Published on 30 November 2018

CSR

Ghosn scandal sheds light on the growing power of corporate whistle-blowers

Similar to UBS, Danske Bank, and Cambridge Analytica, the Carlos Ghosn affair was uncovered by a whistle-blower. This recent scandal demonstrates the rise of whistle-blowers in the corporate world, against a backdrop of increased demands on companies for transparency.

In recent years, many employees have turned into whistle-blowers, shedding light on the illegal practices of their company.
@pixabay

Who sounded the alarm on the Ghosn scandal and for what reason? According to Japanese media reports, the source for the investigation, who is said to be a part of Nissan's legal department, reportedly disclosed information in a plea bargain. "The culture of whistleblowing isn't very well established in Japan", said Jenny Corbett, a researcher at the Foundation for Australia-Japan Studies.

The Ghosn case can therefore "suggest the existence of internal tensions or a struggle for power within the company", Corbett added. But for Patrick Wiedloecher, a representative for the French Business Ethics Club, the fact that the Nissan employee was motivated by personal interests and political purposes, does not rid the informant of his title as a "whistle-blower" if the allegations prove to be true. More than anything, the case is symptomatic of a "wider" movement affecting the economic world.

A global tidal wave

In recent years, many employees have publicised the illegal practices of their company, with the most resounding of scandals ranging from tax evasion ("Luxleaks" and others) to the fraudulent use of computer data (Cambridge Analytica). This "tidal wave" has a global scope and is driven by a desire to "fight against the abuse of power," says Nicole-Marie Meyer, Head of the Ethical Alert program at Transparency International France.

"Political and economic leaders are being held increasingly accountable to citizens," Meyer added. "The phenomenon affects all sectors and all types of business," said Widloecher, who attributed this phenomenon to the growing need for "transparency" amongst citizens, but also the efforts put in place to better protect whistle-blowers. In France, in-house house whistle-blowing programs have even been launched by 17 associations to help with these issues on a daily basis.

Signs of a healthy company

In a recent study conducted in the United States, Asia and Europe (1), one out of two executives declared that they were subject to whistle-blowing, either as an initiator or recipient. "Today, nothing stays hidden for long: information circulates very quickly," recalls Patrick Widloecher. "The market economy is an economy of trust.  Companies must inspire confidence, otherwise they put themselves at the mercy of their competitors".

In a study published in mid-November by Harvard Business Review, two American researchers, Stephen Stubben and Kyle Welch, argued that "whistle-blowers are the sign of healthy companies." "Companies that are more active in using their internal whistle-blowing systems can identify and resolve problems internally before a dispute arises," the authors said.

Such systems would even be "of paramount importance for the achievement of the firm’s objectives". And to affirm that those who "use them most actively" are "generally more profitable" and sustainable.

Béatrice Héraud with AFP

 (1) Study by Freshfields Bruckhaus Deringer law firm, published in 2017, involving a survey of 2,500 people in the United States, Asia and Europe.


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