Breaking the Silence: the Efficacy of Whistleblowing in Improving Transparency
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Scientific Research Journal (SCIRJ), Volume III, Issue IV, April 2015 35 ISSN 2201-2796 Breaking the Silence: The Efficacy of Whistleblowing in Improving Transparency Siti Noor Azmawaty Abd Razak Faculty of Accountancy Universiti Teknologi MARA (UiTM) Kelantan Kelantan, Malaysia [email protected] Wan Nurul Basirah Wan Mohamad Noor Faculty of Accountancy Universiti Teknologi MARA (UiTM) Kelantan Kelantan, Malaysia [email protected] Maheran Zakaria (Associate Professor, Dr.) Faculty of Accountancy Universiti Teknologi MARA (UiTM) Kelantan Kelantan, Malaysia [email protected] Abstract - There has been a substantial increase in the Whistleblowers Protection Act (2010) has been introduced recognition of the importance of whistleblowing as a means of in Malaysia as part of the struggle to combat corruption and reducing corruption. It could enhance a country’s Corruption malpractices in the public and private sector through providing Perception Index (CPI) scor es and indirectly enhance her protection to whistleblowers. These include confidentiality of dignity. While recognizing that whistleblowing is a powerful tool information of the informer, protection against harmful actions to prevent and detect malpractices, very few decided to blow the whistle due to the fear of retaliation, legal liabilities and cultural and immunity from civil and criminal actions that may be oppositions. These barriers should be removed in order to faced by the informant after making a disclosure to the internalize whistleblowing as a positive means of improving Enforcement Agency. However, ever since the Act was transparency in the organizations, over and above the introduced, the ranking of Malaysia in Corruption Perception government as a whole. Index (CPI) has not significantly improved (The Bertelsmann Foundation (2014); Freedom House (2013)) which may Index Terms - corruption, transparency, whistleblowing, indicated stronger measures need to be enforced in Malaysia in barriers to whistleblowing fighting corruptions. I. INTRODUCTION The aim of this paper is twofold. Firstly, to explain some Whistleblowing has been a major issue in the ethics cases in Malaysia that may lead to the increasing consciousness literature. Whistleblowing is defined as disclosure actions by members of an organization of illegal and immoral acts on whistleblowing and secondly, the paper aims to discuss the some deterrents of whistleblowing act by reviewing literatures perpetrated by the organization and organization members to relating to whistleblowing actions which has been publicly persons or organizations that may bring about a change debated over the recent years. (Boatright, 2003). Most of the time corruption episodes occur in secrecy, thus only individuals engaged in corrupt affairs or those working closely with them in an organization are in the II. MALAYSIA ACCORDING TO TRANSPARENCY best position to report (Dyrmishi et al., 2013). Pursuant to that, INTERNATIONAL whistleblowing is widely accredited as one of the most powerful method to prevent and detect corruption and Malaysia’s score on the Transparency International’s malpractices (Transparency International, 2009). Nevertheless, Corruption has slightly increased over the past 4 years. The while recognizing that whistleblowing is a powerful tool to slight improvements indicated that the government initiatives prevent and detect corruption and malpractices, very few may have shown a positive result, even though still decided to blow the whistle. The refusal to report wrongdoings maintaining position in the mid-range rank. Malaysia has that has been observed may be closely related with the fear of improved in CPI ranking beginning 2011 onwards. In 2011, retaliation by the employers or persons being alleged for despite various initiatives to address corruption, which includes malpractices (Paul & Townsend, 1996; Kaplan& Kleiner, Corporate Integrity Pledge for the business sectors, the CPI 2000; Qusqas & Kleiner, 2001; Gundlach et al., 2008; results indicated that the efforts are not good enough to combat Transparency International, 2009). corruption, especially ‘grand corruption’. The ‘grand corruption’ includes awarding mega projects without an open www.scirj.org © 2015, Scientific Research Journal Scientific Research Journal (SCIRJ), Volume III, Issue IV, April 2015 36 ISSN 2201-2796 tender or competitive bidding, limited access to information billion of Cayman funds (Malaysiakini, January 2015) by that contributes to a culture of secrecy and lack of questioning the whereabouts of the money. He raised the transparency, allegations of inflated pricing in military serious questions about the integrity of the fund’s