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 Whistleblowers Need Protection

 


Canada needs whistleblowers to protect stimulus package

Given the $1-billion gun registry overrun and the sponsorship scandal, there's little reason to trust that this unprecedented expenditure will be managed competently or even honestly.
By David Hutton and Gerard Seijts, Hill Times
February 16, 2009

Many Canadians rightly fear that the massive government spending recently announced may simply be wasted or the money end up in the wrong hands, without creating jobs or helping the economy. Given the track record of our corporations (with fiascos like Bre-X and Nortel) and past government waste and corruption (such as the $1-billion gun registry overrun and the sponsorship scandal) we have little reason to trust that this unprecedented expenditure will be managed competently or even honestly.

In the U.S., during passage of the $819-billion stimulus package, the House of Representatives unanimously approved an amendment creating the strongest protection ever for U.S. government whistleblowers. This is no accident: U.S. lawmakers recognize that robust accountability measures are essential to guard against mismanagement and fraud as these immense sums of public money are distributed.

Canada is in poor shape when it comes to safeguards for corporate and government integrity. For example, our securities regulatory oversight regime is a mess—a hodge-podge of more than 30 agencies with an appallingly poor rate of investigations and convictions. The government is right in proposing to establish a single national securities regulator: but this could take years to implement, and unless the new regulator has real teeth and a forceful attitude—unlike the current players—we may be no better off.

Canada has also made little use of whistleblower protection—a highly effective method of combating misconduct and fraud. A 2007 PricewaterhouseCoopers study showed that whistleblowers uncovered far more fraud than internal audit and all other management control systems combined. The study, which polled 5,400 senior executives from 40 countries, found that 43 per cent of corporate frauds had been initially detected by employee tip-offs.

The lesson is clear: top-down controls such as regulatory oversight and corporate governance standards are not sufficient: they need to be augmented by strong mechanisms that enable employees to safely report suspected misconduct.
This is why the U.S. is moving to strengthen its already wide-ranging whistleblower protection legislation. However, on this important front we Canadians are essentially naked.

For government whistleblowers the Accountability Act’s much-touted “ironclad protection” has been a huge disappointment, as predicted by critics even before this loophole-ridden legislation was passed into law. The new whistleblower watchdog, the public sector integrity commissioner, watches over approximately 400,000 federal public servants in a secretive bureaucracy that spends about half a billion dollars every day. It defies belief that, during her first year of operation, with a staff of 21 and a budget of $6.5-million, commissioner Christiane Ouimet has been unable to find a single occurrence of wrongdoing in the entire federal public service.

As for private sector whistleblowers, the government has not even made a pretence of any effort to protect them. While Canadians who work for corporations listed on a U.S. stock exchange may have some protection under the U.S. Sarbanes-Oxley legislation, Canadians in the private sector have no such shield against corporate reprisals.

What this means in practice is that conscientious employees who courageously come forward in an attempt to halt misconduct not only have their allegations ignored, but are typically subject to the most determined and vindictive reprisals, orchestrated by their bosses, in order to silence and punish them. Most lose their careers and their livelihood, and in the process many also lose their families and their health.

We all lose as a result. Our government departments and corporations, unable to purge themselves of these self-serving actors, lose touch with their values and their purpose. And both investors and employees lose as our businesses stumble, shedding jobs and market value while our governments fumble.

In tough economic times it becomes even more important to ensure that scarce resources are available for vital services like education and health care, rather than being wasted.

Prime Minister Stephen Harper should follow U.S. President Barack Obama’s lead by providing real protection for both government and private sector employees who report misconduct. By doing so he would not only help to safeguard his multi-billion dollar stimulus spending, but would help protect the integrity of our institutions, our economy and our democratic way of life.


David Hutton is executive director of the Federal Accountability Initiative for Reform (FAIR). Gerard Seijts is associate professor of organizational behaviour at the Richard Ivey School of Business.

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