Reporting, analysis and opinion by Mathew Carr*
April 18-21, 2023 — LONDON: It’s the insincerity that’s most annoying. In 2023, British fake sincerity — known more kindly as the ‘stiff upper lip’ — pervades.
Do the British deserve their reputation for competence? Are they faking and covering it up?
Regulators who pretend to regulate collaboratively. Police who commit crimes. Carers who don’t care. Inspectors who terrorize rather than collaborate to improve institutions. Firemen who acted out a rape of a female colleague. Major retailers who sell products they must know are of low quality. Councils and schools and police who fail to protect women and children. Financial regulators who get questioned for ignoring wrongdoers (unless they are small fry and won’t push back, too much). Tech companies, travel agents and car-hire firms that rip you off (but probably won’t overcharge their corporate clients). News companies that are dangerously biased. Racist managers, who deliberately seek out minority-race employees for persecution. Pretend climate leadership. Property companies and government bodies that shroud tall residential buildings with deadly flammable cladding. Politicians who pretend to care about policy.
Those who speak out about the harms flagged above — financial, physical, mental — get turned into villains.
There’s a push both here in the UK and in the US — indeed globally — to boost protection of whistleblowers, who encourage companies, government departments and institutions to prevent wrongdoing and install a more collaborative culture, even when it might threaten their standing with their boss.
These are the slightly naive people who hope that doing the right thing will be rewarded, or at least not punished. They think their boss will respond appropriately.
Yet, they are usually wrong, according to a survey of whistleblowers and whistleblower representatives interviewed by CarrZee the past three weeks, as well as according to research and speeches given at Whistleblower Awareness Week (WBAW), an underreported event held late last month in Parliament House, London.
Bosses’ instincts favor self preservation rather than team or corporate improvement, so they attack the truth teller as someone who is threatening, my survey found. Their next instinct is to cover up whatever harm the whistleblower was seeking to put right, so that it does not reflect badly on existing management. Gotta maintain that facade of calmness, right? That’s the most important thing, right?
Are UK lawmakers sincere in their apparent determination to tackle this culture and better protect whistleblowers? The jury is out, according to my survey. It’s certainly no sure thing and, according to some, probably won’t happen in the last two years of this current government.
There are plenty of reasons why that’s the case.
Reason 1 – lack of capacity
Firstly, politicians have a packed legislative agenda, with laws struggling to move forward even though the ruling Conservative party has a strong majority in parliament. Still, PM Rishi Sunak is seen as a safer legislative hand than his two predecessors.
Also, Britain is known for a rather divisive, shamelessly biased and shrill media landscape, which arguably stokes the cover-up culture.
“Governments by their very nature do not speak up about wrongdoing,” said Chaand Nagpaul, chairman of the British Medical Association through May last year and a practising doctor. “They believe it will lead to lack of electoral success, so you don’t have an openness at government level. It’s not a very good starting point in terms of how the rest of society functions,” he told me by phone.
Do you have confidence Mr Sunak will prioritize whistleblowing law reform?
“I do not have confidence that it is in the government’s mind or plan to decisively address this culture of blame and victimizing individuals that is prevalent in the NHS (National Health Service). I do not see anything coming out of government that tells me that this is something that is on the top of their agenda. What I am saying is it should be on the top of their agenda because it is directly impacting on service provision.” (He was speaking before last week’s junior doctors’ strike.)
So the political culture is insincere. It’s a point that Mary Robinson, a member of parliament from the same ruling Conservative party, is willing to concede.
“There is a tendency to say ‘nothing to see here’,” said Robinson, in a session at WBAW in which Nagpaul had also spoken. “And perhaps that goes to government, too. That’s a very valid point.”
She’s not quite saying the current government loves mendacious behavior. But it’s close.
Robinson’s view is important because she chairs the All Party Parliamentary Group for Whistleblowing. At least superficially, there’s support across the political spectrum for reform of Britain’s whistleblower protection laws.
“Whistleblowers in general remain the subject of suspicion and scepticism and while organisations and official bodies sing the merits of whistleblowing and parade policies and procedures the lived experience of whistleblowers remains poor”
APPG via parliament/Hansard
See here for a transcript of a debate in UK house of parliament on whistleblowing, including lots of examples:
Politicians are happy to take the credit when whistleblowers finally help improve policy or the law. But that comes months or even many years after the whistleblowing.
