What is a whistleblower?

A whistleblower is a person who exposes or reports information about wrongdoing or illegal activities within an organisation or government entity.

A whistleblower typically brings to light confidential or sensitive information to the public or relevant authorities intending to expose misconduct, fraud, corruption, safety violations, or other unethical practices.

Whistleblowers are crucial in promoting transparency, accountability, and the rule of law. By speaking out, they often risk retaliation, such as job loss, harassment, or social stigma.

To protect whistleblowers from harmful repercussions, many countries have enacted laws that provide legal protections and incentives for reporting such information, and they are often shielded from retaliation when their actions are in good faith.

Whistleblowers can come from various sectors, including business, government, non-profit organisations, and other institutions.

Their disclosures can lead to investigations, legal actions, and necessary reforms to address the issues they expose.

Whistleblowers have been instrumental in uncovering significant cases of corporate fraud, government abuse, and other systemic problems that might otherwise remain concealed.

Edward Snowden: In 2023, Snowden expressed his ethical concerns regarding the global surveillance programs carried out by the American National Security Agency.

Frank Serpico: Serpico assisted with a 1970 article in the New York Times that exposed widespread corruption in the NYPD.

Chelsea Manning: In 2010, an intelligence analyst named Manning from the U.S. Army leaked the most extensive collection of classified documents in the history of the United States. These documents were published mainly by WikiLeaks and contained descriptions of prisoners’ detention, abuse, and torture, among other sensitive information.

Whistle-blowers can have a major impact on corporate activity.

Many people worldwide were gripped by the testimony of Frances Haugen, 37, a former employee of Facebook who worked as a product manager.

In 2021, Haugen appeared before the US Congress giving evidence, against Facebook, to the Senate Commerce Subcommittee on Consumer Protection.

In testimony to Congress, she said that the social network’s products harm children and polarise people in the US and that its executives ignore safety concerns to focus on profits.

In America, whistleblowing, while still very challenging, is encouraged. Can other nations adopt a more progressive and supportive stance towards whistle-blowers?

Sometimes whistleblowers blow the whistle to prevent more harm from occuring.

In Ireland, for example, scandals caused by banks and financial brokers can be devastating to people and communities, and they have ruined many lives and families.

What if there was a way to prevent the scandals from happening, rather than trying to chase the white-collar offenders after the event?

New laws are to be introduced in Ireland to tackle financial crimes carried out by bankers and brokers.

The Individual Accountability Framework is a piece of legislation introduced in Ireland. It will allow the Central Bank to hold executives in banks and other financial institutions personally accountable for any regulatory failings on their watch.

Many people think it isn’t strong enough. The proposed legislation deals only with potential sanctions once wrongdoing has been identified.

Correct. Some argue this won’t be enough to prevent a banker from ‘having a go’. After all, if their misdeeds are very hard to prove, what are the chances of getting caught? The tracker mortgage scandal is a case in point. There were entire teams of people working in the banks who knew what they were doing was wrong, and none of them was held to account.

One proposed solution, put forward by Vincent Digby in The Irish Times, suggests that an effective way of stopping the white-collar perpetrators of wrongdoing as early as possible is to introduce incentivised whistleblowing.

It is. As we all know, whistleblowers in Ireland are typically castigated, shunned and bullied. What if they were rewarded instead? What if they got paid quite handsomely for blowing the whistle before any financial crime got out of hand?

They do. In the United States, where financial crime is taken seriously, incentivised whistleblowing was introduced in 2012, and it has proven to be very effective.

The US Securities and Exchange Commission (SEC) says that in total, it had paid out more than $1 billion (€854 million) to whistle-blowers and issued its second-highest ever award to a person for flagging wrongdoing.

“Every single one of the whistle-blowers has provided an important public service,” says SEC chairman Gary Gensler.

As Vincent Digby wrote in the Irish Times, “In every scandal involving financial services over the decades, there has been one constant factor: someone always knew what was going on.

“Incentivised whistleblowing facilitates effective and timely notification of wrongdoing to the regulator.”

Financial crime, as we know, has devastating consequences for real people.

As we saw with the Davy saga and the tracker mortgage scandal, it was luck and hard-nosed work on the part of a few individuals that brought these incidents to the attention of the press.

The Central Bank says the tracker mortgage scandal impacted more than 40,000 customers.

Think of the stress and hurt those families would have avoided if an incentivised whistle-blower had alerted the regulator in the early years of this problem?

It is very cost-effective since it is financed by fines levied against wrongdoing firms.

Whistle-blowers in the US receive between 10 and 30 per cent of any fines they collect. No public funds are needed to make these payments.

We could follow the SEC example when designing an incentivised whistleblowing programme.

“It could be a real game-changer in terms of improved culture and behaviour across financial services,” says Vincent Digby.

“In the SEC programme, the whistle-blower does not need to be an employee of the firm doing the wrongdoing, or even directly impacted by that firm’s wrongdoing. As long as the whistle-blower provides “independent analysis” and defines that analysis, then anyone can be a whistle-blower.

“This means that in the right circumstances, we can all act as whistle-blowers.

“How powerful would that be as a deterrent? If that prospect doesn’t change culture and behaviour in financial service companies’ boardrooms, then I am not sure what will.”