Moral & Ethical Issues Surrounding Whistle Blowing GMUL 5063 Law, Ethics & Social Responsibility 1.0 INTRODUCTION The term whistleblower originally came from the practice of English police officers, also known as “bobbies” who would blow their whistles as their immediate reaction to the commission of a crime. The whistle would alert other law enforcement officers and the general public of danger within their area. Another version of the originality of the term believed to be coming from the act of the referee or umpire of a football game who would blow the whistle when he / she detect or seeing a foul committed by players in the game. Simply put whistle blowing is an act of correcting once a discovery of wrongdoing has been exercised. 2.0 DEFINITION OF WHISTLE BLOWING There is no globally accepted definition for whistle blowing and among the definitions are given by Near and Miceli (1985), whistle blowing is the disclosure by a current or former organization member of illegal, inefficient or unethical practices in an organization to persons or parties who have the power or resources to take action. James (1995), defined Whistle blowing as “an attempt by an employee or former employee of an organization to disclose what he or she believes to be wrongdoings in or by the organization”. (Uys, 2000), defined whistle blowing as “the disclosure of illegal, unethical or harmful practices in the workplace to parties who might take action” while Zarinah Anwar (2003), defined whistle blowing as ”a term used to describe the disclosure of 1
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Moral & Ethical Issues Surrounding Whistle Blowing GMUL 5063 Law, Ethics & Social Responsibility
1.0 INTRODUCTION
The term whistleblower originally came from the practice of English police officers, also
known as “bobbies” who would blow their whistles as their immediate reaction to the
commission of a crime. The whistle would alert other law enforcement officers and the
general public of danger within their area. Another version of the originality of the term
believed to be coming from the act of the referee or umpire of a football game who would
blow the whistle when he / she detect or seeing a foul committed by players in the game.
Simply put whistle blowing is an act of correcting once a discovery of wrongdoing has been
exercised.
2.0 DEFINITION OF WHISTLE BLOWING
There is no globally accepted definition for whistle blowing and among the definitions are
given by Near and Miceli (1985), whistle blowing is the disclosure by a current or former
organization member of illegal, inefficient or unethical practices in an organization to persons
or parties who have the power or resources to take action. James (1995), defined Whistle
blowing as “an attempt by an employee or former employee of an organization to disclose
what he or she believes to be wrongdoings in or by the organization”. (Uys, 2000), defined
whistle blowing as “the disclosure of illegal, unethical or harmful practices in the workplace
to parties who might take action” while Zarinah Anwar (2003), defined whistle blowing as ”a
term used to describe the disclosure of information that one reasonably believes to be
evidence of contravention of any laws or regulation or information that involves
mismanagement corruption or abuse of authority”.
Although numbers of definition has been given pertaining to whistle blowing, in the end, the
commonly accepted definition specifies that whistle blowing is “the disclosure of information
by an organization’s members of illegal, immoral or illegitimate practices under the control
of their employers that could potentially endanger or harm persons or the society as a result
of their employers irresponsible action.”
3.0 WHISTLEBLOWER
A whistleblower is a person who raises a concern about wrongdoing occurring in an
organization or body of people. Usually this person would be from that same organization.
The Malaysian Whistleblower Act 2010, stated that “whistleblower” means any person who
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Moral & Ethical Issues Surrounding Whistle Blowing GMUL 5063 Law, Ethics & Social Responsibility
makes a disclosure of Improper conduct to the enforcement agency under section 6 and
Improper conduct, the subject matter of the disclosure, is defined as ‘any conduct which if
proved, constitutes a disciplinary offence or a criminal offence’.
The Whistleblower is a concerned citizen, who is totally inspired by the public interest, and
opened to disclosing a significant wrongdoing to a person capable of investigating and
facilitating correction of such wrongdoing (Senate Select Committee on Public Interest
Whistle blowing 1994). Such disclosure could be done within a source in an organization or
outside the organization. Vickers (1995) explains two types of whistleblower; the ‘watchdog’
and ‘protest’ whistleblowers. Vickers describes a ‘watchdog’ whistleblower as a person or an
employee who discovers any form of illegality or wrongdoing, then exposes it so as to aid
financial disaster or safety, and a ‘protest’ whistleblower as a person who tends to be mostly
concerned about the effects of their employer’s activities.
