By Beverley Agbakoba-Onyejianya & Ebunoluwa Bayode-Ojo
Whistleblowing is a very effective but still under utilised as a corporate governance tool in Nigeria. Whistleblowing serves many purposes, the most commonplace being that it allows the general public to report malpractice in workplaces, organisations and even government bodies.
Apart from not only exposing illegal and unethical practices , a properly implemented whistleblowing mechanism can give corporate employers an opportunity to expose irregularities that occur in the workplace and to rectify them before they cause deep and irreversible systemic and reputational damage.
Whistleblowing Regulations in Nigeria
Although there is no specific legislation on whistleblowing in Nigeria, however, there are several whistleblowing guidelines which have been successfully implemented by various government parastatals and bodies across different sectors from civil service ; public departments, to private sector banking and capital markets, pensions industry etc. which will be discussed in turn below:
The Whistleblowing Guidelines for Pensions 2008 (‘the PENCOM Guidelines’) were issued, on 1 June 2008, by the National Pension Commission (‘PENCOM’), which is the body responsible for the regulation of the pension industry in Nigeria.
The PENCOM Guidelines outline the methods for reporting violations of the Pension Reform Act, 2014 (‘the Pension Reform Act’) and other laws applicable to pension fund custodians, pension fund administrators and closed pension fund administrators (collectively referred to as ‘the Pension Institutions’), as well as the penalties for such violations.
Directors, management, employees and any other person(s) dealing with the Pension Institutions are required to report any violation of the Pension Reform Act or any other applicable laws or regulations, to PENCOM.
The PENCOM Guidelines provide for the protection of whistleblowers and mandates of Pension Institutions to ensure that its members of staff are aware of their responsibilities with regard to whistleblowing and that they are conversant with reporting procedures.
The Code of Corporate Governance for Banks and Discount Houses in Nigeria and Guidelines for Whistleblowing in the Nigerian Banking Industry 2014 consists of:
1. The Code of Corporate Governance for Banks and Discount Houses in Nigeria (‘the Corporate Governance Code’), which, under Section 5.3 requires banks and discount houses to have a whistleblowing policy, which must be made known to employees and other stakeholders.
The policy must contain a whistleblowing mechanism which includes an assurance of confidentiality that encourages all stakeholders to report any unethical activity to the bank and/or the Central Bank of Nigeria (‘CBN’).
Failure to comply with this provision will attract a fine of NGN 5,000 (approx. €12) for each day during which the failure occurs. Persistent failure to comply with this provision may be a ground for the revocation of the bank/discount houses’ licence.
2. The Guidelines for Whistleblowing in the Nigerian Banking Industry (‘the CBN Guidelines’). The CBN Guidelines became mandatory and effective from 1 October 2014, providing a minimum standard to be observed by all financial institutions under the supervisory purview of the CBN in relation to whistleblowing.
The CBN Guidelines provide for the reporting of alleged unethical conduct of employees, management, directors and other stakeholders of a bank or any other financial institution. Banks and other financial institutions are required to have a whistleblowing policy which should be made known to employees, management, directors and other stakeholders such as contractors, shareholders, job applicants and the general public.
Rulebook of the Nigerian Stock Exchange 2015 (‘the NSE Rulebook’)
Rule 26.19 of the investors’ protection fund rules, under Chapter 10, provides that the board of trustees of the Nigerian Stock Exchange (‘NSE’) Investors’ Protection Fund (‘the Board’) shall establish and maintain a system to receive disclosures in respect of contraventions as required in the ISA and acts on them, where appropriate.
In 2014, the NSE launched X-Whistle, a whistleblowing portal for secure and effective submission of information relating to violations of rules and regulations in the Nigerian capital market. The NSE whistleblowing portal allows any person (an employee, an investor, a compliance officer, an issuer, a stockbroker or any member of the public), on an anonymous basis, to raise genuine concerns about unethical or unlawful conduct by market participants with the objective of protecting market integrity.
Economic and Financial Crimes Commission Act, Laws of the Federation of Nigeria 2004 (‘the EFCC Act’).
Under its Section 38, which grants the Economic and Financial Crimes Commission (‘EFCC’) the power to ‘seek and receive information from any person, authority, corporation or company without let or hindrance in respect of offences it is empowered to enforce under the Act.’ Additionally, Section 39 of the EFCC Act states that the EFCC officers ‘cannot be compelled to disclose the source of information or identity of the informants except by the order of the court.
Nigerian Data Protection Regulation 2019 (‘the Data Protection Regulation’)
Section 3.1.5(i) of the regulation requires all organisations that deal with the collection or processing of personal data to conduct an audit of their privacy and data protection practices within the first half of every year stating the policies audit of their privacy and data protection practices, within the first half of the year, stating the policies and procedures of the organisation for monitoring and reporting violations of privacy and data protection policies.
Corrupt Practices and Other Related Offences Act 2000 (‘the Corrupt Practices Act’)
Section 26(1) of the Act provides that any public officer to whom any gratification is given, promised, or offered, in contravention of any provision of the Corrupt Practices Act, shall report such gift, promise or offer together with the name, if known, of the person who gave, promised or offered such gratification to him to the nearest officer of the Independent Corrupt Practices And Other Related Offences Commission (‘ICPC’) or police officer.
Section 26(2) of the Corrupt Practices Act further provides that any person from whom gratification has been solicited or obtained, or from whom an attempt has been made to obtain such gratification, in contravention of any provision of the Corrupt Practices Act, shall, at the earliest opportunity thereafter, report such soliciting or obtaining, or attempt to obtain the gratification together with the name if known or a true and full description attempt to obtain the gratification together with the name, if known, or a true and full description of the person who solicited, or obtained, or attempted to obtain the gratification from him, to the nearest officer of the ICPC or police officer.
