For compliance professionals, the key sign that a whistleblowing hotline is working properly is the fact that more people are prepared to use it. And in Ireland’s financial services sector, it looks like recent attempts to encourage employees to come forward with suspicions of wrongdoing are paying off.

New figures provided by Ireland’s Finance Minister Michael Noonan show a surge in the number of individuals making protected disclosures to the country’s banking regulator. In fact, after just five months, the number of disclosures is not far behind the total for last year, and Noonan expects the final figure to be double by the end of the year.

In response to a written parliamentary question last month, Noonan said that the Central Bank of Ireland has received over 40 reports from whistleblowers this year, compared to a total of 50 for 2016.

Since the Central Bank (Supervision & Enforcement) Act 2013 came into force in August 2013, which enables employees to tip off the regulator about possible malpractice without fear of reprisals at work, almost 200 whistleblowers have come forward with their concerns. And year on year, the number of protected disclosures made to the Central Bank has risen steadily: There were ten disclosures made between 1 August 2013 and 31 December 2013; 42 in 2014; and 49 in 2015, The Central Bank is currently considering approximately 50 whistleblower allegations, says a spokesperson.

To try to ensure that whistleblower complaints are taken seriously by senior staff in financial services firms, the legislation also introduced new obligations on certain categories of officials in regulated firms to disclose breaches of financial services legislation to the Central Bank.

Recent EU rules also give protection to whistleblowers in Ireland’s financial services sector. The EU regulation establishing the Single Supervisory Mechanism, which took effect on 4 November 2014, includes a provision that enables employees (and other persons with possible information) to report potential breaches—including whistleblower reports—to the European Central Bank, so long as those banks are directly supervised by the ECB. In Ireland, this includes Allied Irish Banks, Citibank, and Ulster Bank Ireland.

“The FSU continues to campaign for a change in the culture of banking so that blowing the whistle on malpractice is valued and appreciated. That is rarely the case at present,”
Larry Broderick, General Secretary, Financial Services Union

The Central Bank is keen to stress its pro-whistleblower credentials. Not only has it established a whistleblower desk and put in place policies and procedures to ensure that such disclosures are dealt with “appropriately,” the regulator also has a designated channel through which it receives various protected disclosure reports from people external to the Central Bank (such as members of the public, employees working in regulated firms, and so on) regarding allegations of wrongdoing.

In addition, it has rolled out a fitness and probity regime, whose core function is to ensure that persons in senior positions within regulated financial service providers are competent and capable, honest, ethical, and act with integrity.

The Central Bank likes to show that it is responsive to whistleblower concerns—even though it has a legal obligation to report to the police (or other appropriate enforcement or regulatory body) any suspected criminal offence anyway. As outlined on page 60 of its 2016 Annual Report (the most recent), the bank has initiated various supervisory actions following the receipt of protected disclosures reports, including enforcement action, conducting on-site inspections, issuing risk mitigation plans, and placing firms on a watch list (though it does not name them).

However, despite the increase in whistleblower tip-offs, not all reports result in investigations (and ultimately sanctions) because “the information may not be sufficient to take action, or the information received was not substantiated when investigated, or was provided anonymously and so contact for further supporting information could not be made,” says a Central Bank spokesperson.

The bank has also declined to say what proportion of the €12m worth of fines it imposed on financial institutions last year might be related to whistleblower complaints, nor how quickly investigations are carried out after a complaint is received, or how long the cases take to resolve.


