S aint S or S inner S
S
a From Watergate’s Deep Throat to Wikileaks’ Bradley Manning, the annals of history are peppered with individuals who decided to fight the tide and to blow the whistle on their organisation’s dodgy practices.
S
i
n
i
n
o
r
n
e
Words By 142 E SQ 1 0 . 1 2
t
s
Ironically, many became a cropper in the ensuing fallout, with little to protect them legally when it turned out the powers that be didn’t view such exposés as in the public interest. And, with more obstacles than ovation along their path to full disclosure than ever before, where does the whistleblower go from here?
r
s
?
marc jitab E SQ 1 0 . 1 2 143
Previous spread: Scenes from the Watergate hearings, 1973, which ultimately led to US President Richard Nixon’s resignation from office.
144 E SQ 1 0 . 1 2
Not For the Everyman
A joint study on the dynamics of disobedience and whistleblowing was conducted at the University of Amsterdam and its findings were released in 2011. In the study, participants were fed a cover story by an experimenter in which they had to endorse a separate study involving sensory deprivation. The experimenter said that the sensory deprivation study had severe traumatic effects on test subjects where they panicked, had their cognitive abilities impaired, and experienced some visual and auditory hallucinations. What he wanted the participants to do was to convince other students to participate in the sensory deprivation study, to lie and say that the study was really good fun knowing full well it was anything but— in exchange for money. The experimenter wanted to see if the participants would obey, disobey or blow the whistle to a Research Committee. Here’s where it gets interesting: another set of students at the University of Amsterdam, a control sample, were given all the information on the above study and asked how they would behave hypothetically, at least:
3.6% Said they would not
64.5%
Those who obeyed allayed their guilt by pushing the blame away and said that it was expected of them to follow the task and to do what they were told. The disobedient participants and the whistleblowers, on the other hand, felt a very strong ethical dilemma that ultimately led them to disobey. This group said that disobeying was the “greatest moral act” to take against an unethical authority—a feeling so strong that in some cases, the experimenter even noticed that they refused to talk much or make eye contact with him. In the discussion of the study, the researchers noted that in the real world, whistleblowing is often followed by bankruptcy, depression and alcoholism, where at least half of all whistleblowers lost their jobs. With no guarantee that the wrongdoing would be corrected, the whistleblower can only take refuge in the personal knowledge that they did the right thing by whistleblowing and speaking out when most others would not do so.
Said they would obey the experimenter
31.9%
Confidently replied they would blow the whistle.
Closer to Home
Part of the pretext of this study revolved around the idea that people usually think better of themselves and are confident that they would do the right thing at the right time. The researchers were right. The results of the whistleblower study were telling:
76.5%
Obeyed the experimenter
14.1% Disobeyed
9.4%
Blew the whistle
GETTY
O
their security clearances and fire them, without judicial review” whereas “another bars employees of the National Security Agency and the Central Intelligence Agency from any coverage under the law”.
P R E V I O U S PAG E S : G E T T Y
n September 11, 2012, Bradley Birkenfeld’s life took a dramatic twist. The sinner-turned-saint was given the biggest payout ever for choosing the winding and narrow path. The former banker and convicted tax cheat served time for helping clients evade taxes but provided key information for which he was rewarded a staggering RM315.8 million by the US government. The information helped the IRS pursue Birkenfeld’s former employer, UBS, for allowing its clients to evade taxes; the bank was fined RM2.4 billion. The tough measure by the IRS set into motion the wave of voluntary disclosures by 33,000 US citizens regarding their offshore accounts, which netted RM15.15 billion in additional revenue for the IRS. In truth, cases such as Birkenfeld’s are few and far between. Even as whistleblowers have come forward to disclose information on the highest levels of government mismanagement, fraud and wrongdoing, these informants have found themselves in the crosshairs of the US Department of Justice. President Obama’s widely held democratic credence is worth reconsidering after his administration prosecuted five people under the Espionage Act, a relic of the World War I, which is more than all other presidents combined. Jesselyn Radack and Kathleen McClellan, in writing for the Labour and Employment Law Forum, found that “the prosecutions identify no actual national security harm... and they target those who appear to be classic whistleblowers”. The administration tried, on these accounts, to ferret out confidential sources who blew the whistle and leaked sensitive information to the media in order to prosecute