THE PUNCH Newspaper

2011-02-11
Safeguarding the banking industry through whistle-blowers

While reading about the founder of Wikileaks and the quantum of information and secret documents belonging to the US Government the organisation was able to hack and leak to the world, it was discovered that the main source of the leaks was from Bradley Manning, a disgruntled 22-year-old intelligence analyst, who needed an outlet to vent his frustration. He decided to release his frustration by leaking the classified documents.



Following the latest baring of US secrets on the Internet, Congress is poised to pass legislation giving employees in the most sensitive government jobs a way to report corruption, waste and mismanagement without turning to outside organisations like Wikileaks. Supporters of the bill say this will discourage leaking of classified information. The legislation will allow intelligence agency whistle-blowers to raise concerns within their agencies instead of giving classified materials to Wikileaks or other outlets, which is illegal. I strongly subscribe to this development and recommend the passage of a similar bill into law in Nigeria.



Without protections explicitly spelt out in law, whistleblowers risk being fired or demoted for informing their chains of command about misconduct.



The bill, when passed into law therefore, is meant to provide an outlet for aggrieved staff, citizens, etc, with full assurance of protection from any adverse consequences. Every employee will think twice before committing career suicide. Whistle-blowers may make their allegations internally (for example, to other people within the accused organisation) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues).



The term ‘whistle-blower’ is derived from the practice of British police officers who will blow their whistles when they detect or sense the commission of a crime. The whistle will alert other law enforcement officers and the general public of danger. Ideas about whistle-blowing vary widely. Whistle-blowers are commonly seen as selfless martyrs for public interest and organisational accountability; others view them as ‘back-stabbers’ or ‘snitches’ solely pursuing personal glory, fame or vendetta.



The banking system remains critical to the entire economy. It is said that when the banking system sneezes, everyone catches cold. The banking system remains the most regulated of industries. Still, it is open to all sorts of insider abuses, creative accounting, etc, right under the watch of the regulators. Most times, the regulators are left chasing shadows or reacting late. The deed would have been done and depositors’ funds left in jeopardy. What this therefore means is that it is the responsibility of everybody – employees and the general public – to see the banking system protected. It is not only the responsibility of the CBN, NDIC or their auditors. Of course, they always audit these banks.



However, when viewed against the banks’ vast network of branches, the millions of transactions in a single day and with some in rural areas, it will be discovered it is always easy to hide transactions. How much can an auditor see or detect, eagle eyed or not? Besides, an audit is based on auditing of a few days in few samples of branches. Talk about looking for a pin in the hay sack! Anybody that has watched the film, Titanic, will remember how Rose (played by Kate Winslet) was rescued when she used the whistle to inform the rescuers in the boat that she was alive. The beauty of a whistle-blower is that he helps to shed the light in darkness or draw attention to the fraud or suspicious transactions.



The whistle-blower’s role is similar to the role of a soldier on the ground that helps pinpoint coordinates and location of enemy hideout for the bombers to drop their missiles, without which they will miss their targets.



Whistle-blowers frequently face reprisal, sometimes at the hands of the organisation or group which they have accused, sometimes from related organisations, and sometimes under the law.



Nevertheless, the information would then be used as a guide and follow-up can be done by the auditors. Auditors are not spirits, they need help too. Laws should protect employees who call attention to violations, help with enforcement proceedings or refuse to obey unlawful directions. This whistle-blowing can be done using a website that does not require a password to log onto, and with a direct link to CBN-designated personnel. This will help bankers or the public with a conscience to ‘unburden’ their souls, and effectively put a check on executive excesses.



People don’t misbehave when they are being watched, and could be reported. It serves as a sort of trigger “peer review”. If this can be done, the benefits will be immense. We can even extend this further. Banks should put such measures in place to enable staff from various locations and branches to report such practices to their management at the head office who can then follow up. When such malpractices involve management, there should be an avenue for staff to report to the regulators directly?



In a branch of a big bank, there was the story of a male AGM who positioned himself in the female restroom and harassed female staff. Well, you know the rest. Many staff that could not cope had to leave, and there was no avenue to relay such to higher authority.



Moreover, this proposed bill will serve as an anxiety remedy. A study was conducted in Japan a few years ago. It was discovered that productivity would improve if people could unburden their heart. As we say in this part of the world, a problem shared is half solved. The management of the corporation created a website where staff could state their concerns, make suggestions and even negative comments about management staff without such being traced back to them.



Productivity improved significantly because staff felt good since they “were able to speak their mind.” It must be admitted that this is a radical idea. But such ideas have been the sorts that change the world.



The down side to whistle-blowing is persecution. It is probable that many people do not even consider blowing the whistle, not only because of fear of retaliation, but also because of fear of losing their relationships at work and outside work. There have been many cases where punishment for whistle-blowing has occurred, such as termination, suspension, demotion, wage garnishment, and/or harsh mistreatment by other employees. For example, most whistle-blower protection laws provide for limited “make whole” remedies or damage for employment losses if whistle-blower retaliation is proved.



However, many whistle-blowers report that there exists a widespread “shoot the messenger” mentality by corporations or government agencies accused of misconduct. In some cases, whistle-blowers have been subjected to criminal prosecution in reprisal for reporting wrongdoing. In the United States, Sarbanes-Oxley Act (SOX) has a provision for the protection of whistle-blower; we need to take a cue from this.



This proposed bill will help to develop corporate courage. There are issues that however need to be resolved – how to safeguard key information or bank strategy (that is not illegal) or how to check misuse of the information. Who should have access to information sent by the whistle-blower?



There are challenges that need to be resolved for effective take-off. How do we ensure regulatory agents remain objective or open-minded? How do we ensure there is no retaliation or repercussion? How do we ensure the bill does not contradict other legislation like the Evidence Act, Criminal Code, Public Complaints Commission Acts, etc? These are issues that will be effectively handled if political will is in place. Although the bill might be thrown away at the National Assemly simply because of the vested interests of some undesirable elements who may want to keep the system as “blind” as possible, a lot will depend on the political will of the government and the doggedness of the civil society. One point is clear: No matter the challenges this bill might pose, they cannot be compared to the value of advance signal from a whistle-blower.



I have this sneak feeling that if this bill is allowed to see the light of day and allowed to operate in the banking industry, we may hear not only whistles, but Vuvuzelas!

 

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