investments purchases and the continued close nexus between business and and refused to let the matters drop. Tun Dr Mahathir Mohamad politics in Malaysia. Based on Transparency International (TI), also acknowledged that there is a major structural issue in the 40% of the public perceives that corruption levels have stayed way Malaysia’s public funds were managed, which is lack of the same over the past three years with the police and political transparency that allow little or no scrutiny of the 1MDB parties has been identified as the most corrupt institutions. funds. In 2012, Malaysia has climbed up to be ranked at the 54th Another case that has heightened the needs for transparency place. Even though the country’s position continues to be in the among Malaysians was the case of National Feedlot Centre mid- range, the results indicated a slight improvement. (NFC). The report of Auditor-General’s 2010 highlighted NFC According to Datuk Paul Low (2012), the president of failure to meet the annual demand of beef production target set Transparency International Malaysia (TIM), despite various by the Government. As reported by The Star Online (June government initiatives, the respondents did not experience a 2013), the centre was supposed to produce 38,600 heads of significant decrease in corruption. This was evidenced by one cattle in 2010 but it fell short as the implementation of of the question in survey relating to bribe, “During the last 12 Entrepreneur Development Programme (EDP) involving 130 months, do you think that your company has failed to win a satellite farms had yet to be implemented back in 2010. contract or gain new business because a competitor has paid a Concern also arose as RM250 millions of soft loans were bribe?” whereby 50% of the respondents answered “Yes”, approved in December 2007 to NFCorp, of which as at March which scored amongst the highest in comparison to other 2010 RM134.7 million was disbursed by the Ministry of countries within the same range of position ranking. During Finance (MOF) to NFCorp. The loan was to enable the 2012, one of the suggestions for improvement was to further corporation to start a national feedlot centre in Gemas, Negeri improve whistleblower legislation to provide wider protection Sembilan. The repayment tenure is from 2012 to 2028. to whistleblowers and encourage more whistleblowing. Furthermore, in the press release by the Auditor General dated Malaysia has improved its standing in the ranking in 2013 25 January 2012, some weaknesses in the implementation of (from 54th to 53th). The country’s position is still in the mid- NFC have been identified. Those weaknesses have been duly range and this situation call out for stronger measures and highlighted in the Auditor’s General report in 2010. The New enforcement to be in place to eliminate entrenched interests Straits Times online (November 2014) has reported that the and processes that support abuses. In the previous year of 2014, Government is taking legal action against NFCorp for its Malaysia has further improved its country ranking by climbing failure to repay 2014’s loan instalment. The Prime Minister, up to 50th position. Following this, TIM urged the government Dato’ Seri Najib Tun Razak who is also the finance minister to take up the recommendations to ensure greater has acknowledged that until September 2014, NFCorp had only improvements, including putting more emphasis on the misuse repaid RM34.98 million as part of its 2012 and 2013 of public funds as highlighted in Auditor-General Reports repayments. The company also failed to meet up 90-day (Astro Awani, 2014). extension given by the Government. Pursuant to that, government issued an Event of Default Declaration Notice on III. TRANSPARENCY ISSUES IN MALAYSIA to terminate the agreement and subsequently proceed with The discoveries from TI can be further enlightened by some legal action. In the meantime, the president of TIM, Dato’ controversies that evolved around Malaysia in relation to Akhbar Satar, in the press release dated November 2014 urged misuse of public funds, corruption, bribery and lack of the Government to seek damages for this serious breach by the transparency in the government management. Take for NFCorp and all related offenders. TIM urged the Government example the recent controversy surrounding 1Malaysia to publish a list of borrowers online on their status, amount Development Bhd (1MDB) in relation to the secrecy of trading borrowed, progress, loan repayment to boost transparency and and arrangements involving PetroSaudi Holdings (Cayman) accountability. TIM also proposed to the Government to be Limited (PSI Cayman), a wholly owned subsidiary of more transparent on the process of giving soft loans to cut PetroSaudi International Limited (PSI), a company down the possibility