them under the Act. The five are: • Shamai Leibowitz, a former contract linguist for the FBI • Thomas Drake, a former senior executive at the NSA • Bradley Manning, US Army, of WikiLeaks fame • Stephen Kim, a former Senior Adviser for Intelligence to the State Department Arms Control Compliance Bureau • Jeffrey Sterling, a former CIA agent These prosecutions should also be taken in light of the administration coming down hard on other leaks: General Stanley McChrystal was dismissed after he openly criticised top-ranking officials to Rolling Stone magazine, while PJ Crowley, a State Department spokesman, was asked to resign after he criticised the prosecution of Bradley Manning. Working in tandem with the prosecution of whistleblowers is the administration’s unquenchable thirst to classify documents. The authors Radack and McClellan found that in Obama’s first year, his administration “designated 224,734 new secrets, 22.6 percent more than those created the previous year”. Moreover, in 2010 alone, the Obama administration classified close to 77 million documents, a 40 percent jump more than his first year in office. They also called the current Whistleblower Protection Act a “sham” upon finding that “one loophole gives the government the absolute right to strip employees of
On July 1, 1996, Datuk Syed Ahmad Idid Syed Abdullah resigned from his position as High Court Judge. It was the first time a judge of the High Court of Malaya had ever done so. His resignation came after he had written a 33-page anonymous letter detailing heretofore-untold levels of corruption and abuse of power in the judiciary. The letter implicated 12 judges who were later cleared by the authorities and it was vilified as a poison pen letter. Datuk Syed Ahmad later lamented that the letter poisoned the whistleblower more than anyone else, especially the wrongdoers. He was forced to resign and he lost his pension, several years of his life and even his standing among peers. Despite this, and as a testament to his integrity, he was appointed as the Director of the Kuala Lumpur Regional Centre for Arbitration in 2004 as well as an arbitrator until 2010 to the Permanent Court of Arbitration of Slovenia. But things have changed since 1996. On December 15, 2010, the Malaysian Government’s Whistleblower
Protection Act 2010 (WPA) came into force. The purpose of the Act was for Malaysia to meet the international standards of whistleblowing after it ratified the United Nations Convention Against Corruption in September 2008. According to the government, 32 informants from the private and public sectors had been granted protection under the WPA, with 1,690 cases of improper conduct exposed in 2011 and 1,100 in the first three months of this year. There are no known cases in which information from these disclosures have been used to prosecute wrongdoers. Speaking on the WPA, Bar Council Treasurer Steven Thiru says: “If you look at the Preamble of the Act, it’s very good. It says that it is ‘an Act to combat corruption and other wrongdoings by encouraging and facilitating disclosures of improper conduct in the public and private sector, to protect persons making those disclosures from detrimental action, to provide for the matters disclosed to be investigated and dealt with’, which tends to suggest that the purpose of the Act is to bring wrongdoings to the fore and to protect the persons doing that. But the Act specifically said corruption and other wrongdoings, which shows that the intent is to combat corruption first and foremost. “The first problem we run into is under Section 6, where the disclosure can only be made to an enforcement agency. What if the disclosure is made against the enforcement agency itself? Where do you go? In that sense, this was a bit short-sighted. In this situation, a provision should be made for such a disclosure to be brought to an independent body, such as SUHAKAM. This will give whistleblowers a level of comfort to disclose sensitive information.
“These are the next frontiers; we are moving to more transparency and accountability in a more participative democracy. This Act contributes to that notion and that is good.”—steven thiru, bar council treasurer
Above: Whistleblower Jeffrey Wigand (centre-left), a former Brown & Williamson exec who claimed the company manipulated nicotine levels, at a news conference announcing a US government settlement with the tobacco industry.
E SQ 1 0 . 1 2 145
with all sorts of fines, people are going to think twice about coming forward.” According to Thiru, one thing missing from the Act that helps gauge its effectiveness is a provision for enforcement agencies that receive disclosures of this nature to table reports in Parliament for scrutiny on how many reports were made, when action was taken, and reasons for inaction. “After 55 years, this country is still maturing and learning,” he adds. “These are the next frontiers; we are moving to more transparency and accountability in a more participative democracy. This Act contributes to that notion and that is good, in terms of the Preamble at least. But then you have these hurdles that go against the intention of the Act.”