See below, where, as part of these reasons, I outline some industries’ troubled responses to whistleblowers, even as those organisations are being helped by those same truth tellers …and often in the context of management coverups.
Reason 2 – lack of track record
Related to reason 1, had the British government been keen to change the nation’s cultural propensity to look away from inconvenient truths, it would have changed the whistleblowing law by now.
The current law, the Public Interest Disclosure Act (PIDA) 1998, sits under the employment law, an inappropriate place for it, according to Robinson and my survey, partly because it only protects workers — not customers, job applicants, volunteers and others. Only 14% of whistleblowers with a case that goes to court win their litigation.
The Conservative party has been in charge for 13 years, about half of PIDA’s life. In the quarter of the century since the inception of the PIDA law, it’s dropped in ranking from near world’s best law to near worst. Last year, the International Bar Association and others conducted the first review of its kind to assess countries with whistleblower legislation against compliance with international best practice. The UK ranked only 12th out of 16 levels, languishing near the bottom.
Kenya, New Zealand, Guyana, Lithuania, Republic of Korea, Slovakia, Albania, Jamaica, Malta, Uganda, Vietnam, Bosnia, France, Ghana, Malaysia, Tanzania, Tunisia, Moldova are just some of the countries ranking ahead of Britain …with the EU and the US at the top. (See chart below)
And two years later, reforms to known problems with the law are not being put in place. Instead, a review is being undertaken.
(See related reasons below for examples of the poor track record)
Reason 3 – by admission
The government itself signals whistleblowing law reforms may be modest.
I approached Kevin Hollinrake, an MP and Parliamentary Under Secretary of State (Department for Business and Trade), who announced the review.
I asked would the new law be in place before the next general election, due by early 2025.
“Possibly, depends what the legislation entails. If an office of the whistleblower would be primary legislation, it’s much more difficult. Secondary legislation is much quicker,” Hollinrake said last month, amidst the echoes in Westminster Hall in parliament house in London.
Secondary legislation would normally imply a tweak of the existing PIDA law rather than the wholesale changes required to bring protections up to global best practice.
I ran Hollinrake’s comments past the Liberal Democrat party’s Baroness Susan Kramer of the House of Lords.
“Unless you were going to do minor changes to PIDA, I can’t see what you would do … with secondary legislation. He might have something more creative in mind,” she said.
The new law could come under the economic crime law, equality law (whistleblowing could be included in a list of protected attributes/activities), or stay under employment law, depending on the review. Minimum whistleblowing standards could be installed under multiple legal streams, including trade deals.
Should a government use secondary legislation, it should in theory amount to a change only in regulations and not introduce new policy, said Baroness Kramer, speaking by phone. She is sponsor of the Office of the Whistleblower Bill, having also pushed for better legislation back in 2017, when she said this about financial-industry corruption:
‘Being realistic, so much money swirls though the financial system that the potential for ill-gotten gains from misbehaviour is huge. My amendment mentions fraud, tax evasion, money laundering and mis-selling, but ingenuity in this area is boundless, as evidenced by the fixing of the LIBOR benchmark rate, which involved many banks over several years distorting billions of dollars of transactions, for which very few have paid the price, and those who have are primarily junior staff. With money on this scale, no regulator or enforcement agency can begin to tackle these issues without inside information. That means a positive culture of whistleblowing, which in itself then becomes a deterrent.’
Six years and multiple scandals later, we have a “review.” There’s been £21 billion ($26 billion) of public money lost to fraud since the Covid pandemic, according to Sky News, citing the National Audit Office, which acts somewhat like a whistleblowing organisation, to be fair.
Had the government created better whistleblowing law sooner, I wonder how much money might have been saved. Which brings me to some key examples of how better whistleblowing laws (had they been deployed) might have saved taxpayers, consumers, employees and customers billions more, and possibly help mitigate the mental health crisis across the country.
Instead, the poor experience of whistleblowers below demonstrates how the current government does not seem to have appetite for corporate-government-societal-cultural change. There’s a special focus on the health service, which is currently facing massive upheaval.
