South Africa: When You Protect Whistleblowers, You Protect Your Business

​Recent news stories have highlighted the role whistleblowers played in curbing international financial crimes, bringing to light alleged financial mismanagement and the effects of not addressing whistleblowers' concerns on listed companies' value.

None of these cases would have emerged without the courage these individuals show. And so business leaders have a professional duty toward these heroes, who are willing to speak out. This is because, ultimately, the C-suite of any organization has a responsibility to make sure it protects the company's bottom line. One of the trickiest parts of getting this right is protecting whistleblowers who become concerned about transactions or actions that could affect the business.

Everything from international crimes, such as money laundering, to financial crimes that affect only one busines, such as petty cash fraud, can be managed better if whistleblowers are more open and willing to step forward. For this to happen, though, company leadership has a responsibility to ensure whistleblowers are safe.

Globally, we are seeing a move to encourage whistleblowers since, when issues of corruption, fraud and bribery come to light, it is because someone had the courage to speak out. Sadly, this is often done in the face of tremendous pressure and with fear of what the repercussions might be for the whistleblower. This is where both the law and businesses can play a role to encourage whistleblowers to tell their stories, in a supportive and protective environment.

In South Africa (SA), we have world-class pieces of anti-bribery and anti-corruption legislation, but the issue is enforcement, where a lot more can be done. This is not only the case for enforcement agencies such as the SA Police Service, but also an issue for businesses, individuals and communities to address.

A key piece of local legislation is the Protected Disclosures Act, which has governed disclosures since 2000. In terms of the act, organizations are required to implement measures to facilitate whistleblowing. In addition, organizations such as Corruption Watch, encourage whistleblowing and have created platforms where individuals can report corruption.

After 21 years, a number of best practices have emerged that business leaders can follow, which should be part of every company's basic HR policies and shared with employees. At a practical level, one of the key aspects is that the tone has to be set at the top of the organization.

Business leaders have to focus on creating an ethical culture, where whistleblowers are taken seriously. This includes the company being open to showing how it deals with allegations, how it investigates whistleblowers' complaints, and whether it takes decisive action against guilty parties.

There also needs to be consistency in implementation when whistleblowers do come forward, as this has been shown to have the best outcomes that encourage whistleblowers, in public and private organizations.

While companies may balk at spending money on whistleblowing systems in the current economic environment, they may also encourage employees to use external platforms where they can report corruption.

Encouraging whistleblowers need not cost your company money—in fact, it will save your bottom line in the long run. I've done numerous investigations where we've uncovered millions of rands of fraud because someone in the organization has had the courage to speak up, the leadership has investigated, the criminals have been punished and the financial bleeding has been staunched.

Zaakir Mohamed is a partner and head of corporate investigations and forensics with CMS South Africa in Johannesburg. © 2022 CMS South Africa. All rights reserved. Reposted with permission of Lexology.