“The second problem is under Section 7 where it states that the disclosure must not be specifically prohibited by written law. This is a very real problem because corruption, more often than not, may find itself in a Banking And Financial Institutions Act (BAFIA) or Anti Money Laundering Act (AMLA) situation. This actually hamstrings the effectiveness of the WPA, because the moment you disclose information as evidence of corruption and go against BAFIA, you’re liable for prosecution. This will prevent whistleblowers from coming forward,” the veteran lawyer says. In the Association of Certified Fraud Examiner’s Report to the Nations 2012, the biggest industry of fraud victim organisations in its 96-country study is the banking and financial services industry. Furthermore, enforcement agencies may only investigate the wrongdoings but have absolutely no power to prosecute. In this regard, only the Attorney General may make the policy decision to prosecute or withhold prosecution—a decision that cannot be challenged in court. “If you talk about corruption today, leaving aside all sorts of empirical data, the public perception of where corruption is worst is in the public sector,” Thiru continues. “Another very odd thing about the Act is that whistleblowers are not given protection if the information they provide ‘principally involves questioning the merits of governmental policy including the policy of a public body’. This simply means that you can’t whistleblow against the government. “Then if it turns out that the information you provided is false, the penalties are very severe, which are a tad too strong. If there are all these ways to lose your whistleblower protection and you can be slapped
“To make this successful, the company needs to be quite clear about its encouragement for people to come forward in good faith to disclose wrongdoing... they need to walk their talk.”— david lehmann, director of deloitte forensic malaysia Above: The president of the World Editor Forum, George Brock, reads a speech to award the Golden Pen for Freedom award on June 4, 2007, to Shi Tao, editor of the Dangdai Shang Bao, who is serving a 10-year sentence in a Chinese prison for revealing Chinese goverment instruction on Tiananmen commemoration media coverage.
146 E SQ 1 0 . 1 2
Rafizi Ramli, Executive Director of National Oversight and Whistleblowers (NOW) Malaysia, has become a bit of a case study when discussing the WPA. The Parti Keadilan Rakyat (PKR) politician says that he stumbled upon whistleblowing by accident when he was literally counting cows at the National Feedlot Centre (NFC). As the prodding of the NFC became more intense, many insiders came forward to disclose information to him—information which he claims shows gross amounts of misuse of public funds by the public body. “I was an auditor before I rejoined PKR,” Rafizi explains, “and the answers given by the NFC were not satisfactory to me. It just didn’t add up, so I dug further. “As I dug some more, people from within the NFC came forward to provide evidence of wrongdoing— people who, to this day, have not had their identities exposed,” he says. Rafizi started NOW to foster the culture of whistleblowing in the country and seeks to fill a niche in helping people to blow the whistle. However, Rafizi, under the Act, cannot be classified as a whistleblower as he made his disclosures to the media, instead of an enforcement agency, and his disclosure also allegedly violates BAFIA. As such, he isn’t entitled to protections usually afforded to a whistleblower. “It seems to me that when these laws were made, they lifted everything verbatim from the legislation of other countries without giving due consideration to making the laws complementary,” Rafizi says. “For example, in the WPA, it says that you cannot break any other law when you want to blow the whistle. So, if the information you have goes against the Official Secrets Act, you’re not a whistleblower. In other countries, you may disclose your information to what’s known as a competent party, such as a non-governmental organisation or the media. The WPA does not allow this. These characteristics of the law, among others, does seem to depart from international standards.” But in the corporate world, money isn’t everything. “People think whistleblowing is just about money,” he says. “No, it’s not. It’s also about other things like safety. During my time at Petronas, one of our biggest challenges was to ensure the safety of our people on the drilling platforms. [continued on page 264]
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The Accidental Whistleblower
is flouted by senior management, that behaviour will creep into other areas of the business. Likewise, strong ethical behaviour coupled with a means to correct wrongdoing via disclosures will also flow into all areas of business. “If foreign investors see that there’s a high level of corporate governance and whistleblowing is a foundational element to it, they will be more likely to invest in a place like Malaysia than elsewhere,” Lehmann says. “It can be done in Asia, despite the perception that it is not the culture here. That’s what it is— merely a perception. Look at the Association of Certified Fraud Examiner’s Report to the Nations. In Asia, a significant number of fraud investigations are the result of tip-offs.” According to the latest report, 43.6 percent of fraud detection in Asia comes from employees’ tip-offs, showing that Asians can, will and do blow the whistle when coming across wrongdoing within an organisation. Considering that 38.3 percent of perpetrators in Asian cases are themselves employees, it makes sense that wrongdoing would be caught much more easily by other employees. Employees are also better placed to watch their immediate superiors, such as managers, who account for 45.4 percent of perpetrators of occupational fraud and abuse in Asia.
