Companies Ignore Risks, Benefits of Whistle-Blowing, Lawyers Say

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By Suzi Ring

Dec. 1 — Multinational companies don't do enough to encourage whistle-blowers who could help them uncover bad behavior, according to a law firm survey released Dec. 1.

Almost half of the 2,500 employees queried in the U.S., U.K., Hong Kong, Germany and France said their companies don't have or don't publicize whistle-blower policies, Freshfields Bruckhaus Deringer LLP said in the report. Fewer than one in 10 said it's an important issue at their work.

Whistle-blowers have been key in uncovering wrongdoing in several high profile cases resolved this year. In September, the Securities and Exchange Commission awarded more than $30 million—the highest-ever such payout—to a person who provided key information in an unidentified fraud case (12 CARE 1193, 9/26/14). Bank of America Corp.'s Countrywide unit had to pay $1.3 billion in July for defective mortgage loans after a source came forward. In June, France's BNP Paribas SA was fined almost $9 billion for violating U.S. sanctions in a case that began when an informant approached the Manhattan District Attorney.

Whistle-blowers can help companies address wrongdoing before outside investigators learn of it, as well as mitigate penalties when they are targeted in probes, according to Adam Siegel, Freshfields's co-head of global investigations.

“Robust whistle-blowing policies bolster a company's argument that it has implemented adequate procedures to guard against bribery,” said Siegel, who is based in New York. “They also make it more likely that concerns will be raised internally.”

Fear of Retaliation

The Freshfields survey found that about 12 percent of employees had blown the whistle before and almost half would consider it. Still, almost 40 percent were concerned that they would face repercussions, including losing their jobs, if they did.

“It's surprising that employees continue to fear unfavorable treatment” given the protections many countries have in their laws, said Caroline Stroud, an employment partner at Freshfields in London. “Boards need to create a culture in which employees are not only protected but genuinely encouraged to make disclosures to their superiors.”

SEC officials have continuously warned employers that confidentiality or severance agreements that might discourage workers from approaching the commission to voice concerns will receive close scrutiny (12 CARE 322, 3/21/14).

The Freshfields survey was conducted between September and October and focused on middle and senior managers from industries including finance, telecommunications and law.

To contact the reporter on this story: Suzi Ring in London at

To contact the editor responsible for this story: Heather Smith at

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