A moment on the lips ... a lifetime on your record. The stigma by those brave enough to blow the whistle on their employers' malpractice is enough to deter most would-be 'conscientious objectors' from speaking out. But the Public Interest Disclosure Act is making life easier for them--and giving employers far more incentive to adopt sound policies on disclosure.

What must have been going through Katharine Gun's mind as she sat in the dock of court number seven at the Old Bailey, charged with what was, in effect, treason? Feeling the full weight of the government's legal apparatus, did she feel a flicker of regret for the enormous pressure she had put both herself and her family under as she prepared to defend her decision to leak the now infamous GCHQ spy memo last year (see panel, page 21)? And, for all Gun's well-publicised resolve, surely her stomach must have knotted just a little at the prospect of spending months behind bars?

The government's controversial last-minute decision to drop charges may have let her off the hook, but Gun's case still highlights the dilemma faced by all whistle-blowers--politically motivated or otherwise. Corporate whistle-blowers such as Enron's Sherron Watkins and WorldCom's Cynthia Cooper found the decision to expose financial skulduggery to their own colleagues hard enough, but Gun must have had nerves of reinforced steel to take on the state. Her job in the intelligence services meant that she was denied the normal financial and legal support available to "ordinary" employees under the Public Interest Disclosure Act 1998 (Pida).

But Gun was lucky. Even if the ease had proceeded, she had a husband who'd provided emotional and financial support in the run-up to the trial and public backing that extended across the Atlantic--the Reverend Jesse Jackson was among the many civil rights activists who signed a statement of support for her in the US.

Gun may have lost her job, but her new status as cause celebre will almost certainly bring with it lucrative offers in the form of book deals and invitations on to the political lecture circuit. But, beyond the international media spotlight, what happens to all the other people who blow the whistle on employers that don't have such a high profile? The recent coverage of Gun and the European Commission's former chief accountant, Marta Andreasen, might give the impression that whistle-blowing is a rare phenomenon, but such cases are only the tip of the iceberg. In the UK alone, hundreds of worried employees seek guidance each year on how to tackle concerns ranging from financial irregularities to health and safety lapses. Those who contact the country's officially recognised whistle-blowers' charity, Public Concern at Work, are often surprised at how much legal support is available to them.

It's likely that there are many more would-be whistle-blowers waiting in the shadows. One of the main factors preventing them from speaking out is the fear of isolation, according to Cary Cooper, professor of organisational psychology and health at Lancaster University Management School. He has found that some people would rather leave their employer than confront serious misconduct.

"A lot of cases are not as clear cut as the ones you read about in the newspapers," Cooper says. "Even if someone has firm suspicions about malpractice, they might feel that they haven't got a strong enough case to raise the issue. Then there is the question of getting it wrong. Even if you are absolutely certain, there is still the fear that you might lose the respect of your colleagues for rocking the boat. Often people will try to ignore the problem or even move jobs to avoid it."

Accountant Antonio Fernandes waited almost three years to expose his company's managing director for running up almost 400,000 [pounds sterling] in unauthorised expenses and cash advances. He says he hesitated because some of the unauthorised payments were going towards fees relating to the adoption of a child.

"I was in a real dilemma," Fernandes recalls. "I didn't want to jeopardise that child's future but I couldn't let the problem continue either." Without even telling his wife, the Berkshire-based father of two notified another of the firm's directors with evidence compiled in a 12-page letter. Dayslater he was dismissed.

The next six months were among the most stressful periods the Fernandes family had ever experienced, but it could have been much worse. His case was one of the first to be covered by the Pida. Although the company fought back with a string of counter-claims, it was obliged under the act to continue paying Fernandes his full salary until the case came to an employment tribunal. Even so, he suffered many sleepless nights and felt "exposed, weak and very alone" in the run-up to the hearing. The pressure was heightened by the fact that the case was not eligible for legal aid, which meant that Fernandes had to spend nearly 40,000 [pounds sterling] on solicitors' fees.

But the new protection given to him under the act eventually paid off--at least in the legal sense. At the final tribunal hearing his case was proven and his former employer was ordered to pay out almost 300,000 [pounds sterling] in compensation. But the legislation could not protect him from people's attitudes to what he had done. Although the national press hailed Fernandes a hero at the time, he has since found that potential employers do not see him in quite the same light. Although the 63-year-old feels that part of his ongoing inability to find full-time work is connected with ageism, he's also certain that the old attitude that whistle-blowers are more trouble than they are worth is still prevalent.

"I get the feeling that some companies might want me to turn a blind eye to certain things, but I can't change how I am," he says. "I'm like an old 78 record: the grooves are set."

Fernandes's experience may have been painful, but such cases have paved the way for improvements in how whistle-blowers are treated. In the first three years under the new legislation, firms paid out more than 30 million [pounds sterling] in compensation to whistle-blowers who had been victimised or dismissed as a result of their actions. The average pay-out was around 100,000, [pounds sterling] with the biggest award exceeding 800,000 [pounds sterling]. Some out-of-court settlements topped 1 million [pounds sterling].