According to Near and Miceli (1995), whistleblower can be generally categorized into
internal whistleblower and external whistleblower.
i. Internal whistleblowers
Is a person or an employee who report misconduct on a fellow employee or superior
within their company to a source within the organization that can pass necessary
judgment. This may possibly comprise of company’s board of directors such as
executive officers as well as non-executive officers, who are representatives of
company’s shareholders (Finn, 1995). Consequently, reporting wrongdoings to
colleagues cannot be classified as whistle blowing (Kings, 1999). Barnett (1992)
further stated that the issue of internal whistle blowing helps organizations rectify
wrongdoings before it goes public and causing damages to such company’s reputation
as well as its shareholders.
Somers and Casal, (1994), alleged that in organizations, internal whistle blowing can
be examined as an expression of trustworthiness and commitment. Therefore, internal
whistle blowing among employees can be encouraged by the introduction of cultural
ethics (Kings 1999). One of the most interesting questions with respect to internal
whistleblowers is why and under what circumstances people will either act on the spot
to stop illegal and otherwise unacceptable behavior or report it. There is some reason
to believe that people are more likely to take action with respect to unacceptable
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behavior, within an organization, if there are complaint systems that offer not just
options dictated by the planning and control organization, but a choice of options for
individuals, including an option that offers near absolute confidentiality.
ii. External whistleblowers
This is a type of whistle blowing whereby a wrongful or illegal act is reported to
sources outside the organization. In these cases, depending on the information's
severity and nature, whistleblowers may report the wrongdoing to lawyers, the media,
law enforcement or watchdog agencies, or other local, state, or federal agencies. In
some cases, external whistle blowing is encouraged by offering monetary reward.
When an organization is without a safe internal route, whistleblowers are left with no
other choice but to disclose the wrongdoings externally to authorities or more widely.
Also, employees tend to blow the whistle externally when they do not feel safe
blowing the whistle within the organization. (Dehn, 1999) Most times, external
whistle blowing occur when internal whistle blowing is ignored or when proper action
is not taken on the report. On the other hand, some researchers argue that this type of
whistle blowing brings about negative publicity about an organization as well as its
brand name and reputation. This negative impact causes shareholders and potential
shareholders loose confident in the organization. (Barnett, 1992 and Binikos, 2006).
4.0 WHISTLE BLOWING PROBLEMS
Westin (1981), stated some of the problems in whistle blowing as follows:
i. The problems of ineffectual performing employees are likely to blow the whistle in
order to keep away from been sanctioned.
ii. The issues some whistleblowers are protesting about are not the unlawful
/wrongdoings activities, but social policies by management that employees sees as
foolish.
iii. The unclear of legal definitions of what comprises of a safe products, unacceptable
treatments of employees or products dangerous to health.
iv. Employees who blow the whistle can be chosen in some ways that would be
unacceptably disturbing, in spite of the merits of their complaints.
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5.0 ORGANISATIONAL RESPONSES TO WHISTLE BLOWING
Barnett (1992) and Ponemon (1994) perceived that organizations response to whistle blowing
in different ways. The following organization response towards Whistle blowing has been
described by (Baker and Dawood 2004) as:
The credibility of the whistleblower might be challenged by the organisation and
hence can reduce the attention received from the public
The unlawful activity can be acknowledged, and the whistleblower rewarded for his
good conduct.
The whistleblower can be isolated from other employees so as to avoid the flow of
information.
A specific individual might be selected to classify who is responsible for what, and
also to receive complaints on wrongdoings.
The organization can respond to whistle blowing by punishing the whistleblower as
an example to other potential whistleblower.
