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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Whistleblowing in Global Bribery and Corruption Investigations

Author: Azizur Rahman  7 December 2012
4 min read

A high-profile banking scandal can teach us about how and why wrongdoing should be reported.


Inter-bank lending rates. Libor. Not exactly household terms. That was until 2012, when they came to the media’s attention and led to the downfall of the most high-profile banker in the UK.

Barclays’ chief executive, the splendidly named Bob Diamond, finally fell on his sword a week after the bank was fined a record amount for trying to manipulate the inter-bank lending rate. He was joined on his walk to the exit by Barclays’ chief operating officer and chairman. As a search for a new chief executive began, Lord Turner, chairman of the Financial Services Authority (FSA) talked of the “cynical greed’’ that had driven Barclays traders to falsify their Libor submissions so they could make even bigger profits. Senior politicians said it was right that Diamond should go and made vague references to changing the culture of the banking industry. 

It became known that staff at Barclays had routinely rigged Libor and Euribor; the interest rates at which banks lend to each other. Barclays, we were told, had raised them for profit and then lowered them during the financial crisis to hide the true level of pressure the bank was facing. Diamond was head of Barclays Capital, the bank’s investment bank division, when staff were trying to manipulate the bank rates. He maintained he did not know what was going on, which raises questions about what sort of culture was present in Barclays. Was whistleblowing encouraged? And how much emphasis was the bank really putting on compliance?

Scrutiny of Banking and Finance

Bankers – and other business people – are now under increasing scrutiny. Senior figures in companies are now far more liable for their actions and the actions of those under their charge than they ever have been. The Bribery Act 2010, the Companies Act 2006 and the Fraud Act 2006 have joined
the Theft Act 1968 in being statutes that make a director, manager or other senior company figure criminally liable for any wrongdoing committed by their firm if it was carried out with their consent, connivance or neglect. The term consent implies that the person must have had some knowledge of the illegal activity, whereas a willful blindness to what was going could be sufficient to prove connivance. But much will depend on the circumstances of each case, as it will in proving neglect. For example, how close to the day-to-day operation as the accused when the wrongdoing arose? The lack of corporate prosecutions at board level may indicate problems in proving criminal liability at such elevated levels within a company. But the far-reaching implications of the Bribery Act may eventually lead to this changing. 

Now companies can be criminally responsible for the corrupt activities of their staff, agents and third parties anywhere in the world. The pressure is on at senior level to know about every aspect of a company’s workings. Factor in the wishes of the Serious Fraud Office (SFO) to see more self-reporting of misconduct -through either the current Code of Practice 9 arrangements or the future possibility of deferred prosecution agreements - to avoid the harshest penalties and it becomes clear that the stage is now set for the rise of the whistle blower. 

The Value of Whistle Blowers

Previously, a whistle blower may have been regarded as the bane of board members’ corporate lives. Now, however, they can become one of their main assets. With companies often only alerted to wrongdoing when the authorities start taking an interest, they could and should make greater use of employees’ knowledge and preparedness to speak up. Unfortunately, this is not as simple as it sounds. Legal restrictions exist regarding the creation and running of whistle blowing facilities, meaning the right advice will be needed when setting them up. Such advice will cover any legal pitfalls but can also help decide exactly what sort of whistle blowing facility is best suited to a particular organisation.

Establishing Whistle Blowing Procedures

A whistle blowing facility within a company is as much about developing a culture of openness and communication as it is about the rules that are devised to put it in place. Issues such as whether whistle blowing can be anonymous (with the whistle blower never revealing their identity) or confidential (where the whistle blower gives the information on condition that their identity is not revealed to anyone other than the person they reported to) have to be considered. Generally, confidential reporting is best. It leads to more credible information being revealed which can then be clarified with the whistle blower, who can also be kept abreast of any action that results from it. Such a system is more likely to encourage a whistle blowing culture that can aid a company, as those blowing the whistle get to see action being taken.

Company Commitment to Whistle Blowing

Such a culture, however, can only be successfully generated if there is a real commitment to it from the highest level of a company. Senior company figures must be seen to be involved in the formation and running of the whistle blowing facility if the workforce is to be confident that they can use it without fear of reprisal. Senior figures have to be responsible for determining the extent of the company’s activities covered by whistle blowing. They must also determine who whistle blowers should report to and exactly who is able to blow the whistle – is it limited to staff or can trading partners or other third parties also report wrongdoing? All such matters must be communicated to everyone covered by the policy so they can have the confidence to use it when they need to. Publication of any outcomes can also be vital in proving to people that they can use it without fear of being ignored or persecuted. If it is to be a success it has to be regularly reviewed and, if necessary, amended to meet the needs of the company. Only then will it be an asset to a company.

In a world where every business is facing increased liability for its actions, whistle blowing should be embraced rather than feared.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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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.

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