EXPLORING ECONOMIC CRIMES AND WHISTLEBLOWING AT THE LAW AND SOCIETY CONFERENCE IN DENVER
CORPORATE CRIME OBSERVATORY
WHISTLEBLOWING
Whistleblowing - Overview
The Corporate Crime Observatory (CCO) is constantly engaged in supporting the protection of fundamental rights against any form of violation or abuse. Over the past two decades, whistleblowers have proven to be a crucial tool in combating pervasive and obscure forms of criminality, such as corruption, as they allow for the exposure of these criminal phenomena that would otherwise not come to the attention of authorities and society at large. Despite this essential activity, especially in a democratic context, whistleblowers are not adequately protected and often face severe reprisals and violations of their fundamental rights. For these reasons, the Corporate Crime Observatory, recognizing the crucial value of reporting persons, especially in the realm of economic and corporate crime, is actively committed to studying the phenomenon of whistleblowing and supporting whistleblowers against unfair and unjust treatment.
Whistleblowers are legal or natural persons who report, disclose, or expose information about illegal, unethical, fraudulent, or dangerous activities, practices, or policies within an organization or institution, whether public or private. This information may be related to financial impropriety, public safety concerns, environmental violations, health hazards, discrimination, or any other misconduct that is harmful to the public or to the well-being of individuals. A whistleblower may make their disclosure internally to their employer, or externally to law enforcement, government agencies, or the media. The act of whistleblowing is protected by various laws, policies, and regulations, and whistleblowers are generally shielded from retaliation, including termination, demotion, harassment, or discrimination for their actions.
Whistleblower protection laws are essential for ensuring transparency and accountability in government and private sector organizations. Whistleblowers help prevent disasters, facilitate accountability, and uphold transparency in democratic institutions. They fight corruption, detect internal fraud, highlight regulatory divergence, and identify those who would act to damage organizations’ credibility through acts of illegality. As such, they may be understood as the "most effective stakeholders for reducing the occurrence of unethical behaviors in organizations" (Vadera et al., 2009).
Despite their importance, there is no universally agreed definition of the act of whistleblowing, or who may constitute a whistleblower, and legal protections often vary from country to country.
A best practice whistleblower law should protect whistleblowers who expose wrongdoing or illegality regardless of their employment status or position, establish clear report procedures, ensure confidentiality, provide strong protection against retaliation, establish effective enforcement mechanisms with a clear process for investigating complaints and imposing penalties for violations and remedies for retaliation victims, and require organizations to provide awareness and training programs to employees about whistleblower protections and the importance of reporting wrongdoing or illegal activities.
Globally, it is possible to identify several initiatives from international organizations and NGOs recommendations and standards for the protection of whistleblowers including, inter alia, the G20 High-Level Principles for the Effective Protection of Whistleblowers; the 2021 OECD Anti-Bribery Recommendation - Section XXII on Protection of Reporting Persons; Directive (EU) 2019/1937 on the protection of persons reporting on breaches of Union law; the Organization of American States' Inter-American Convention Against Corruption (e.g, Article III(1) and Article III(8)); the African Union Convention on Preventing and Combating Corruption (e.g, Article 5(5)); UNODC’s Resource Guide on Good Practices in the Protection of Reporting Persons and Anti-Corruption Toolkit; Council of Europe Recommendation CM/Rec(2014)7 on the Protection of Whistleblowers, Government Accountability Project’s International Best Practices for Whistleblower Policies, the EU Whistleblowing Monitor, The Tshwane Principles; ISO 37002 Guidance on Whistleblowing Management Systems; and Transparency International’s International Principles for Whistleblower Legislation.
A 2022 Government Accountability Project and International Bar Association joint report analyzes the different national frameworks for whistleblower protection and their level of compliance with the 20 best practices for whistleblower protection laws.
On 23 October 2019, the European Union adopted the Directive (EU) 2019/1937 on the protection of persons reporting on breaches of Union law (the Whistleblowing Directive). The Directive is a significant legislative achievement that provides a minimum level of legal protection and support to whistleblowers in all EU member states. Some of its top accomplishments include:
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Creating a common EU-wide standard for whistleblower protection, which sets out clear rules and procedures for reporting and investigating breaches of EU law.