Near and Miceli (1985) who refers organisational response towards Whistle blowing as it
were like an incorporated and consistent response to the whistleblower by all members of an
organization but Miceli and Near (1992) later contradicted their earlier argument in their
further research where they concluded that most whistleblowers encounter diverse responses
within their organizations. These responses could be a shot-term response or long-term
response summarized in the diagram below:
Short-Term and Long-Term Responses/Outcomes of
Whistle blowing
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6.0 MORAL AND ETHICAL ISSUES SURROUNDING WHISTLE BLOWING
Whistle-blowing is essentially an ethical work. Hence, it involves both costs for some and
benefits for other. Besides, given the principle of loyal agency and maintaining
confidentiality in the matters of organization by the agent, i.e. employee, on the one hand,
and internally prescribed procedure, wherever exists, to deal with wrongdoings in the
organization, on the other, underline the need for and necessity of whistle-blowing in the
organization. In order to study whistle-blowing from an ethics viewpoint, one obviously
needs to know what is meant by ‘ethics.’ Some treat ‘ethics’ and ‘morality’ as synonymous.
Others consider morality as a special form of ethics: the word ‘morality’ has by now taken on
a more distinctive content, and I am going to suggest that morality should be understood as a
particular development of the ethical, one that has a special significance in modern Western
culture.
It peculiarly emphasizes certain ethical notions rather than others, developing in particular a
certain notion of obligation, and it has some peculiar presuppositions. In view of these
features it is also, I believe, something we should treat with a special skepticism. (Williams,
1985). Whistle blowing is a conflicting subject in terms of employee’s loyalty. Whistle
blowing entails an ethical dilemma as the individual considering becoming a whistleblower is
torn between two competing loyalties that is loyalty to the corporation and loyalty to society
or the law or some higher morality. It is often assumed that employees have a vow to protect
the dealings of the organization.
Ravishankar (2010) stated that an arbitrator in a 1972 case told an employee that it is wrong
to bite the hand that feeds you. The major obstacle in justifying whistle-blowing is the
relationship between the employees and loyalty to the organization. Acknowledging the
enormous damage whistle blowing does and will cause to both individual, i.e. whistle blower
and organization, it is opposed by some. They oppose whistle blowing mainly on the grounds
of loyalty and confidentiality. According to them, as per the Law of Agency, an employee is
the agent of his/her employer / organization. According to Powell (1965), “an agent is a
person who is authorized to act for a person (called ‘principal’) and has agreed so to act, and
who has power to affect the legal relations of his principal with a third party.” In nutshell, the
employee has to work just like a loyal agent. Since whistle-blowing violates the law of
agency, i.e., loyalty, hence it is condemned. Whistle blowing by violating the law of agency
seems to some as disloyalty, i.e., “to bite the hand that feeds one.”
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James Roche, the former Chairman of the Board of General Motors Corporation,
enthusiastically condemned whistle blowing by saying “Since critics are now busy eroding
another support of free enterprises the loyalty of a management team, with its unifying valued
co-operation. Some of the enemies of business now encourage an employee to be disloyal to
the enterprise. They want to create suspicion and disharmony and pry into the proprietary
interests of the business. This may be whistle blowing … but it is another tactic of spreading
disunity …. Whistle blowing is not courageous and not deserving of gratitude and protection;
it is corrosive and impermissible (Roche 1971).” A more mild statement of typical
condemnation of whistle blowing along the same lines of Roche comes from Sissela Bok as
quoted by Boatright (2003), “Furthermore, the whistle-blower hopes to stop the game, but
since he is neither referee nor coach, his act is seen as a violation of loyalty. In holding his
position, he has assumed certain obligations to his colleagues and clients. He may even have
subscribed to a loyalty oath or a promise of confidentiality. Loyalty to colleagues and clients
comes to be pitted against loyalty to the public interest, to those who may be injured unless
the revelation is made.”
Milton Friedman (1962) has made a manager’s responsibility to the stockholders, i.e. owners
commandingly clear. He says, “In a free-enterprise, private property system, a corporate
executive is an employee of the owners of the business. He has direct responsibility to his
employers. That responsibility is to conduct the business in accordance with their desires,
which generally will be to make as much money as possible while confirming to the basic
rules of the society, both those embodied in law and those embodied in ethical custom.”
Although the Law of Agency stated that the employees have obligation of loyalty toward
their organization, one has to remember that obligation is not without limitation. The
limitation is to obey all reasonable directives of the principal, i.e. employer-organization. For
example, an employee is hired as an agent with a purpose to sell life insurance policies on
commission. Then, it would be ludicrous to assume that the agent has also committed himself
to washing dogs, cleaning vehicles, or doing anything else that happened to give his principal
pleasure.
