Report spells out protection for corporate whistle-blowers

A government panel on Wednesday completed basic work on legislation to protect whistle-blowers from retaliation from their employers, a move designed to help safeguard consumers’ interests from coverups of corporate wrongdoing.

Members of the Social Policy Council, an advisory body to the prime minister, agreed that the protection should focus on legal infringements after they were divided over the extent to which whistle-blowers should be protected under the new system, panel sources said.

The panel’s report, due to be approved May 19 and become part of a consumer policy report the council will compile by the end of May, proposes legislation with the power to stipulate that decisions by employers to dismiss, demote or impose pay cuts be overturned.

No punitive measures against employers were proposed, however, the sources said.

An outline drafted by the Cabinet Office sets clear legal violations as the criteria for protecting whistle-blowers, but it met opposition during the panel’s discussions from representatives of consumer groups.

These consumer groups maintain that legal loopholes and inappropriate legislation often lead to unscrupulous businesses harming consumers’ interests and sometimes criminal cases.

The report says fraudulent business acts that slip through the legal loopholes should be dealt with individually under existing legislation.

However, after taking arguments from consumer group representatives into account, the report also includes an “opinion” saying it would be appropriate to protect those who blow the whistle on business deals that could endanger the safety or assets of consumers even though they may not break the law, according to the sources.

Calls for new legislation are the result of a spate of scandals that only came to light as a result of information leaks from insiders.

One scandal involved a subsidiary of Snow Brand Milk Products Co. that sought to pass off imported beef as domestically raised in order to claim government subsidies introduced because of mad cow disease. Another was Tokyo Electric Power Co.’s coverup of defects at nuclear reactors.

Based on the subcommittee’s report and taking its cues from examples in Britain and other countries, the Cabinet Office will work toward having the legislation adopted at an extraordinary Diet session this fall.

The report also suggests which workers should be protected by the system, such as outsourced workers, people dispatched by staffing agencies and retired employees.

In drawing up the report, panel members assumed information leaks would occur mostly at administrative offices of the national or municipal governments or from the media.

In a potentially controversial suggestion, the report proposes that conditions for protection be stricter for people who raise the alert through the media or citizens’ organizations instead of governmental bodies.