Switzerland is currently not a particularly hospitable country for whistleblowers. The anti-retaliation protections provided to potential whistleblowers are relatively sparse – individuals fired from their jobs can, at best, hope to receive up to the equivalent of six months of their salary rather than reinstatement – and there are few legislative incentives in place to encourage individuals to report corruption or other forms of corporate wrongdoing. Moreover, not only are the country’s laws rather harsh when it comes to encouraging and protecting whistleblowers in the private sector, commentators have noted the “brutally hard line” that the Swiss government has taken in a number of high-profile whistleblower prosecutions.
Unfortunately, a proposed law which has passed the country’s Council of States and will be considered by its National Council, initially billed as an attempt to address ambiguities within the current whistleblower system, appears likely, if enacted, to make an already hostile climate for whistleblowers even worse.
Two components of this bill have caused commentators to view it with skepticism. First, whistleblowers must report any complaints internally before raising their concerns with the relevant authorities (a requirement waived in only a few circumstances, including when there is a risk to “life, health [or] safety” or an employer lacks a “suitable reporting system” and the employee has a “valid reason” to believe reporting internally would not result in any improvements to the situation). Following this internal report, whistleblowers are barred from communicating their concerns to outsiders if their employer possesses an adequate internal reporting system. Second, individuals may not alert the media to instances of corruption unless, after informing governmental authorities of their concerns, officials fail to provide them with a status update regarding the procedures initiated in response to their report within two weeks.
At first glance, these measures may not appear particularly problematic. After all, readers of this blog may well remember that the question of whether or not whistleblowers should be required to register their complaints internally (and the relative merits of this practice) was hotly contested after the passage of the Dodd-Frank Act in 2010. Many of the advantages which commentators have attributed to the adoption of an internal reporting mechanism in the US during the course of this debate could well be thought to apply to Switzerland. For example, proponents of this bill could argue that such measures would play a crucial role in strengthening companies’ compliance systems by preventing whistleblowers from circumventing existing internal reporting procedures and going straight to governmental authorities. Indeed, these benefits may be even more pronounced in the system created by the proposed Swiss bill, as companies have a significant incentive to adopt not simply some manner of internal compliance system but a relatively robust one at that as an effective reporting system ensures that employees will not be permitted to disclose suspected wrongdoing to the relevant authorities (unless one of the few conditions which permit employees to bypass internal reporting altogether, such as an emergency situation in which there is a risk to “life, health, safety or the environment” applies).
Moreover, the bill’s proponents might point out that Switzerland has long been considered one of the least corrupt countries in the world (falling within the top ten of Transparency International’s Corruption Perception Index for the past three years) and, as such, there may be good reason to believe that most Swiss companies are willing and able to address allegations of corruption without the involvement of public officials. Switzerland’s traditional success in combating corruption might also be invoked to explain why the proposed bill would bar whistleblowers from going to the media unless it can be shown that the Swiss government has failed to investigate their claim. After all, in a country whose anticorruption enforcement efforts are perceived as successful, it might seem to make sense that, as long as the government is investigating a whistleblower’s allegations, this individual should not be permitted to inform the public of what could, in the end, prove to be a meritless claim.
Yet in spite of some of these potential justifications, this whistleblower bill would likely do more harm than good, for three main reasons:
- First, this provision is likely to deter potential whistleblowers from coming forward to report wrongdoing. Several commentators have noted that the proposed law currently provides no additional protections to whistleblowers from retaliation by their employers (while one source has suggested that it may increase the damages a terminated employee could receive from six-months to one years-worth of their salary). As such, this new bill has created a system whereby, in the vast majority of cases, whistleblowers attempting to draw attention to corporate wrongdoing will be forced to report this conduct internally with no guarantee that their company will not fire them for their temerity (with some financial recompense for their trouble). While this bill has arguably created an incentive for companies with adequate reporting mechanisms not to retaliate against their employees by permitting whistleblowers who have suffered retaliation to report the company’s potentially corrupt actions to governmental authorities, this is cold comfort to whistleblowers who will still, at the end of the day, be out of a job. This problem is only exacerbated in light of the lack of significant incentives to induce employees to report wrongdoing and take the risk that they may be fired for raising a red flag internally. Moreover, the institutional deterrents to whistleblowers created by this proposed law are likely to both reinforce and heighten what many commentators perceive to be a corporate culture in Switzerland (particularly within financial institutions) which already actively discourages whistleblowers.
- Second, the decision to allow companies deemed to have adequate internal reporting systems to essentially foreclose their employees’ ability to report potential wrongdoing to governmental authorities in all but the most dire of circumstances seems problematic, at best. It is not difficult to imagine that such a system could easily be abused, as it does not necessarily follow that a corporation which has adopted an adequate procedure to process whistleblower reports will implement appropriate changes in response to these concerns.
