Corporate Governance on Whistleblowing By Tinotenda Mapetuse PDF

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What is Whistleblowing Whistleblowing is when an employee who discloses information that s/he reasonably believes is evidence of illegality, gross waste or fraud, mismanagement, abuse of power, general wrongdoing, or a substantial and specific danger to public health and safety. The person who raise his voice is called as a whistle blower. Whistleblowers can be employees, suppliers, contractors, clients or any individual who somehow becomes aware of illegal activities taking place in a business either through witnessing the behavior or being told about it. The companies should motivate their employees to raise an alarm in case they find any violation of rules and procedures and do intimate about any possible harm to the interest of the organization and the society. The information of alleged wrongdoing can be classified in many ways as violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization such as an immediate supervisor. Externally a whistleblower can bring allegations to light by contacting a third party outside of an accused organization such as the media, government, law enforcement or those who are concerned. Whistleblowers however, take the risk of facing stiff reprisal and retaliation from those who are accused or alleged of wrongdoing. Whistleblowing is divided into internal and external. Internal whistle blowing is when employee informs about the misconduct to his officers or seniors holding positions in the same organization. The External whistle blowing thus when the employee informs about the misconduct to any third person who is not a member of an organization, such as an external auditors or any other legal body. The employees fear to raise a voice against the illegal activity being carried out in the organization because of following reasons, threat to life, lost jobs and careers, lost friendships, resentment among workers and breach of trust and loyalty Is whistleblowing necessary for the organization? It is necessary for an organisation to have whistleblowing. Every organization desires honesty from and among its employees. The presence of honesty allows for complete dedication to the

organization’s mission and success. By encouraging a whistle blowing culture, the organization promotes transparent structure and effective, clear communication. More importantly, whistle blowing can protect the organization’s clients. For example, if a hospital employs a number of negligent staff members other, more ethically inclined, employees would need to bring such issues to the hospital’s attention, protecting the organization from possible lawsuits or severe mishaps resulting in a patient’s demise. It is essential for businesses to provide a safe and trustworthy environment, so that their employees feel comfortable and protected when they have information to share. That is why it is so important for top management to promote, demonstrate and commit to the inclusion of whistleblowing within their business culture. By being open and honest, following through on procedures, treating their employees with respect, confidentiality, and investigating the issue thoroughly, a successful whistleblowing culture can be implemented. This then provides businesses with the opportunity to minimise fraud and misconduct, enabling employees to focus on the core business needs, and the success of the organisation.

How can the whistleblowing practice encouraged in Zimbabwean companies Promoting a whistle blowing culture within an organisation by creating and publicize a whistle blowing policy, emphasize communications about bans on retaliation for whistle blowing activities. The Top Management must demonstrate the inclusion of whistle blowing in the culture, also the organization’s commitment to whistle blowing must be emphasized and promoted. The organization must follow through with a complete investigation after a whistle blowing event and discuss with employees their personal thoughts on topics to make sure everyone has a similar mindset. Clear communication is key to building an organization where employees feel comfortable raising their concerns. In the resulting positive work environment, organization goals are

