Transparency International (TI) just released its “Global Corruption Report 2009: Corruption and the Private Sector (GCR).” In it, more than 75 experts examine a wide range of corruption issues around the world.
In this post, I would like to introduce several whistleblowing issues around the world based on the report.
The report emphasizes that “recognizing the role of whistleblowers” is one of key elements of good corporate governance, mentioning “employees are the single most important group of actors capable of detecting corporate fraud and as such they represent an extraordinarily important pillar in the system of checks and balances that comprise corporate governance.”
According to the report, only New Zealand, South Africa, and the United Kingdom have passed comprehensive whistleblower protection to cover both the public and private sectors. Japan has a whistleblower law that applies to the private sector. In Asia, Indonesia, Singapore, South Korea, and Taiwan have a legal and regulatory frame work to provide whistleblower protection for private sector employees.
Globally, only 42% of companies have their own whistleblowing systems. 77% of companies in North America have whistleblowing systems, while only 33% of companies in Europe and 38% of companies in Africa. In Asia, 55% of companies have whistleblowing systems as opposed to 46% of companies in South and Central America.
In the report, experts from each country describe legal and institutional changes and cases relating to corruption, fraud, and whistleblowing.
The following is brief list of whistleblowing stories making the news:
In Ghana, the Whistleblower Act 2006 has not been an effective mechanism for fighting corruption because the law is nascent and does not build confidence among citizens in executive offices. Potential whistleblowers fear victimization and are convinced that their reports will not be acted on.
In Nigeria, the Freedom of Information bill suffered a setback in 2008: section 31(2) of the draft bill, which dealt with whistleblower protection, was deleted by the Senate Committee.
In Chile, the Whistleblower Protection Act, presented by President Michelle Bachelet, became law in 2007. The legislation protects whistleblowers against disciplinary action during the course of an investigation, but it lacks the teeth to protect employees who report irregularities or breaches of integrity. The law also does not protect any whistleblowers in the private sector, state-owned, and state-controlled companies. In 2007, Chilean government submitted a bill to recognize the risks of corporate fraud and the value of corporate governance, but the bill does not have any provisions for the legal protection of private sector whistleblowers.
In South Korea, there was a major whistleblowing case relating to Samsung, the biggest private company in South Korea. On October 29, 2007, Kim Yong-Chul, who had headed Samsung’s legal advisory team, blew the whistle about Samsung’s illegal slush fund bribes to high-ranking officials and ultimately caused the resignation of the president of Samsung.
In Sri Lanka, the new Companies Act 2007 includes provisions for rewarding whistleblowers (even though the reward may not be enough to compensate whistleblowers). Whistleblowers and their attorneys may be eligible for reimbursement of attorney’s fees.
In France, on November 13, 2007 a new law (Law no. 2007-1598) was passed into, which was transposed from the criminal provisions of the Council of Europe Criminal and Civil Conventions and the UN Convention Against Corruption. The law provides legal protection for whistleblowers in the private sector.
In Germany, the new Law on the Status of Civil Servants, adopted on June 17, 2008, provides a whistleblower protection provision as stated by article 9 of the Council of Europe Civil Law Convention on Corruption. Section 38 (2) of the law states that “officials have the right to report suspicions of corruption directly to the competent law enforcement authorities without previously informing their superiors”. Recently, the Federal Ministry of Food, Agriculture and Consumer Protection has been working on a draft law about consumer-related whistleblower protection in the private sector.
You can download “Global Corruption Report 2009” from the TI’s website.