Saints or Sinners? [continued from page 146] A stringent whistleblowing policy can contribute to this.” A Matter of Culture “When I first came to Malaysia, I was told that whistleblowing would not work here,” says David Lehmann, Director of Deloitte Forensic in Malaysia. “When Deloitte embarked on implementing its whistleblowing system in Australia, people within the business community there said it would never work because it wasn’t the Australian culture to tell on your mates. But it did work. History has shown that it works 264 E SQ 1 0 . 1 2
when whistleblowing is communicated within the organisation on an on-going basis, and this changes the perception of the culture over time. “It really needs to be the culture of the company,” the former Victoria Police officer continues. “To make this successful, the company needs to be quite clear about its encouragement for people to come forward in good faith to disclose wrongdoing. Then, they have to follow through on that when it does happen; they need to walk their talk. So, it’s a combination of having the policies in place, creating the culture for people to come forward and then leading by example in protecting those people when they do come forward. “This idea isn’t so prevalent in Ma-
laysia. In some instances, I receive opposition to this idea, and whistleblowers are considered as nuisances. But this perception needs to change within organisations. Communicating the importance of this service is the key. The WorldCom case is an extreme example in which organisations need to understand that things, which don’t come to light at an early stage, might very well result in the demise of the organisation and the livelihoods of the people they employ,” Lehmann says. According to him, the culture is created firstly by senior management in a company and those who are more junior mirror their behaviour. For instance, if an expense reimbursement policy
But Needs to Be Done “By and large, whistleblowing usually occurs internally, and whatever protections that employees are seeking for whistleblowing internally do not exist under the WPA at all,” says Dr Tan Pei Meng, an Assistant Professor at Universiti Tunku Abdul Rahman. “In turning to the Companies Act and other employment or contract laws, one does not find provisions for internal whistleblowers. “The Companies Act only deals with disclosures to the Companies Commission of Malaysia, while the Capital Markets and Services Act only covers disclo-
sures made to Bursa Malaysia or the Securities Commission. “Any company that outlines a method for or encourages whistleblowing in their code of ethics is not legally bound to abide by those whistleblowing provisions because its code of ethics are not terms of contracts, unless a court is willing to rule that these ethical guidelines are implied terms,” Dr Tan quickly points out. “The WPA is supposed to provide strong protections for employees. But unfortunately, under the WPA, much is lacking when it comes to the protection of employees. For instance, if an employee wants to blow the whistle on wrongdoing within the company, he or she usually prefers not to go to an outside party to do so, because they have a sense of loyalty to the company. So, this puts them in a dilemma. On the other hand, companies would like to resolve internal matters without involving the authorities,” she adds. Furthermore, salient features of this Act are actually unique to the Malaysian legal system and not found anywhere else, even though the enactment of the Act was done to meet international standards. “Under the Act, the whistleblower’s disclosure cannot question the merits of government policy or whistleblower protection will be lost,” Dr Tan continues. “But how would a layman know what the scope of government policy is? Whistleblower legislation in other countries do not have this provision, so, in this case, we are unique. “Besides that, the WPA only allows for disclosure to an enforcement agency—just that one avenue. Now, if I choose to disclose the information to my legal counsel or trade union official, would I be breaching the WPA and be disqualified from protection? Or what if I told my family or friends after disclosing to the agency? Before the disclosure? There is a lot of ambiguity in that. “The law as it stands does seem to indicate that because the information
can only be disclosed to an enforcement agency, disclosure to my legal counsel could revoke my protection. No precedent has been made on this issue yet, so it remains to be seen. Even South Africa, Ghana and Uganda have whistleblower protections that cover disclosure to multiple parties. In that regard, those provisions are more comprehensive than ours,” she says. Being involved in the wrongdoing also negates whistleblower protection under the current Act, something Dr Tan takes issue with. “In this case, Section 11(1)(a) revokes protection for those who participate in the improper conduct that has been disclosed, which strikes me as odd,” she says. “If the purpose of the Act is to combat corruption, shouldn’t this be an exception? Yes, the person should be prosecuted for the previous wrongdoing but should be granted immunity from further prosecution or retaliation because of his willingness to come forward to blow the whistle, even though it implicates himself. He has shown remorse. This exception would not be something new in the law, as even under normal criminal law a plea bargain can be negotiated.” To Right the Wrongs The lives of Jeffrey Wigand and Kathryn Bolkovac were changed forever because of their decision to step forward and expose wrongdoing, and the events surrounding their disclosures were dramatised in The Insider and The Whistleblower respectively. Cynthia Cooper, who blew the whistle at WorldCom, was reportedly treated as a pariah and later resigned. Wigand’s wife left him, while Bolkovac never found the justice she was looking for. The fact remains that whistleblowing is the domain of a select few, and sadly so, as self-sacrifice is often a prerequisite to exposing the wrongs of society, sometimes even on pain of death, at risk of losing life and limb.