foremost, allowing employees to focus on the success of the organization and its members. Whistle blowing is an essential tool for an organization. Without it, fraud, misconduct, and failure may dominate an organization. By promoting clear communication and keeping the organization’s goals in focus for everyone, one can minimize their chances of being the next Enron. The whistleblowing hotline (toll free) is a service that enables employees and third party suppliers to report malpractice, unlawful or unethical behaviour within the workplace. It usually refers to a telephone-based service, but is often complemented by other reporting options. Whistleblowing hotlines are often referred to by other names, including the Speak up line, the Ethics line, Security line, Fraud line and Loss prevention line. Many organisations choose to brand their hotline to reflect its desired purpose, or to encourage only certain types of whistleblowing reports. The organisations must use hotlines to protect employees. The organisations often introduce hotlines to allow employees to raise issues that they may feel uncomfortable discussing with a manager. This helps to expose important issues that would otherwise remain undisclosed and help reassure employees that their concerns will be taken seriously. In Zimbabwe there is a tip off anonymous facility run by the Deloitte and Touche to which a number of organisations in the country subscribes is a clear effort to use the whistleblowing mechanism in reporting corporate misconduct and protecting organizational assets. The hotline helps in the risk intelligence, for most organisations, there is no better information source than its employees. But corrupt and illegal behaviour often goes undetected because employees fear the consequences of reporting them through existing internal channels. Implemented correctly, a hotline can be a powerful tool in helping to expose illegal or unethical behaviour. Organisations therefore often place a high value on the risk intelligence that an effective hotline can provide. The hotlines are used for reputational reasons. Protecting brand reputation is often a key motivator for a business choosing to introduce a whistleblowing hotline. If employees or third parties do not have access to a reporting channel provided by the organisation, they may choose to use alternative public channels. A whistleblowing hotline can give an organisation early sight

of a potential issue, and reduce the likelihood of potentially damaging information reaching the public domain. It can be used for compliance reasons. A whistleblowing hotline can help a business comply with its legal and regulatory responsibilities. For example the existence of effective speak-up channels, such as a hotline, are one of the six adequate procedures recommended by the UK Department of Justice for an organisation to prevent bribery and comply with the UK Bribery Act 2010. The organisations must operate their own internally-administered hotline. This can present challenges, particularly in organisations where employees are fearful of possible retaliation. The organization must practice an open-door policy. People are often afraid to discuss problems with their boss, or sometimes even talk to them at all. You can alleviate this by showing your employees that you adhere to a true open-door policy. No matter how busy you are, always greet employees and find time to meet with them on a regular basis. Foster an environment where a level of healthy discourse is welcomed with open arms. The organization must provide an anonymous suggestion box. Some problems need to be addressed anonymously. People simply don’t feel comfortable breaking ranks to bring up issues they feel involve possible illegal or immoral acts they witness at work. Some entry-level employees will only mention a problem once and assume if it were important, someone above them would do something. Snitching on other employees may be seen as sinister, and your people may be embarrassed to speak up. Ensure you have a form, inbox, or number they can contact for anonymous tips. The police have prevented and solved a lot of crimes with this way; your business could flourish from anonymous tips as well. The manager must also walk your talk. They must make sure they lead the way they want to be followed. If they take shortcuts, the employees will notice. The work environment they build isn’t just what they say; it’s also what they do. It’s just like a child knows the difference between what their parents say and do, the employees know the same about the managers as well. If they rip off their customers or don’t stand behind their products and services, why would your employees?

The organization must take the good and the bad . They must not just ignore bad feedback or brush it off because they’re doing well. You may be making money right now, but one day you may not be. The managers must listen to negative feedback wherever you get it, especially internally. The management must show they are listening. People stop going to church when they feel God isn’t listening. They stop voting when their government isn’t listening. If you don’t give proof you’re listening to your customers and employees, they’ll stop talking and eventually abandon you. Implement small improvements–make the effort to show you value input and implement suggestions. Reward your people for speaking up, even if it’s not what you wanted to hear. Every step you take counts, so move in the right direction. Treat everyone in business, whether it’s your boss, partner, employees, or customers, with respect, and they’ll do the same for you, building a solid brand in the process.

The other way is to institutionalize whistleblowing. While the word whistleblowing may have a generally negative connotation, in this paper it means giving every employee the means to raise a hand when he or she has something important to share and making that information available to everyone, including the CEO. This could be anything from not having the resources to complete a project on time to seeing a potentially disruptive move by a competitor. Great managers solve this problem by walking around and getting the pulse of their employees. As companies grow, this becomes a logistical challenge. There simply isn’t enough time to have conversations at every level of the organization. At this point, leaders need to replace walking around with a system to solicit feedback about issues. This could be done via anonymous surveys and/or a system that regularly asks for employees’ perceptions of how their work is going, tied to their quarterly objectives. Consider asking the question, “How do you feel about your work?” This tends to elicit more qualitative input than a status report, which is often comprised of historical numbers rather than forward-looking insight. The chance of giving every employee a way to raise a red flag to management can help solve many problems before they become a catastrophe.

