LETTERS: Malaysia enacted the Whistleblower Protection Act 2010, which promotes the disclosure of information on corruption or other misconduct.
Ethical conduct and whistleblowing were promoted in organisations after the enforcement of Section 17A under the Malaysian Anti-Corruption Commission Act 2009 (MACC Act 2009) in June 2020.
This was part of the implementation of the T.R.U.S.T. procedures prescribed in the Ministerial Guidelines on Adequate Procedures released by the Minister in the Prime Minister's Department in December 2018, based on Subsection 5 of Section 17A.
However, it would not be effective if steps are not taken by the board of directors and senior management to disseminate information on ethical business conduct and disclose deviations from the company principles.
Hence, a well-established internal whistleblowing policy is required to enable organisations to adopt ethical business conduct, review internal processes and controls, and maintain a clear monitoring mechanism.
However, a challenging question often faced by corporate leaders is whether they would hire a whistle-blower or view him as an employee who had displayed disloyalty to his previous employer.
The argument stems from the mindset that whistleblowers put an organisation's reputation at risk if public disclosures were to be made without due consideration for the impact on the organisation.
However, findings show that whistleblowing had been proven effective to combat corporate fraud and to initiate investigations into improper conduct.
In the Enron case, we saw the likes of Sherron Watkins, in her evidence during the investigation, revealing corruption of the highest level between senior management and external auditors.
Disclosures triggered investigations and resulted in the exposure of fraud, downfall of the organisation (and external auditors) and regulatory changes in the United States.
During that period, we also saw Cynthia Cooper, former vice-president of internal audit at WorldCom, blowing the whistle and conducting internal investigations into the books of the then telecommunications giant.
Its senior management had participated in fraudulent financial reporting by overvaluing the assets owned by the organisation, sales and book value of fixed assets that came along with mergers and acquisitions.
From the findings, WorldCom announced that it had misstated its financials by US$3.8 billion, an amount that eventually grew to US$11 billion.
This was dubbed as the biggest fraud in the US at that time. Watkins and Cooper had been idolised for their bravery and named as two of three of TIME's Persons of the Year in 2002.
However, there is still hesitation to expose fraud and wrongdoings due to the repercussions in doing so.
For instance, in the case of Barclays Bank, the letters from a whistleblower were circulated among senior management, leading to then chief executive officer Jes Staley to instruct his internal security team to track down the whistleblower, who claimed that hires made for senior positions were done without due consideration and involved favouritism.
Having found such reports to be "false and malicious", the then CEO acted to unmask the whistleblower instead of having his team of investigators look into the matter independently.
This was a clear abuse of power, which deterred whistleblowers from making their disclosures known to those carrying out investigations.
A whistleblowing mechanism will only work when those managing provide trust, impartiality and independence in the whistleblowing process (ISO 37002).
Individual whistleblowers would need to feel safe and trust the mechanism in place before deciding to take their complaints to the upper levels of authority for investigation and resolution.
The question for us is, how can we take things forward in Malaysia?
Do we have a legislation in place to protect whistleblowers? What is the extent of this protection? And how do organisations encourage internal and external whistleblowing in the private sector?
RAYMON RAM
Petaling Jaya, Selangor
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times