The whistle-blowing framework in South Africa has developed over a number of years. It is currently primarily located in the Constitution of the Republic of South Africa, the Protected Disclosures Act 26 of 2000, the Labour Relations Act, the Companies Act 71 of 2008 and the body of jurisprudence that has been developed by the Labour, High and Supreme Courts of South Africa. Another act that often impacts on whistle-blowing is the Prevention and Combating of Corrupt Acvitivities Act (2004), and the new Companies Act, which will be published in April 2011, is also likely to have an impact.
According to Jacques van Wyk, head of employment law at Werksmans Attorneys, “South Africa’s whistle-blowing laws are still poorly understood, limiting their effectiveness. For employees, one of the biggest pitfalls is the misperception that they can go straight to the media or an outside authority if they suspect wrongdoing by the employer, he says. “What employees do not always realise is that they must first raise the matter within the company,” he adds.
The effect of the King III report and of the American Sarbanes-Oxley Act means that disclosure services are increasingly becoming part of the corporate governance landscape. Effective prevention and detection processes help increase the confidence and morale of all stakeholders.
Whistle-blowing involves two parties with opposing rights and interests – the whistle-blower, who has a right to equality, freedom of expression and fair labour practices and the organisation against which an allegation is made, which has rights to a reputation and to loyalty from staff. The power imbalances in the relationship, between whistle-blowers and the organisations against which allegations are made, require the governing framework to be strong and effective to enable a meaningful safe alternative to silence for the whistle-blower. Judging from many cases where legitimate whistle-blowers suffered severe consequences for their actions, it is evident that the perception still exists that organisational loyalty and the maintenance of confidentiality are regarded as of crucial importance.
People who are victimised as a result can refer a dispute to the Commission for Conciliation, Mediation and Arbitration and thereafter to the Labour Court, as misconduct of any nature and perpetrated at any level in any organisation does not deserve protection, nor does it merit shelter behind the guise of proprietary activities, corporate loyalty or privilege.
Need for whistle-blowing
Carte Blanche recently asked viewers why a need existed for whistle-blowing. They mentioned the launch of the space shuttle, Challenger, in 1986. One hour before lift-off, engineer Robert Boisjolly voiced his concerns about the safety of the shuttle, but he was ignored. Thirteen seconds after lift-off, the shuttle exploded. They also cited the 2001 collapse of energy trading giant, Enron. Months earlier, accountant Sherron Watkins warned the chair of the board and the American government about fraudulent accounting, but was ignored. Six-thousand people lost their jobs and hundreds of millions of dollars were lost. Each of these dramatic and sometimes tragic events has one thing in common – a whistle-blower.
Most people will recall the term ‘whistle-blowing’ from the high-profile cases reported in the media, referring to making a disclosure in the public interest and occurs when a worker raises a concern about a danger or illegality that affects others.
A global study on fraud indicated that auditing identifies only about 7% of fraud in organisations. The study further revealed that most fraud detection – between 40% and 50% – is achieved through tip-offs. Whistle-blowing should thus be considered as one of the strategic focuses of efforts on promoting good governance and incorporating zero tolerance for corruption.
The Open Democracy Advice Centre (ODAC) commissioned two Markinor Surveys on whistle-blowing and access to information between 2007 and 2008. The key findings of the studies were:
- In 2007 69.7% of respondents said that they were in favour of whistle-blowing protection, this number increased to 74.5% in 2008.
- Views on whether whistle-blowers by law receive effective protection are mixed and the trend over the period remained the same, with 43.1% feeling that judicial protection is inadequate, 28.4% reporting that they thought that it was effective and adequate and 28.6% feeling unsure.
Blow the whistle or zip the lip?
by Ronel Nel
When looking at whistle-blowing, one has to consider the type of crime it is mostly aimed towards – corruption. Corruption can loosely be defined as a lack of integrity or honesty (especially susceptibility to bribery) or the use of a position of trust for dishonest gain. Corruption includes bribery, embezzlement, fraud, extortion, abuse of power, conflict of interest, abuse of privileged information, favouritism, moonlighting, piracy, collusion and nepotism.
