Whistleblowing in the UK, Ep. 1: The cost of speaking up

0:00Martin Arnold: What happens next in the story of money? Nuveen has spent over 125 years helping clients answer this question. By investing in the growth of businesses, real estate, infrastructure and natural capital, we continue to deepen our expertise across income and alternatives so investors can confidently write the next chapter of their own portfolio stories. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. Back in 2006, Daniel Sheard was working at an asset manager in London when he heard from an old colleague with a new opportunity.

0:39Mary Inman: We met up at a coffee shop in the Royal Exchange in the heart of the city. And he was looking for a co-manager to help him run a significant pool of money. At the time, it was about 3 billion euros with a pretty much go-anywhere mandate. Sounded a lot of fun.

0:59Martin Arnold: This old colleague was a guy named Tim Haywood.

1:02Mary Inman: I'd known Tim many years before and we'd got on. And that, combined with sort of the bureaucracy and slow-moving nature of where I was working at the time, really was an attractive offer.

1:15Martin Arnold: So Daniel took the job. And for a while, he was happy in this new position. He says that he and Tim grew to be seen as guardians of this fund that they ran together.

1:25Mary Inman: There was a standing joke within the sales and marketing team that we were basically the mother and the father of the Absolute Return Fund. And, you know, you know how husband and wife argue. Well, sometimes we argued, but usually I won.

1:41Martin Arnold: Though they'd known each other for a long time, Daniel says he felt like they approached their work differently.

1:47Mary Inman: Tim was very much a risk taker. Tim was always looking for the outside odds opportunity, very much like an equity investor looking for the fabled 10-bagger. So very perhaps diametrically opposed approaches to investment. But perhaps that's why we worked together so well for such a long time.

2:10Martin Arnold: You might think that Daniel and Tim made good counterweights to each other. That is, until about a decade in, when a new investor became involved with their firm called GAM. This new investor's name was Lex Greensill of Greensill Capital. This is, of course, the Greensill. Years later, the FT would expose the firm's shaky business model. Greensill would eventually collapse, losing investors billions of dollars. But when Daniel says he first came across Greensill's involvement with GAM, they were still relatively unknown. Even so, as the relationship grew, Daniel says he started to notice some red flags.

2:52Every now and again, there would be an additional move outside of the tram rails.

2:59Mary Inman: So we'd go from buying, you know, well-known names that were insured to buying unknown names. And then there'd be, oh, it's not insured this time, but it's only a one-month piece of paper. and then it would be, it's not a one-month piece of paper, it's a 30-year bond, but it's got some kind of Scottish government guarantee, which would have been fine if it was in 5 million, but not so fine when it's in hundreds of millions because it was, you know, a totally illiquid asset. One thing we have to remember always is that the funds that were investing were daily dealing mutual funds. Clients could ask for their money back any time

3:41Martin Arnold: In response to these moves outside the tram rails, Daniel says he tried to speak with Tim about his concerns. He says he pushed for better record keeping and documentation.

3:51Mary Inman: There was just a lack of information, which meant everything was living in Tim's head. And I felt that was an undue risk.

3:58Martin Arnold: And what did Tim say when you would talk to him? Tim would always agree and, you know, say that we would do something and then he'd be gone.

4:09Mary Inman: And then you'd find out weeks later that nothing had been done and, you know, we were still in, you know, flying blind, as it were.

4:16Martin Arnold: By late 2017, Daniel's concerns reached the point that he decided to raise them to the firm's top brass.

4:23Mary Inman: I had blown the whistle internally at GAM. The company had not responded in the way that I or my lawyers had hoped and expected that they would. there had been an investigation, in inverted commas, by an independent law firm, which had basically concluded very little. And in February of 2018, Daniel says he discovered that Tim and Lex Greensill

4:51Martin Arnold: were still undertaking transactions that he had concerns about.

4:55Mary Inman: And that was the final straw that prompted me to go to the FCA.

5:01Martin Arnold: In March, Daniel did exactly that and made his whistleblowing report to the UK regulator, the Financial Conduct Authority. So I spent quite a bit of time with my lawyers.

5:15Mary Inman: The advice was basically keep it fairly succinct and understand exactly what your complaint is because the FCA gets around 1 ,000 whistleblowing reports a year and most of them are not acted on because people don't understand what the FCA's role and remit is.

5:37Martin Arnold: And true to his lawyer's warning, it's what happened next that left Daniel feeling betrayed and disillusioned.