The whistleblower in a sense challenges this relationship by accusing the employer of having
his or her responsibility put aside, and the employer in turn claims that the employee is doing
precisely that by revealing confidential matters, true or not. The law says that revealing the
truth is socially valuable and that both parties have a responsibility to do so, while revealing
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false information on either side is to be punished. Loyalty to moral principles is higher than
the loyalty to persons. It does not prevent a loyal agent to be a whistle blower. In fact, many
whistle blowers are often loyal employees who make whistle-blowing with a belief that they
are doing a job in the best interests of the company. The likelihood of voice increases with
the degree of loyalty. One of the considerations that needed to be taken into account is
whistle blowing is not something to be done without sufficient justification. But at the same
time, it is not something that can never be justified. The major justification forwarded in
favor of whistle blower is that employee has obligation not only toward the employer
organization, but to the society as well.
Duska (1990) expresses his disagreement with the opponents of whistle blowing in the same
vein in these words: “Isn’t time it to stop viewing corporate machinations as games. The
activities not only affect the players but everyone … the appeal to loyalty though
understandable is misleading; in the moral sphere competition is not the prevailing virtue ….
Whistle-blowing is not only permissible but expected when company is harming society. The
issue is not of disloyalty to the company, but of whether the whistle-blower has an obligation
o society and if blowing the whistle will bring retaliation.” The condemnation of whistle-
blowing at the personal, often high, cost of the whistle-blower is also not justified. If the
whistle-blower follows the principle of universal ethic, the last ‘deontological’ stage of one’s
moral development (Kohelberg 1981), it is good even at one’s personal sacrifice. This is also
justifiable based on the utilitarian approach of ethics, i.e. ‘the greatest good for greatest
number.’ Chakraborty (1986) also in the similar vein justifies and supports whistle-blowing
even at the high self-sacrifice of whistle-blower. He says whistle-blowing is justifiable in
business where individuals in organization undertake intense effort at great deprivation to
themselves by yielding immense social benefits.
Usually, the employees choose to whistle blow as the last resort. This is in recognition of the
potential costs that are associated with whistle blowing. Some of these costs include loss of
jobs, difficulty in getting a new job and loss of faith in others such as the government or the
judicial system. Some may experience name-calling like traitors and troublemakers. Whistle
blower may face heavy financial burden as a result of loss of job or they may have to bear the
legal cost if whistle blowing is unsuccessful. Given these costs, why would one be interested
to whistle blow in the first place. Whistle blowing is justified on moral grounds. All
employees have the moral duty to the public safety that must supersede loyalty to their
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organization. They should voice out their concerns for the sake of fellow employees in terms
of safety and health considerations, for the sake of stockholders and for the sake of the
company wishing to maintain its public image and do the right thing. Whistle blowing is
often justified to champion the right to have freedom of speech, to champion public’s right to
information and to recognize public’s right to participate in important decisions concerning
public interest.
Society recognizes that there is a need for whistle blowing, the need to expose corruption and
wrongdoing, and legal structures has been developed to encourage and protect the
whistleblower, showing that society recognizes this as a socially valuable act. Inherent in any
discussion of the matter is a comparison and conflict of responsibilities, both the employer
and the employee has responsibilities to themselves, the organization, and society, as well as
to each other.
7.0 PROTECTING THE WHISTLE BLOWER
Whistle blowing is a useful internal tool to control against wrongdoings in an organizations.
It should supplement the external measures like regulation, competition, litigation and
shaming of offenders through media exposures. It is undeniably true that it takes a lot of
courage to whistle blow due to the costs involved as mentioned earlier. Unless the whistle
blower is protected, it is very difficult to encourage employee to open up. Many perceived
that there are only slim chances to success in bringing the offenders to justice and resulting in
most of them choosing to be a free rider, expecting others to blow the whistle.
This is a real problem that needs to be addressed. For all intents and purposes, employees
have to place the society above them. What if the managers’ actions put the society’s interest
at stake? What if the public’s health and safety are at stake? Blowing the whistle should be
carried out for moral reasons. To encourage employees to speak up against immoral
organizations and managers, the law must protect them. For example, whistleblowers must be
able to resume their career after blowing the whistle. They must be confident that follow-up
actions will be taken against the potential offenders.