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Providing comprehensive protection to whistleblowers against retaliation, including legal, financial, and social support, as well as measures to prevent and sanction any retaliation by employers or colleagues.
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Establishing reporting channels and procedures that ensure confidentiality, anonymity, and the right to be informed and consulted throughout the reporting process.
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Extending protection to a wide range of whistleblowers, including employees, self-employed individuals, volunteers, shareholders, and others who have access to information related to EU law breaches.
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Promoting a culture of transparency, accountability, and integrity across the EU by encouraging and facilitating whistleblowing as a means of preventing and deterring wrongdoing, and by ensuring that whistleblowers are recognized and valued for their contributions to the public interest.
Despite the growing number of laws, regulations, and internal policies available for whistleblower protection, whistleblowers do so at considerable personal and professional risk and frequently suffer from various forms of retaliation including termination, loss of promotion, poor performance reviews, ostracization, bullying, harassment, assault, gaslighting, career blocklisting, reputational damage, retaliatory investigations, and retaliatory civil or criminal liability lawsuits.
The impact of retaliation can be harmful to one’s mental and physical health, and it can also damage personal relationships and cause isolation, long-term financial loss or harm, or long-term career and reputation ruination. In addition to being an immoral, anti-democratic, and potentially illegal practice, the activity of retaliation against whistleblowers exerts a chilling effect on would-be whistleblowers. The analysis conducted by experts from the Corporate Crime Observatory has confirmed that it is precisely this form of "socially inflicted deterrence" that represents one of the main motivations driving organizations and their unscrupulous members to react with retaliatory actions against reporting individuals (see e.g., Bourdon, 2020, video recording at 31:07).
While whistleblower laws attempt to prevent retaliatory conduct and provide remedies, such provisions are often ineffective and require costly and time-consuming legal actions, with successful parties often being awarded much less than they have lost years down the line.
Conversely, some forms of whistleblowing may be financially rewarding, whistleblower incentives programs, which are more established in the United States, provide an example of a successful model, although only a small percentage of whistleblowers succeed in getting financial rewards. The United States has several such laws in place. Whistleblower incentive laws are designed to encourage and reward individuals who report illegal or unethical activities within their organization or industry. These laws typically offer financial rewards and protections to whistleblowers who provide information that leads to successful enforcement actions or penalties against wrongdoers. For example, in the United States, the Securities and Exchange Commission (SEC) offers monetary awards of up to 30% of the penalties collected from companies found to have violated securities laws, to individuals who provide original information that leads to a successful enforcement action. Similarly, the Internal Revenue Service (IRS) offers rewards of up to 30% of the amount collected in cases of tax fraud or underpayment, and the False Claims Act provides for rewards of up to 30% of the recovery amount in cases of fraud against the government. These incentive programs have been successful in uncovering and prosecuting a wide range of illegal activities, and have helped to promote a culture of transparency and accountability in the corporate world.
Such provisions for providing financial rewards to whistleblowers (sometimes referred to as “relators”) help tip the scales between risk and reward by providing strong confidentiality protections and increasing the flow of disclosures to regulators. However, reward programs are not without controversy or opposition. Some may argue that whistleblowers should be motivated not by financial reward, but rather by a greater moral or civic imperative towards protecting the interests of society, and therefore financial gain dilutes any perceived moral duty. Others argue that providing financial incentives may result in vexatious, false, or inflated claims that could waste resources and cause reputational harm.
Whistleblower rewards programs can also encourage whistleblowers to report externally instead of reporting internally first (for example in the Digital Realty v. Somers case the U.S. Supreme Court ruled that internal disclosures are not protected which further incentivizes bypassing internal disclosures until Congress provides a legislative fix). Whistleblower experts have also expressed concern that such programs can worsen retaliation against whistleblowers by damaging the level of trust and loyalty. It is worth noting that only a small percentage of tips result in an investigation, and whistleblowers are not rewarded just for the disclosure, but rather, a disclosure that results in a successful enforcement action and recovery following a comprehensive investigation and penalties can be mitigated if the company has strong whistleblower policies and procedures in place.
