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Jan 20

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The Alarming Results of the First Independent Review of the G20’s Whistleblower Policies

The Australian division of Transparency International recently released a report assessing the adequacy of the G20’s whistleblower laws, regulations, and protections. The assessment was done in preparation for this past November’s G20 Summit, hosted in Australia, during which corporate and public fraud were top agenda topics. These nefarious activities have a substantial negative impact on individual counties’ economies and citizenry, leading to lost profits, increased safety hazards, and an overall deviation from efficiency. Furthermore, fraud and corruption expose the global economy to greater uncertainty, instability, and environmental impacts; among other negative externalities. In terms of just direct financial impact, the G20 estimates its members lost roughly $1 trillion (USD) in potential output due to corruption (Transparency International, 2014).

Establishing strong whistleblower protections is a vital tool in the enforcement and deterrence of fraud, corruption, and other acts of financial malfeasance. Unfortunately, according to the Transparency International report the G20 nations have not met their 2010 commitments to increase whistleblower protection, as agreed during the Seoul Summit. The added protections were supposed to be in place by 2012 and the lack of follow through has left the G20 nations vulnerable to continued acts of public and private fraud.

Overall, each country was rated for its performance on 12 criteria, including how well whistleblowers are defined, how well their anonymity is maintained, and the remedies available to persecuted whistleblowers. Overall, the US definitively topped the list in terms of best industry protections. Interestingly, Canada ranked 3rd in public whistleblower protections, while simultaneously coming in at 3rd from the bottom in the private sector assessment, just ahead of Russia and Italy, and just behind Saudi Arabia and India.

The report specifically noted three urgent and universal “needs” of the G20:

“1) A three-tiered system of reporting channels, including clear external avenues to third parties such the media, MPs, NGOs and labor unions where necessary

 2) Anonymous channels to get those who know about corruption in the door to auditors or regulators, in the first instance.

 3) Internal disclosure procedures, the mechanisms by which organizations public or private adapt whistleblower protection principles to their own environment”

Special attention was given to the critical need for anonymous channels to facilitate whistleblower complaints. The report applauded efforts by industry in some countries to enlist external law firms and hotlines that serve as independent channels through which whistleblowers can report corruption and other acts of financial deceit. The use of such a compliance instrument increases anonymity and lends a greater degree of objectivism to the reporting and investigation process. A detailed list of the many benefits that an independent whistleblower hotline adds can be found here.

About the author

Devin Yaeger

Devin Yaeger is a consultant at Fulcrum Inquiry, an accounting, finance and economic consulting firm specializing in complex litigation, forensic investigations and appraisal issues across a broad spectrum of industries.

Permanent link to this article: http://betweenthenumbers.net/2015/01/the-alarming-results-of-the-first-independent-review-of-the-g20s-whistleblower-policies/

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