Whistle-Blowing - All Hype No Bite?

This week's weather report assesses whether whistle-blowing can expose the crimes of white-collar officials, or whether the hype surrounding whistle-blowing is unfounded. First, what is whistle-blowing, and why is it important to the enforcement of white-collar crime?

What is whistle-blowing?

Whistle-blowing relates to the process whereby (in most cases) an employee exposes a company's criminal wrongdoing. Between 2022/23 the FCA (the Financial Conduct Authority) received 1086 whistle-blowing reports.

An example of when whistle-blowing has been deployed is the Suisse scandal. In 2017 an HSBC employer Hervé Falciani, provided a list of 130,000 names 'of individuals using the Swiss banking system to launder money and evade taxes'.

Mr Faliciani's information shone a light on the crimes committed by white-collar officials. The Suisse scandal demonstrates the potential of whistle-blowing, but can whistle-blowing clear the dark cloud which looms over the world of finance?

Whistle-blowing, the light that shines over the world of finance?

While whistle-blowing has huge potential to level the playing field between prosecutors and corporations, it does not come without its limitations. One of the main concerns is the lack of incentive for whistle-blowers to come forward with information.

Unfortunately, whistle-blowers are not afforded much protection under the law. Hence by coming forward with important information, a whistle-blower may potentially be risking their job.

In the current cost of living crisis, an individual may be hesitant to step forward with important information. Consequently, due to the limited protection afforded to whistle-blowers by the law, and the current economic climate, whistle-blowing may be unable to balance the playing field between companies and prosecutors in the distant future.

Whistle-blower's motivations

Whistle-blowers may have the wrong motivations when reporting the criminal conduct of corporations in some cases. For instance, whistle-blowers may reach an agreement to share information in exchange for their immunity from an investigation.

Additionally, a whistle-blower may choose to come forward with information following being fired from a job. Alternatively, a whistle-blower may agree to share information surrounding a company executive to secure a potential promotion. hence whistle-blowing may be used to pursue an individual's self-interests rather than be used as an effective tool, to clean up the financial market.

Is whistle-blowing, all bark and no bite?

Whistle-blowing is a mechanism which is used and abused, and for this reason it may never be able to expose the crimes of corporates in the way that prosecuting agencies intended.

Despite the hype surrounding whistle-blowing's potential, there remains a gap between the information available to prosecutors and the information held by companies. For this reason, whistle-blowing alone may never be able to bridge the gap between prosecutors and businesses.

Whistle-blowing must be, in no doubt, a weapon in the arsenal of regulators, but it cannot serve to uncover the invisibility of white-collar crime by itself.

Prosecutors must have a range of weapons within their arsenal to clear the dark gloom covering the crimes of the financial world and to provide a more level playing field between prosecutors and corporations. Join us for the next weather report to discover the other weapons which are at the disposal of prosecutors.

The next report will focus on the recent rise of DPAs (Deferred Prosecution Agreements). In particular, the next post will asses whether DPAs are more than just NDAs in disguise, and whether DPAs can act as the gateway to white-collar crime's future?