SA needs a robust whistle-blower policy. Our economy depends on ...

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SA needs a robust whistle-blower policy. Our economy depends on it

The PIC case again highlights the importance of a stringent ecosystem where corruption can be exposed

Lionel Adendorf
Image: 123RF/lightwise

The report of the judicial commission of inquiry into allegations of impropriety at the Public Investment Corporation (PIC), released by President Cyril Ramaphosa on Thursday, again highlighted the importance of a strong, reliable whistle-blower programme for corporates.

It was found in it that “the whistle-blowing process was not to be trusted”; that even its CEO, Dan Matjila, “acted in breach of the PIC’s whistle-blower policy”; that the PIC did not have in place training programmes to create awareness of the whistle-blower policy; that the board did not review, consider or receive a report on an anticorruption programme; and the board failed to exercise oversight regarding the whistle-blower policy.

There was thus a “perceived breach of the Protected Disclosures Act” and the commission recommended that the PIC should put in place appropriate policies for the board and management and regularly monitor and update as they relate to “compliance, including whistle-blowing and procedures for raising concerns”.

Given these problems it is no surprise that the whistle-blowing policy and system has been abused to a point where, according to the report, some wanted to “cause maximum reputational damage to the PIC and its directors/top management”, where employees would rather report matters directly to the police or that disclosures were made in bad faith.

Awareness campaign

The commission is therefore correct to recommend that the board “review the codes and policies that address ethics, values and whistle-blowing, examine why they have not been effective and put in place appropriate measures to enhance the value system adhered to by all employees”.

The report re-emphasised that the mere existence of a whistle-blower policy and the availability of a whistle-blower mechanism are insufficient unless they are supported by a rigorous awareness campaign, and targeted and regular training programmes and they are embedded in the organisation’s corporate culture.

A stringent and robust corporate whistle-blower ecosystem works optimally when it is trusted by all employees, it grants them sufficient protections such as anonymity, protects them against occupational detriment, and when action against those accused of wrongdoing – no matter who they are or what position they hold internally – is taken swiftly.

The PIC case again shows the significant role and potential the Protected Disclosures Act has in protecting and promoting the sustainability, reputation and integrity of a brand and corporate citizen, as it allows them to receive, investigate and resolve protected disclosures internally. Failure to do so would jeopardise this as a whistle-blower can then report it outside.

Severe damage

It also provides for a structure and procedure for lodging and managing disclosures in a transparent, protected and co-ordinated manner, and in doing so employees are given an opportunity to uphold the highest ethical values while safeguarding their livelihoods.

Economic crime in the corporate sector has caused losses of $1.7bn (R27.5bn) a year in SA.
PwC 2020 global economic crime and fraud survey

During the past few years there have been many other examples of SA corporates and organisations that failed to implement and maintain robust, reliable and complete whistle-blowing systems. This left them vulnerable and exposed, causing severe damage to their brand, leadership and market share and harming the trust, confidence and integrity internally and with other stakeholders.

According to PwC’s 2020 global economic crime and fraud survey, published at the start of March, economic crime in the corporate sector has caused losses of $1.7bn (R27.5bn) a year in SA. About 7% of the almost 250 respondents who experienced fraud in the past 24 months reported losing more than $50m across all incidents, and 4% reported direct losses in excess of $100m for all incidents of economic crime experienced since 2018.

Changing these shocking statistics and ensuring the long-term sustainability and profitability of Corporate SA demands that all employers adhere to the letter and spirit of the act, and put in place the policies and mechanisms that would protect them were they to be confronted with claims of corruption, allow them to manage it and encourage employees to partner with them in this national project.

We need to grow our economy, attract much-needed foreign direct investment, create decent and value-adding job opportunities, boost competitiveness, facilitate the transfer of technology and skills, and develop and support small and micro enterprises.

The PIC report makes it very clear that unless we deal effectively with corruption or perceptions of corruption and have in place the necessary internal mechanisms to partner with staff and service providers to root it out, our economy will continue to suffer and the repercussions will be long-lasting.

• Adendorf is MD of Reputegrity Ethics and Compliance Solutions.