Whistle-blowing and plea-bargain deals are as much part of American corporate culture as a suit and tie.

In the 1970s, after the Watergate scandal, Congress passed legislation that protected workers who told authorities and regulators about their concerns over illegal activities and malpractice by an employer.

Under that legislation, employees cannot be sacked for raising concerns. Equally, an employer is not allowed to discriminate against them in promotion, although in practice, the career of such an employee is usually finished at that company.

Once a formal complaint has been made, the Department of Labour and the Occupational Safety and Health Administration, its subsidiary, are notified.

The Securities and Exchange Commission is often informed as well.

Sarbanes-Oxley legislation – introduced in 2002 after the collapse of Enron and WorldCom – was an attempt to beef up protection for whistle-blowers in the securities industry. Paul Sarbanes tried to put into the legislation rules that protected the identities of whistle-blowers so that they could reveal all without losing their jobs.

So does whistle-blowing work and has it helped to clean up Wall Street and corporate America?

One regulator who declined to be named said: “There’s a range of opinions on how valuable whistle-blowers really are.

“I think, in the main, they are less critical for lawyers and regulators to actually nail a case against a firm than many people believe. But I think they do help in assisting prosecutors in unravelling stuff.”

While most listed companies in America have internal whistle-blowing mechanisms, such as identifying designated individuals for recognised channels of complaint, the regulator pointed out that many complaints address petty fraud, rather than more substantial misdemeanours.

In the end, the usefulness of American legislation may become irrelevant as the internet becomes more pervasive.

Wikileaks, the website that encourages dissidents, bankers, and employees to post untraceable documents, is a growing phenomenon.

Recently, Julius Baer, the Swiss bank, served a court order on the site after it published internal documents. Wikileaks has since won an appeal and is back in business, leaving the bank with the reputation that it has something to hide.

Plea-bargain deals and immunity from prosecution arrangements are also likely to play a significant part in the miss-selling and predatory lending legal cases that are mounting up in America as a result of the sub-prime debacle.

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