Dominic Hannigan (Labour)

I welcome the Minister of State and the opportunity to speak on the subject of whistleblowing. There have been a number of high profile cases in the banking world where brave individuals have sought to highlight wrongdoing only for their careers and lives to be put on hold or, worse, ruined as a result. I have no doubt countless others would have made matters public on points of principle but were afraid because of concerns that in doing so, they might put their livelihoods at risk.

I note the Minister of State said the Government had never sought to play party politics with this issue. He mentioned the Labour Party Bill of 11 years ago and said a number of amendments were necessary in that regard. I cannot help believing those amendments might have been introduced at some stage in the past 11 years. If that had happened, we might have averted some aspects of the current banking crisis or at least mitigated some of the damage done by individuals in the intervening years since we attempted to bring forward that Bill.

The term "whistleblowing" comes from English policemen blowing their whistles on noticing the commission of a crime. The more technical term, as pointed out by the Minister of State, is "reporting in good faith", which has been defined as, "the public disclosure by a person, working within an organisation, of acts, omissions, practices or policies perceived as morally wrong by that person, and is a disclosure regarded as wrongful by that organisation's authorities". A whistleblower is someone who sounds the alarm within an organisation in which he or she works, aiming to spotlight neglect or abuses which threaten the public interest. Apart from the Labour Party Bill, the Office of the Director of Corporate Enforcement has done significant work on this issue and it is clear his office agrees with the Labour Party position that we need comprehensive regulation to protect whistleblowers such as the Public Interest Disclosure Act in the United Kingdom.

In 2008 the Office of the Director of Corporate Enforcement called for the inclusion of a whistleblower provision in the companies legislation. This proposal would have provided protection for whistleblowers in cases where the disclosure was made in good faith, where a person had sought to bring a matter to the attention of those responsible, internally at first or following attempts to address it internally if no action had been taken to remedy the default. Those proposals strike a good balance in ensuring people are encouraged to report matters internally, have such issues dealt with by their managers and only resort to whistleblowing as a last resort.

It is very disappointing that the company law reform group has rejected this proposal in its submission to Government on a new companies Bill. I note the Minister of State said that a majority recommendation of the group was to the effect that this should not be included in the new companies Bill. This conclusion was arrived at because the group took into account the degree of malpractice, the nature and extent of such disclosure, with the reputational risk for companies, and concluded that such an initiative was not warranted. I wonder whether the group would have come to the same conclusion today after all the wrongdoing highlighted in the past two years. I believe that, in the event, it would have come to a different conclusion.

Research from the United Kingdom has found that companies can lose up to 5% of turnover as a result of internal malpractice. Effective whistleblowing can help to counter and prevent this. While it is hardly surprising that the Government is running scared on this issue, it makes one wonder what it can be afraid of. It is disingenuous for the Government to state this can be dealt with sector by sector. This means, in effect, that only those working in a small number of State bodies which have a whistleblowing provision in their founding legislation will have legal protection while the majority of State employees and all those working in the private sector will have no protection at all.

Today we are focusing on the financial services sector and, yet again, the Government is showing its determination to avoid whistleblowing at all costs. A couple of weeks ago the Taoiseach admitted something all of us had known for the past two years, namely, that there had been a stunning failure of corporate governance in the banks. If we are to address the issue of these past failures, we need to put in place a strong and effective corporate governance structure, part of which would include effective policies and procedures to support those who feel the need to blow the whistle.

In the last month the Financial Regulator has published a draft code on corporate governance for banks and financial institutions which, as with the rehashed programme for Government, was produced in consultation with the Government. The contents of this draft code are broadly based on the provisions of the combined code of corporate governance with which companies listed on the UK and Irish Stock Exchanges are required to comply. One of the interesting omissions from this draft code was the provision of the combined code section C.3.4 in relation to audit committees. It states that audit committees should review arrangements by which staff of a company may, in confidence, raise concerns about possible improprieties in matters of financial reports or other matters as well. Will the Minister of State clarify whether the omission of this requirement concerning audit committees is deliberate on the part of the Government? If it is an error, he should clarify this because if there was a deliberate decision to exclude this provision, I am baffled as to why given what we now know. I call on the Government to review that decision.

A code is not sufficient. As we have seen, the banks have paid lip service to these whistleblowing policies and speak-up charters. We need effective monitoring and oversight of the corporate governance code to ensure the whistleblowing policies and procedures are put in place. We need to ensure they work in practice in order that whistleblowers know they can call time on malpractices within their organisations without fear of getting P45s for their efforts.