2.7.2 SPECIFIC PRIVATE SECTOR PROVISIONS While private companies and non-profit organisations are governed by the overall rules and regulations assessed above, there are specificities and provisions that apply exclusively to private companies. Given that a quarter of the occurrences of fraud discovered in private enterprises came to light thanks to whistleblowers64, it is in the interest of companies themselves to establish adequate reporting mechanisms. Appropriate reporting channels and effective follow-up mechanisms encourage whistleblowers to use internal reporting systems, rather than going public with their disclosure. The International Chamber of Commerce (ICC) Anti-Corruption Commission adopted voluntary guidelines in early 2008, aimed at helping companies establish and implement internal whistleblowing programmes.65 The British Standards Institute’s code of practice regarding whistleblowing, also published in 2008, details key elements of effective arrangements, thus establishing best practice for organisations.66 In the 10 countries assessed for this report, many larger companies have whistleblowing mechanisms in place, particularly when they are international subsidiaries or partially owned by the government. The provisions are usually part of the companies’ codes of ethics or conduct. Multinational companies tend to have systems in place as a result of their own corporate governance and anti-fraud policies, as well as to comply with provisions such as the Sarbanes-Oxley Act, which mandates whistleblower protection mechanisms.67
Appropriate reporting channels and effective follow-up mechanisms encourage whistleblowers to use internal reporting systems, rather than going public with their disclosure.
However, little information is available about the detailed provisions in these codes or about their effectiveness. In Ireland, the majority of the largest companies do not release information about the level and nature of the use of internal whistleblowing procedures, and no current annual report of the 10 largest companies features instances of whistleblowing as examples of positive staff behaviour.68 In Estonia, few companies responded to related requests and only one code was made available. In this case, confidentiality was promised, but the provisions were limited to internal reporting channels.69 In Lithuania, only a small number of companies assessed referred to the code of ethics as an integral part of their business identity. Few companies have explicit and publicised norms on employee whistleblowing.70 Small and medium enterprises (SMEs) tend to lack internal reporting mechanisms. In Italy, a survey of SMEs revealed that among the main reasons for not setting up systems to allow employees an internal channel for reporting were the related costs and the question of necessity.
Alternative to Silence
64 See KPMG Forensic, Profile of a Fraudster, Survey, 2007, p. 26, mentioned above. 65 See ICC Guidelines on Whistleblowing, http://www.iccwbo.org/iccccfee/index.html For an analysis of these guidelines see the Government Accountability Project http://www.whistleblower.org/doc/2008/GAPICCEvaluationNovember 2008.pdf 66 PAS 1998:2008. Whistleblowing arrangements: Code of Practice (London, UK: BSI, 2008). 67 Sarbanes-Oxley Act (2002, sections 301 and 806). http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=107_cong_bills&docid=f:h3763enr.tst.pdf 68 See National analysis of whistleblower protection in Ireland, TI Ireland (2009). 69 See National analysis of whistleblower protection in Estonia, TI Estonia (2009). 70 See National analysis of whistleblower protection in Lituania, TI Lithuania (2009).
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