blowers think? The issue of what a whistle blower subjectively believes, will be an important discussion. Throughout the Directive, there are references to “reasonably believed” and “necessary” to report. This places a huge emphasis on the whistle blower’s rationale for reporting. Their good faith and maturity will be assessed as part of this process.
There will undoubtedly be fascinating aspects to this focus on “reasonable belief”. For example – the interplay between whistle blower protections and defamation cases brought by their organisations. If a whistle blower genuinely believes a set of facts, they may well be protected under the Directive. Yet those facts could be extremely damaging to an organisation, and may even be untrue. What rights to recourse or correction would an organisation have against a whistle blower who has damaged their reputation, albeit under ‘reasonable belief’?
Better handled internally?
We know from studies across many years that the vast majority of whistle blowers want to handle issues internally. One could question whether we will see a change to these patterns due to the Directive. Is it simply too terrifying to go external? Is there some residual loyalty to their organisation? Time will tell if the Directive changes this, and consistent, high quality research will ensure we capture and observe these changes.
Climbing the ladder
There is a theoretical concern that disgruntled whistle blowers will “climb the ladder” of rights until they get to public disclosure. Or maybe they’ll just skip straight to the media.
A reporter might consider starting with internal reporting, then external, then full public disclosure, hoping each time for an outcome they will like.
I don’t see this as a major risk. Firstly, for the fact that only a tiny percentage of whistle blowers report things externally. Secondly, if the reporter is disclosing information publicly, then they might already have received answers they don’t like from both the organisation (internal reporting) and the authority (external reporting). Will media outlets side with such a reporter? It’s another, major threshold for whistle blowers to cross.
Handling the risk of retaliation in the real world
Between a rock and a hard place
Retaliation can be horrible and deters many whistle blowers from making or pursuing a concern. The Directive is right to focus on retaliation.
But handling such a nebulous risk in the real world is a significant challenge. Imagine an anonymous complaint of possible bribes to a public official. The reporter hasn’t revealed themselves, though their identity may be deduced. There may be no means of dialogue with them to gather further information. Compliance departments will know this uncomfortable feeling, right between the most familiar of ‘rocks and hard places’. You can barely investigate, let alone prevent retaliation against the reporter.
Time is limited
As a CCO I would often take direct contact with whistle blowers (if possible) who I felt were acting in good faith, were totally genuine and yet could be exposed to retaliation. My teams and I would talk to reporters at regular intervals to ensure we heard about any issues that sounded like retaliation. Being able to do this in a select few cases is fine. But you simply cannot do so for everyone. If the average multinational receives between 3 and 6 serious reports per year for every 1000 employees, it’s unrealistic to talk like this to them all. Language and cultural barriers add risk to such an exercise that must be carefully considered.
Reporters often come with baggage
In my experience reporters regularly have performance issues or other grievances that are often totally unrelated to their whistle blowing report.
We have to develop clear positions on retaliation. What is our definition? What are the red flags that dictate we should follow-up? What controls do we have in place to check for these red flags, and that our processes are being followed? How does HR and Compliance collaborate on retaliation and other issues? What records have been kept by HR that document clearly any unrelated issues?
These sorts of steps aim to ensure we keep a factual eye on the case at hand versus totally separate operational issues. For a system to operate smoothly, you’ll need the support of managers throughout the organisation and a collaborative, efficient Human Resources function.
Can you prove a negative?
It is noteworthy that the EUWBD places a presumption of retaliation against whistle blowers in certain cases before a court (Article 21(5)). Causation therefore needs to be ‘broken’ by an organisation for, for example, overlooking a reporter for a promotion or raise. This could make for peculiar viewing – organisations will be trying to ‘prove a negative’ (it was not about the report) and will need to point to HR files and management decisions totally extraneous to the whistle blowing process.
If a whistle blower’s identity has been hidden and there was no means of deducing that a report was made by them, will that be enough for a court to state that there is no causal link between the report and the detrimental treatment?
In next week’s blog we’ll be looking at the creativity required from General Counsels and Chief Compliance Officers in meeting the Directive. We’ll also outline the practical next steps required to meet the Directive. We look forward to seeing you here again next week! Follow us on LinkedIn or subscribe here to North Star Compliance and stay tuned!