E SQ 1 0 . 1 2 265
a From Watergate’s Deep Throat to Wikileaks’ Bradley Manning, the annals of history are peppered with individuals who decided to fight the tide and to blow the whistle on their organisation’s dodgy practices.
S
i
n
i
n
o
r
n
e
Words By 142 E SQ 1 0 . 1 2
t
s
Ironically, many became a cropper in the ensuing fallout, with little to protect them legally when it turned out the powers that be didn’t view such exposés as in the public interest. And, with more obstacles than ovation along their path to full disclosure than ever before, where does the whistleblower go from here?
r
s
?
marc jitab E SQ 1 0 . 1 2 143
Previous spread: Scenes from the Watergate hearings, 1973, which ultimately led to US President Richard Nixon’s resignation from office.
144 E SQ 1 0 . 1 2
Not For the Everyman
A joint study on the dynamics of disobedience and whistleblowing was conducted at the University of Amsterdam and its findings were released in 2011. In the study, participants were fed a cover story by an experimenter in which they had to endorse a separate study involving sensory deprivation. The experimenter said that the sensory deprivation study had severe traumatic effects on test subjects where they panicked, had their cognitive abilities impaired, and experienced some visual and auditory hallucinations. What he wanted the participants to do was to convince other students to participate in the sensory deprivation study, to lie and say that the study was really good fun knowing full well it was anything but— in exchange for money. The experimenter wanted to see if the participants would obey, disobey or blow the whistle to a Research Committee. Here’s where it gets interesting: another set of students at the University of Amsterdam, a control sample, were given all the information on the above study and asked how they would behave hypothetically, at least:
3.6% Said they would not
64.5%
Those who obeyed allayed their guilt by pushing the blame away and said that it was expected of them to follow the task and to do what they were told. The disobedient participants and the whistleblowers, on the other hand, felt a very strong ethical dilemma that ultimately led them to disobey. This group said that disobeying was the “greatest moral act” to take against an unethical authority—a feeling so strong that in some cases, the experimenter even noticed that they refused to talk much or make eye contact with him. In the discussion of the study, the researchers noted that in the real world, whistleblowing is often followed by bankruptcy, depression and alcoholism, where at least half of all whistleblowers lost their jobs. With no guarantee that the wrongdoing would be corrected, the whistleblower can only take refuge in the personal knowledge that they did the right thing by whistleblowing and speaking out when most others would not do so.
Said they would obey the experimenter
31.9%
Confidently replied they would blow the whistle.
Closer to Home
Part of the pretext of this study revolved around the idea that people usually think better of themselves and are confident that they would do the right thing at the right time. The researchers were right. The results of the whistleblower study were telling:
76.5%
Obeyed the experimenter
14.1% Disobeyed
9.4%
Blew the whistle
GETTY
O
their security clearances and fire them, without judicial review” whereas “another bars employees of the National Security Agency and the Central Intelligence Agency from any coverage under the law”.
P R E V I O U S PAG E S : G E T T Y
n September 11, 2012, Bradley Birkenfeld’s life took a dramatic twist. The sinner-turned-saint was given the biggest payout ever for choosing the winding and narrow path. The former banker and convicted tax cheat served time for helping clients evade taxes but provided key information for which he was rewarded a staggering RM315.8 million by the US government. The information helped the IRS pursue Birkenfeld’s former employer, UBS, for allowing its clients to evade taxes; the bank was fined RM2.4 billion. The tough measure by the IRS set into motion the wave of voluntary disclosures by 33,000 US citizens regarding their offshore accounts, which netted RM15.15 billion in additional revenue for the IRS. In truth, cases such as Birkenfeld’s are few and far between. Even as whistleblowers have come forward to disclose information on the highest levels of government mismanagement, fraud and wrongdoing, these informants have found themselves in the crosshairs of the US Department of Justice. President Obama’s widely held democratic credence is worth reconsidering after his administration prosecuted five people under the Espionage Act, a relic of the World War I, which is more than all other presidents combined. Jesselyn Radack and Kathleen McClellan, in writing for the Labour and Employment Law Forum, found that “the prosecutions identify no actual national security harm... and they target those who appear to be classic whistleblowers”. The administration tried, on these accounts, to ferret out confidential sources who blew the whistle and leaked sensitive information to the media in order to prosecute them