The Pida was created after a series of disasters, including the Clapham Junction rail crash and the Bristol Royal Infirmary baby death scandal, where investigations revealed that employees were aware of failures in their organisations but hadn't spoken out for fear of reprisals. Under the legislation, which was introduced in July 1999, whistle-blowers enjoy legal protection only if they approach their own organisation or prescribed bodies such as the Financial Services Authority or the Health and Safety Executive with their concerns, as opposed to going public. This allows the company to start a dialogue with its accuser and helps to weed out misinterpretations or grudges from genuine cases. But, if the individual feels that the employer has responded inappropriately, the issue can be taken to tribunal. As in the Fernandes case, those who have been dismissed can apply at an interim hearing for full wages to be paid until the case is heard.

Public Concern at Work is a charity that aims to promote compliance with the Pida and good practice in organisations across all sectors. Every year it takes more than 500 calls relating to malpractice or negligence--twice as many as it received before the act carne into force. The two key areas of concern relate to safety risks and financial misconduct, but the organisation has also seen a threefold increase in inquiries about consumer, competition and ethical issues in the 11 years since it was set up, and a similar growth in the number of calls relating to the care sector.

Although the Pida seems to be making life easier for whistle-blowers to some extent, fraud experts in particular are keen to encourage employers to ensure that their policies include a well researched and carefully considered approach to whistle-blowing. There are already encouraging signs: a survey of 281 employers by the Work Foundation in 2002 found that just over half already had policies in place. Of those that didn't have a policy, half said they were planning to implement one within the year. Public Concern At Work has seen the effects of this at first hand: over a third of the calls it handles are from people who have been referred to it by their employers.

"A decade ago, when whistle-blowers were branded misfits and traitors, people never found out about our helpline from their employers," says its director, Guy Dehn. "But these organisations are starting to realise after Enron that they discourage and ignore whistle-blowing at their peril."

He hopes that the whistle-blowing guidance to audit committees contained in the revised Combined Code on corporate governance will improve these figures. "This provides a valuable benchmark for good practice and encourages companies to recognise the benefits of a whistle-blowing culture," he says. "Employees need to feel that there's a sale and effective alternative to silence."

Dehn stresses that it's particularly important for companies to include independent agencies such as his own charity in the information that they circulate to employees. "You will always find individuals who are suspicious of the value of company policy. These people need to have an alternative source of guidance to turn to," he says.

Small and medium-sized enterprises in particular should ensure that they are aware of what obligations they have under the Pida, as it can be particularly hard to blow the whistle where group loyalty is strong. Dehn draws the line at asking SMEs to have a written policy but advises them to be aware of the issues and how to deal with them.

Will Kenyon, a partner in the forensic services division at PricewaterhouseCoopers, believes that effective whistle-blowing procedures in firms of all sizes can be an effective way of harnessing employees' knowledge and insight. "Employees can be a major ally in the fight against fraud if they know that their concerns will be addressed appropriately," he says. "When it comes to health and safety issues, bullying and harassment, these are all things that a well-managed organisation should want to know about, so it can deal with them effectively."

At a time when businesses are under such enormous competitive pressure to deliver immediate results, it's inevitable that rules will sometimes be bent, if not broken. Few companies would not acknowledge privately that there are times when the line between corner-cutting and malpractice can be very fine indeed. It may well be that such employers would be unwilling to encourage greater scrutiny of their operations by those closest to them.

But the message is straightforward when it comes to clear cases of fraud: employees can be a vital weapon in fighting potentially major crimes. And business needs all the help it can get: nearly 40 per cent of the 3,600 firms responding to PwC's 2003 global economic crime survey said they had been affected by economic crime, citing asset misappropriation as the biggest problem. According to the poll, the proportion of firms affected by fraud in western Europe has grown from 29 per cent to 34 per cent in the past two years. The banking and insurance industry continues to be at the highest risk of all.

Forensic accountant Raj Bairoliya runs a hotline specifically for people who want to lift the lid on fraud. He agrees that awareness of whistle-blowing as an issue has improved, particularly since the Enron scandal, but feels it will be at least five years before the value of whistle-blowers is fully appreciated. Bairoliya hopes that the new emphasis on corporate transparency and accountability will help to improve the whistle-blower's status.

"The truth is that the vast majority of companies are proper and honest, and these companies would much rather know about problems as early as possible," he says. "The message we need to get across now, more than ever, is that whistle-blowers are not a pain but again."

THE PUBLIC INTEREST DISCLOSURE ACT'S RECOMMENDATIONS IN BRIEF

Under the Public information Disclosure Act 1998, any clause of term in an agreement between an employee and employer is deemed void if it prevents the employee from making a "protected disclosure". This is a disclosure made in good faith of information that, in the employee's reasonable belief, tends to show that any of the following "failures" has been, is being--or is likely to be--committed:

* a criminal offence;

* a failure to comply with a legal obligation;

* a miscarriage of justice;

* the endangerment of the health and safety of any individual;

* damage to the environment;

* a deliberate concealment relating to any of the above.

