Part I analysed some of the structural features of the financial sector that can erode ethical commitments between market participants and touched upon some specific instances where whistle-blowers within the financial sector had served as circuit breakers for positive change.  Part II considers the concept of whistle-blowing itself, especially its contested character. 

For many people, the term whistle-blower has strong connotations of an individual, who motivated by a sense of personal, and/or public duty, may expose what they perceive as specific instances of wrongdoing, which may be within the private and/or public sector.  In many cases it is their occupational role that has provided them with the knowledge of said wrongdoing. 

This latter image has become ingrained in popular culture, especially specific Hollywood movies with prominent movie stars playing the whistle-blower role such as Jane Fonda in Silkwood and Russell Crowe in The Whistle-blower.  However, there are significant levels of ambiguity surrounding the motivations, status, desirability and value of whistle-blowing, both as a concept, and, in practice.  Unsurprisingly, given these uncertainties, dilemmas permeate debates about whistle-blowing as a social priority, as a business objective and as a mechanism of regulation. 

Should whistle-blowers be viewed as an entirely positive force in the business world and the wider community?  Or, are more negative labels such as informants, snitches, rats, squealers, sneaks, or stoolies more appropriate? Research by Fisher et al (2002) found that the revelations of whistle-blowers may not always be accurate, nor motivated by unselfish concerns and sometimes may hamper, rather than help the efforts of law enforcement against harmful behaviour.  Is a whistle-blower a heroine or a villain?  The use of the female term heroine is deliberate because there are those who view women as being more likely than men to assume the role of whistle-blower.  Is there a gender dimension regarding whistle-blowing?  Are women more likely than men to blow the whistle on misconduct because they may seek a higher moral plane than men do in how organisations and their personnel should conduct business?   Part I provided the examples of Sherron Watkins at Enron and Cynthia Cooper at World-Com, but to date there is insufficient data to determine accurately whether there is a significant gender dimension in whistle-blowing.  This is a potentially fruitful area of inquiry though and comparison between different sectors and business cultures could be informative.  For example, is whistle-blowing more evident within industries that have a higher proportion of women working in them?

What motivates people to blow the whistle given the recriminations that they are likely to face?  Alford’s research in the US (2001) discovered that most whistle-blowers suffered reprisals for their actions.  In Alford’s sample approximately half of whistle-blowers were dismissed from their jobs, of these half lost their homes, and of this latter group half lost their families as well.  Alford felt that most of the whistle-blowers that he interviewed were in some way broken and unable to assimilate the experience.  If Alford’s sample is an accurate representation of the experience of whistle-blowers in general and is applicable to other jurisdictions as well as the US, with the personal risks facing whistle-blowers seeming immense – why should they bother blowing the whistle?  Given the likely personal downside, what motivates whistle-blowers to risk so much and blow the whistle?  For Sherron Watkins and Cynthia Cooper it was their personal commitment to their core sets of values, allied with a belief that these values had synergies with what they perceived as the values of their broader communities and intrinsic notions of the public good.  This perspective ties in with some of analysis of the pieces on this CLMR portal discussing The Oxford Project and the importance of the virtues not only in community oriented activities but also in business.

If for now we accept the assumption, and in some it is a substantial assumption, that whistle-blowing is on balance a positive contribution to the public good, what regulatory arrangements should be put in place to facilitate and support whistle-blowers and what developments have there been in Australia? 

Over the last twenty years legislative provisions to protect whistle-blowers have been enacted across most states and territories, for example The Whistleblowers Protection Act 1993 in South Australia.  There have been initiatives in other environments too.  For example, provisions to protect whistle-blowers in the private corporate sector were introduced in 2004 with Part 9.4AAA into The Corporations Act 2001 (Cth).  In 2007, the Australian Stock Exchange (ASX) introduced its revised Principles of Good Corporate Governance and Best Practice Recommendations in which Recommendation 3.1 stated that companies should establish and disclose a code of conduct that seeks to ensure that whistle-blowers who report violations in good faith are protected.  The Australian Securities and Investments Commission (ASIC) publishes guidance on company auditors’ obligations regarding whistle-blowing, handling revelations from a whistle-blower and the protection of whistle-blowers in Australia.

The limitations on protections for whistle-blowers are likely to be a strong driver as to why there has been little use of Australia’s whistle-blower protections to date.  However, it is understandable that governments, their agencies and business interests would be wary of offering wide indemnities for whistle-blowers given the potential for vexatious complaints and the difficulties associated with investigation.  This highlights again the complex issues that are thrown up by whistle-blowing.  Nevertheless, there seems to an increasing recognition that if societies want to promote whistle-blowing as a virtuous behaviour then there will have to be a quid pro quo in terms of increasing protections.  These developments are being driven in part by an increasing number of interest groups such as the National Whistle-blowers Center in the US and Whistle-blowers Australia who perceive whistleblowing as a fundamentally positive force, and want to nurture and strengthen the culture and practice of whistleblowing.  There appears to be growing support for their core objectives in many jurisdictions.  For example, in May 2012 the US Department of Labor’s Occupational Safety and Health Administration (OSHA) announced the establishment of a Whistleblower Protection Advisory Committee.  Also in May 2012, The Whistleblower Protection Enhancement Act of 2012 passed through the US Senate.

There are complexities associated with whistle-blowing and debate will continue, but in closing listed below are some changes (pragmatic and conceptual), that might help to promote whistleblowing in ways that are likely to contribute to the public good:  comprehensive statutory underpinning; accompanying infrastructure support; an independent, but State funded, Whistleblowers Agency; appropriate checks and balances; whistleblowing must be brought out of the relative shadows; and whistleblowing should be normalised as behaviour that in the main contributes positively to the public good