A bank employee learns that his client moved money from the company’s account with the local bank to another account with a foreign bank in a lower tax jurisdiction, realising that the payment was for inflated invoices, possibly forged….
A corporate client receives USD 1m for securing a large construction contract for a foreign company. The company establishes a trust in which the client’s children are designated as beneficiaries. A bank account is opened into which the company transfers the money. Bank employee discovers the sources to be from illegal channels.
Examples galore…. By asking banks to identify their customers to file suspicious activity reports to relevant authorities when there is apprehension of dirty money, anti-money laundering laws are already asking banks to maintain systems of institutionalised whistleblowing. For every case of unethical behaviour, many others go undetected, despite all the lip service paid to corporate ethics.
A compulsive need has arisen to have a comprehensive whistleblowing policy in each institution, thanks to the all-pervasive likes of PNB scam. In a world where corporate corruption is rampant and taxpayers are often left with enormous bills as a result, understanding and protection of ethical corporate whistleblowing should be an even more important education and policy issue. Else, unfairness would go unresolved and misdeeds in the corridors of power would never be known.
Corporate governance strategy
Research conducted in 106 countries by the Association of Certified Fraud Examiners indicates that employees are the “most common source of disclosure of fraud and wrongdoing’ and that tips by employees are by far the most prevalent means to detect wrongdoings.
Hence, establish internal reporting mechanisms. Ensure employees address their concerns anonymously to an independent body within the institution, or to an ombudsman’s office. Source disclosure may only be compelled by an independent judiciary on exceptional occasions, if such an order is justified by an overriding requirement of public interest.
The whistleblowing policy should feature a “how-to” guide, given the backdrop of waste, fraud and abuse. Introduce financial/non-financial rewards. Provide the ‘informant’ the right to claim compensation for moral/material damage.
Protect the whistleblower
The whistleblower-employee should not be harassed or discriminated against, even if it is later found to be incorrect or unsubstantiated. Beware, even libel and defamation laws may be triggered to threaten whistleblowers from making disclosures. Though the Whistle Blower Act, 2011 is in force, the legislative spirit has not been sufficiently recognised.
In the infamous Goldenberg affair, about USD850m, a fifth of Kenya’s GDP, was looted from the Central Bank of Kenya (CBK) in the 1990s. The whistleblower- the bank clerk- updated the parliament with all evidences. Though the disclosure eventually ended the ‘export compensation (of gold and diamonds) scheme’, the courage resulted in the clerk’s arrest and dismissal from the bank.
Employees who blow the whistle to parties outside the organisation generally do so because their internal efforts are frustrated by hostile superiors or top management. Illegalities also occur without the knowledge or consent of top executives.
When you suspect that your employer is skirting safety or environmental rules, cheating on taxes, violating government contracts, committing financial fraud or breaking the law, and if the boss is crook, speaking up is never easy.
An employee who had dared to speak up might soon find his duties redefined, sending clear message to others. Though statistics are not available, the whistleblowers’ effort to report crimes, fraud and dangers to public health and safety have saved hundreds of lives and property. Wrongdoing is less likely to occur in the first place if employees know that their bosses are inclined to portray good whistleblowers as heroes.
When you claim your dissent will achieve a public good, consider factual accuracy and seriousness of the impropriety. When you breach ‘loyalty’ to your organisation, reckon: Is whistleblowing the only alternative? Are internal channels corrupted? Are accusations fair? Does the public have a right to know?
Whistleblowers may use different routes, such as, internal procedures (of company/bank), approaching public agencies – regulators, public auditors, and media. Unions can also act as the conduit.
Remember, these are the people who alert the public of an impending disaster, substandard healthcare, unfair elections, banks going to meltdown. Think of a world, where Enron had been averted, FBI stopped 9/11, Challenger had not blown up, PNB scam forestalled. Prevention saves trillions. Few whistleblowers succeed in effecting change; fewer are regarded as heroes or martyrs.
Yes, there is a need to blow the whistle!
(The views expressed by the author in the article are his/her own.)