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By John Kamau
Kenya: When Bradley Birkenfeld decided to provide details of a tax evasion scheme to the US Internal Revenue Service (IRS), he probably did it to avoid jail. Bradley was facing charges of abetting tax evasion by one of his clients.
Though he was eventually sentenced to 40 months in prison, Bradley received a record-breaking award of $104 million (Sh8.98 billion at today’s exchange rates) from the IRS Whistleblower Office in 2012 for the information he provided.
Had he been Kenyan, chances are that Bradley would still have been jailed. It is, however, unlikely that he would have been rewarded either by the Government, regulators or even his employer if he had been working in the private sector.
In today’s world, more and more regulators are offering rewards to whistleblowers. The jury is still out on the impact of these rewards, though they are expected to encourage more people to come forward and offer useful information. Giving rewards may not be an attractive option for public organisations other than regulators or businesses.
But must these organisations reward their employees and other stakeholders to get valuable whistleblowing information? Is the lack of reward the reason employees are not whistleblowing, or are there other factors involved?
The British Standards Institution’s code of practice aptly describes whistleblowing as the process whereby someone within an organisation “raises a concern about a possible fraud, crime, danger or other serious risk that could threaten customers, colleagues, shareholders, the public or the organisation’s own reputation”.
According to the 2014 PwC Global Economic Crime Survey (GECS) results, internal fraudsters commit 61 per cent of economic crimes in Kenya.
A process where employees report concerns about possible cases of fraud would, therefore, be a boon to business owners and the people in charge of risk. But the unfortunate truth is that staff and other internal stakeholders in Kenya rarely report their concerns or observations.
The GECS respondents from Kenya indicated that of the respondents who reported having a whistleblowing mechanism, over 20 per cent reported that it had not been used at all in the last 24 months! In addition, only 19 per cent of incidences of economic crime in their organisations were detected through whistleblowing and tip-offs.
The reasons behind this reluctance to blow the whistle may differ from one individual or organisation to the next. But in most, if not all cases, the reluctance revolves around the culture and the transparency of how things are dealt with — assuming they even are.
For a long time, organisations have reacted to known cases of fraud and other irregularities by sweeping such cases under the carpet. Reputation is to be protected at all costs, and for many, reputation is best protected by not reporting anything negative. Consequently, whistleblower reports have been ignored, and at times discouraged.
Not surprisingly, many organisations in Kenya do not have a whistleblowing policy. Indeed, many organisations do not have any policy that would encourage a culture within them where all stakeholders continuously behave with and promote professional ethics in their dealings.
Maybe due to the lack of policy, many managers do not know how to deal with whistleblower reports. They do not, for instance, understand the importance of keeping whistleblowers updated on the progress of their complaint. As in many other instances, feedback embeds trust.
Where an event has happened, and especially where an organisation has suffered a crisis, leaders need to be seen to learn from it and to have responded to it, not avoided it.
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So long as organisations choose to take no action, or worse still, take reprisal action against whistleblowers, whistleblowing will remain dead and whistleblowers will be seen as snitches.
Business and Government leaders must take the frontline in ensuring that action is taken whenever cases of fraud are reported, and that there are laws and policies that make everyone feel safe in using whistleblowing mechanisms. More importantly, there should be increased emphasis on the underlying principles and values, not just rules.
The writer is a forensics practitioner at PwC Kenya. [email protected]