Reason 4 – slow progress at National Health Service shows government reluctance
One of the best interventions at Whistleblowing Awareness Week that I witnessed came from Dr Chris Day, a doctor who was lamenting his treatment by “the system” after about a decade of whistleblowing to improve UK’s health industry. In the room also were nurses who had been treated badly and representatives of NHS leadership and the regulator the Care Quality Commission.
It’s not just about the law, or training. It’s about culture, Dr Day said.
“You don’t need to be trained to know not to lie. You don’t need to be trained not to destroy evidence, not to conceal evidence. These are fundamental things, perhaps particularly if you are a senior manager or a lawyer. I’ve been going at this for nine years. The struggle I’ve found with senior leaders — I won’t name names … the CQC NHS England’s failure to act on that (whistleblowing) and maybe to assist in getting the various people off the hook is not a training issue. It’s something else… I would suggest that it is potentially a fear issue.
“I don’t think for one second that you are in your office at NHS England or the CQC cooking up evil plots to destroy healthcare staff, but it might be that you worry for your own future, you worry for your own security and you have no faith whatsoever in the employment tribunal system.
Day vs Day
“Just imagine if Mr Chris Day (CQC’s director of engagement – who was in the room where Dy Day was speaking) supported Dr Chris Day in some miraculous act and Mr (Tom) Grimes (NHS England’s head of advocacy and learning) [who was also in the room] supported me. They didn’t, actually. (But had they supported me) then they would be in the employment tribunal with me, wouldn’t they, fighting for their careers and they would probably get the same sort of monkey business I’ve had and they’d be out of a job, lose their house. I completely understand why you guys don’t want to do that. Isn’t that fundamentally what this new bill is all about. You as leaders shouldn’t have to make that choice (between protecting the whistleblower and protecting your job). And I certainly shouldn’t have to make that choice (between speaking up and protecting my job).
Getting rid of false choices
“I think that’s what all of this is about — getting rid of that choice. (It could give) you (NHS leaders) a bit of legal backup to do what you actually want to do. No one likes to cover stuff up, but for some reason in the NHS it happens again and again and again. And that’s why I’m excited about this bill. It actually gives all of you a chance to get a bit of legal backup to go about things in a different way. I think you need it. You’re fearful and that is the reason why you don’t do anything. When it gets really nasty, I see senior leaders in the NHS running a mile for the door and worse. It’s cost me personally. It’s cost others even worse.“
The data set out by Nagpaul and others was illuminating, especially given striking junior doctors are struggling to even get a proper negotiation going on pay and conditions:
Over half of doctors surveyed felt they would be unfairly blamed themselves if they raise a concern. Only 40% of nurses are willing to report a safety concern.
“You end up in a system that is not learning. Litigation is costing £14 billion pounds each year to the NHS — 7% of the budget. I suggest a portion of that would certainly be saved with better patient-safety systems,” and better culture, Nagpaul said.
The NHS might learn from the aviation industry’s “no blame” culture, he said. Once adopted, that industry had a 75% reduction in fatalities and nine fold increase in passenger numbers, Nagpaul said (not fact checked, but here is a paper).
“I’m suggesting we have a very major problem of culture … We should all be honest and say the level of staffing is making the service unsafe.”
He referred to Norway, where a no fault system means that “76% raise concerns…83% report a positive experience on raising a concern, 64% report improvements.”
Mr Chris Day of the Care Quality Commission (as opposed to Dr Chris Day) says Britain’s health service is showing some progress.
‘Shocking and worrying’
“What we’ve heard today is shocking and worrying actually in terms of how people in health feel. We rely on almost 15,000 whistleblowers each year to give us evidence.”
Sometimes staff and users of the NHS come to the same conclusions from different perspectives (on what problems need to be addressed), he said.
CQC has begun new ways of responding to whistleblowers …for example by ensuring they are anonymous to the NHS but not to CQC. That helps the CQC understand problems at the level within a particular hospital and at the level of themes across institutions, Mr Day said.
Whistleblowers need to be encouraged to tell their story, he said.
An Office of the Whistleblower could help guide how an industry might break their experience down chronologically into a story. “How do you help them not only to tell their story well …but feel supported.”
The CQC is starting to bring groups of whistleblowers together “so they feel solidarity. If we need to understand how the service is performing real time, the best information will come from people in that service, people using it. We need to be clear about expectations about transparency and openness.”
