A former compliance officer, Bharat Bhagani, was recently awarded £560,000 in damages by an employment tribunal.
The tribunal found he was unfairly dismissed after making a protected disclosure about a suspected Chinese espionage agent working for his company.
The whistleblower's allegations
In 2022, Bhagani reported to the Financial Conduct Authority (FCA) that his employer, Goldenway Global Investments, had asked him to secure a visa for an employee who was later deported by British authorities for espionage.
He also raised concerns about unauthorised appointments of directors from Hong Kong and suspected money laundering activities within the company.
Following these disclosures, Bhagani faced accusations of gross misconduct for allegedly failing to follow directors' instructions.
This led to his dismissal, which the tribunal ruled was a direct result of his whistleblowing, making it unfair.
The importance of anti-retaliation policies
The case highlights the critical need for companies to implement strong anti-retaliation policies.
Businesses must ensure whistleblowers are protected from retaliation, including dismissal, demotion, or harassment.
This protection is not just ethical, but a legal requirement.
Tribunal findings
The tribunal heard that Bhagani was responsible for ensuring his company complied with FCA regulations, including preventing money laundering and reporting any knowledge of suspected laundering activities.
In July 2020, he froze a multimillion-pound payment that he believed was illegal.
Despite receiving pressure from company directors to release the funds, Bhagani stood by his decision and reported the issue to the FCA.
His situation worsened when, in February 2022, Bhagani became the sole UK director of the company.
After two directors resigned, a project manager in Hong Kong attempted to take over Bhagani's duties, despite the FCA rejecting his application.
When Bhagani resisted these actions, he was warned and eventually dismissed for gross misconduct.
The tribunal ruled that Bhagani's dismissal was directly linked to his whistleblowing activities.
The judge stated that the company had no genuine belief that Bhagani had committed misconduct.
The real reason for his dismissal was his protected disclosures to the FCA.
FCA response
Following Bhagani’s dismissal, the FCA banned Goldenway Global Investments from operating in the UK.
Neil Donovan, a dispute resolution partner at Ashurst law firm, emphasised that regulated firms are under increased scrutiny regarding their treatment of whistleblowers.
These companies are required to have effective procedures in place to handle disclosures and protect employees who raise concerns.
The FCA requires firms to report annually on the effectiveness of their whistleblowing systems.
Any evidence of mistreatment of whistleblowers can lead to serious financial consequences for firms.
There is no upper limit to the amount of compensation that can be given to whistleblowers that have been unfairly dismissed.
Key steps for employers
This case serves as a warning to all businesses, especially those in regulated sectors, about the importance of supporting whistleblowers and maintaining robust compliance systems.
Employers must take proactive steps to ensure they meet their legal obligations and protect employees who come forward with concerns.
To better protect whistleblowers and comply with regulations, employers should:
• Enforce strong anti-retaliation policies: Ensure that your company has clear policies that protect whistleblowers from any form of retaliation, including dismissal or demotion.
• Ensure safe reporting: Create a safe environment where employees can report concerns without fear of consequences.
This includes setting up anonymous reporting channels if necessary.
• Maintain confidentiality: Protect the confidentiality of whistleblowers during and after all investigations.
Ensure their identity is not disclosed unless absolutely necessary.
• Document and investigate: Properly document all whistleblowing reports and thoroughly investigate them.
Keep a detailed record of findings, actions taken, and when.
• Training management: Give mandatory training to managers and directors about the importance of handling whistleblower complaints seriously and professionally.
They should understand the legal implications of retaliation.
• Monitor and review: Regularly review your whistleblowing procedures to ensure they are effective and compliant with current regulations.
Report annually to the relevant authorities, such as the FCA, on the effectiveness of these systems.
Also, ensure that all employees in regulated firms are aware of their legal duty to report suspected money laundering or suspicious activities.