Organizations can no longer afford for bureaucratic barriers to stifle their ability to pivot and grow. The combination of the CEO’s big-picture view and wisdom plus employees’ domain expertise and on-the-ground insight can be powerful stuff but only if leaders find a way to continuously solicit and use the information.

Identify Zimbabwean cases where whistleblowers was used and the outcome thereof. It is difficult to conduct business with an unethical person, in that one cannot risk trusting him/her and the commitments and promises he/she makes (Trevino, and Nelson, 1995:290). According to (Masaka, 2007) a case in point is that of Zimbabwe where public sector malpractices are reported to be on a meteoric rise. People have lost faith in the way some public officials perform duties given a plethora of cases of malpractices that have beset Zimbabwe. In the 1980s Obert Mpofu provides information that several cabinet ministers have abused a car loan facility to enrich themselves. The resulted in what known as the “willowgate scandal”. It was the Chronicle under the editorship of Geoffrey Nyarota that unearthed the scandal. One of the major investigative stories in the history of the media in Zimbabwe, the scandal came to the attention of Nyarota in October 1989 when a member of parliament Obert Mpofu surrendered a check he had accidentally received from Willowvale Motor Industries to the Chronicle for investigations. The investigation unearthed that the check which was signed by the then Industry minister Callistus Ndlovu was meant for one Alfred Mpofu. This triggered further investigations that implicated four top government officials. Mugabe set up an inquiry (Sandura Commission) which was headed by former Judge President Wilson Sandura. he commission found that many officials had abused their positions to buy cars and resell them. The then Minister of State Frederick Shava, had bought and sold so many vehicles that the Sandura commission criticized him for "behaving like a car dealer," because he made about $70,000 in a year. On March 31 the panel gave its report to Mugabe. The Sandura panel implicated five government officials: Maurice Nyagumbo - The inquiry found out that his bank account had twelve suspicious transactions from twelve different individuals totaling Z $11 500. Nyagumbo

who was minister for political affairs and Zimbawe African National Union Patriotic Front (ZANU PF) administration secretary resigned from his post and later committed suicide in April 1989 after being implicated in the scandal. Callistus Ndlovu - He allegedly purchased a motor vehicle for Z $22 087 and resold it for Z $65 000. Mark Dube - He was the Matabeleland South provincial Governor who allegedly purchased a vehicle for Z $24 000 and resold it for Z $80 000 to one Mr G Scultz. Enos Chikowore - It was revealed that he used his position as Minister of Local Government and Urban Development to assist his secretary, Alice Sakupwanya and her friend Esther Gupo to buy two Nissan Sedans.. Enos Nkala - Despite having denied any guilt previously, he announced his resignation during one of the commission's sittings after overwhelming evidence was presented by the commission. Finally Despite the findings of the inquiry Mugabe went on to grant a pardon to those implicated. Soon after the Chronicle began

investigating the scandal, its editor, Geoffrey Nyarota, was promoted by Zimpapers to a headquarters public relations job, a move seen more as a way to silence him. There were appeals by prominent writers and politicians for the reversal of the promotion, but President Robert Mugabe refused, arguing that the new post's higher salary was Nyarota's "reward." The Willowgate cases encourages all the scandals to happen from the !980s and none of them were brought to court but the former President fails to solve these scandals upto the country looses $15 billion in Chiadzwa Diamonds. These led to the collapse of the Willowvale Motor Industry. The National Railways of Zimbabwe (NRZ) fraud, the Bulawayo police investigates $10million fraud at the NRZ involving some of the rail firm’s senior executive in what could showcase the free for all situations at parasastals. This was when Gibson Boston Siziba (whistleblower), the senior auditor filed a police report implicating the state owned firms finance director Patrick Bondayi and Frank Msutu NRZ manager for operational security (former police commissioner). Bondayi was allegely worked in cahoots with the other officials in the finance department to misappropriate funds through over invoicing of spare parts. CMED Ltd has implicated its managing director Mr Davison Mhaka in the US$3 million fuel scam and accuses him of trying to conceal incriminating evidence. Also implicated is the parastatal’s fuels manager, Mr Brian Manjengwa.The top CMED (Pvt) Ltd executives including the managing directors Davison Mhaka have been implicated in a $3 million fuel scam