5:44Mary Inman: Ultimately, you know, you think that the Financial Conduct Authority, you think that their role is to protect investors, and you realize that it isn't, that they have little interest in investor protection. Their main role seems to be protecting the reputation of the UK financial services industry rather than acting to police wrongdoing by people within the industry.

6:14Martin Arnold: This is Behind the Money from the Financial Times. I'm Michaela Tendera. Daniel Sheard's experience as a corporate whistleblower is just one example of many. For years, corporate whistleblowers in the UK have found themselves in an unenviable predicament. They're encouraged to report wrongdoing, but at the same time, they often feel like they risk everything. Their careers, their livelihoods, in exchange for, well, not much. This episode is part one of a two-part series on corporate whistleblowing in the UK. Over the next two episodes, we're going to explore the cost of speaking up And how insiders are trying to create new paths in order to protect whistleblowers.

7:11Martin Arnold: When Daniel Sheard went to the UK's Financial Conduct Authority in 2018, he wasn't expecting to be paid for his information. But he did hope that the agency would quickly take some kind of action to protect investors.

7:25Mary Inman: And at this stage, money was still coming in from private and institutional investors. And, you know, that really was my horror. The fact that knowing that something is wrong, not merely suspecting, knowing, knowing that something is wrong, you are still allowing this fund to be promoted to unsuspecting investors. But after Daniel made his report to the FCA, he was surprised by how slow things moved.

7:56Martin Arnold: They conducted an interview with him in May.

7:58Mary Inman: And then it's months and months until you hear from them again, during which time the world has moved on a lot.

8:05Martin Arnold: All the while, he was still on GAM's staff.

8:08Mary Inman: Stress doesn't really cover how it was. I mean, it becomes an obsession and the frustration is indescribable. You know, this situation is still live. Investors' money is still at risk. Why are they not doing anything?

8:26Martin Arnold: Meanwhile, GAM's internal challenges spilled out into the open in July. The FT reported on this at the time, that the firm suspended Tim Haywood with little public explanation. and investors rushed to redeem what they owned in the funds that Tim and Daniel had managed together. In November 2018, eight months after he first blew the whistle to the FCA, Daniel finally got to go in for a full-day interview with agency investigators.

8:55Mary Inman: And in this case, between first speaking to the FCA and actually being interviewed in depth, You know, the funds had been suspended from trading. They'd started winding them up. You know, it's hard to describe how shocked I was at the FCA's lack of haste.

9:22Martin Arnold: And during that interview, he says he couldn't believe how little they knew about Gamm and his work.

9:28Mary Inman: It was very clear to me that the two investigating officers from the FCA had a very, very low level of technical knowledge and understanding of the situation that I was describing to them. They weren't familiar with the operation of the securities markets. They weren't familiar with how funds are run, how risk is managed, how decisions should be made. They were not up to the standard of financial investigations that I would have expected.

10:01Martin Arnold: In 2019, Daniel was laid off along with others. The same year, Tim Haywood was also dismissed for what Gam called, quote, gross misconduct. When this happened, Tim challenged his dismissal and insisted that he hadn't been treated fairly. He told the FT at the time that he was being made a, quote, scapegoat. Two years later, in 2021, the FCA fined GAM 9.1 million pounds for failing to manage conflicts of interest. They also fined Tim Haywood about 230 ,000 pounds. For his part, Tim, who was allowed to continue in the industry, has said many of Daniel's initial allegations were not upheld. None were criminal.

10:48Martin Arnold: Clients got their money back. And the FCA's findings were mainly to do with failures regarding procedures, breaches which he, quote, deeply regrets. And he says he laments the job losses that ensued at GAM. But for Daniel personally, the costs have been high. He hasn't been able to find another job at the same level in finance. And he says he's paid more than£36 ,000 in bills to lawyers.

11:14Mary Inman: I was paying two sets of lawyers pretty much from day one. One set were employment lawyers. The other set were criminal and regulatory defense lawyers. If things had gone wrong with the investments and there had been an investigation and it had come out that these investments were improper, I was the named co-manager on the fund. And as one of the lawyers said to me, if you know and do nothing, you're part of it.

11:44Martin Arnold: My colleague Martin Arnold met Daniel this spring. Martin, who covers financial regulation for the FT, has been hearing about problems with the UK's whistleblower system for years. So when Martin started talking with Daniel, something that struck him was just how typical Daniel's path had been.