Another clear benefit is that the legal practice of whistleblower law has progressed among large firms in the United States, which increases the ability of whistleblowers to get legal representation and increases their likelihood of success. Finally, the U.S. government and taxpayers have benefitted greatly from strong whistleblower reward laws because it provides a tool for uncovering and prosecuting fraud and other illegal activities that might otherwise go undetected and whistleblower tips have resulted in billions of dollars in recoveries for the government in cases involving healthcare fraud, securities fraud, tax fraud, and other crimes. These laws also help deter future wrongdoing by sending a stronger message to potential wrongdoers. Finally, incentivizing whistleblowers to come forward with information helped lead to companies strengthening their internal compliance programs and preventing future violations.
We would like to thank most sincerely Samantha Feinstein, CCO Head of Area - Whistleblowing (Public Sector), and Stephen Holden, CCO Associate Editor, for their contribution to the development of the content on this page. For any proposals for integration or potential amendments, please contact the Corporate Crime Observatory.
Whistleblowing - Bibliography - Annual Spotlight
Please find below what we believe are the most interesting scientific publications in the area of whistleblowing which have been published each year.
2022
Feinstein, S., Devine, T., Pender, K., Allen, C., Nawa, R., & Shepard, M. (2022). Are Whistleblowing Laws Working?: A Global Study of Whistleblower Protection Litigation. Government Accountability Project and International Bar Association.
2021
Bazzichelli, T. (2021). Whistleblowing for Change: Exposing Systems of Power and Injustice. Digital Society.
2020
Mueller, T. (2020). Crisis of conscience: Whistleblowing in an age of fraud. Penguin.
2019
Kölbel, R., & Herold, N. (2019). Whistle-blowing from the perspective of general strain theory. Deviant Behavior, 40(2), 139-155.
2018
Westbrook, A. D. (2018). Cash for your conscience: Do whistleblower incentives improve enforcement of the Foreign Corrupt Practices Act. Wash. & Lee L. Rev., 75, 1097.
2017
Kohn, S. M. (2017). The new whistleblower's handbook: A step-by-step guide to doing what's right and protecting yourself. Rowman & Littlefield.
Whistleblowing - Select Bibliography
Whistleblowers and society
• Arszulowicz, M., & Gasparski, W. W. (Eds.). (2017). Whistleblowing: In defense of proper action. Routledge.
• Bazzichelli, T. (2021). Whistleblowing for Change: Exposing Systems of Power and Injustice. Digital Society.
• Boot, E. R. (2019). The ethics of whistleblowing. Routledge.
• Engdahl, O., & Larsson, B. (2016). Duties to distrust: The decentring of economic and white-collar crime policing in Sweden. British Journal of Criminology, 56(3), 515-536.
• Gao, J., Greenberg, R., & Wong-On-Wing, B. (2015). Whistleblowing intentions of lower-level employees: The effect of reporting channel, bystanders, and wrongdoer power status. Journal of Business Ethics, 126(1), 85-99.
• Lewis, D., Brown, A. J., & Moberly, R. (2014). Whistleblowing, its importance, and the state of the research. In International handbook on whistleblowing research (pp. 1-34). Edward Elgar Publishing.
• Miceli, M. P., & Near, J. P. (2005). Standing up or standing by: What predicts blowing the whistle on organizational wrongdoing?. In Research in personnel and human resources management. Emerald Group Publishing Limited.
• Mueller, T. (2020). Crisis of conscience: Whistleblowing in an age of fraud. Penguin.
• Sallaberry, J. D., Martínez-Conesa, I., & Flach, L. (2022). Whistleblowing in small and large accounting firms in Brazil. Small Business International Review, 6(2), e502.
• Savage, A., & Hyde, R. (2015). The response to whistleblowing by regulators: a practical perspective. Legal Studies, 35(3), 408-429.
Definitions and legal frameworks
• Bok, S. (1980). Whistleblowing and professional responsibilities. In Ethics teaching in higher education (pp. 277-295). Springer, Boston, MA.
• Devine, T., & Katz, S. (2014) The National Security Whistleblower's Tightrope: Legal Rights of Government Employees and Contractors, in Whistleblower, Leaks, and the Media, Rosenzweig, P., McNulty, T., and Shearer, E. (eds.), 81-105. Chicago: American Bar Association.
