Author: Azizur Rahman
26 January 2016
4 min read
More and more people are becoming willing to report wrongdoing, according to the Serious Fraud Office (SFO). SFO Director David Green used a recent speech in London to say that insiders are now increasingly keen to speak out against wrongdoing. Perhaps more importantly, the SFO head declared that his organisation is now using increasing numbers of whistle blowers in its investigations.
In making his announcement, Mr Green declared: “Whistle blowers and insiders are playing an increasingly important role in our work. Be clear: we regularly receive reports from such sources and this is happening much more frequently.
“The increase in whistle blowing is something that a company debating whether to self-report to the SFO should think about very carefully. It greatly increases the risk to the company if it decides to keep quiet. “We have more whistle blowers than self-reports, and it is whistle blowers that you should be worried about.”
The SFO is actively encouraging insiders to pass on information. Its tactic appears to be one that involves announcing an investigation and then doing whatever it can to encourage those “in the know’’ to come forward and declare their knowledge of wrongdoing.
Such a tactic seems to mean that Mr Green's organisation will take a dim view of a company whose wrongdoing comes to light through someone whistle blowing to the SFO rather than the company self reporting.
It is a point emphasised by Mr Green, who explained: “Some companies claim publicly that they are fully cooperating with the SFO - but there is cooperation and there is cooperation.
“It would be wrong, unjust and counter-productive for the SFO to reward obduracy and lack of cooperation by offering some sort of settlement. We won't give up and walk away, and we do get there.”
For all the strong talk, the SFO's fortunes have been mixed when it comes to big prosecutions. There is also the possibility that instances of whistle blowing may be made maliciously; which places a particular emphasis on the SFO to be able to determine the truth of an allegation.
But the SFO does have legislation and funding on its side. The government has made it clear that the SFO can have extra funding as and when major, Libor-sized cases develop. The SFO and other authorities now also have the Bribery Act 2010, the Companies Act 2006 and the Fraud Act 2006 – not to mention increased obligations on certain business sectors regarding money laundering – that they can utilise to prosecute companies, organisations or individuals.
When it comes to individuals, it seems as if directors, managers and other senior company figures stand greater risk than ever before of being criminally liable for any wrongdoing committed by their firm. The legislation is there to bring prosecutions, there is greater cooperation between prosecuting organisations and also an appetite from government itself for charges to be brought. If you consider that the SFO now also has a policy of cultivating and harvesting information from whistle blowers, the stakes are incredibly high for a company trying to keep news of any wrongdoing from seeping out.
So what should they do? The simple answer is establish their own whistle blowing procedures. The Bribery Act alone makes companies criminally responsible for the corrupt activities of anyone acting on their behalf: companies need to know what is being carried out under their roof or in their name. The only reliable way of doing this is to devise and implement procedures where a company’s staff, agents, clients or trading partners can report their suspicions direct to the company. This means that the company has a chance to act on the information and prevent or identify wrongdoing. From a company’s perspective, it is much better to take the opportunity to do this - and, if necessary, self-report – than to have to account for its activities to the authorities because a whistle blower has gone direct to them.
Whistle blowers have to be seen as a possible asset when it comes to a company's safety. They can flag up the wrongdoing early; often before any major damage has been done and before outside agencies are starting to investigate. Employees and those in close contact with a company have an interest in, and a knowledge of, its workings. If they can be encouraged to report concerns it can only be a good thing.
What needs to be emphasised, however, is that creating a whistle blowing facility has to be more than just placing a suggestions box outside the boss’ office door. There are legal limitations on the way whistle blowing facilities can be devised and run, meaning legal advice can often play a large part in devising such a procedure. Any such procedure is centred on fostering a culture of openness and communication as much as the rules that are created and implemented to make it function. Whistle blowing procedures can involve the whistle blower having complete anonymity - never having to reveal their identity - or having to raise a concern confidentially; with only senior figures knowing who reported the problem. Much may depend on the nature of the business. Confidential reporting tends to be regarded as the better source of credible information. Such information can also be checked and clarified with the whistle blower; who can also be kept abreast of any action that results from it. This kind of procedure will help spread awareness that reported suspicions are treated seriously and, if necessary, acted upon.
But any such whistle blowing facility needs genuine support from a company's senior figures if it is to be of any value. They have to be seen to be involved in its formation, implementation and review so that anyone thinking of reporting their concerns of wrongdoing knows that they will be treated seriously. A poorly-devised whistle blowing procedure or no procedure at all will lead many to either not report their concerns or take them elsewhere. And with the SFO on the hunt for incriminating information, it is far better to have whistle blowers happy to voice their concerns in house rather than to outside forces.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.