At the end
of last month, I had the honour of being invited to a seminar conducted by
Rajah & Tann, one of the larger local law firms. The seminar was around the
topic of knowing your customer and the perils of money laundering and terrorism
financing. It was clear from the presentation that Singapore has a very comprehensive
set of laws to deal with “doggy money.”
There is, however,
one slight flaw to our legal system when it comes to financial nasties. It
assumes that people on the top are automatically responsible and decent people who
will always be responsible. Hence, the trick to making everything work like clockwork
is make senior management responsible for everything.
There is
one slight fallacy with this. This situation only existed in the wettest dreams
of Confucius. While it does take a lot of positive qualities for someone to get
to a high level, being “always moral,” simply isn’t one of them and we need to
remember that the law in practice and the law as it is written are not necessarily
the same thing. You can have all the laws in the world but if there’s no
ability to detect and enforce those laws, then the laws are pointless.
In theory,
Singapore law states that if an employee knows his or her employer is guilty of
something or other, they have a legal obligation to report it. However, let’s
be honest, how many of us would be willing to report the source of our livelihood
to the authorities when there is a risk of losing your job and never being
hired and the potential for vengeance from an employer who may get acquitted whereas
you only have the reward of knowing you did the “right thing”?
Let’s look
at one of the most famous “whistleblowers” in recent years – Lieutenant Colonel
(LTC) Alexander Vindman, who famously reported his “Commander-in-Chief,” then
President Trump for trying to shake down Ukrainian President Zelensky into
conducting an investigation into Hunter Biden.
What was
LTC Vindman’s reward? The President Trump was acquitted in the Senate Trial and
took no time in disposing of everyone who got him impeached. LTC Vindman, a
decorated war hero was labeled “insubordinate” by his “Commander-in-Chief,” not
something which any military officer wants to be known for. The man fought for
his country and has been rewarded with the hatred of a good percentage of it:
https://news.am/eng/news/559243.html
https://www.youtube.com/watch?v=5azzC0ZS9yM
When I
attended an International Fraud Group (IFG) conference in November of last
year, the question of whether more countries should implement a whistleblower
reward program along the American model. The general consensus was no. The Eastern
Europeans had scars of the Soviet era and argued that nobody wanted to be know
as the “informant” and a lot of the attendees from the developed world argued
that it would incentivize frivolous information. Only the boss of an NGO that deals
with human trafficking argued that whistleblowing was necessary to reduce human
suffering.
This
sentiment wasn’t particular to the group. The Bank of England’s
Financial Conduct Authority and Prudential Regulation Authority, henceforth
(FiCA & PRA’s), writes in a note for a UK Parliament Committee that “There
is as yet no empirical evidence of incentives leading to an increase in the number
or quality of disclosures received by regulators” (PRA and FiCA 2014, p.2,
italics in original).
Now, if this is the sentiment of regulators in the “democratic
Western,” world, what can be said of Asian countries where the culture remains
focused on the importance of the “patriarch.”
Going against “your boss” or the person who has power over
you and in cultures where authority figures are venerated, its even more difficult.
However, the fact remains that you’re not going to get fraud punished if you don’t
get it reported and you’re not going to get it reported if people are fearful
of doing so. Going against someone who has the power of an organisation involves
serious risk. Let’s face it, one can say “it’s only money,” but its different
story when it means you can’t feed yourself or look out for your family.
One might event ague that whistleblowing is not necessary or
that it encourages “frivolous” complaints. However, if you look at the UK where
there is a system of rewarding whistleblowing in the health care sector, it was
found that 41 percent of fraud causes were detected by employees.
Whistleblowing or getting people who are under the power of
others to report crimes is good for the system. While government’s might be hesitant
to get involved, there are at least private sector companies willing to step
in. One example is Omni Bridgeway, a litigation funder, which has argued that
whistleblowing takes “courage”
While Omni Bridgeway does have a system that funds whistleblowing suites, it only offers the service in the US market, where whistleblowing has financial rewards. Would Omni Bridgeway or companies like Omni Bridgeway be allowed to work in other markets? Just because governments may be hesitant to take on rewarding whistleblowers, there’s no reason why they can’t encourage the private sector to step in.
Whistle blowing takes courage but it’s shown that it is an
essential part in combating things like corruption, money laundering and
terrorist financing. These are things that societies need to deal with if they
are to grow in every sense of the word. Isn’t it time we stop talking about
combating financial crimes and lauding people’s courage and actually protect
and reward people for doing the right thing and being serious about combating
crime?
No comments
Post a Comment