It is a general knowledge that Western countries are accepting whistle blowing more
compared to the Asian countries. This is due to their culture where it is widely known that it
is part of their culture to speak up. On the other hand, the Asian are known as a employees
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who are loyal to their employers where they would rather expressed their unhappiness in
closed-doors then to declare them openly in the public. However, the trends has recently
appears to be changing where more and more employees are voicing out their concerns and
demanding for an investigations to be done. For example, in Malaysia, ‘thestar’ online has
reported that Penang Chief Minister, Lim Guan Eng, under the “i” (integrity) reward scheme
has awarded a Mr. Yusuf Musa RM10, 000, a souvenir and a certificate for exposing
RM500,000 misappropriation of bail money at the Penang Syariah Court. He had managed to
detect a fraudulent withdrawals from a fixed deposit account and prevented further
misappropriation from taking place. He becomes the first person to receive such award from
the state government.
8.0 LEGAL PROTECTION FOR WHISTLEBLOWERS IN MALAYSIA
8.1 Companies Act 1965 (Act 125) and Capital Markets and Services Act 2007 (Act
671)
The Malaysian Parliament has from time to time introduced legal protection for
whistleblowers in an attempt to counter malpractices and fraud of companies. Such protection
is found in the Companies Act 1965 (Act 125) (CA), Capital Markets and Services Act 2007
(Act 671) (CMSA) and the newly enacted Whistleblower Protection Act 2010 (Act 711)
(WPA,). The protection provided in these three legislations will be discussed in turn.
Section 368B (1) CA states that an officer of a company who in the course of performance of
his duties has reasonable belief on any matter which may or will constitute breach of the CA
or its regulations or a serious offence of fraud or dishonesty35 has been, is being or likely to
be committed against the company or by other officers of the company may report the matter
to the Registrar of company. The definition of officer refers to any director, secretary or
employee of the company, receiver and manager appointed under a power contained in any
instrument or any liquidator appointed in a voluntary winding up. Section 368B (2) CA
expressly prohibits the company from removing, discharging, discriminating or interfering
with the livelihood or employment of the officer who makes a ‘protected disclosure’.
Furthermore, such officer shall not be liable to be sued in any court (for instance, breach of
confidentiality agreement or defamation) or be subject to any tribunal process including
disciplinary action due to the ‘protected disclosure’ if he is acting in good faith and in the
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intended performance of his duties as an officer of the company. Any person who breaches
s.368B (2) or (3) shall be guilty of an offence and is liable to pay fine, subject to
imprisonment or both. The protection of whistleblowers as provided in the CMSA is largely
similar to s.368B CA. Section 321 CMSA applies to disclosure of information made by a
chief executive, any officer responsible for preparing or approving financial statements or
financial information, an internal auditor or a secretary of a listed corporation.
Information disclosed should involved breach or non-performance of any requirement or
provision of securities law or breach of rules of the stock exchange or any matter which may
adversely affects to a material extent the financial position of listed corporations. Disclosure
of information must be made to the Securities Commission in relation to matters involving
breach of securities law, and to the relevant stock exchange for breach of rules of the stock
exchange. The protection is only available for those who have in the course of the
performance of their duties reasonable belief that there has been a breach of law regarding
matters as mentioned earlier. A breach of s.321 (1) or (2) amounts to an offence. Section
367(1) CMSA 2007 states that where a corporation is liable for breach of any provision in
CMSA 2007 or its regulations, its chief executive, director, an officer or a representative of
the body corporate is deemed to have committed the offence
8.2 Evaluation of the whistleblower protection provisions in CA 1965 and CMSA 2007
The scope of protection found in CA and CMSA is limited and inadequate. First, the
protection for a whistleblower is only applicable if he forms a reasonable belief in the course
of performance of his duties. It is questionable whether an officer who learns about the
circumstances amounting to a wrongdoing outside office hours may be entitled to protection
under the CA and CMSA. Besides, from the wordings of both s.368B CA and s.321 CMSA,
it appears that an employee is only protected if he reports the wrongdoing committed by his
employer or its officers. As such, an officer of one company who is aware of the wrongdoing
of another company would not be protected if he reports the wrongdoing to the Registrar of
Company, Securities Commission or the stock exchange.