• Farrell, D., & Petersen, J. C. (1982). Patterns of political behavior in organization. Academy of Management Review, 7(3), 403-412.
• Feinstein, S., Devine, T., Pender, K., Allen, C., Nawa, R., & Shepard, M. (2022). Are Whistleblowing Laws Working?: A Global Study of Whistleblower Protection Litigation. Government Accountability Project and International Bar Association.
• Jubb, P. B. (1999). Whistleblowing: A restrictive definition and interpretation. Journal of Business Ethics, 21(1), 77-94.
• Nader, R., Petkas, P. J., & Blackwell, K. (1972). Whistle blowing: The report of the conference on professional responsibility.
• Near, J. P., & Miceli, M. P. (1985). Organizational dissidence: The case of whistle-blowing. Journal of business ethics, 4(1), 1-16.
Motivation of whistleblower
• Brown, A. J., Lewis, D., Moberly, R., & Vandekerckhove, W. (Eds.). (2014). International handbook on whistleblowing research. Edward Elgar Publishing.
• Cassematis, P. G., & Wortley, R. (2013). Prediction of whistleblowing or non-reporting observation: The role of personal and situational factors. Journal of business ethics, 117(3), 615-634.
• Grant, C. (2002). Whistleblowers: Saints of secular culture. Journal of Business Ethics, 39(4), 391-399.
• Near, J. P., Rehg, M. T., Van Scotter, J. R., & Miceli, M. P. (2004). Does type of wrongdoing affect the whistle-blowing process?. Business Ethics Quarterly, 14(2), 219-242.
• Peeples, D. K., Stokes, P., & Wingfield, S. S. (2009). When the whistle is blown: Legal defenses and practical guidelines for managing reports of organizational misconduct. Business & Society, 48(4), 467-488.
• Richardson, B. K., & Garner, J. (2019). Stakeholders’ attributions of whistleblowers: The effects of complicity and motives on perceptions of likeability, credibility, and legitimacy. International Journal of Business Communication.
• Roberts, P. (2014). Motivations for whistleblowing: Personal, private and public interests. In International handbook on whistleblowing research. Edward Elgar Publishing.
• Rothschild, J., & Miethe, T. D. (1999). Whistle-blower disclosures and management retaliation: The battle to control information about organization corruption. Work and occupations, 26(1), 107-128.
• Thüsing, G., & Forst, G. (Eds.). (2016). Whistleblowing-A comparative study (Vol. 16). Springer.
Characteristics of whistleblowers
• Bjørkelo, B., Einarsen, S., & Matthiesen, S. B. (2010). Predicting proactive behaviour at work: Exploring the role of personality as an antecedent of whistleblowing behaviour. Journal of Occupational and Organizational Psychology, 83(2), 371-394.
• Brewer, G. A., & Selden, S. C. (1998). Whistle blowers in the federal civil service: New evidence of the public service ethic. Journal of public administration research and theory, 8(3), 413-440.
• Cassematis, P. G., & Wortley, R. (2013). Prediction of whistleblowing or non-reporting observation: The role of personal and situational factors. Journal of business ethics, 117(3), 615-634.
• Culiberg, B., & Mihelič, K. K. (2017). The evolution of whistleblowing studies: A critical review and research agenda. Journal of Business Ethics, 146(4), 787-803.
• Dozier, J. B., & Miceli, M. P. (1985). Potential predictors of whistle-blowing: A prosocial behavior perspective. Academy of management Review, 10(4), 823-836.
• Dworkin, T. M., & Baucus, M. S. (1998). Internal vs. external whistleblowers: A comparison of whistleblowering processes. Journal of business ethics, 17(12), 1281-1298.
• Gundlach, M. J., Douglas, S. C., & Martinko, M. J. (2003). The decision to blow the whistle: A social information processing framework. Academy of management Review, 28(1), 107-123.
• Park, H., Blenkinsopp, J., & Park, M. (2014). The influence of an observer’s value orientation and personality type on attitudes toward whistleblowing. Journal of business ethics, 120(1), 121-129.
