When Dave (not his real name) decided early last year that his bosses at BP’s Alaskan subsidiary were not taking his concerns about the impact of staff cuts on the maintenance of the oil giant’s Alaskan pipelines sufficiently seriously, he and two colleagues went and blew the whistle outside BP. They found a ready audience among environmentalists keen to spike BP’s ambition to drill for oil in the nearby Arctic National Wildlife Refuge.
The complaints of the BP three led to questions in Congress, a letter to President George Bush giving warning of a “major catastrophe”, and an inquiry instigated by BP. The inquiry team’s report, leaked in November, found that “many workers” at BP’s Alaskan subsidiary (whose self-proclaimed goals are: “no accident, no harm to people and no damage to the environment”) believe that “reductions in staffing, training and budget are making field operations less safe.” In response to the inquiry, BP has transferred a senior manager, Tom Gray, to implement the report’s recommendations. The company says that it has also already taken on additional staff to clear the maintenance backlog.
It has done rather less, though, to ensure that future whistleblowers do not have to go to such lengths to get a response. Dave says he suffered persistent harassment and reprimands for raising his concerns internally. BP says that it is training its supervisors to “respond more positively” to employees’ expressions of concern. But it may take more than a training course to persuade rugged oilmen on Alaska’s North Slope to change their obstructive ways.
Many potential whistleblowers are deterred by the practice’s less than jolly history. Few emerge from their experience rewarded in any way. Many lose their job and some their sanity. James Bingham, an assistant treasurer of Xerox who was fired in August 2000 when he complained about the accounting tricks that the copier company was using to boost its flagging earnings, found his subsequent battle with Xerox so all-consuming that he was unable to work and earn a living.
Mr Bingham alleges that the problems at Xerox arose largely because of a culture in which managers were under intense pressure to “stretch” financial targets and then to reach them. Such a culture is by no means unique to the now distressed copier company. Many firms, pushed to reach unrealistic targets in these tighter times, are tempted to massage their numbers too, sometimes within the law but also, on occasions, outside it.
A recent case in Australia shows how easily fear can frustrate a whistleblower’s good intentions. In December, a woman wrote anonymously to the country’s antitrust watchdog, the ACCC, alleging that her employer was colluding with others in breach of the Trade Practices Act. Her evidence was sufficient to suggest to the ACCC that fines of A$10m ($5.2m) could be imposed on “a large company”. But the agency needed more details. So just before Christmas it advertised extensively to try and persuade the woman to come forward again. Some days later her husband rang the ACCC, but he hung up before disclosing vital information. Now the agency is trying to contact the couple again.
In America, there is some evidence that the events of September 11th have made people more public-spirited and more inclined to blow the whistle. The Government Accountability Project, a Washington-based group, received 27 approaches from potential whistleblowers in the three months before September 11th, and 66 in the three months after. Many of these complaints were about security issues. They included a Federal Aviation Administration employee who claims that the agency has repeatedly failed to respond to known cases of security breaches at airports.
Legislation to give greater protection to people who expose corporate or government shenanigans externally (after having received no satisfaction internally) is being introduced in a number of countries. In America, it focuses on whistleblowers among federal employees. According to Billy Garde, a lawyer who was a member of BP’s Alaska inquiry team, they “have less rights than prisoners”. A bill introduced last year by Senator Daniel Akaka to improve protection for them is currently bogged down in congressional committees.
In Britain, the Public Interest Disclosure Act came fully into force last year. Described by one American as “the most far-reaching whistleblower protection in the world”, it treats whistleblowers as witnesses acting in the public interest. This separates them from people who are merely pursuing a personal grievance. But even in Britain, the protection is limited. Rupert Walker, a fund manager, was fired by Govett Investments in September 2001 for expressing concerns in the Financial Times about a coterie of investment trusts that invest in each other.
One novel aspect of British law is the responsibility it hands to regulatory agencies. The FSA, Britain’s financial-services super-regulator, is setting up a hotline in mid-January, in the hope of deflecting allegations before they indiscriminately hit the public arena. The regulator’s role will be that of an informed (and discreet) outsider — a good idea in principle, were it not for the fact that, in practice, the FSA is already spread as thinly as butter on Bridget Jones’s bread.
Sir Howard Davies, the FSA’s chairman, sees strong whistleblowing mechanisms as a deterrent to fraud. He wants firms to improve their own internal whistleblowing procedures. He said recently that the FSA “won’t hesitate to consider making rules” about this “if the guidance we plan to issue in the new year does not lead to the higher standards we want to see.”
Sadly, few firms are yet persuaded that such procedures are in their own best interests. In America at least, it is almost always thought cheaper to fire whistleblowers than to listen to them, despite years of legislation designed to achieve the opposite. “No matter how many protections whistleblower laws have created over the years,” says Kris Kolesnik, director of the National Whistleblower Centre in Washington, DC, “the system always seems to defeat them.”
There are a few companies, however, that realise there are benefits in encouraging whistleblowers: for example, Abbey National, a British bank. In 1993, Gary Brown was working in its marketing department when he noticed some fishy things going on. He reported them internally in May 1994, and the man suspected of wrongdoing was suspended. But the atmosphere in the department became so unpleasant that Mr Brown left the company to work elsewhere.
In June 1997, after an inordinately long delay and an eight-month trial, the thief was sent to prison for eight years for his part in stealing £2m ($3.3m). Mr Brown received a commendation from the judge, £25,000 from Abbey National and an invitation to rejoin the bank. Since his return in March 1998, he has been promoted three times. Abbey National now gives its employees regular advice on how to blow the whistle — including the suggestion that they contact Public Concern at Work, a charity manned by lawyers, should they not get satisfaction internally. That is a far more constructive approach than BP’s.
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