We’ve been hiding corruption too long, it’s time to let the ‘grass’ grow

The UK needs to do more to promote whistleblowing

(Rex Features)

Nobody likes a snitch. It’s something that’s engrained into us from the moment we can speak and tell tales, that the better thing to do is to stay silent. See nothing, say nothing.

The reality, however, is that this approach must change. For too long, we’ve also been brought up with a romantic notion that much in Britain is perfect. But in short succession we’ve been subjected to scandals in the City, NHS, Catholic Church, BBC, Parliament and the press. Indeed, one of the shocks of Leveson for me was the scale of payments to public officials.

Until recently I’d thought that ours was a relatively clean country where bribery is concerned; that apart from the occasional MP seeking a bung or favouritism among the Freemasons, we were more or less clean. Our courts were notable for not being dominated by white-collar fraud cases; our public institutions, despite handling huge sums of money, were not seen as hotbeds of corruption.

Law enforcers from elsewhere suspected different. They would point out that either we were incredibly virtuous or our police and regulators were not shining lights in the right places. The Americans loved to highlight the disparity between their conviction rates and ours – something in the UK prosecution system was badly wrong. Now that virtually all the pillars of our society have come crashing down, with cover-ups, exposures and disasters galore, we’ve been brought to our senses.

We need to respond accordingly. Our prosecutors clearly require better weaponry, of the sort widely used elsewhere, such as plea-bargaining.

More than that, however, we need to promote whistleblowing. Our record in this area is terrible. Late in the day, the Home Office is considering whether the UK should begin financially “incentivising” whistleblowers so that more of them come forward.

In the US they have the False Claims Act, which enables those who tip off the authorities to receive a share of the financial penalty levied on a firm found guilty of ripping off the US government. After the financial crisis, the Americans passed another law in the Dodd-Frank Act, saying that anyone who alerts the Securities and Exchange Commission to malpractice can receive 10 to 30 per cent of whatever the SEC recovers. Last week, one person collected $14m (£8.7m) in such a case.

We must do the same – and more. In the City, we have to find ways of encouraging workers to break ranks otherwise our chances of preventing another crash are minimal. It’s no use leaving it to the official bodies; they’re not inside the banks, the law firms and accountancy offices; they’ve no idea what’s going on.

Neither is it any good assuming the bosses will intervene. One of the striking aspects of the numerous financial scams is how few of them had any idea what was going on. Even if they did discover, the suspicion must be that they would chose to suppress it rather than go public and damage their name, and their company’s.

All of which points to the use of the insider. They have to be made to go against what they were taught as children, and on the school playing fields, and grass on friends and colleagues. The new attitude should cover more than financial crime, however. We have to go further and compensate whistleblowers in other walks of life.

Recently I met Ian Foxley. He was programme director for a £1.9bn scheme to modernise the communications network for the Saudi Arabian National Guard. All the cash on the project was being channelled through the UK Ministry of Defence.

When Foxley uncovered large bribes were being paid into secret bank accounts in the Cayman Islands, he reported it to the contractor, the MoD and the Serious Fraud Office. He was threatened by the supplier with arrest and jail in Saudi, accused of gross misconduct for having warned the MoD and fired.

He went to employment tribunal but lost on the ground that much of the evidence arose overseas and was not admissible in the UK. What was his award for doing a public service? The loss of his job and salary.

He’s now formed an organisation called Whistleblowers UK to reform the law, to provide protection to those like him. He’s got 30 actual whistleblowers in his membership. They hail from the NHS and private medical care, military and security, financial and regulatory organisations, police and government. Some have been named in the media. How many of them have worked since? “Very few,” says Foxley.

In theory, the Public Interest Disclosure Act is supposed to afford some reassurance to whistleblowers. But while it allows for reporting to an outside body, it encourages going to management first. Then the officials say they’re not interested and the whistleblower is left high and dry – and probably out of work.

It makes sense, too, under the law, for the whistleblower to settle outside court. If they refuse, they run the risk of incurring the other side’s legal costs. But if they settle, the wrongdoing never becomes public.

The law requires urgent overhauling. So too, does our attitude. From now on, grasses should be welcomed, not ruined and stigmatised.

Few travails expected in the big Royal Mail sale

Today, it will be high fives all round in Vince Cable’s Department for Business, Innovation and Skills as the Royal Mail floats on the London Stock Exchange. It’s some achievement, getting the privatisation away, just like that. Compared with the travails that accompanied the processes that accompanied the Thatcher sales of the 1980s this one has gone remarkably smoothly. But has Vince given the Royal Mail away too cheaply?

Shares will be priced at the top of their range, 330p, netting £1.7bn for the Government. Even before the market opened, bookies were taking bets they would close on their first day’s trading above 400p. The offer, for 52.2 per cent of the company, was seven times oversubscribed. As to the promised non-participation by the union, forget it. A mere 368 of the Royal Mail’s 150,000 staff refused the chance of free shares.

All that points to Vince and his advisers having been too conservative. One analyst, Canaccord Genuity, even claimed the shares were worth 599p, or almost twice Cable’s price.

What’s disappointing is that for a fellow of the people, Cable succumbed to the City’s wishes. Too many of the shares – 67 per cent – are destined for the big financial institutions. The little man’s portion is just 33 per cent.

There’s no doubting the loser: the taxpayer. Vince’s sale has put a value on the entire Royal Mail of £3.3bn. But that figure could be £6bn, according to that Canaccord estimate (another, from Panmure Gordon, said £4.5bn).

Cable has been dismissive, saying the price is right, and inviting people to look past the “froth”. Hmmm. I can’t help thinking that on dealing floors and in City boardrooms today, they’ll be raising several glasses to the Business Secretary and it will be vintage fizz they’ll be drinking, not ordinary bitter.