Whistleblowing in business : Vital check against excesses or corruption

Local business leaders believe that whistleblowing continues to have its place in the corporate and business world.

Leading American whistleblowing attorney Stephen M. Kohn wrote an article published on June, 2023 by Stanford University’s Stanford Social Innovation Review (SSIR) magazine which stated that whistleblowing has proven to be an effective anti-corruption tool, whose promise to deter frauds is almost unlimited.

“Whether it’s busting a billionaire banker illegally stashing money overseas, or a ship captain that ordered the dumping of oil overboard, blowing the whistle is how these crimes are detected and successfully prosecuted,” he opined.

The National Whistleblower Center based in the United States defines a whistleblower as someone who reports waste, fraud, abuse, corruption, or dangers to public health and safety to someone who is in the position to rectify the wrongdoing.

Speaking during the debate of the Whistleblowing Protection Bill in Parliament in 2022, Prime Minister Dr Keith Rowley said while it will not wipe out corruption completely, the new legislation will protect whistleblowers and hold guilty parties accountable.

T&T has seen its fair share of whistleblowing over the decades from Gene Miles and the gas station racket of the 1960’s, which saw her giving testimony over the corruption surrounding the granting of gas station licences, to individuals who anonymously gave tip offs before the Clico insurance company collapse in 2009 to the female Angostura executive who made claims of sexual harassment.

Last December, at Massy Holdings’ annual meeting, Massy’s then executive vice president of business integrity and group general counsel, Angélique Parisot-Potter, took to the floor during the question-and-answer segment, criticising one of the group’s executive leadership training programme for its bizarre practices.

She also criticised how the company is spending its foreign exchange during these challenging economic times.

She told the company’s board of directors, chaired by Robert Riley, that she had written a 13-page letter to the company’s President and CEO Gervase Warner but had received no communication on the matter.

Nine days after Parisot-Potter raised concerns about the company’s executive leadership programme, she resigned.

Benefits of whistleblowing

Attorney-at-law and Chairman of the Tobago Business Chamber Martin George told the Business Guardian that whistleblowing is “tremendously important” in the business world as it offers transparency.

“Whistleblowing is particularly important in the world of business as it serves as a vital check and balance against excesses or over expenses or maybe double dealing or bribery or graft or corruption or scandal. So, it is a very useful tool in the business world.”

Apart from being useful in the private sector and corporate world, George said whistleblowing is important in the public sector.

“However, it is of even greater importance in the Government sector because when you are talking about state enterprises or state authorities, it is even more important to be able to protect persons who have vital information as to things that may be going on in the organisation which are totally wrong and contrary to the basic principles and tenets of good corporate governance.”

He also spoke about the new whistleblowing legislation that was enacted in 2023.

“The legislation that was recently enacted seeks to protect the rights of the whistleblower, to protect them from victimisation and from them being pilloried, tarred and feathered and hung out in the public to dry.

“We saw this, to some extent, with the executives of Massy in terms of their reaction to the whistleblowing by their general counsel, so it is really something that is important. Sometimes, it is the only way that things can be brought to light and that corrective action can be taken. We also see advertisements from the Office of the Procurement Regulator in T&T where they encourage persons to speak up and to give information where they know in state agencies things are going wrong and there is corruption, bribery, graft and theft.”

George added that it is important that some people give information anonymously as not everyone has the courage to spill the beans publicly.

“Miss Angélique Parisot-Potter at Massy Holdings did it, as we can see, at tremendous personal sacrifice given the fallout that has followed. We saw that she subsequently tendered her resignation. It’s not an easy thing to do and it takes tremendous courage, but the legislation that has been enacted is seeking to try to give those protections to the persons who have the courage and fortitude to call a spade a spade and say this is wrong.”

Negative impact

In a 2007 study conducted by PricewaterhouseCoopers in the United States, it was found that professional auditors only detected 19 per cent of fraudulent activities at private corporations, while whistleblowers detected and exposed 43 per cent. According to the study, surveyed executives “estimated that the whistleblowers saved their shareholders billions of dollars.”

Despite the positive impact whistleblowers could have on a company’s shareholders, President of the San Fernando Business Association Daphne Bartlett told the Business Guardian that whistleblowing in private companies with a few shareholders could have negative repercussions.

She made it clear she was referring to private companies whose securities are not traded on public markets.

“This can be bad for a private company. Private companies have a few shareholders who are already aware of how the company is run. They may not divulge their internal decisions to their staff because in their opinion they don’t need to know. The risks involved in private companies is that they may lose valuable customers and employees, which could be the same for public companies. The only difference is that the number of shareholders differ by a huge margin.”

She added that whistleblowing in larger, publicly listed companies like Massy also carry risks as the public could sell off their shares if they are unhappy with the type of information the whistleblower divulges about the company’s operations.

Bartlett spoke about the possible consequences on the person who does the whistleblowing.

“In a private company you always run the risk of becoming redundant, dismissed or treated unfairly. Usually, the disgruntled employee resigns. Sometimes, the company can lose their best employees.”

BY : Raphael John-Lall

‘Vital check against excesses or corruption’