Is Whistleblower Protection Sufficient?

Posted on 5 May 2019

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In the pursuit of a better corporate governance system, a whistleblowing mechanism is essential. If the mechanism is in place and institutionalized, it can avoid a corporate fraud or minimize the consequent impacts towards the organization, shareholders and stakeholders.

In the Enron scandal, its Vice President Sherron Watkins discovered the wrongdoings of the CFO Andrew Fastow, and whistleblowed it in an anonymous email to the Chairman cum CEO Kenneth Lay. However, the email was ignored and the allegations were not investigated. The rest, is history.

In Malaysia, the Whistleblower Protection Act 2010 (WPA 2010) was passed in June 2010 and took effect in December 2010. However, does the WPA 2010 provides sufficient and adequate protection to whistleblowers, especially when red flagging the wrongdoing?

Section 6(1) WPA 2010 provides, the whistleblower protection is only given to the informant who whistle blowed to the enforcement agency. Therefore, if such disclosure was first made through the media, then informant may not entitled to the whistleblower protection.

The subsequent section 8(1) also restricts the informant to disclose the details of the whistleblowing to other parties after the informant has lodged its report to the enforcement agencies initially.

Thus, if the informant loses the confidence towards the enforcement agencies at any point of time, and decides to bring forward the matter to the public, the informant also loses the whistleblower protection.

In some circumstances, quite often, the informant was part of the wrongdoing, but a lesser evil. If the informant decides to whistleblow due to the guilty conscience, he may not entitled for the whistleblower protection. Section 11(1)(a) provides that the whistleblower protection is revocable if the enforcement found the informant was involved in the report lodged.

If the informant lodges a report to the enforcement agency in order to avoid dismissal or disciplinary action taken by the employer, which the impending disciplinary proceeding may relates to the report lodged to the enforcement agency, the informant may not entitled to whistleblower protection. Section 11(1)(e) provides that any disclosure made with such motive substantially, the whistleblower protection is revocable.

The efficiency and effectiveness of the enforcement agency, is the paramount factor that influences the public confidence towards the whistleblowing mechanism. In the absence of public confidence, informant would be very reluctant to step forward and whistleblow. 

Note: This article also published at LinkedIn.