According to Steven Powell, the Managing Director: Edward Nathan Sonnenbergs Forensics, corruption costs the South African economy about R150-billion per year, with around 84 000 such crimes being reported to the relevant authorities during the last year. What is even more concerning, is the ‘not-so visible’ effects of corruption. Senior Researcher at the Institute for Security Studies, Lala Camerer, says the whole African continent, including South Africa, is plagued by a culture of corruption that is “more damaging to the nation’s psyche than visible, violent street crimes.” Corruption also results in a lack of public confidence in democratic processes, it entrenches elites, slows economic growth and deepens economic inequality as money continues to trickle up. Ethical resistance, or whistle-blowing, can thus be regarded as an important tool in fighting corruption.
Organisations are requested by the King III Report to adhere to good corporate governance, which includes providing guarantees – through a written and publicly available policy document – of the anonymity of whistle-blowers and gives the assurance that there will be no retaliation or victimisation of people coming forward with incriminating evidence or information. The organisation should set up appropriate reporting structures and raise awareness of the company’s ‘hotline’ – should they have one – highlighting its ease of use and encouraging staff and other stakeholders, including, customers, suppliers and contractors to report anything suspicious.
There are a number of companies, including the large auditing firms, which provide a hotline service, to obviate the cost and effort of setting up one’s own call centre and hiring qualified staff. They also have the qualified staff to ask the right questions in determining whether a call is genuine or an attempt at malicious slander. Thereafter they have the expertise to assist with any investigation the client deems necessary. Guy Brazier, co-founder of Deloitte Tip-Offs Anonymous and the regional head of Deloitte KwaZulu-Natal, says, “Through the use of a hotline facility, employees can protect their jobs and the future of their company”.
The effectiveness of one such hotline, Crime Line, between 6 June 2007 and 30 August 2010 indicates the role such lines can play in crime detection:
- 6 June 2007 to 30 August 2010, the tip-off service has led to over 1 000 arrests and close to R37-million in seizures.
- 17 of the country’s most wanted criminals have been recaptured.
To conclude, ideological leader, Matahma Gandhi once said, “There are seven things that will destroy us: Wealth without work, Pleasure without conscience, Knowledge without character, Religion without sacrifice, Politics without principle, Science without humanity and Business without ethics”.
Whistle-blowing cases making headlines:
- Swiss police have arrested former banker, Rudolf Elmer, on fresh charges of breaching Swiss bank secrecy law for giving data to whistle-blowing site, WikiLeaks, hours after he was found guilty of another secrecy offence. Earlier, a court found Elmer guilty of breaching banking secrecy for publicising private client data.
- Former Fidentia executive Rudi Bam blew the whistle on J Arthur Brown and Graham Maddock, for corruption, leading to their downfall and the demise of the Fidentia group.
- Wendy Machanik, is facing criminal charges, after the Estate Agency Affairs Board launched an independent investigation which found she’d defrauded the trust account run by her agency. The allegations that Machanik was misappropriating funds were leaked to the EAAB by a whistle-blower and employee, Fiona Chaitowitz.
- Wendy Addison, the former international treasurer of LeisureNet, blew the whistle on two of the company’s senior executives, Peter Gardener and Rod Mitchell who apparently used the company as a personal bank, eventually leading to its collapse.
Advice when you want to blow the whistle on suspicious activities:
- Have all evidence of incident/s gathered and documented, speak to co-workers involved (if possible),and approach the management ladder to report the issue (if necessary).
- If somebody is in harm or your moral instincts kick in, you should blow the whistle.
- Hold everyone accountable, including yourself.
- Don’t be scared to do the right thing.
Protected Disclosures Act (no 26 of 2000) applies to people at work raising concerns about crime, failure to comply with any legal duty (including negligence, breach of contract, breach of administrative law), miscarriage of justice, danger to health and safety, damage to the environment, discrimination and the deliberate cover-up of any of these. The Protected Disclosures Act sets out a clear and simple framework, promoting responsible whistle-blowing.