12:03Mary Inman: Put it this way, he's not the first person I've come across who has blown the whistle to the FCA and been unhappy about it and been so unhappy about it that has then felt obliged to complain to the media because they don't feel like they got properly treated.

12:22Martin Arnold: Martin noticed Daniel's name in a report put together by a parliamentary group on investment fraud and financial services. Overall, the paper pulls together critical findings about the way that the FCA has been treating corporate whistleblowers and their testimony. It's based on firsthand accounts like Daniel's. Well, with the people that you've come across and maybe from reading this parliamentary report, help me understand what are the main issues that corporate whistleblowers in the UK face?

12:56Mary Inman: I would say that one of the main ones, I think, is when people blow the whistle on something, the FCA says, right, thank you very much, we'll look into it. And then they hear nothing. And they hear nothing for years. I think another complaint is when a whistleblower feels like something terrible has happened and investors or consumers are being harmed, but the FCA doesn't feel for whatever reason that it's in their remit to do something on this. because maybe the firm is an unregulated firm, so it's outside of their remit, and that can leave a whistleblower extremely frustrated.

13:47Martin Arnold: Beyond that, there have also been instances where the FCA has mishandled the identity or information about the whistleblowers.

13:55Mary Inman: There was one case where the identity of or some of the information around whistleblowers was leaked online. The latest example is this case that came out last year in 2024, when one whistleblower complained to the FCA that the chair of the regulator had passed their identity on to colleagues within the FCA. So it stayed within the regulator, but that their whistleblowing was specifically anonymous and they didn't give him permission to share their identity more widely within the FCA.

14:44Martin Arnold: Well, what about the issue of compensation? It seems like a lot of this conversation right now is about whether the FCA and other agencies should be paying whistleblowers for information when a company's been found liable of acting badly.

15:00Mary Inman: Well, you don't hear whistleblowers saying, I'm really upset because I didn't get any compensation. I didn't get paid. That might be surprising for you sitting here in the U.S. where that has become commonplace. But it's never been part of the way the UK has worked. So whistleblowers, there's no reason why they would expect to be paid.

15:46Martin Arnold: All while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.

16:01Mary Inman: My name is George Patelos. I got into finance by chance a long time ago, sort of went through the ranks. And before I knew it, I'd spent, you know, 25 years in the U.K., a couple of years in Australia. So that's where the bulk of my work experience was.

16:20Martin Arnold: In 2011, George Patelis was the CEO of a U.K. company called Tayuda, which offered loans to property developers. In January of that year, his chief financial officer gave him some surprising news. that the company potentially had a hole to the tune of 20 million pounds.

16:40Mary Inman: And then it was just like a house of cards. And as was my duty as an approved person under, they were the FSA at the time, Financial Services Authority. I had to report it, which I did.

16:53Martin Arnold: George has also participated in sharing his story with the parliamentary group the same way Daniel did. In that testimony, George said that a couple months after contacting the FSA, say he had a meeting with the agency. He said that they had asked him to bring any documentation or evidence to back up his claims.

17:12Mary Inman: I was actually back in the States, so I flew back to London for this meeting. At the end of the meeting, I tried to hand over the suitcase full of evidence, and they wouldn't take it. Despite asking me to bring it, they refused to take the evidence.

17:29Martin Arnold: Within a couple of days, the agency asked for Georgia's documents.

17:33Mary Inman: This was a crystal clear roadmap of exactly what was going on, how they were doing what they were doing, where the money was owed, cash flows, balance sheets, everything. And I never heard another word from them after that. That was it. Nothing. The company continued to trade for another 18 months before the company blew up.

17:54Martin Arnold: George later said in his testimony that after that meeting, communication with regulators was scant. He also said that regulators didn't classify him as a whistleblower. In 2012, Tayuda was placed into administration or basically bankruptcy. So I guess then obviously this is quite challenging to do, but to kind of recap just the past decade-ish, what's happened?

18:24Mary Inman: So, yeah, well, it's been pretty bad and there's no really good way to sort of dress that up. I would say within a year or so, there started to be a lot of talk about it in the press. And that then started this sort of chain of events where in the press, I was being blamed for what was happening there. And the FCA put statements out essentially saying that they met with me, but I could have done a lot more to prevent it. I had death threats. Both of my kids were contacted, harassed on social media. It just sort of kicked off a just a really challenging time. Hmm.

19:12Martin Arnold: How would you describe the effect on you personally?