Below, Neil Hodge authors some specifics on Protected Disclosures Act.
Ireland’s Protected Disclosures Act 2014—which is fast approaching its third anniversary—aims to protect people who raise concerns about possible wrongdoing in the workplace.
The Act, which came into effect on 15 July 2014, provides protection and a mechanism for financial redress for employees working in public sector organisations who are dismissed (or otherwise penalised) for having reported possible wrongdoing in the workplace. Private sector organisations are encouraged—though not forced—to offer similar protections and adopt the spirit of the legislation as part of good corporate practice.
As part of the legislation, “workers”—the term is deliberately broadly defined so that it applies to as many people as possible—are protected so long as they make their disclosures via a specified route, including to their employer, a “prescribed person” (such as a regulator), a government minister, a legal adviser (including trade union officials). Going public to the media is protected, so long as the disclosure isn’t made for money, and that the employee has tried to inform his employer or a prescribed person first of all. 
There are a number of important protections available to whistleblowers under the legislation—chiefly that they are protected from employer victimisation, their identities will be kept secret, and that they are protected even if their suspicions are incorrect, so long as they had a “reasonable belief” that the information they disclosed showed malpractice or illegal activity.
Employees can be awarded compensation of up to five years’ remuneration for unfair dismissal on the grounds of having made a protected disclosure. This is in stark contrast to the two years’ remuneration available under the existing statutory unfair dismissals regime. Also, an employee who claims to have been dismissed or threatened with dismissal for having made a protected disclosure can apply to the Circuit Court to restrain the dismissal.
Whistleblowers can also expect civil immunity from action for damages, as well as qualified privilege under defamation law. They also have a right of action in tort where she, he or a family member experiences coercion, intimidation, harassment or discrimination at the hands of a third party.
Public bodies such as government departments, local authorities and certain other publicly-funded bodies are obliged to establish and maintain procedures for the making of protected disclosures by workers who are or were employed by it and for dealing with such disclosures. They must also publish an annual report setting out the number of protected disclosures made to them and the action taken in respect of these disclosures.
There is no similar obligation on private sector employers. The Workplace Relations Commission has published the Code of Practice on Protected Disclosures Act 2014. It sets out in practical terms how a disclosure might be made and how an employer ought to handle such a disclosure.
—Neil Hodge

Noonan said that “all allegations from whistleblowers are treated seriously and examined thoroughly.” He added that he is “satisfied that whistleblower procedures for banks and other financial institutions are robust.”

Not everyone else agrees. Larry Broderick, general secretary of the Financial Services Union (FSU), which has helped several bank employees make whistleblower reports to the Central Bank, believes one of the main obstacles facing whistleblowers is the “culture of fear” that exists in banking, despite the recent introduction of legal protections. “The FSU continues to campaign for a change in the culture of banking so that blowing the whistle on malpractice is valued and appreciated. That is rarely the case at present,” he says.

Sinn Féin finance spokesman Pearse Doherty, who asked the parliamentary question, said his own experience in helping bring whistleblowers’ allegations to the Central Bank had been “disappointing.” In one particular case involving moneylenders, the Donegal TD said that “although they received a fine, they escaped lightly in my book with many serious allegations not dealt with,” adding that “the workers who blew the whistle have now all lost their jobs.”

Ireland has a mixed reputation in terms of the treatment of whistleblowers, though no country has an unblemished record. A survey conducted last September on behalf of Transparency International in Ireland found that while most employers welcomed the recent legislation protecting whistleblowers, less than two-thirds (64 percent) would encourage an employee to report wrongdoing where the disclosure might harm the reputation of their organisation. Some 66 percent of respondents also admitted having no procedures or policies in place to protect whistleblowers or to channel their reports to the appropriate person.

Several high-profile whistleblower-related stories have featured prominently in Ireland’s newspapers for a while—one of the main ones being a decade-long scandal over allegations that the Irish police service (Garda) quashed penalty points for driving offences. Worryingly, appearing before the Public Accounts Committee in January 2014, then-Garda Commissioner Martin Callinan called the actions of the two Garda whistleblowers “disgusting.” Callinan was forced to retire two months later.

More recently, one of the country’s biggest media outlets—Ireland’s Independent News and Media (INM)—has been in the spotlight after the company’s own chief executive, Robert Pitt, made a complaint last year under the Protected Disclosures Act to the Office of the Director of Corporate Enforcement (ODCE), Ireland’s corporate watchdog, regarding the company’s possible acquisition of radio station Newstalk. The content of the actual complaint has not been made public, but sources say it is likely to centre on the fact that INM’s largest single shareholder, Denis O’Brien, also happened to own the radio station that the company was trying to acquire, and that INM’s chairman, Leslie Buckley, who was an associate of O’Brien, may not have been exercising appropriate independence in the decision making.

INM released a statement in November to investors that confirmed that “an issue” had arisen between Pitt and Buckley, but that the deal did not meet with board approval, and was therefore dropped. However, Pitt then took his complaint—presumably that such a deal risked a colossal conflict of interest—to the senior independent director. The ODCE investigation is ongoing.