Most corporate governance codes stipulate that companies shall establish whistle-blower policies. It is imperative for companies to note that a good whistle-blowing policy should provide a legitimate way for stakeholders to voice concerns they might have, as well as offer whistle-blowers protection from victimization, harassment, grievance or disciplinary policies and procedures. Types of disclosures that can be made by a whistle-blower include illegal or unethical conduct, infractions of a company’s code of conduct, criminal offence.
For example, The Nigerian Securities and Exchange Commission’s code provides that a company shall establish a whistle-blower policy, which should be known to employees, stakeholders such as shareholders, job applicants and the general public. It further states that it is the responsibility of the board to implement such a policy.
However, in line with good practice, the new Financial Reporting Council code goes beyond the SEC code to include provisions that raise the security of the whistle-blower by insisting that companies guarantee anonymity for whistle-blowers. It also goes further to say that “No company to which this Code applies shall subject a whistle-blower to any detriment whatsoever on the grounds that he has made a disclosure in accordance with the provisions of this Code.”
As with other advanced regulations, the FRC also stipulates that a whistle-blower that has suffered any detriment by reason of disclosure shall be entitled to compensation. For example, the UK’s Public Interest Disclosure Act (PIDA) states that employers must prove that any action taken against an employee was not driven by the fact that said employee had acted as a whistle-blower. Any employee who is found to have been the victim of retaliation can claim for actual financial loss as well as compensation for aggravated damages and injury to their feelings.
In sum, without adequate protection for whistle-blowers, whistle-blowing just becomes a box-ticking exercise in compliance. Whistle-blower protection assures that whistle-blowers feel safe and confident. Whistle-blower protection is especially necessary in cultures like Nigeria where reporting offences is seen as breaking cultural bonds and where a blind- eye is usually turned in order not to rock the boat. Although the FRC code has not yet been passed, companies should ensure that the sound whistle-blower protection measures are added to their whistle-blower policy and practice.