19:17Mary Inman: I couldn't get a job because there was just a lot of suspicion. If I told people what happened, they didn't believe me because if that really happened, these guys would be in jail and so on. So that caused a huge financial strain. It led to me encountering substance abuse issues that I I ended up in rehab. My help suffered. I was diagnosed with PTSD. And to this day, I'm still taking medication and I still see a psychiatrist every couple of months. So the blast radius on these sort of things is wide. It's not none of it's isolated. This doesn't didn't just affect me. It affected my wife, my kids.

20:06I just, I kept thinking that the right thing would happen.

20:12Mary Inman: And to this day, it hasn't.

20:16Martin Arnold: Like Daniel Sheard, George says he hasn't worked in finance at the same level since then. George eventually filed a complaint over his treatment by the UK regulator. He received a public apology from the FCA, but he told the FT that the apology was a, quote, joke, because it didn't mention his name, nor did it mention the company in question. He was also offered a 1 ,500-pound payment, which he says he refused to take.

20:44Mary Inman: I asked them to make a donation to their training budget in my name, which I don't know whether they did that or not. I never heard back from him on that.

20:53Martin Arnold: Eventually, the FCA was forced to issue a fresh apology in 2020, nine years after the events took place.

21:00Mary Inman: You know, a day late and a dollar short. I mean, at that point, that's all I wanted. Like, just say that I was right and let me move on with my life and my career. And they couldn't do it.

21:10Martin Arnold: George filed a claim against the FCA last year. The lawsuit was not served. However, George tells me that he's planning to pursue new litigation against them. In response to questions about Daniel Sheard, George Patelis, and the experience of corporate whistleblowers who have been involved with the FCA, an FCA spokesperson told the FT the following. quote, We take our responsibilities to whistleblowers seriously. We have a dedicated team who are trained to receive whistleblowing concerns and confidence and take appropriate steps to protect the identities of those who whistleblow to us. The allegations referred to are historic, and since that time we have strengthened and improved our approach to how cases are managed.

21:54Martin Arnold: But lately, more people are talking about ways to avoid repeating what George Patelis and Daniel Sheard had to go through. Part of that has to do with paying corporate whistleblowers in the U.K. And they point to the U.S. as a prime example of that. Since 2012, the Securities and Exchange Commission has paid out more than$1 billion to whistleblowers. This difference in approach between the U.K. and the U.S. can feel pretty stark on an individual level. Here's George Patelis again.

22:28Mary Inman: Let me put it to you this way. If I had done what I did in the U.K., if I'd done that in the U.S., I would have been looking at around$30 million, right? I'm not going to say that, you know, having that sort of windfall sort of negates all the other bad experiences with death threats and people contacting my kids. But you're not ruined financially.

22:52Martin Arnold: That difference between nothing and millions of dollars has led to a lively debate in the UK. And one of the biggest advocates of setting up a reward system for whistleblowers is Mary Inman. My name's Mary Inman. I'm a founding partner of the law firm Whistleblower Partners. I've had the great privilege to represent a number of high-profile whistleblowers, including Tyler Schultz, one of the Theranos whistleblowers who exposed Elizabeth Holmes for the blood testing scandal. Francis Haugen, the Facebook meta whistleblower who testified in front of Congress, and then finally represent a whistleblower in the Uber file as a gentleman by the name of Mark McGann.

23:33Martin Arnold: Mary's connection to the UK started in 2017. That's when she moved to London from San Francisco. She had a goal to bring more international whistleblowers into the U.S. system. The thinking for Mary was that in order to find these cases, she should, well, go abroad. Ideally, to a place with ties to global trade in other countries. So for her, that seemed like London. For economic crimes, the U.K. and London in particular is a hotbed. It's a global financial center, but also a lot of money and dirty money moves through the city. What Mary didn't count on was the amount of interest she'd received from British whistleblowers themselves.

24:14Martin Arnold: The people she met there hoped that they could use a U.S. connection to bring their cases in front of the SEC or the DOJ, the U.S. Department of Justice. So when you arrived, how would you describe how whistleblowers in the U.K. were being treated back then? What did you learn? So I learned that it was pretty bleak and I found that to be surprising because the UK actually was a leader in whistleblower protection. The Public Interest Disclosure Act was one of the first whistleblower protection statutes to really be a leader to the rest of Europe. And so by the time I arrived, the U.K. was really on its back foot because of Brexit and the fact that Europe had jumped ahead of the U.K.

