The Corporate Governance Committee of the Commerce &
Industry Group, the Law Society's recognised body for in-house
lawyers, has warned that lawyers could find themselves exposed
because of gaps in legislation protecting people who expose
corporate wrongdoing.
"Compliance officers and money-laundering reporting officers are
particularly exposed because they may have to make disclosures
outside of their organisations, and this was not contemplated when
the whisleblowing legislation was drafted," said a statement from
the Group.
It said that the law should be changed. "The Committee suggests
that the legislation should be amended to protect individuals who
are complying in good faith with their obligations to make external
reports."
The Public Interest Disclosure Act (PIDA) provides some
protection for employees when it comes to reporting malpractice by
a company. The Commerce & Industry Group (C&I Group) has
produced guidance on the application of that law to in-house
lawyers.
"PIDA encourages employees, contractors and other staff and
workers in an organisation to raise their concerns about a
malpractice by protecting them from dismissal, victimisation or
other detriment, provided they have acted in good faith," said the
guidance.
"If they suffer a detriment for making a 'protected disclosure',
there is no qualifying period of service and there is no limit to
the amount of compensation they may be awarded," it said.
The disclosures must show that the person believes that the
company's behaviour is or is likely to cause a criminal offence to
be committed, a failure to comply with a legal obligation, a
miscarriage of justice, a threat to the health or safety of a
worker, damage to the environment or deliberate concealment of any
of these.
The C&I Group said that the legislation leaves some lawyers
exposed, though, because some of the information they will want to
disclose will be bound by legal privilege between lawyer and
client.
The law also fails to protect lawyers who disclose information
to external authorities, even when other laws insist that such
information be disclosed.
"The law sometimes requires particular individuals to report
malpractices directly to external bodies, such as the Financial
Services Authority or Serious and Organised Crime Agency," said the
C&I Group's guidance. "It would therefore be logical for PIDA
to provide these individuals with the protection they would have
had if they had been making an internal, rather than an external
report."
"Unfortunately, it does not. Instead it imposes an important
additional burden on the whistleblower, if he or she has to blow
the whistle to an external regulator or government body such as the
FSA, by requiring him or her to show that they had a reasonable
belief that the information disclosed and that any allegations
contained in it are substantially true. Consequently,
compliance officers may be required to report matters to the FSA
before they have sufficient information to be sure that they are
within the safe harbour provided by the PIDA," it said.
Nonetheless, the Group said that lawyers should always report
malpractice, even if the Act does not give them the protection that
they might want.
"Our view is that you should not allow the question of PIDA
protection to affect or delay your decision whether or not to blow
the whistle. If you believe that your organisation has committed,
or is about to commit, a malpractice that is sufficiently serious
to justify reporting it directly to the Board, and still more so to
justify reporting it externally, then you must do this regardless
of any concerns you may have about preserving your own job or
obtaining compensation if you are victimised. You may be heavily
criticised if you decide not to blow the whistle because of
concerns for your own position," it said.