- Third, as others have noted, this proposed law would severely limit whistleblowers’ ability to alert the public to significant instances of corruption – even matters that threaten “life, health and safety” – so long as the government simply informs them that they are looking into their complaint. It is true that there may be good reason to believe that the Swiss government “gets it right” more often than not when it comes to allegations of corruption. However, as has been discussed previously on this blog, prosecutorial discretion may at times be improperly employed to shield defendants accused of corruption. While this is a complicated problem, external public pressure is often essential to prompt states to take their commitments to enforce anticorruption norms more seriously. This, in turn, requires that there be some mechanism by which the public can be made aware of these kinds of claims.
Thus it seems likely that this bill, if passed, would discourage employees from coming forward to report instances of corruption in the workplace and would also make it nearly impossible for whistleblowers to bring such issues to the public’s attention. This problem is all the more pressing in light of the fact that whistleblowers have played an important role in exposing corruption in Switzerland, for example by revealing “suspicious business dealings” by the State Secretariat for Economic Affairs. It thus appears likely that the proposed whistleblower legislation in Switzerland will do more harm than good and, as such, the anticorruption community should strongly encourage the Swiss legislature not to adopt this highly restrictive law.
I fall into the camp that believes it is best to force employees to report allegations of misconduct internally before whistleblowing to the government, primarily because a contrary rule might tend to (1) undercut the development of adequate internal compliance programs and (2) provide employees, who should be acting as fiduciaries for the company, with incentives to leak confidential information to the government whenever they suspect that corporate conduct may fall into legal gray areas. That said, I think you’re right about this proposed Swiss law. Standing alone, there is nothing inherently wrong with an internal reporting requirement. The problem instead inheres in the fact that the law dramatically increases the risks to the employee without concurrently raising the protections. If you’re going to force employees to notify the company of alleged wrongdoing, then the person will be exposed, and absent greater legal protections, they will be less likely to report wrongdoing. That’s why I think any internal reporting requirement should only be instituted as part of a package of provisions that offsets increased risk in reporting with more robust legal protections.
I also believe that the proposed restrictions on public disclosure by the whistleblower are quite troublesome both as an overly broad restriction on speech on a matter of public concern and as an anticorruption measure. As to the latter problem, I think both press coverage and NGO advocacy are crucial to pressuring reluctant companies to reform and reluctant governments to prosecute. (We have seen this to great effect in the American environmental law context.) Unfortunately, this law seems to leave no room for this kind of pressure — the government needs only jump through a small procedural hoop to bar the whistleblower from publicly disclosing his or her allegations — and thus takes off the table a major force in the battle against corruption. It would, in a sense, leave recalcitrant Swiss companies and an unmotivated government free to largely disregard allegations of corruption by Swiss companies.
I’m curious about what exactly an ‘adequate reporting mechanism’ would be. I would imagine that it would require an ombudsman-type office which is isolated from the rest of the company (a basic conflict of interests protection). In this situation, barring corruption within the ombudsman’s office, an employee who wishes to report would be able to do so to someone outside of her chain of command, which does provide some structural protection in terms of any retaliatory measures. In such a senario–particularly given the pros of requiring internal reporting as a first step which Jordan pointed out in his comment–the Swiss law does not seem incredibly unfair. I’d be inclined to give the Swiss courts the benefit of the doubt in terms of assessing whether a reporting mechanism is adequate–as you note, they’ve done a pretty good job on corruption so far.
I find the arguments in this article for not supporting this legislation incorrect in their logic. Any whistle blower is going to “blow the whistle” because it goes against their personal ethics to allow the situation to continue, there is no opportunity for advancement in whistle blowing and the person involved does not gain in any way, therefore it must be a personal conscience or ethic that moves a whistle blower and if this is then the case, it must follow that the whistle blower would be prepared for the harshest of consequences regarding their position within the company.
Using virtue ethics to analyse this, a whistle blower should have to at least try to internally report an issue before decrying to the public. Whilst there is no need to consider loyalty to the company (Duska, 1990) for this preference in reporting, surely following the tenets of truth, justice and responsibility would naturally guide a whistle blower to report first to the company, so that they have a chance to rectify the situation internally, before considering externalizing the issue.
If the initial report is then ignored and the issue is a legal as well as a moral issue, (by which I mean, both a situation against the whistle blowers personal tenets and also against the law of the land), then surely the next logical step for a virtuous person would be to report it to a government agency or police force for investigation. If the whistle blower goes straight to the public, this could impede or even halt any investigation that might have been made through the authorities.
If the issue is a moral one, or even a social one, then in the interests of truth and justice, a whistle blower could indeed go to the public with the issue. If no legal crime has been committed, but a social injustice is taking place, then there is no choice but to air the company’s laundry in public and let the public decide, however effective social reform is rarely effected in this manner (French, 1984)2.