25:05Martin Arnold: with the EU whistleblowing directives. So Mary took on the British cases. And Daniel Sheard's was one of her earliest. That's because GAM managed investments for public pensions in the United States. So Mary helped him connect with the SEC here in America.

25:21Mary Inman: Between my whistleblowing to the FCA and actually speaking and being interviewed by the FCA, I'd already been interviewed by the SEC. And the standard of their questioning was so different to the FCA. They understood how the instruments worked. They understood how fund management worked. They understood how client expectations and the nature of the portfolio worked. They were asking questions that I had to think about answering.

25:58Martin Arnold: For Daniel, dealing with the SEC was a bright spot in his story. However, according to Mary, it seems like the agency didn't choose to pursue his case. And the SEC doesn't comment on the existence or non-existence of possible whistleblower submissions. Still, for Mary, seeing the difference in Daniel's two experiences drove home a key point. I think that what Daniel observed really epitomizes the difference between the American and the UK systems, which is that U.S. programs have architecture set up so that when a tip is submitted, it goes to an office of the whistleblower that is staffed by people who are ready and able to prosecute and receive this information and take it forward.

26:45Martin Arnold: And not only that, their programs, the success of their programs depend on whistleblowers. So in a way, they roll out the welcome mat. And why is making sure that whistleblowers receive some form of payment? Why is that so important in your mind? Why not just focus on setting up the staff and the reporting channels? I think there just was a failure to recognize that nothing says we value whistleblowers more and that they are respected and valued than actually paying them a finder's fee for the information that they bring. As a prosecutor, you can investigate from the outside all day long. but if you have someone on the inside who can tell you that this wasn't just negligence this was done with intent and sort of deliver you those smoking guns that just supercharges any investigation so what we know when you speak up about whistleblowing it is very likely that you may be retaliated against you may never work in that industry again and so whistleblower rewards honestly sometimes are the last paycheck a whistleblower ever may receive.

28:00Martin Arnold: For Daniel, his career and life were totally changed after he blew the whistle.

28:05Mary Inman: I had a couple of sort of verbal offers that, following which I was just totally ghosted. I met one firm three times. They said that, you know, there would be an offer coming and HR would want to see me and literally never heard any more from them.

28:20Martin Arnold: How did that make you feel? I mean, that just sounds pretty rough.

28:25Mary Inman: Lots of platitudes about, you know, really brave to be a whistleblower and, you know, we have to, you know, applaud your integrity. But there's always a subtext there of, well, we don't really want that sort of person in our shop.

28:35Martin Arnold: And why not?

28:36Mary Inman: I think you're just perceived to be a troublemaker. And, you know, finance is still really a people business and the team needs to trust everyone on it. And I think you would just go in with people would always worry. You know, if something goes wrong and I have to cut the corners a little bit here to, you know, is this guy going to dob me in? Yeah, I was very, very lucky. I'd been working for a long period of time. The city had paid well. I didn't have to go out and work for a living to pay the bills immediately. I knew I had a little bit of breathing space. And I had, although I suspect that for a few years I was a horrible person to live with, I had a lot of support from my family.

29:25Martin Arnold: The arguments that Mary's heard against whistleblower awards surprised her. It basically boiled down to one thing. It's not British. It's not consistent with the British sensibility to pay people to speak up. We're British. We do it because it's the right thing to do. We're not mercenary transactional Americans who have to get paid for everything. So there was that cultural bias in the background that really for years until very recently had made it a non-starter in the UK. We're just not going to do it. It's just not British, despite the fact that we'd seen other Commonwealth countries, particularly Canada, adopting these programs.

30:05Martin Arnold: And even in the UK, the Competitions and Markets Authority does have a program that pays rewards to whistleblowers. Recently, though, this idea of paying whistleblowers is gaining momentum.

30:18Mary Inman: I think that's an entirely good thing to do. We do it in the UK with informants, criminal informants. Why are we so reticent to do the same thing for whistleblowers? I just cannot understand it.

30:29Martin Arnold: In part two of our series, why the UK may adopt this very un-British practice after all. That's up next week.

30:43Martin Arnold: Behind the Money is hosted by me, Michaela Tendera. This episode was produced by me and Katya Kumkova. Special thanks to Robert Smith, Ella Shiva Kissen, and Jonathan Ely. Fact-checking by Simon Greaves and Lucy Baldwin. Sound design and mixing by Sam Giovinco. Original music is by Hannes Brown. Topher Forges is the FT's acting co-head of audio. Thanks for listening. See you next week.

31:17Martin Arnold: The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen's credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.