It is possible for employees of one business entity to learn about the wrongdoing of another
company as there may be some relationship between them such as between an auditor firm
and its client company or between a parent and its subsidiary company. Secondly, there is
also no provision in CA 1965 and CMSA 2007 protecting the anonymity of the
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whistleblower. Thirdly, it is not expressly provided in the CA 1965 and CMSA 2007 as to
whether the officer who makes a ‘protected disclosure’ is entitled to any civil law remedies
such as damages.
Fourthly, there is no duty imposed on the Registrar of Companies, Securities Commission
and the stock exchange to investigate the matter highlighted by the officer. This is important
as it would instill confidence on officers of companies if their complaint is taken seriously
and is investigated. Otherwise, if a person realizes that the relevant body may not investigate
his complaint, he may be discouraged to blow the whistle. This is due to the fact that his
whistle-blowing would subject himself to the possibility of reprisal by his employer but yet
the wrongdoing of his employer remains hidden from the public.
In addition, there is also no clear guideline offered to the officers to lodge a complaint in the
event that they suffer any reprisal in the course of their employment as a result of their
‘protected disclosure’. As a result, the protection of whistleblowers based on CA and CMSA
is clearly inadequate and lacks the necessary clarity to create assurance that individuals
would be protected if they spill the beans on their employer’s wrongdoing. So far, both
s.368B CA and s.321 CMSA have not received any judicial treatment as there is no reported
case on these two provisions.
8.3 Whistleblower protection ACT 2010
With the enactment of the WPA, the officers of a company or any other person who provides
information as to the misfeasance or wrongdoing of any company or its directors are entitled
to wider protection under the this Act. The WPA applies generally to whistleblowers who
disclose information relating to the wrongdoings in the private or public sector. The
enactment of the WPA is part of the efforts taken by Malaysia to fulfill its obligations under
the United Nation Convention against Corruption. The WPA came into force on 15
December 2010. Section 6 (1) WPA states that the whistleblower protection is only available
to a person who makes a disclosure of improper conduct to any enforcement agency based on
his reasonable belief that any person has engaged, is engaging or is preparing to engage in
improper conduct.
Section 2 WPA defines ‘improper conduct’ to mean any conduct which amounts to a
disciplinary offence or criminal offence. The scope of ‘improper conduct’ is wide and clearly
includes any breach of the CA, CMSA, other securities law or listing rules and the code of
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ethics relating to auditors. However, the protection afforded by WPA is only limited to a
disclosure made to an enforcement agency. This includes any ministry, department, agency or
other body set up by the Federal Government or State Government conferred with
investigation and enforcement powers. The five main enforcement agency involved in the
implementation of the WPA includes the Police, Customs, Road Transport Department,
Malaysian Anti- Corruption Commission and the Immigration Department.
Arguably, the Company Commission of Malaysia, the Securities Commission and the stock
exchange fall within the definition of ‘enforcement agency’. This inclusion is necessary as
following the discussion above, the protection afforded to whistleblowers under the CA and
CMSA is inadequate compared to the protection granted under the WPA as explained below.
The enforcement agency under the WPA is given a number of powers including the power to
receive disclosure of improper conduct, to implement and enforce the provisions of the WPA.
The coordination of all the enforcement agencies would fall within the responsibility of the
Legal Affairs Division of the Prime Minister’s Department.
Section 6 (2) (a) WPA allows disclosure of improper conduct to be made even if the person
making the disclosure is not able to identify a particular person involved in the misconduct.
Disclosure of improper conduct which occurs prior to the commencement of the WPA is also
included. Disclosure of improper conduct can be made in writing or orally. A whistleblower
who makes a disclosure in accordance with s.6 WPA would be conferred with whistleblower
protection under s.7 (1) WPA such as:
(a) protection of confidential information;
(b) immunity from civil and criminal action; and
(c) protection against detrimental action.
The term ‘confidential information’ used in the WPA refers to information about the
identity, occupation, residential and work address of the whistleblower and the person
complained of by the whistleblower, information disclosed by the whistleblower and any
information if disclosed may cause detriment to others.