“The most important thing (for any new legislation for an Office of the Whistleblower) is to not create a front door that’s separate from everything else.” That is, information should be shared, Mr Day said.
Health regulator CQC needs to be ‘repurposed’
Nagpaul was critical of the English regulatory system:
“I’m calling for the repurposing of the CQC. I’m calling for more granular identification of issues with very clear improvement plans which are not driven by shame, but are driven by the need for improvement. The simplistic ratings are not really working.”
They “lead to culture of concealment rather than openness”
The commission is considering tweaks to its system, and wants to try to win more friends for its four-point ratings scale (outstanding, good, requires improvement and inadequate) through next year.
Care Quality Commission system seen flawed
Source: CQC
It reduces accountability by calling a whole hospital outstanding, Nagpaul said. It also reduces praise for those bits that are good when the whole hospital is labeled inadequate.
“When you get this trust (this institution) branded as inadequate, it is not true that the entire hospital is inadequate because that is not the way they do inspections.” The well-functioning parts of the hospital are “tarred with the same brush”.
He cited both Norway’s and Scotland’s systems, which is less blamey.
People who retaliate against whistleblowers “need to be held accountable,” Nagpaul said. This rarely happens, according to my survey.
“Those people (who terrorise whistleblowers) should not be in place because that’s not leadership. We need to have an NHS (where) you appoint people on their skills of creating an inclusive workplace. I don’t think those questions even come up in interviews (because the focus is on improving performance statistics and meeting targets and cutting costs),” he said.
CQC chairman in control?
On March 30, I asked the CQC press office questions, including these:
I’ve been told by senior people in the health industry that CQC inspections unnecessarily create a culture of blame and fear …so that NHS folks are reluctant to speak out (similar to the Met Police culture). The NHS could save 10s of billions of quid in unnecessary legal fees if the CQC was “repurposed.” I want to give you a chance to comment. Is the CQC planning to change to improve the NHS culture and support whistleblowers? How? Why does the CQC fight proposals to publish reports detailing what’s going on (if that’s true)? Healthcare Improvement Scotland does it better, apparently…and the name reflects a better regulatory attitude, I’m told. Can you learn from them? Comment? Does the CQC need to be disbanded? Why why not? Is the CQC a law unto itself and not properly regulated by anyone? (As one NHS Dr said).
While the regulator put out the statement linked above, I’ve still got no direct response. I will let you know if I get one.
Whistleblower Dr Chris Day: follow-up comments, by phone
“Senior health leaders have no faith in the law themselves, which means should they decide to support a whistleblower, they could find themselves in the whistleblower graveyard.
“Senior healthcare leaders are made just as vulnerable as on-the-ground staff by weak and dysfunctional whistleblowing laws.
“I found it astonishing to learn that public money was being used in a fight between NHS trusts and the NHS regulator, the Care Quality Commission, over publication of CQC reports that are critical of trusts. That, again, fuels this culture of silence. That’s crazy.
“If an NHS trust is prepared to pay lawyers to sue the NHS regulator to prevent their reports being published, you can see why Trusts are also prepared to spend vast sums of public money crushing whistleblowers. Both actions divert public money to a small group of law firms for the purposes of cover up.
It seems to Dr Day that the inspection system is “a massive sideshow. And you can see how dysfunctional that sideshow can get.”
Judicial oversight?
“The judicial oversight in this country is unbelievable in that there appears to be none,” Dr Day said.
“That’s why I think this Office of the Whistleblower is a really good thing. The only thing that works with oversight is a public hearing but in my case, even when you have this, we have seen that the judge feels able to effectively ignore multiple acts of destruction of evidence.”
So the most important part of the proposed whistleblowing law is the establishment of an independent office of the whistleblower with the safety net of a public hearing in a specialist Tribunal to determine disputes about whistleblowing, Dr Day said.
“Where you have a packed public gallery, where you have an important issue”… That’s how you keep people heading regulatory bodies accountable, Dr Day said.
On whistleblower incentives: “I would call it recognition and compensation, not rewards”
Further, there needs to be strong disincentives to treat whistleblowers badly, he said. “At the moment you have the opposite. You’ve got this idea that ‘power people’ and employers can just get away with anything.”
