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Business

June 17, 2017

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Securities watchdog needs to fine-tune whistleblower policy

Securities watchdog needs to fine-tune whistleblower policy

LAHORE: The whistleblower policy introduced by Securities and Exchange Commission of Pakistan (SECP) was long overdue yet it has created some anxiety in the corporate sector; that fears it could be used by disgruntled employees to blackmail them.

Resistance to reforms is common in Pakistan. Need for reforms arise when the existing laws of the country are unable to stop irregularities in businesses. Overtime, these irregularities are taken by the businessmen as routine. Reforms in Pakistan fail because after overlooking the irregularities of the businesses for decades, the new law aims to tighten the noose immediately and take action against past irregularities. This makes business and trade agitate so strongly that the implementation of even an ideal law is suspended.

Corruption and malpractices in Pakistan are rampant because employees are afraid to report any wrong doing to the regulators. They fear losing their job or even losing their life or lives of their dear ones for exposing the malpractices of influential persons. They avoid passing on the information for unlawful activities because they know that these are being conducted with the connivance of the concerned public officials.

A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organisation that is either in private or public sector. He could be an employee that reports an employer's misconduct. There are laws that protect whistleblowers from being fired or mistreated for reporting misconduct.

It is in the interest of the public interest that the law protects whistleblowers so they can speak out in case of malpractices in an organisation. As a whistleblower, you're protected from victimisation if you are: a worker revealing information of the right type by making what is known as a 'qualifying disclosure'. Whistleblowers have changed the course of history around the world. American President Nixon was forced to resign as an FBI agent Mark Felt secretly helped Washington Post reporters Bob Woodward and Carl Bernstein.

Similarly, it was Sherron Watkins an executive for the Enron Corp. She helped expose the formidable company in 2001 and 2002 as one constructed on enormous financial lies and frauds. Some whistleblowers even in the United States lost their life or landed in jail for exposing fraud. Karen Silkwood died mysteriously in 1974 in the midst of a campaign to challenge Kerr-McGee about the safety of a nuclear facility.

Mark Whitacre worked with the FBI in 1990s to expose price-fixing in agriculture by his own company, Archer Daniels Midland, but ended up in legal trouble himself for his own actions. The SECP has realised the importance of whistleblowers to get rid of unethical practices in the corporate sector; however it should have encouraged whistleblowers to report directly instead of involving the corporate sector.

To create stability, the SECP should encourage the companies to disclose past violations by a cut-off date and regularise it by paying some penalty. They should be warned that if they fail to declare the irregularity by cut-off date and are apprehended because of a whistleblower, they would face penalties and punishment.

The SECP has restrained the companies from taking any action against whistleblowers. This is not enough, as the company may not take any action against the whistleblower but would be at liberty to transfer him/her to a section where he could get no information at all.

Moreover, his/her carrier path would be truncated, as from then on, the whistle blower would be deprived of any promotion within that company. His career would be ruined because if he leaves the job in view of promotion restraints he would not be accommodated by other companies.

The identity of a whistleblower is protected the world over. If the identity is revealed, he would be a pariah in the job market. No protection from SECP would ensure him a career path that he deserves on the basis of his competence. Still the whistleblowers are badly needed in our country.

It would be safer is the SECP encourages the whistleblower to contact it directly as allowed by law and protect his/her identity; assuring that all disclosures made to the commission will remain confidential if the whistleblowers desire so.

 

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