According to s.8 (1) WPA, the whistleblower is entitled to full anonymity of any information
about himself and the alleged improper conduct that he provided to the enforcement agency.
Any person who makes disclosure of ‘confidential information’ to others unless allowed by
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the WPA would be guilty of an offence. Section 9 WPA states that a whistleblower should
not be subject to any civil or criminal liability, including disciplinary action as a result of the
disclosure of improper conduct. It must be remembered that an employee owes a number of
duties to his employer such as duty of loyalty, duty to act in the interest of the employer and
duty of confidence. Any disclosure of information relating to the employer may amount to a
breach of these duties.
The protection afforded by s.9 is important as the defenses provided by the common law for
these breach of duties are very narrow. Section 10 WPA deals with the protection of a
whistleblower against detrimental action. ‘Detrimental action’ has been defined as any action
causing injury, loss, damage, intimidation, harassment, interference with the lawful
employment or livelihood of any person and a threat to take any of the actions as stated
earlier. It is important to take note that the protection found in s.10 is available to persons
related or associated to the whistleblower. But it is not expressly provided in the WPA as to
who can be considered to be related to or associated with the whistleblower. Section 10 (1)
prohibits any detrimental action to be taken against the whistleblower as a result of disclosure
of improper conduct.
Section 10 (5) WPA states that no person acting on behalf of any public or private body shall
terminate a contract, withhold payment that is due under a contract or refuse to enter into a
subsequent contract solely for the reason that the party to the contract or its employee or
employer has made a disclosure of improper conduct to any enforcement agency relating to
the public or private body. This section is applicable to a situation where an employee of the
supplier of a private body makes a disclosure of the improper conduct of the private body to
the enforcement agency. As a consequence, the private body terminates any contract with the
supplier. Arguably, if the employee suffers any retaliation by the supplier as a result of the
disclosure of an improper conduct of the supplier’s client or creditor, the employee may rely
on the protection under s.10 (1) as it does not limit that the disclosure of improper conduct
must relate to the person taking the detrimental action.
A whistleblower may complain to any enforcement agency if he or any person related to or
associated with him suffers from any detrimental action in breach of s.10 (1). A person is
deemed to have taken a detrimental action against a whistleblower if;
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i. the reason behind his action is due to the disclosure of improper conduct or his belief
that the whistleblower has made or intends to make disclosure of improper conduct61
or
ii. he incites or permits another person to take or threaten to take detrimental action
against the whistleblower due to the disclosure of improper conduct.
In any proceedings, the burden lies with the defendant to prove that the detrimental action
taken or intended to be taken against the whistleblower or any person related to or associated
with him is not in reprisal for a disclosure of improper conduct.
Nonetheless, the whistleblower protection under the WPA may be revoked by the
enforcement agency in six circumstances under s.11 (1) WPA as follows:
(a) The whistleblower himself has participated in the improper conduct disclosed.
(b) The whistleblower willfully made in his disclosure of improper conduct a material
statement which he knew or believed to be false or did not believe it to be true.64
(c) The disclosure of improper conduct is frivolous or vexatious.
(d) The disclosure of improper conduct principally involves questioning the merits of
government policy, including policy of a public body.
(e) The disclosure of improper conduct is made solely or substantially with the motive of
avoiding dismissal or other disciplinary action or
(f) The whistleblower, in the course of making the disclosure or providing further
information commits an offence under the WPA.
The enforcement agency must give a written notice to the whistleblower if the whistleblower
protection is revoked. Any whistleblower aggrieved by the enforcement agency’s decision to
revoke his protection may refer the decision to a court for determination. Section 12 WPA
imposes a duty on the enforcement agency to conduct an investigation and prepare a report as
to the finding of the investigation and the recommendations to be taken. The enforcement
agency has to inform the whistleblower if the disclosure of improper conduct is not
substantiated and where the Public Prosecutor decides not to prosecute. If the improper
conduct constitutes a disciplinary offence, s.13 (1) (b) requires the enforcement agency to
make recommendation to the appropriate disciplinary authority or to the employer to initiate
disciplinary proceedings or other appropriate steps against those who had committed any
improper conduct.