It's immaterial whether the failure occurred, of would occur, in the UK and whether the law applying to it is that of the UK or of any other country of territory.

Employers are encouraged to adopt internal procedures that will encourage employees with concerns to air them internally as part of their risk management systems. Appropriate internal procedures include:

* a clear statement that the organisation takes malpractice seriously;

* an indication of what it deems malpractice;

* respect for the confidentiality of any employee who raises concerns;

* the chance to raise concerns outside the line management structure;

* penalties for making false and/or malicious allegations;

* an indication of the proper way in which concerns may be raised outside the organisation if necessary.

Small firms should consider addressing employee concerns by explaining the issue, being open to criticism and responding to it. Companies should also consider telling employees that they can make disclosures to certain prescribed bodies such as the Financial Services Authority or the Health and Safety Executive.

Source: Financial Services Authority

CALLING THE TUNE: WHISTLE-BLOWERS IN THE HEADLINES

Daniel Ellsburg  Leaked the infamous Pentagon papers in 1969. These
                 were 7,000 pages of documents exposing a US government
                 fabrication about its motives for going to war in
                 Vietnam. He faced a possible sentence of 115 years,
                 but his case was dismissed in 1973 on the grounds of
                 government misconduct against him. Ellsburg is now a
                 lecturer, writer and political activist.

Sarah Tisdall    Leaked documents to the Guardian in 1984 detailing
                 arrangements for the delivery of Cruise missiles to
                 Greenham Common while working as a clerk in the
                 foreign secretary's office. She was found guilty of
                 breaching the Official Secrets Act 1911 and served
                 four months of a six-month jail sentence.

Clive Ponting    Working as an assistant secretary at the Ministry of
                 Defence in 1985, Ponting leaked papers relating to
                 government attempts to mislead a select committee
                 inquiry into the 1982 sinking of the Argentine warship
                 General Belgrano during the Falklands war. He was
                 acquitted, despite the judge's attempts to guide the
                 jury to a conviction. Ponting is now a reader of
                 politics and international relations at the University
                 of Wales.

Jeffrey Wigand   The former vice-president of tobacco company Brown &
                 Williamson went public in 1992 with claims that the
                 industry knew of the dangers of smoking for decades
                 without warning the public. He received death threats
                 and was sued by his company. His story was made into a
                 film, The Insider, and he is now one of the world's
                 most famous anti-smoking campaigners.

Sherron Watkins  In 2001 the vice-president of Enron warned her then
                 chief executive, Kenneth Lay, that the Houston based
                 energy giant was in danger of collapse as the result
                 of an accounting fraud designed to keep debt off the
                 balance sheet. Her memo was later leaked to the press
                 by US Congress. She resigned in 2002 and now runs her
                 own consultancy.

Marta Andreasen  The European Commission's chief accounting officer was
                 suspended from her job for refusing to sign off its
                 2001 accounts. She subsequently went public with her
                 concerns about the commission's accounting procedures.
                 Despite a gagging order, Andreasen has continued to be
                 a highly vocal critic of the organisation. She is
                 still suspended on full pay.

Cynthia Cooper   An internal auditor at Mississippi-based
                 communications giant WorldCom, Cooper alerted the
                 company's audit committee in 2002 to the fact that it
                 had overstated its profits to the tune of $4
                 billion--one of the biggest accounting scandals in US
                 history. The company sacked its CFO within days and
                 came clean, but shareholders still lost $3 billion.
                 Time magazine named Cooper as one of its "persons of
                 the year", together with Sherron Watkins.

Katharine Gun    While working as a translator at the GCHQ surveillance
                 base, Gun leaked an e-mail purportedly from the US
                 National Security Agency. The message was said to have
                 requested British help in bugging UN diplomats whose
                 votes were needed to authorise the war against Iraq.
                 The government's decision to offer no evidence at her
                 trial is thought to be linked to fears that it may
                 have been forced to reveal the wording of advice by
                 the attorney-general on the legality of the war. Gun
                 recently enrolled on a postgraduate degree course in
                 global ethics at the University of Birmingham.

David Kidd       The health worker was awarded 43,500 [pounds sterling]
                 in compensation last month after being hounded out of
                 his job for blowing the whistle on colleagues who had
                 neglected and mistreated patients in their care. Kidd
                 alerted Calderstones NHS Trust to the problems at
                 residential homes in Tameside, Greater Manchester, in
                 2001, but his claims were ignored and he was
                 eventually asked to leave his job. Last month he was
                 awarded 10,000 [pounds sterling] for unfair dismissal
                 and 33,500 [pounds sterling] for psychological
                 suffering.

FURTHER INFORMATION

For more guidance on whistle blowing, contact Public Concern at Work on 020 7404 6609 of visit www.pcaw.co.uk.