(Newsday 13 May 2014). The whistleblower told the Parliamentary Portfolio Committee on transport and infrastructure development that the $3 million scandal could be a tip of the iceberg. However, as proceedings goes on Mhaka was suspended and loses his job. The media in 2012 exposed the corruption that was taking at ZBC. The workers at the parastatal revealed that at a time when the bosses were living in luxury, ZBC had only 3 cameras for 15 reporters while the archiving system was in a deplorable state (Matshazi, 2012, p. 7). The top 4 managers got loans amounting to US$50 000 each to buy luxurious vehicles and more than US$200 000 as housing loans (Matshazi, 2012, p. 7). This partly explains why the national broadcaster has become a laughing stock. The mother ministry did nothing to address these challenges and it only took the appointment of Jonathan Moyo as Information Minister in 2013 to clean up the mess. Although the decision by Moyo to expel Muchechetere is commendable, it was obviously too late. The minister who used to preside over this parastatal was Webster Shamu, but he did nothing even when things were heading for a wrong turn. Instead, Shamu protected Muchechetere. It is also important to have ‘independent’ players in the broadcast industry to reduce cases of negligence. ZBC TV needs competitors, just to knock some sense in its head.

The econet tax issues, Zimra and the whistleblower. The whistleblower has been econet’s clearing company for more than 10 years is telling on them. In 1998 duty was waived on parts for base stations under duty tariff. The whistleblower who was Edward Matambanadzo the managing director of a shipping company called Paul Edward’s shipping company says Econet has imported 56500 containers which were cleared as base stations and yet Zimra knows only 2500 base stations that Econet has. The whistleblower has to get 10% of the value reported. Zimra officials took their investigations on their own and latter suspends the Paul Edwards Shipping Company on December 2013, pending the outcome of the urgent chamber application by econet before the High Court against ZIMRA over the classification of goods. However, the whistleblower loses his duty to be customs clearing agent. The ZIMDEF scandal, this was the issue of Jonathan Moyo which he benefited from close to $270 000 which corruptly syphoned out of Zimdef by the ministry fund official. The fund was created by section 47(1) of Manpower Planning and Development Act Chapter 28:02. Its main

aim is to develop manpower in the country. He uses these funds to buy bicycles for the Chiefs in his Tsholotsho Constituency costs about $50 000 and $24 000 loan to himself which he repaid. The whistleblowers which were the two companies F techonology Pvt Ltd and Wiseborne trading owned by Gandawa. Jonathan Moyo accepts that he uses the money by boasting that he was the modern day version of Robin Hood for taking the money from Zimdef to help the poor people. The Zimbabwe Anti-Corruption Commission want to carry out the investigations but they were blocked by Robert Mugabe. Jonathan Moyo issue was dismissed and no investigations were done. To conclude, whistleblowing is very important to both private and public entreprises. The damage that was done by NRZ, GMB, ZMDC, CSC, Ziscosteel and ZBC to mention but a few, explains the sorry state that the country’s economy finds itself in. There is no doubt that the continued mismanagement will further widen the gap between the rich and the poor and impede economic development. The Zimbabwe government has a tall order if hopes for an economic turnaround are to be revived. Looting in key government institutions should be seriously condemned, starting from the highest hierarchy. The country openly boasts of abundant and rich mineral resou...