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The appropriate authority and employer shall inform the enforcement agency as to the steps
taken to give effect to the former’s finding and recommendations or the reasons for not doing
so. If the enforcement agency considers that insufficient steps or no action has been taken to
give effect to its finding and recommendations within a reasonable time, it can report the
matter to the Minister. The enforcement agency must also inform the whistleblower as to the
actions taken by the appropriate disciplinary authority or employer in relation to its finding
and recommendations. Section 14 (1) WPA imposes a duty on the enforcement agency to
investigate any complaint of detrimental action that it receives from a whistleblower.
Duties and powers of the enforcement agency in dealing with investigation, finding and
recommendations of any complaint of detrimental action are similar to s.13 WPA. Section 15
(1) WPA provides that upon a request by the whistleblower that reprisal actions have been
taken against him or at any time he fears that detrimental action would be taken against him,
the enforcement agency may on his behalf, seek damages, injunction or any other relief as the
court deems fit. Alternatively, the whistleblower may take legal action on his own to pursue
the remedies as mentioned earlier.
9.0 LEGAL PROTECTION FOR WHISTLEBLOWERS IN OTHER COUNTRIES
9.1 Whistleblower Protection in England - Public Interest Disclosure Act 1998 (PIDA)
The Public Interest Disclosure Act 1998 (c.23) is an Act of the Parliament of the United
Kingdom that protects whistleblowers from detrimental treatment by their employer.
Influenced by various financial scandals and accidents, along with the report of the
Committee on Standards in Public Life, the bill was introduced to Parliament by Richard
Shepherd and given government support, on the condition that it become an amendment to
the Employment Rights Act 1996. After receiving the Royal Assent on 2 July 1998, the Act
came into force on 2 July 1999. It protects employees who make disclosures of certain types
of information, including evidence of illegal activity or damage to the environment, from
retribution from their employers, such as dismissal or being passed over for promotion. In
cases where such retribution takes place the employee may bring a case before an
employment tribunal, which can award compensation.
As a result of the Act, many more employers have instituted internal whistleblowing
procedures, although only 38 percent of individuals surveyed worked for a company with
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such procedures in place. The Act has been criticised for failing to force employers to
institute such a policy, containing no provisions preventing the "blacklisting" of employees
who make such disclosures, and failing to protect the employee from libel proceedings should
his allegation turn out to be false.
9.2 Whistleblower Protection in United States of America
9.2.1 The Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation enacted in response
to the high-profile Enron and WorldCom financial scandals to protect shareholders and the
general public from accounting errors and fraudulent practices in the enterprise. The act is
administered by the Securities and Exchange Commission (SEC), which sets deadlines for
compliance and publishes rules on requirements. Sarbanes-Oxley is not a set of business
practices and does not specify how a business should store records; rather, it defines which
records are to be stored and for how long.
9.2.2 Whistleblower Protection Act of 1989
The Whistleblower Protection Act of 1989 is a United States federal law that protects federal
whistleblowers who work for the government and report agency misconduct. A federal
agency violates the Whistleblower Protection Act if agency authorities take (or threaten to
take) retaliatory personnel action against any employee or applicant because of disclosure of
information by that employee or applicant. Whistleblowers may file complaints that they
believe reasonably evidences a violation of a law, rule or regulation; gross mismanagement;
gross waste of funds; an abuse of authority; or a substantial and specific danger to public
health or safety.
9.2.3 ‘Qui Tam’
Qui Tam is a lawsuit brought by a private citizen (popularly called a "whistle blower")
against a person or company who is believed to have violated the law in the performance of a
contract with the government or in violation of a government regulation, when there is a
statute which provides for a penalty for such violations. Qui tam suits are brought for "the
government as well as the plaintiff." In a qui tam action the plaintiff (the person bringing the
suit) will be entitled to a percentage of the recovery of the penalty (which may include large
amounts for breach of contract) as a reward for exposing the wrongdoing and recovering
funds for the government. Sometimes the federal or state government will intervene and
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become a party to the suit in order to guarantee success and be part of any negotiations and
conduct of the case. This type of action is generally based on significant violations which
involve fraudulent or criminal acts, and not technical violations and/or errors.