Internal vs. External Whistleblowing: Doing the Right Thing … in the Right Way

Whistleblowing has gradually received much attention and has been in the center of academic and policy debates worldwide. The recent financial crisis and the scandals of the previous decades have demonstrated the importance of whistleblowing as an accountability and good corporate governance mechanism. It is considered as an important enforcement tool in the fight against mismanagement and corruption. Although its importance does not go unrecognized, the legal frameworks at an international level are divergent, as every country has its own approach to the process, level of protection and remedies available to potential whistleblowers. In the United States, there are different procedures depending on the industry and the Supreme Court decision in Digital Realty Trust vs. Somers muddled the waters even more. In the European continent, at least in the countries that have adopted comprehensive legislation on whistleblowing, the framework seems to encourage whistleblowers to report internally first. However, with the EU Whistleblowing Directive still in the implementation phase, it remains to be seen whether there will be a change of approach and any signs of convergence among the Member States. Finally, in the United Kingdom, the process of introducing new whistleblowing legislation has been initiated and it remains to be seen what approach the United Kingdom will adopt. As it becomes apparent, cultural differences in relation to regulation and whistleblowing policy in particular are of paramount importance and cannot be underestimated. The present article, building on the experience from the United States and the United Kingdom as well as the Whistleblowing Directive, deals with the dilemma between internal and external whistleblowing and reflects on the existing diversity of approaches. Looking at the directions that rules and regulations take internationally, it aims to critically analyze the effectiveness and efficiency of these directions for all future whistleblowers.