under the Act. The five are: • Shamai Leibowitz, a former contract linguist for the FBI • Thomas Drake, a former senior executive at the NSA • Bradley Manning, US Army, of WikiLeaks fame • Stephen Kim, a former Senior Adviser for Intelligence to the State Department Arms Control Compliance Bureau • Jeffrey Sterling, a former CIA agent These prosecutions should also be taken in light of the administration coming down hard on other leaks: General Stanley McChrystal was dismissed after he openly criticised top-ranking officials to Rolling Stone magazine, while PJ Crowley, a State Department spokesman, was asked to resign after he criticised the prosecution of Bradley Manning. Working in tandem with the prosecution of whistleblowers is the administration’s unquenchable thirst to classify documents. The authors Radack and McClellan found that in Obama’s first year, his administration “designated 224,734 new secrets, 22.6 percent more than those created the previous year”. Moreover, in 2010 alone, the Obama administration classified close to 77 million documents, a 40 percent jump more than his first year in office. They also called the current Whistleblower Protection Act a “sham” upon finding that “one loophole gives the government the absolute right to strip employees of
On July 1, 1996, Datuk Syed Ahmad Idid Syed Abdullah resigned from his position as High Court Judge. It was the first time a judge of the High Court of Malaya had ever done so. His resignation came after he had written a 33-page anonymous letter detailing heretofore-untold levels of corruption and abuse of power in the judiciary. The letter implicated 12 judges who were later cleared by the authorities and it was vilified as a poison pen letter. Datuk Syed Ahmad later lamented that the letter poisoned the whistleblower more than anyone else, especially the wrongdoers. He was forced to resign and he lost his pension, several years of his life and even his standing among peers. Despite this, and as a testament to his integrity, he was appointed as the Director of the Kuala Lumpur Regional Centre for Arbitration in 2004 as well as an arbitrator until 2010 to the Permanent Court of Arbitration of Slovenia. But things have changed since 1996. On December 15, 2010, the Malaysian Government’s Whistleblower
Protection Act 2010 (WPA) came into force. The purpose of the Act was for Malaysia to meet the international standards of whistleblowing after it ratified the United Nations Convention Against Corruption in September 2008. According to the government, 32 informants from the private and public sectors had been granted protection under the WPA, with 1,690 cases of improper conduct exposed in 2011 and 1,100 in the first three months of this year. There are no known cases in which information from these disclosures have been used to prosecute wrongdoers. Speaking on the WPA, Bar Council Treasurer Steven Thiru says: “If you look at the Preamble of the Act, it’s very good. It says that it is ‘an Act to combat corruption and other wrongdoings by encouraging and facilitating disclosures of improper conduct in the public and private sector, to protect persons making those disclosures from detrimental action, to provide for the matters disclosed to be investigated and dealt with’, which tends to suggest that the purpose of the Act is to bring wrongdoings to the fore and to protect the persons doing that. But the Act specifically said corruption and other wrongdoings, which shows that the intent is to combat corruption first and foremost. “The first problem we run into is under Section 6, where the disclosure can only be made to an enforcement agency. What if the disclosure is made against the enforcement agency itself? Where do you go? In that sense, this was a bit short-sighted. In this situation, a provision should be made for such a disclosure to be brought to an independent body, such as SUHAKAM. This will give whistleblowers a level of comfort to disclose sensitive information.
“These are the next frontiers; we are moving to more transparency and accountability in a more participative democracy. This Act contributes to that notion and that is good.”—steven thiru, bar council treasurer
Above: Whistleblower Jeffrey Wigand (centre-left), a former Brown & Williamson exec who claimed the company manipulated nicotine levels, at a news conference announcing a US government settlement with the tobacco industry.
E SQ 1 0 . 1 2 145
with all sorts of fines, people are going to think twice about coming forward.” According to Thiru, one thing missing from the Act that helps gauge its effectiveness is a provision for enforcement agencies that receive disclosures of this nature to table reports in Parliament for scrutiny on how many reports were made, when action was taken, and reasons for inaction. “After 55 years, this country is still maturing and learning,” he adds. “These are the next frontiers; we are moving to more transparency and accountability in a more participative democracy. This Act contributes to that notion and that is good, in terms of the Preamble at least. But then you have these hurdles that go against the intention of the Act.”
