This struggle is heightened in an environment where the concept of overarching loyalty to superiors, colleagues and protection of the public image and reputation of the corporation is constantly re-enforced within the structures of the corporation. Whilst it may be useful for the organisation to inculcate a corporate culture where the organisation is viewed as a “team” or “family” for the purposes of increasing productivity and profitability and to effectively manage issues like compliance, integration and control, the downside is that it can alienate those who stand up to questionable practices. The general impression of a whistle blower thus becomes someone who is not a team player, who has the need for personal aggrandizement, or has a strong sense of paranoia.

It is not surprising therefore that experience shows that whistle blowers find themselves isolated from their colleagues and management, sacked, demoted, sued or otherwise victimised, usually for beach of confidence or for defamation.

Loyalty vs. whistle blowingThe situation can get more complex for example in Asia, where “loyalty” is a particularly strong value both within the office and outside. Our environment and culture is such that respect for authority is ingrained since young and re-enforced by the education system and traditions. It is important therefore that this sense of loyalty and respect of authority does not overshadow the more basic values – that of ethics and morality and the duty to be true to these principles.

We must work to reinforce acceptance of the fact that loyalty to employers stop when public harm becomes an issue. The employee has a higher responsibility, an ethical and moral duty to society to report an immoral act by an employer. This shift in approach involves a major change in corporate culture.

Let me reiterate the point I have made in previous talks. Ethics and morality are not just about refraining from doing the wrong thing but also about doing the right thing. In this context, an employee should not only refrain from committing a wrongdoing, but should not hesitate to report when a wrongdoing has been committed. Ethics is also about duty to society; it is about the obligation of individuals to others in the community they live in. Viewed in this context, whistle blowing is thus not so much about retribution against the transgressors but about society and protecting society from harm. It is also a part of a chain of actions that may lead dishonest individuals to recognise the harm that they do to others and ultimately to themselves.

What, in my view, is essential is for there to be a changes in mindset so that society recognises and accepts that everyone has a moral duty to say no when asked to do something inappropriate and to whistle blow on the transgressors. Whistle blowers act to expose a wrongdoing they feel need attention, because they believe that it is the correct and moral thing to do. It is only right therefore that whistle blowers be seen as responsible corporate citizens who have the fortitude and strength to stand up against the transgressions and their perpetrators.

Changing the mindsetThe initiative to inculcate integrity and ethical considerations should be taken by all market participants be it on a micro as well as a macro level. The public and private sector must promote a system, which aligns profit-making activity with ethics and morality – it can be done.

The laws have been amended to afford the independent auditors and key officers protection when they whistle blow. Such legislation will help to de-stigmatise and provide legitimacy to whistle blowing. However, it is important that we recognise that whilst laws and regulations may protect whistle blowers who act in good faith from law suits and harassments, it cannot regulate mindsets, nor can it regulate ethics and morality. It is impractical for the regulator to prescribe a full-scale ethical code for the market. The role of law and regulation in this field is to provide a level playing field so that all players are treated fairly. The laws also have to ensure that there is fairness and equity without stifling the market and impeding competitiveness.

Thus while legislation provides an important back stop, civil society have an important role to play to support the implementation of legislation. Professionals must be made to realise that, in certain circumstances, they must whistle blow even if it seems disloyal to do so. Accountants have a statutory and fiduciary responsibility to report certain illegal or potential harmful activities if they encounter them in the course of their auditing. This obligation comes from their professional status and from a moral and ethical human duty to prevent harm to others. Thus I would venture the view that the moral obligation to blow the whistle on colleagues who violate canons of appropriate behaviour does not just apply to accountants but all professionals including financial services professionals and lawyers who have obligations to their profession and the public.

Training and educationOne of the ways in which awareness and the sense of public duty can be heightened is through training and education. It is essential that awareness of legislation on whistle blowing be enhanced, and advice and training provided on making whistle blowing procedures effective. In this respect, MAICSA and other similar associations and organisations must continue with these conferences and other training programmes not only to enhance awareness of legislation and provide guidance on acceptable procedures and practices for whistle blowing, but also to facilitate a change in culture by promoting ethical behaviour and creating awareness amongst the professionals - not just on their legal obligations but also their moral duties that accompany their position and power.

In addition, more effort must be made to train middle and upper managers so that they may play a key role in communicating ethical awareness within their respective organisation and the industry at large. From there on, steps can be taken to develop structures that foster ethical conduct and institutionalise ethical practice.

Leading through exampleIn this endeavour, the role of the CEO cannot be over-stated. CEOs must lead the way, and indeed they have a duty to do so, by ensuring that ethics pervades the working environment to such an extent that it becomes the culture of the organisation. They can do this by demonstrating ethical leadership through example. Captains of industry are in a position to shape a strong ethics message that focuses industry on values and ethical conduct and to infuse corporations with principles that will guide the action of all within that environment. The benefits of an ethical corporate culture must not be underrated, for the corporation’s culture is what determines how people behave when they are not being watched.

Companies to make it conducive for wrongs to be reportedLadies and gentlemen

Companies must make it conducive for wrongdoings to be reported. It is important that companies demonstrate their legitimatisation of whistle blowing in the workplace by establishing structures and systems that facilitate the reporting of wrongdoing. This would include developing internal grievance procedures, encouraging and rewarding use of these procedures, appointing senior executives to be responsible for investigating and reporting wrong doing and imposing punitive sanctions for wrongdoing. Disciplinary procedures should make it clear that harassing or victimising a whistle blower is considered a serious misconduct which will subject the perpetrator to disciplinary proceedings.

Organisations are also encouraged to provide a secure environment in which whistle blowers will feel safe discussing their suspicion. Very few employers are willing to do so, not surprising, since whistle blowers rarely bear good tidings for a company’s share price. Yet in the end, they the whistle blowers save their companies far more than they cost.

ConclusionIn conclusion, it should be reiterated that whistle blowers are responsible corporate citizens who have the courage to do as their conscience dictates. However, they face huge risks of reprisals as a result of their actions. To this end, securities laws have been amended so that auditors and key officers dealing with the company’s financial reports who whistle blow will be afforded protection against any retaliation arising out of their action. But the challenge for all of us is to create the conditions where all who wish to, can become actively involved, can understand and participate, can influence, persuade, campaign and whistle blow.

As regulators, while we acknowledge that practical realities do not yet allow us to impose a statutory duty on everyone to whistle blow, we hope that the new provisions will encourage those who are privy to malfeasance to listen to their conscience and speak out against such wrongs.

This notwithstanding, the point must be emphasised - there are limitations to the law; law cannot regulate ethics and morality nor can it force mindsets to change and yet this is what is needed most. The many financial debacles that have taken place recently are testament that there is a great void of ethical behaviour in today’s business world.

Therefore, it is important that there is a concerted effort by all – the public as well as the private sector to emphasise on ethics and morality. Companies must make it clear to employees that unethical behaviour will not be permitted; and ensure that there are adequate mechanisms to deal with whistle blowing effectively.

The point must also be made that revelation of wrongdoing within organisations cannot be left only to whistle blowers. Defences against fraud and other wrongdoing need to be all-round, interlocking and in-depth. The key to this is good corporate governance and above all, sound ethical behaviour.

Thank you.