“The fundamental problem in the UK at the moment is you’ve got whistleblowers with very very good evidence of wrongdoing, very very good evidence of cover up, losing their cases because of the farce of the system. In my case evidence was even allowed to be destroyed mid-hearing with no consequences. This mishandling of whistleblowing cases seems to be happening on a surprising scale across the country.”
So the NHS doesn’t really have managers that support people for speaking up, Nagpaul said. “That’s not even on the agenda when they are being appointed.”
Racism?
In the NHS, workers of ethnic minority are far more likely to be bullied and harassed, far more likely to be disciplined and referred to disciplinary processes, Nagpaul said. He’s also current chairman of the British Medical Association’s National Forum for Racial and Ethnic Equality.
“When you have a blame culture and when you have a culture where organizations want to deflect accountability onto individuals…the culture feels that.”
Management inclined to retaliate will “always choose the most vulnerable and the most vulnerable are those of ethnic minority.” Ethnic minority people are trying to get a foothold in career profession and they worry that if they challenge their employer they will be harmed by that challenge, he said. “It might affect their career progression. So in fact they become soft targets.”
Conscious or unconscious, such targeting of the vulnerable “is wrong doing,” Nagpaul said. “That goes on” (in the NHS).
Leadership in the NHS has a predominance of white people, yet sometimes leaders from ethnic minority backgrounds “behave pretty poorly toward their ethnic-minority staff,” he said.
Nurses hung out to dry
Cathryn Watters, a whistleblowing nurse, told of numerous colleagues who had been thrown on the scrap heap because they spoke up. Even when they win their arguments, some nurses become mysteriously unemployable or are too stressed to work.
“I thought that my managers would listen, take on board, reflect and improve clinical areas. It took me a while, but I realised that this rarely happened,” she said at parliament house.
Watters, in an interview this week with CarrZee, said she will be surprised if the Conservative government introduces law reform before the next election.
“There will always be something else that will be seen as a bigger priority.”
Reducing the pay gap between managers and workers provides an opportunity improve culture, Watters said. Two decades ago, managers didn’t have such a high pay premium and acted more like a team member.
The UK government is misguided in its lack of enthusiasm to close the pay gap for nurses and junior doctors, a rebalancing which may even result in taxpayer savings if done well because there would be savings from manager wages and reduced litigation costs, Watters said.
“How can you expect to get commitment from people if you don’t commit to them?”
So, better treatment of whistleblowers is required to create systems of government and capitalism that are less focussed on money and more focussed on the sustainable development goals.
If the UK’s new law can pull off finding a way to reward whistleblowers for protection against non-financial harm, it would leapfrog the US system, said David Colapinto from Kohn, Kohn & Colapinto, a Washington-based lawfirm that specializes in representing whistleblowers.
“That’s a very novel concept,” he said in an interview in London. “That doesn’t exist in the U.S. for the most part. The reward system has been limited to …did the government collect a sanction, or damages …was there a fraud recovery for the government? Then they give a portion of that to the whistleblower.”
First, Britain needs to catch up on installing a whistleblowing system that reveals fraud that is probably already there, yet remains unseen, he said.
Any law that the UK manages to enact would probably have to be improved again in a couple of years, anyway, he said. “Nothing is static.”
Why does there need to be a system of rewarding whistleblowers?
“Because folks are going to ruin their careers by coming forward to report a fraud,” Colapinto said in the sitdown interview in Westminster.
A key debate at WBAW was how to incentivize whistleblowers.
Whistleblower payout surge
Source: See Alex Platt’s draft report published in notes below (it’s being completed, seeks comments).
America’s system has created lucrative business for former employees of the Securities & Exchange Commission who become whistleblowing attorneys.
Stunning $239 million in 18 months (and counting):
Education
I spoke with a deputy headmaster in a large secondary school in England.
He acknowledged that the regulatory rating system that labeled whole schools “inadequate” or “outstanding” is probably flawed because it creates too much stress, especially at smaller schools.
Berkshire head teacher Ruth Perry, head of Caversham Primary School in Reading, was reportedly devastated and earlier this year took her own life after being told that her previously outstanding primary school was to be downgraded to “inadequate”.
“There is ridiculous pressure on senior leaders. Ofsted (the education regulator) does put a lot of pressure on senior leaders,” the deputy headmaster told CarrZee. I won’t name him.
