PUBLIC ACCOUNTABILITY: by Warren ReedNews Weekly
Shooting the messenger undermines democracy
, March 7, 2009
Whistleblowers were ignored in the UK and the US in the lead-up to the global financial crisis, writes Warren Reed.Whistleblowers were ignored in the United Kingdom and the United States in the lead-up to the global financial crisis, providing a salutary warning to Australia to pull its socks up.
Two high-profile overseas financial scandals have turned the spotlight on the sigh-and-forget attitude that Australians have towards whistleblowers who, by truth-telling, strive to protect the nation's well-being.
Harry Markopolous, a former American money manager turned fraud investigator, tried for nine years to alert the Securities and Exchange Commission (SEC) to Bernard Madoff's giant $US50 billion Ponzi scheme.
Markopolous has told a Congressional hearing that he, in effect, "gift-wrapped" the case and delivered it to the regulatory authority on a silver platter. He claimed it was a combination of incompetence and an unwillingness to act that led the SEC to ignore his evidence and advice.Managerial responsibility
This is a typical example of whistleblowing: the undoubted veracity of the information provided is outweighed by managerial irresponsibility. As Markopolous pointed out, the SEC's hierarchy was captive to the industry it was meant to be regulating.
What lies at the heart of this case is not just a professional breakdown, but rather moral failure. And it's that crucial dimension that's too often overlooked in such situations.
Morality rears its head in another celebrated financial case in Britain, one which saw four former heads of the country's two largest banking casualties apologising unreservedly to the House of Commons Treasury committee for their "professional failure". One of the institutions, the Royal Bank of Scotland, is now government-controlled, while the other, HBOS, is now owned by the Lloyds Banking Group. The whistleblower, Paul Moore, was in HBOS.
Moore was head of group regulatory risk, which meant he was the one whose duty it was to warn the bank of imminent danger. In a nutshell, the bank was expanding too quickly.
As with most whistleblowers, Moore was simply doing his job but, as he told the parliamentary committee, no one wanted to listen. Instead, he was forced out of his job by the bank's then chief executive, Sir James Crosby. Crosby was, until his resignation the other day, deputy chairman of the UK's Financial Services Authority. You have to relish the irony in that.
What makes Moore's case classical is that he was made the scapegoat: whistleblowers customarily lose not only their job but just about everything else. That's how the messenger is shot while the problem is studiously - and immorally - ignored.
What is unique in Moore's case is that he survived to see his nemesis toppled. True, it didn't save his old bank, and it only came about because he had the chance to give evidence to a panel of politicians obliged for reasons of face and honour to listen to what he had to say.
That's rare. The laser beam is always focused on the whistleblower. Various studies, including in the US and Australia, show that almost all such people are subjected to reprisals.
If you're wondering how whistleblowers fare in Australia, ponder the following two cases, both of which are in their way as high-profile as those of Markopolous and Moore.
The two people involved had the well-being of the broader community at heart. They weren't merely acting out of personal preference. Rather, it was out of duty, which they fulfilled to the letter. Australians benefited from their exertions and tenacity.
One of them was greeted with a shrug of indifference; the other with public acknowledgment, though seemingly without any rectification of the problem involved.
Allan Kessing was a member of the Customs Air Border Security Unit based at Sydney Airport. He had been instrumental in compiling two reports, in 2003 and 2004, which highlighted major shortcomings in the security net at the country's major airports. These included surveillance blind-spots, criminal activity and drug-smuggling - and all this such a short time after the 9/11 terrorist attacks on the United States.
Kessing's reports were fed into the bureaucratic paper-mill but were never acted upon. Somehow, in 2005, they were leaked to The Australian
and became front-page news across the nation. Kessing has always denied leaking the reports (and believe me, you can believe him), but a lethargic Canberra, mugged by reality, demanded a scapegoat on whom to vent its spite. Kessing was designated as the whistleblower involved.
Thus the government and bureaucracy, despite their rhetoric and duty, had failed to be either alert or alarmed.
Meanwhile, the then Prime Minister, John Howard, urgently hired British international aviation security expert, Sir John Wheeler, to look into the claims - for a stiff fee. Wheeler confirmed the dangers and vulnerabilities outlined in the reports, and the Federal Government quickly allocated $200 million to rectify the deficiencies.
Despite his denials, Kessing was charged and convicted. He was given a nine-month suspended sentence and put on a good-behaviour bond for two years. He appealed, and after a long, drawn-out process, lost. The decision was handed down - you guessed it - a few days before Christmas last year.
In his early sixties, Kessing has lost his life savings and superannuation. Only The Australian
and the journalists' Media Alliance have stood by him, covering a fair swag of his legal fees. By the end of the year, however, the Australian public had lost interest in Kessing and are unlikely ever to bother to thank him for doing his job and having to suffer prosecution.
The other whistleblowing case is that of a brave Australian woman, Toni Hoffman AM, who holds a masters degree in bioethics. Between 2003-2005, as a nurse and manager of the intensive care unit at Bundaberg Hospital in Queensland, she repeatedly raised concerns about Dr Jayant Patel, one of the hospital's surgical officers.
Despite pleas to her superiors, to the police and to the Queensland coroner, Patel was allowed to continue working unimpeded. Ultimately, out of frustration, she went to her local member of parliament and to the media. This resulted in a Queensland Government inquiry into unexplained surgical deaths at the hospital.
Patel fled overseas, but was last year extradited to Australia, where he is currently facing trial on 14 charges, including manslaughter.
In contrast to Kessing, Hoffman has had some public recognition. She was made a Member of the Order of Australia in 2007 for services to nursing and to the community. This followed a 2006 "Local Hero" award presented by the then Prime Minister Howard at the Australian of the Year ceremony.
But, despite this and her persistent endeavours to highlight the culture that allows such tragedies to occur, she has recently revealed that her colleagues at the hospital are still approaching her about where to go to have complaints of patient mistreatment addressed.
There's much food for thought in these Australian cases, and they're only two. As we set about readying the old parliament house in Canberra for a Museum of Australian Democracy - at considerable public expense - we should ponder how our apathy might ultimately render the exercise meaningless.- Warren Reed was an intelligence officer for 10 years with the Australian Secret Intelligence Service (ASIS) and later chief operating officer of the Committee for Economic Development of Australia (CEDA).