Whistleblowing: Whistleblower Protection Vital to Protect Government Employees;

Transcription

1 Whistleblowing: Whistleblower Protection Vital to Protect Government Employees; It Should Be Easier for Employees to Sue Governments/Businesses That Retaliate Against Them for Revealing Wrongdoing, But Whistleblowers Should Not Be Able to Profit from their Revelations; At Public Companies, Internal Fraud the Main Problem and Third Party-Operated Hotlines Desirable. BDO Dunwoody/Chamber Weekly CEO/Business Leader Poll by COMPAS in the Financial Post for Publication May 30, 2005 COMPAS Inc. Public Opinion and Customer Research May 30th, 2005

2 1.0. Introduction Members of the COMPAS/FP panel of CEO s and business leaders were asked about whistleblowing in the current legal setting of increased protection for whistleblowers in both Canada and the United States. Whistleblowers in Canada have special protection in respect of environmental and health & safety matters. Meanwhile, the emulation of Sarbanes-Oxley in Canada has led to a requirement for public companies to have confidential whistleblower hotlines. The following are the key findings from this week s business leader survey sponsored by BDO Dunwoody LLP and the Canadian Chamber of Commerce: Governments have a far greater need than corporations to encourage and protect whistleblowers; The main areas of wrong doing in public companies are fraud against the company and environmental wrongdoing, not fraud against government or wrong doing in health and safety; Confidential whistle blower hotlines operated by third parties are more effective than hotlines operated by individual public companies themselves; Most panel members oppose Canada s adopting U.S.-style provisions to allow whistleblowers to share in the profit from the savings achieved by their revelations because of the risk of encouraging false allegations; and Members of the panel believe almost unanimously that laws should be modified to make it easier for whistleblowers in business and, especially in government, to sue their employers for both wages and damages in the event of retaliation over whistleblowers revelations of wrong-doing. 2

3 2.0. Whistleblowing Protection for Governments a Much Higher Priority Most whistleblower protections are intended to benefit employees of businesses, especially publicly traded companies. Panellists nonetheless feel strongly that public servants have a far greater need for such protection than employees of businesses. CEO s and business leaders single out governments as opposed to public companies as needing such protection most by a factor of 3:1, as shown in table 2. Table 2: (Q2) In your opinion, which of the following types of organizations needs laws to protect whistleblowers the most? [RANDOMIZE] % Governments 59 Publicly traded companies 20 Privately held companies 15 Not-for-profit organizations 1 Don t know/refused 5 A number of the members of the panel believe that fraud in government is the greatest single cost to Canadian society. One CEO expressed profound concern that the public and the press do not take seriously enough repeated examples of infractions against taxpayers. He would like to see greater use of the courts to punish senior officials guilty of fraud, misrepresentation, and demonstrable harm to the public good. France was outstanding in prosecuting those government officials who failed to protect the blood supply from HIV infection. 3

4 3.0. Fraud by Officers or Employees Against the Company Viewed as Most Common type of Wrong Doing Canada s business leaders and CEO s believe fraud by officers or employees against the company (32%) is the most common type of wrong doing among publicly traded companies in Canada, as shown in table 2. Environmental wrong doing (22%) follows in second place. Table 2: (Q1) As you know, whistle blower legislation in Canada has been influenced by environmental and health & safety concerns as well as Sarbanes-Oxley. Among publicly traded companies in Canada, which of the following types of wrong doing would you estimate is the most common? [CHOOSE ONE, RANDOMIZE] % Fraud by officers or employees against the company 32 Environmental wrong doing 22 Wrong doing in health and safety 11 Fraud by the company against government 11 Fraud by the company against its private sector clients 6 Don t know/refused Most Effective Hotlines Those Operated by Third Parties, Not Internal to the Company Under new Canadian law, publicly traded companies must have a confidential whistle blower hotline and a number of companies are presently setting up such lines within their organizations. Canada s business leaders and CEO s take the position that a confidential line that is operated by a third party organization is more effective (64%) at persuading employees to reveal wrong doing than a confidential whistle blower line that is established within a company (17%), as shown in table 3. 4