“Their reports (Ofsted’s) are, you know, career defining. I can understand the pressure she is under is immense,” he said, referring to Perry. “Ofsted is very high stakes for schools. It has always been very high stakes. If you are at a big school like mine the pressure can be spread around a little bit. They (Caversham) went inadequate because something failed in safeguarding. That is really easy to do (it’s not difficult to make a safeguarding error). If you get an inadequate for your leadership, it’s a bit career suicide-ish. If things go wrong it’s really bad for your career. It’s very bad for the school.”
While parents deserve accountability, the problem is that the inspection system “is very cliff edge. And it’s very high stakes.”
In terms of addressing that system, there’s talk of softening the ratings categories and of taking the safeguarding of children out of the Ofsted ratings, the deputy said. He said his school already had a speak up culture and teachers were willing to criticise management.
I’ve also spoken with a whistleblower who reckons schools, councils and even the police suffer groupthink and discriminate against one separated parent over another on safeguarding…based mainly on one decision made by the council.
Another education whistleblower I chatted to said she is suffering years after making disclosures on safeguarding children that should have given her protection. Instead, she was fired.
It’s a difficult area. I heard of another incident in another country where police arrived at a house of a woman accused of abuse because she offered children she was minding too much ice cream. The woman then had a stroke, which she survived.
Some whistleblowers might make allegations that are out of proportion to their seriousness.
The possibility that whistleblowers have nefarious motivations will also need to be addressed in any new law, according to lawmakers.
Reason 5 – Zahawi
The Conservative party chairman until earlier this year, Nadim Zahawi threatened a whistleblower Dan Neidle before the politician was fired by Sunak in January.
Zahawi was sacked because he didn’t pay enough tax and wasn’t honest about it.
Here are Neidle’s comments on Times Radio, made after that news broke (check out the video):
“I don’t think of myself as a naive person. But I had no idea that a senior politician could say things that were just not true and take legal action — or threaten to take legal action — on that basis. To me, it’s extraordinary.”
Neidle
Reason 6 – Assange
The UK intends to extradite Julian Assange, one of the world’s best-known whistleblowers and journalists, to the US, where he could face effective life in prison. He’s already sick and might commit suicide, according to his family. Assange exposed war and climate crimes, among other public-interest information.
Reason 7 – astonishingly slow progress at the Met Police
The London Metropolitan police has had cultural problems for decades, despite multiple whistleblowers. A series of national governments have failed to lock in better management at the force, and in others across the country.
From March 21 this year, the Guardian Newspaper’s take: the fall of a British institution; Metropolitan police again found to be institutionally racist, sexist and homophobic – and in need of radical reform
- Met police found to be institutionally racist, misogynistic and homophobic
- In 2014, the Metropolitan Police Service (MPS) made repeated attempts to silence a whistleblower who exposed the widespread manipulation of crime statistics, the same newspaper reported at the time.
*Reason 8 – my climate whistleblowing experience indicates the UK government isn’t keen on protecting those warning about harm
I’ve had my own struggles with climate whistleblowing and the Public Interest Disclosure Act.
I will leave this here, for now. (More on CarrZee.org if you search for ‘Bloomberg’) I’ve added this picture below, of my family car being “shat on” around April fool’s day earlier this month….note – it wasn’t bird poo on my car…perhaps flour water made to look like droppings.
NOTE: Lack of fake poo on the pavement and road between the tree and the car shows it wasn’t done by birds sitting in the tree. The fake animal mess washed off much easier than real shit would have. I’m not saying this incident is related to my attempted whistleblowing. It might be someone trying to get me to get rid of my petrol-fired car …or just kid pranksters.
What I can attest to is that whistleblowing is hard on your mental health. I’ve had support from multiple people, so my experience isn’t as bad as many of the whistleblowers I’ve met / spoken to.
Reason 9 – Sick lawmaking culture
The lawmaking process in the UK is a bit sick, which does not bode well for the government meeting its legislative agenda – related to Reason 1
Reason 10 – whistleblowing issues at the UK Financial Conduct Authority
At Whistleblowing Awareness Week, the Financial Conduct Authority was criticized for failing to act aggressively enough on money launderers, demonstrating the need for reform in Britain of whistleblowing laws — because the US was able to settle regulatory action for $2 billion in one key example alone that the FCA might have spotted.