Any person who fails without reasonable excuse to comply with Sections 26(1) and (2) of the Corrupt Practices Act shall be guilty of an offence and shall on conviction be liable to a fine not less than NGN 100,000 (approx. €245) or to imprisonment for a term not exceeding two years or to both fine and imprisonment.
Categories of Whistleblowers Afforded Protection
- NSE Rulebook: Employees and directors of listed companies, employees and directors of capital market operators, auditors and reporting accountants, staff of regulatory bodies, media professionals, members of shareholder’s associations and members of the public.
- PENCOM Guidelines: The compliance officer of the Pension Institution, the directors, management, employees and any other person that has dealings with the Pension Institution.
- CBN Guidelines: Employees, management, directors and other stakeholders of banks and other financial institutions such as contractors, shareholders, job applicants, and the general public.
- Federal Ministry of Finance Whistleblowing Programme: Any person who voluntarily discloses to the Federal Government of Nigeria a possible misconduct or violation that has occurred, is ongoing or is about to occur with specific concerns which are in the public interest.
- EFCC Act and Corrupt Practices Act: Any informant.
- ISA: The employee of a capital market operator or public company
Whistleblowing and Corporate Governance in Nigeria
At this juncture it is necessary to remind the reader of the main objectives of whistleblowing which are as follows:
i. Boost the disclosure of financial related crimes.
ii. Maintain the combat against financial crimes and corruption, and improve the extent of public trust in government.
iii. Increase accountability and transparency in the administration of public finance, which could improve Nigeria’s open government ranking and ease of doing business indicators.
iv. Lastly, to recover stolen public finances and assets.
Following the launch of the Whistle-Blowing Policy by the Federal Government of Nigeria, recovery of looted fund increased with the personnel of Economic and Financial Crime Commission (EFCC), Independent Corrupt Practices (ICPC) and Other Related Offence Commission, Department of State Security, and other security agencies, on alert with available information.
Daily Trust on April 18, 2017 reported that, this laudable initiative has resulted in the discovery of $9.8 million cash in a Kaduna slum residence in Sabon-Tasha and over $30 million cash in an apartment in Ikoyi, Lagos State. At an exchange rate of N350 to $1, the cash recovered so far will be over N14,000,000,000 (fourteen trillion naira in cash), just to name a few.
News Agency of Nigeria reported on February 12, 2017 that, Minister of Information and Culture, Lai Mohammed indicated that the Federal Government’s Whistle blowing policy had yielded $151million and N8 billion in looted funds.
In a statement signed by Segun Adeyemi, the Special Assistant to the Minister, Alhaji Mohammed stated that the looted funds were recovered via the clues provided by three whistleblowers who gave actionable information to the office of the Minister of Justice and Attorney-General of the Federation. The largest amount recovered was a total of $136,676,600.51 allegedly under a fake account name.
Pursuant to the formal activation of the whistle blowing policy in Nigeria, a few cases of corruption have been reported in the banking sector. One notable instance is that of a Justice who opened a corporate account with Diamond Bank PLC with a fake address. A witness (a staff of the bank) told the Court that all other requirements for opening an account were satisfied except the address and the bank waived this because the Justice was ‘their customer’.
In spite of the CBN Guidelines on whistle blowing and the recent introduction of whistle blowing policy, the banking sector reportedly experiences cases of breach of security protocols particularly by famous or highly respected banking clients.
It is arguable how effective implementation of the whistle blowing policy has been thus far and whether it has increased accountability and transparency in the management of public funds. More needs to be done to promote the active use of whistleblowing in both the public and private sectors, in order to change the tide and promote higher degrees of transparency and accountability.
The onus is on us the citizens and inhabitants of the Federal Republic of Nigeria at large, all residents and citizens should be willing to expose corruption without fear of reprisal, and the law enforcement agencies should be sincere and vigorous in prosecuting those involved in alleged corruption.
How Whistleblowing can help Create Safer Workplaces
Whistle blowing in the workplace is the act of reporting a serious issue, crime or unethical act that has been seen or suspected inside an organisation.
Whistleblowers in a workplace usually report criminal activities like the mistreatment of an employee, sexual harassment, bullying, environmental damage or fraud, bribery and corruption. In an effort to sanitise the sports industry, it would certainly not go amiss to introduce whistleblowing to curb corrupt practices that have ravaged the state of African sports for instance.
Use of whistleblowing in the customs and immigration, various departments of the public sector e.g. procurement, the film and music industry etc will definitely help to manage the menace of bad practices, corruption and unethical practices.
Whistleblowing could also be described as a tool for minimising or mitigation of risks. It helps to reduce the kind of crises and resulting risks that are caused by employees, directors, board etc on behalf of stakeholders.
A well defined and holistic Whistleblowing system i.e. secure and confidential hotline, policies and procedures will preserve transparency and promote good governance in any organisation. Whistleblowing is an effective tool in the workplace as it ensures that the management team of an organisation creates an environment, a structure and a culture that reduces risk and enhances transparency.
Whistleblowers present a significant checkpoint in the Nigerian workforce. Without whistleblowers unscrupulous actors and operators in various industries would continue to mistreat workers, cheat consumers, endanger lives and put the health and safety of the general public in jeopardy.
We should celebrate and reward those brave present or former employees or even a member of the public who exposes financial scandals, mismanagement of public funds or serious violation of health and safety guidelines whilst putting their own lives on the line.
Conclusively, exposure of wrong doing in private or public organisations in the public interest to the authorities in charge is very important as it promotes the concept of good governance in the various sectors in the society.
Beverley (An Associate Partner) and Ebunoluwa Bayode-Ojo (an Associate Intern) are legal counsel at Olisa Agbakoba Legal (OAL)