5 Table 3: (Q3) Under new Canadian law, publicly traded companies must have a confidential whistle blower hotline. A number of companies are setting up such lines within the organization. Compared to a confidential line that goes to an outside, third party organization, would a confidential whistle blower line within a given company be at persuading employees to reveal wrong doing? [ROTATE POLES] % A lot less effective 34 Somewhat less effective 30 About as effective 16 Somewhat more effective 13 A lot more effective 4 Don t know/not sure Mixed Feelings about the Need for More Whistleblower Protection Fear of False Claims But Overwhelming Support for Laws Making It Easier to Sue Employers, Especially Government, for Retaliating Against Whistleblowers The business panel has mixed feelings about strengthening whistleblower protection. On the negative side, a small majority fears that more protection could prompt false claims and untrue allegations, as shown in table 4. Likewise, a majority opposes U.S.- style innovations to allow whistleblowers to share in the savings made possible by their stepping forward, as shown in table 5. Thus. 56% say that Canada should not follow the legislation of the United States, which allows whistleblowers employed by the corporation to keep up to 30% of the value of the savings they bring to the government as a result of blowing the whistle. Similarly, 59% believe that Canada should not have laws that allow public servants to share in the savings to taxpayers made possible when revealing fraud, as shown in table 5. The following verbatims, all from CEOs, reflect business leaders reservations: 5

6 One must guard against disgruntled individuals using the whistleblower guidelines for personal situations where they are disappointed at missed promotions or where they envy others. Another CEO praised the purposes of whistleblower protection but thought that strong auditing was the best approach. I m not convinced that whistleblower approaches can work. Whistleblowing is a product of bad management and is often misguided. It should be limited to a last resort and management norms should be improved to eliminate the requirement. Whistleblowing has an Orwellian, 1984-like flavour, suggested another CEO. This is political correctness gone mad! The rewards for whistleblowing should be capped so that people do not turn into spies. The law should also hold the whistleblower accountable for false accusations as the financial reward may encourage some to make false claims for the reward. A female CEO expressed strong concern that too much legal encouragement of whistleblowing could lead to a spate of false claims. The whistle blower should also be held accountable for false claims, she suggested. A lot of our laws go too far in protecting an employee at the expense of owners and managers, who are also just people trying to do their job. On the positive side, overwhelming majorities favour modifying laws to make it easier for whistleblowers to sue their employers for having retaliated against them for revealing wrong doing. A very strong majority of respondents (75%) believes that Canada should have U.S.-style laws to allow whistleblowers to sue their private sector employers for backpay and damages if their employer engaged in retaliation, as shown in table 5. An even stronger majority (85%) believes that Canada should have similar laws to protect whistleblower employees in the government and the public service. 6

7 Table 4: (Q4) Which of the following opinions is closer to your own? [ROTATE] % No more should be done to protect whistleblowers because stronger protection for whistleblowing will lead to false claims and employees have 54 stronger legal protection in general in Canada than they do in the U.S. Whistleblowers are so vulnerable to reprisal that it is only fair to make it easier for them to sue their employer if they are mistreated and to share 30 financially in the benefits of their revelations Don t know/refused 17 Table 5: Attitudes towards Possible Whistleblower Reforms [In the United States, the law allows whistleblowers to sue their private sector employers for back pay and damages if they prove the company engaged in retaliation.] Should Canada have similar laws to protect whistleblower employees in government and the public service? In the United States, the law allows whistleblowers to sue their private sector employers for back pay and damages if they prove the company engaged in retaliation. Should Canada have similar legislation? In the United States, the law allows whistleblowers employed by corporations doing business with government to keep up to 30% of the value of the savings they bring to government as a result of blowing the whistle. Should Canada have similar laws? Should Canada have laws to allow public servants to share in the savings to taxpayers that they make possible when revealing fraud by their political masters? YES NO DNK

8 2.0. Methodology The National Post/COMPAS web-survey of CEOs and leaders of small, medium, and large corporations and among executives of the local and national Chambers of Commerce was conducted May 25-27, Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of 149 are deemed accurate to within approximately 8.0 percentage points 19 times out of 20. The principal and co-investigator on this study are Conrad Winn, Ph.D and Tamara Gottlieb. 8