The financial services sector is easily the biggest industry in Britain, has massive influence globally. That sector is known as key hub for hiding and laundering ill-gotten gains.
The Danske Bank fraud “is one of the most disgraceful money laundering schemes ever, they say the largest,” said Steve Kohn, also a partner of Kohn, Kohn & Colapinto (and he’s chairman of the National Whistleblower Center in the US).
The laundering probably helped underpin the Russian invasion of Ukraine, and British regulators should have spotted it earlier because the UK LLP firms undertaking the laundering were in “plain sight,” Kohn said.
The lender pleaded guilty to bank-fraud conspiracy and agreed to forfeit $2 billion as part of an agreement with the United States announced December last year to settle a long-running investigation involving hundreds of billions of dollars in illicit payments, Reuters reported. The accord with the US Justice Department marked the first time the United States has taken action against Denmark’s biggest bank. The fallout continues.
Some regulators say adopting the US system of rewarding lawyers and whistleblowers they represent might mean lower level, yet important, harm is not addressed properly by the system.
The FCA says it does not comment on individual cases and it won’t comment on Danske: “Where we receive information this will be investigated. However, we are not able to comment on specific cases. Our approach is to treat this information confidentially and we will not share our sources of information.”
In terms of ‘big’ enforcement action, the FCA highlighted these by email:
TSB, fined £29m
Metro Bank, fined £10m
Santander, fined £107m
Citigroup, fined £12m
GAM International Management Limited, fined £9m
Barclays, fined £787,000 (with £10m set aside in ex grata payments to affected consumers)
Hsbc, fined £63m
Natwest, in a criminal prosecution fined £264.8m
Credit Suisse, fined £147m and undertakes to forgive $200m of sovereign debt for Mozambique
Lloyds Bank, fined £90m
Charles Schwab, fined £8m
Barclays, fined £26m
Goldman Sachs, fined £48m
Commerzbank, fined £37m
Lloyds Bank, fined £64m
FCA spokesman: “And that represents just enforcement, which is a fraction of our work. I would also mention it is right that we take action against both large and small firms, where we find evidence of significant harm. A financial adviser could for example give advice putting at risk people’s pensions. And we regulate over 50k firms of all shapes and sizes. We’ll look into any allegations of serious misconduct by any of them. But as the list above shows, it is demonstrably untrue that we don’t take action against large firms.
“The list above inevitably doesn’t include the work we do changing policy, which affects large institutions. For instance, our reform of overdrafts and general insurance. Or our work holding firms to account, for instance taking insurers to the Supreme Court to ensure payouts for small businesses with business interruption cover during the Covid pandemic, resulting in over £1.5bn paid out.”
The FCA says whistleblowers will play an important role reducing harm.
Here are some of the whistleblowing issues it has faced / struggled with:
70% of whistleblowers suffer detriments
Reason 11 – slow Grenfell fire disaster reaction
The Grenfell fire disaster in 2017, where 72 people died when a tall residential tower in London caught alight and then people in the building were told to stay there, resulting in their death. The government is still looking into the matter, with victims and their families waiting for criminal charges to be laid.
Building regulations were “faulty and ambiguous” in the run-up to the Grenfell Tower fire, Housing Secretary Michael Gove said in January this year – the first such admission by a government minister, BBC reported
Turns out, the building’s cladding was flammable. American construction giant Arconic who sold the building material had tested its Reynobond PE aluminium cladding product and found it to have worse performance than expected when exposed to fire.
Coverup
In a 2010 email to colleagues, the company’s Mr Claude Wehrle said that his company’s concerns about the performance of the cladding were something “we have to keep as VERY CONFIDENTIAL”.
The BBC previously revealed that he emailed customers in 2015 to warn them that according to the new tests the cladding used at Grenfell Tower had a fire rating of class E, on a scale from A1 to F. “However, Arconic did not inform the body which issues product specification certificates in the UK,” the news corporation said.
(Updates with Platt research, Tweet about FCA; more to come)
NOTES
Should the UK adopt the US ‘bounty’ system for rewarding whistleblowers? Perhaps not, according to this report:
Report on whistleblowing protection around the world
Ranking from report linked above
Britain at level 5 — embarrassingly far from the best at level 16 (16 criteria met)