“The second problem is under Section 7 where it states that the disclosure must not be specifically prohibited by written law. This is a very real problem because corruption, more often than not, may find itself in a Banking And Financial Institutions Act (BAFIA) or Anti Money Laundering Act (AMLA) situation. This actually hamstrings the effectiveness of the WPA, because the moment you disclose information as evidence of corruption and go against BAFIA, you’re liable for prosecution. This will prevent whistleblowers from coming forward,” the veteran lawyer says. In the Association of Certified Fraud Examiner’s Report to the Nations 2012, the biggest industry of fraud victim organisations in its 96-country study is the banking and financial services industry. Furthermore, enforcement agencies may only investigate the wrongdoings but have absolutely no power to prosecute. In this regard, only the Attorney General may make the policy decision to prosecute or withhold prosecution—a decision that cannot be challenged in court. “If you talk about corruption today, leaving aside all sorts of empirical data, the public perception of where corruption is worst is in the public sector,” Thiru continues. “Another very odd thing about the Act is that whistleblowers are not given protection if the information they provide ‘principally involves questioning the merits of governmental policy including the policy of a public body’. This simply means that you can’t whistleblow against the government. “Then if it turns out that the information you provided is false, the penalties are very severe, which are a tad too strong. If there are all these ways to lose your whistleblower protection and you can be slapped
“To make this successful, the company needs to be quite clear about its encouragement for people to come forward in good faith to disclose wrongdoing... they need to walk their talk.”— david lehmann, director of deloitte forensic malaysia Above: The president of the World Editor Forum, George Brock, reads a speech to award the Golden Pen for Freedom award on June 4, 2007, to Shi Tao, editor of the Dangdai Shang Bao, who is serving a 10-year sentence in a Chinese prison for revealing Chinese goverment instruction on Tiananmen commemoration media coverage.
146 E SQ 1 0 . 1 2
Rafizi Ramli, Executive Director of National Oversight and Whistleblowers (NOW) Malaysia, has become a bit of a case study when discussing the WPA. The Parti Keadilan Rakyat (PKR) politician says that he stumbled upon whistleblowing by accident when he was literally counting cows at the National Feedlot Centre (NFC). As the prodding of the NFC became more intense, many insiders came forward to disclose information to him—information which he claims shows gross amounts of misuse of public funds by the public body. “I was an auditor before I rejoined PKR,” Rafizi explains, “and the answers given by the NFC were not satisfactory to me. It just didn’t add up, so I dug further. “As I dug some more, people from within the NFC came forward to provide evidence of wrongdoing— people who, to this day, have not had their identities exposed,” he says. Rafizi started NOW to foster the culture of whistleblowing in the country and seeks to fill a niche in helping people to blow the whistle. However, Rafizi, under the Act, cannot be classified as a whistleblower as he made his disclosures to the media, instead of an enforcement agency, and his disclosure also allegedly violates BAFIA. As such, he isn’t entitled to protections usually afforded to a whistleblower. “It seems to me that when these laws were made, they lifted everything verbatim from the legislation of other countries without giving due consideration to making the laws complementary,” Rafizi says. “For example, in the WPA, it says that you cannot break any other law when you want to blow the whistle. So, if the information you have goes against the Official Secrets Act, you’re not a whistleblower. In other countries, you may disclose your information to what’s known as a competent party, such as a non-governmental organisation or the media. The WPA does not allow this. These characteristics of the law, among others, does seem to depart from international standards.” But in the corporate world, money isn’t everything. “People think whistleblowing is just about money,” he says. “No, it’s not. It’s also about other things like safety. During my time at Petronas, one of our biggest challenges was to ensure the safety of our people on the drilling platforms. [continued on page 264]
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The Accidental Whistleblower
is flouted by senior management, that behaviour will creep into other areas of the business. Likewise, strong ethical behaviour coupled with a means to correct wrongdoing via disclosures will also flow into all areas of business. “If foreign investors see that there’s a high level of corporate governance and whistleblowing is a foundational element to it, they will be more likely to invest in a place like Malaysia than elsewhere,” Lehmann says. “It can be done in Asia, despite the perception that it is not the culture here. That’s what it is— merely a perception. Look at the Association of Certified Fraud Examiner’s Report to the Nations. In Asia, a significant number of fraud investigations are the result of tip-offs.” According to the latest report, 43.6 percent of fraud detection in Asia comes from employees’ tip-offs, showing that Asians can, will and do blow the whistle when coming across wrongdoing within an organisation. Considering that 38.3 percent of perpetrators in Asian cases are themselves employees, it makes sense that wrongdoing would be caught much more easily by other employees. Employees are also better placed to watch their immediate superiors, such as managers, who account for 45.4 percent of perpetrators of occupational fraud and abuse in Asia.