• Vadera, A. K., Aguilera, R. V., & Caza, B. B. (2009). Making sense of whistle-blowing's antecedents: Learning from research on identity and ethics programs. Business Ethics Quarterly, 19(4), 553-586.
Who blows the whistle?
• Carson, A., & Farhall, K. (2018). Understanding collaborative investigative journalism in a “post-truth” age. Journalism Studies, 19(13), 1899-1911.
• Dyck, A., Morse, A., & Zingales, L. (2010). Who blows the whistle on corporate fraud?. The journal of finance, 65(6), 2213-2253.
• Miceli, M. P., Dreyfus, S., & Near, J. P. (2014). Outsider ‘whistleblowers’: Conceptualizing and distinguishing ‘bell-ringing’behavior. In International handbook on whistleblowing research (pp. 71-94). Edward Elgar Publishing.
• Miceli, M. P., Near, J. P., & Dworkin, T. M. (2008). Whistle-blowing in organizations. Psychology Press.
Methods of Whistleblowing
• Callahan, E. S., Dworkin, T. M., & Lewis, D. (2003). Whistleblowing: Australian, UK, and US Approaches to disclosure in the public interest. Va. J. Int'l L., 44, 879.
• Donkin, M., Smith, R., & Brown, A. J. (2008). How do officials report? Internal and external whistleblowing. Whistleblowing in the Australian public sector, 83.
• Lee, G., & Fargher, N. (2013). Companies’ use of whistle-blowing to detect fraud: An examination of corporate whistle-blowing policies. Journal of business ethics, 114(2), 283-295.
• Lobel, O. (2012). Linking prevention, detection, and whistleblowing: Principles for designing effective reporting systems. S. Tex. L. Rev., 54, 37.
• Savage, A., & Hyde, R. (2015). The response to whistleblowing by regulators: a practical perspective. Legal Studies, 35(3), 408-429.
Retaliation against whistleblower
• Alford, C. F. (2002). Whistleblowers: Broken lives and organizational power. Cornell University Press.
• Grant, C. (2002). Whistleblowers: Saints of secular culture. Journal of Business Ethics, 39(4), 391-399.
• Khan, J., Saeed, I., Zada, M., Ali, A., Contreras-Barraza, N., Salazar-Sepúlveda, G., & Vega-Muñoz, A. (2022). Examining whistleblowing intention: The influence of rationalization on wrongdoing and threat of retaliation. International journal of environmental research and public health, 19(3), 1752.
• Kohn, S. M. (2017). The new whistleblower's handbook: A step-by-step guide to doing what's right and protecting yourself. Rowman & Littlefield.
• Miceli, M. P., & Near, J. P. (1992). Blowing the whistle: The organizational and legal implications for companies and employees. Lexington Books.
• Near, J. P., Rehg, M. T., Van Scotter, J. R., & Miceli, M. P. (2004). Does type of wrongdoing affect the whistle-blowing process?. Business Ethics Quarterly, 14(2), 219-242.
• Smith, R. (2014). Whistleblowers and suffering. In International handbook on whistleblowing research. Edward Elgar Publishing.
Rewards
• Dyck, A., Morse, A., & Zingales, L. (2010). Who blows the whistle on corporate fraud?. The journal of finance, 65(6), 2213-2253.
• Kölbel, R., & Herold, N. (2019). Whistle-blowing from the perspective of general strain theory. Deviant Behavior, 40(2), 139-155.
• Peeples, D. K., Stokes, P., & Wingfield, S. S. (2009). When the whistle is blown: Legal defenses and practical guidelines for managing reports of organizational misconduct. Business & Society, 48(4), 467-488.
• Westbrook, A. D. (2018). Cash for your conscience: Do whistleblower incentives improve enforcement of the Foreign Corrupt Practices Act. Wash. & Lee L. Rev., 75, 1097.
Reporting pathways and implications
• Lewis, D., Brown, A. J., & Moberly, R. (2014). Whistleblowing, its importance, and the state of the research. In International handbook on whistleblowing research (pp. 1-34). Edward Elgar Publishing.
• Miceli, M. P., & Near, J. D. TM (2008), Whistleblowing in Organizations.
• Near, J. P., & Miceli, M. P. (1995). Effective-whistle blowing. Academy of management review, 20(3), 679-708
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