What it comes down to is the whistle blowers personal and corporate ethics. Whilst the company may have a different ethical culture than the employee, the employee would not have accepted an offer of employment with a company that he felt he could not work with ethically speaking. If an issue arises that goes against the employees personal ethics to a point where he is uncomfortable enough to blow the whistle, then if the situation is not rectified, it would be an untenable work environment for a virtuous employee, and if he/she still retained his position after an internal report, wouldn’t he be more likely to find another position with another, more ethical firm. So the argument that an employee is less likely to whistle blow when their job is on the line is specious. So, if keeping their employment is not a priority for the whistle blower, then why should a law reform consider it a priority?
There should be no need to incentivise whistle blowers legally or ethically speaking. An ethical person should always strive to do that which is virtuous, according to virtue ethics. If it is right and just to blow the whistle then all other considerations must be of lesser importance. It seems to me that this legislation is being put in place to encourage exactly that sort of whistle blower, the virtuous one. Any other type of whistle blower is doing it for the wrong reasons, moralistically speaking. These are the whistle blowers that give all others bad reputations. The ones that do it out of spite or perceived slights, when otherwise they would have been happy keeping the peace, are the ones that this legislation is aimed at. Not the moral whistle blower who must, out of integrity, be willing to put it all on the line to correct a perceived injustice.
It seems the Swiss have found a very moralistic approach to whistle blowing in this legislation and its detractors are only emphasising the lack of morals present in the type of whistle blower they are trying to incentivise by opposing the legislation.
Duska, R. F. (1990). Whistleblowing and employee loyalty. In J. R. (Eds.), Contemporary issues in business ethics (pp. 142-147). Belmont, CA: Wadsworth.
French, P. A. (1984). The Virtue of shame in America: Hester Prynne and the Ford Motor Company. Retrieved September 9, 2004, from Angelo State University: http://www.angelo.edu/events/university_symposium/1984/french.htm
L, R. (2014, December 22). Retrieved from GAB, the global anti corruption blog: https://globalanticorruptionblog.com/2014/12/22/a-problematic-proposed-whistleblowing-law-in-switzerland/
Stripping away the lingo about “virtue ethics” and all the footnotes, I take it your main point is this: There’s no point in ever having anti-retalliation protections for whistleblowers, because if a whistleblower is blowing the whistle for the right reasons (moral objections to improper conduct) then (1) she would be prepared for (and presumably wouldn’t mind?) the harshest consequences, such as termination of employment, and (2) if the firm didn’t remedy the problem after she reported internally, she would quit anyway (because an ethical person wouldn’t work for an unethical firm). If a potential whistleblower were reluctant to report (internally or externally) if she thought she would be fired for doing so, then she is, on your view, considering whistleblowing “for the wrong reasons,” and is the kind of whistleblower who would “give all the others a bad reputation.”
Is that what you’re arguing? If it isn’t, please clarify–and please explain why your argument wouldn’t imply that we should eliminate _all_ anti-retalliation protections for whistleblowers (even Switzerland’s relatively mild ones).
If it IS what you’re arguing, then I think the position is absurd on its face, and exhibits a callous indiffernce to the very difficult position that an employee may find herself in if she discovers that her firm–perhaps including senior executives–may be engaged in serious wrongdoing. You’re saying that someone who isn’t willing to sacrifice her entire livelihood–and perhaps that of her family–to stand up for “virtue” in fact has no virtue and is not worthy of legal or moral concern. I would reject that characterization in the strongest terms. A person faced with a dilemma like that is deserving of both sympathy and some form of legal protection. (It’s a separate question whether, say, requiring internal reporting first is good public policy, as Jordan argues in his comment above.) And as an empirical matter, the claim–especially in the current economy–that an employee who thinks her employer is behaving unethically should and would simply quit seems insensitive to economic reality. The claim also overlooks the fact that an employee’s relation to, and feelings about, her employer may be complex: Failure to deal adequately with one ethical issue does not necessarily mean that the company is so corrupt that a virtuous person couldn’t work there.
Second, I don’t follow at all why the only whistleblowers we should care about are the ones who act purely from virtuous motives. Yes, it would be nice if all whistleblowers (or all people) were saints. But what we should care most about is uncovering, remediating, and deterring corruption and other wrongful conduct. In many areas of law enforcement, we use legal protections and material incentives to get members of corrupt groups to rat out their co-conspiritors. We know that these people are not always fully virtuous. But if we refused to get information on wrongdoing unless the source’s own motives and conduct were absolutely pure, we’d get much less information, and much more wrongdoing would go undetected and unpunished.
If “virtue ethics” requires the conclusions you seem to be defending, so much the worse for virtue ethics.