Saints or Sinners? [continued from page 146] A stringent whistleblowing policy can contribute to this.” A Matter of Culture “When I first came to Malaysia, I was told that whistleblowing would not work here,” says David Lehmann, Director of Deloitte Forensic in Malaysia. “When Deloitte embarked on implementing its whistleblowing system in Australia, people within the business community there said it would never work because it wasn’t the Australian culture to tell on your mates. But it did work. History has shown that it works 264 E SQ 1 0 . 1 2
when whistleblowing is communicated within the organisation on an on-going basis, and this changes the perception of the culture over time. “It really needs to be the culture of the company,” the former Victoria Police officer continues. “To make this successful, the company needs to be quite clear about its encouragement for people to come forward in good faith to disclose wrongdoing. Then, they have to follow through on that when it does happen; they need to walk their talk. So, it’s a combination of having the policies in place, creating the culture for people to come forward and then leading by example in protecting those people when they do come forward. “This idea isn’t so prevalent in Ma-
laysia. In some instances, I receive opposition to this idea, and whistleblowers are considered as nuisances. But this perception needs to change within organisations. Communicating the importance of this service is the key. The WorldCom case is an extreme example in which organisations need to understand that things, which don’t come to light at an early stage, might very well result in the demise of the organisation and the livelihoods of the people they employ,” Lehmann says. According to him, the culture is created firstly by senior management in a company and those who are more junior mirror their behaviour. For instance, if an expense reimbursement policy
But Needs to Be Done “By and large, whistleblowing usually occurs internally, and whatever protections that employees are seeking for whistleblowing internally do not exist under the WPA at all,” says Dr Tan Pei Meng, an Assistant Professor at Universiti Tunku Abdul Rahman. “In turning to the Companies Act and other employment or contract laws, one does not find provisions for internal whistleblowers. “The Companies Act only deals with disclosures to the Companies Commission of Malaysia, while the Capital Markets and Services Act only covers disclo-
sures made to Bursa Malaysia or the Securities Commission. “Any company that outlines a method for or encourages whistleblowing in their code of ethics is not legally bound to abide by those whistleblowing provisions because its code of ethics are not terms of contracts, unless a court is willing to rule that these ethical guidelines are implied terms,” Dr Tan quickly points out. “The WPA is supposed to provide strong protections for employees. But unfortunately, under the WPA, much is lacking when it comes to the protection of employees. For instance, if an employee wants to blow the whistle on wrongdoing within the company, he or she usually prefers not to go to an outside party to do so, because they have a sense of loyalty to the company. So, this puts them in a dilemma. On the other hand, companies would like to resolve internal matters without involving the authorities,” she adds. Furthermore, salient features of this Act are actually unique to the Malaysian legal system and not found anywhere else, even though the enactment of the Act was done to meet international standards. “Under the Act, the whistleblower’s disclosure cannot question the merits of government policy or whistleblower protection will be lost,” Dr Tan continues. “But how would a layman know what the scope of government policy is? Whistleblower legislation in other countries do not have this provision, so, in this case, we are unique. “Besides that, the WPA only allows for disclosure to an enforcement agency—just that one avenue. Now, if I choose to disclose the information to my legal counsel or trade union official, would I be breaching the WPA and be disqualified from protection? Or what if I told my family or friends after disclosing to the agency? Before the disclosure? There is a lot of ambiguity in that. “The law as it stands does seem to indicate that because the information
can only be disclosed to an enforcement agency, disclosure to my legal counsel could revoke my protection. No precedent has been made on this issue yet, so it remains to be seen. Even South Africa, Ghana and Uganda have whistleblower protections that cover disclosure to multiple parties. In that regard, those provisions are more comprehensive than ours,” she says. Being involved in the wrongdoing also negates whistleblower protection under the current Act, something Dr Tan takes issue with. “In this case, Section 11(1)(a) revokes protection for those who participate in the improper conduct that has been disclosed, which strikes me as odd,” she says. “If the purpose of the Act is to combat corruption, shouldn’t this be an exception? Yes, the person should be prosecuted for the previous wrongdoing but should be granted immunity from further prosecution or retaliation because of his willingness to come forward to blow the whistle, even though it implicates himself. He has shown remorse. This exception would not be something new in the law, as even under normal criminal law a plea bargain can be negotiated.” To Right the Wrongs The lives of Jeffrey Wigand and Kathryn Bolkovac were changed forever because of their decision to step forward and expose wrongdoing, and the events surrounding their disclosures were dramatised in The Insider and The Whistleblower respectively. Cynthia Cooper, who blew the whistle at WorldCom, was reportedly treated as a pariah and later resigned. Wigand’s wife left him, while Bolkovac never found the justice she was looking for. The fact remains that whistleblowing is the domain of a select few, and sadly so, as self-sacrifice is often a prerequisite to exposing the wrongs of society, sometimes even on pain of death, at risk of losing life and limb.
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