The common perception that corruption in Nigeria or fraudulent behaviour is only endemic in the country's public sector or in the corridors of power seems to be an oversimplification of the spread or dimension of corruption in the country. The frequent reported cases of fraud in Banks perpetrated by bank staff or fraud in companies executed by different cadres of company personnel are all examples of white collar crimes or fraud.
It would be recalled that in the last decade or so executive white collar malpractices bordering on false financial reporting led to the exit of late Rufus Giwa and Bunmi Oni both CEOs of Lever Brothers Nigeria PLC and Cadbury Nigeria PlC respectively. Remarkably, the recent sack of the management of five banks by the Central Bank Governor over actions deemed detrimental to the interests of depositors and creditors brings to fore once again the incidence of white collar fraud, crimes and malpractices in Nigeria's private sector. It is apparent that Nigeria's private sector is not immune to corruption.
The incidence of theft or corruption in the workplace has become a major issue facing many advanced economies as corporate crimes have in recent times rocked certain western economies. The widely reported corporate scandals that affected Enron, WorldCom and Tyco are typical cases of white collar crimes.
As at 2005, it was estimated that the total cost of employee fraud or white collar crimes to public companies in the United Kingdom was up to 2 billion British Pounds. While in the case of the United States, a 2006 report of the Association of Certified Fraud Examiners estimated that more than $600 billion is lost through white collar crimes. Though the paucity or near absence of related statistics in Nigeria may not permit any similar estimate, the significant incidence of official corruption in Nigeria's private sector cannot be disregarded especially when it affects public companies driven by investors funds and banks holding depositors funds.
Beyond the recent sporadic and ad hoc responses of the Central Bank of Nigeria and the Economic and Financial Crimes Commission to the current non-performing loan debacle in the banking sector, it is necessary that laws or policies meant to alert or forestall white collar misdemeanour or crimes are created and implemented. One method of forestalling such official malpractice is the adoption of a Whistle blowing policy- as a fundamental ingredient of a sound corporate governance practice by public companies in the country.
Whistle blowing which is regarded as the "reporting of wrongdoing within an organization to internal and external parties" has attracted legislative attention following the rising incidence of corporate scandals in western economies. Following the False Claims Act of 1863, the Whistle blowing Act of 1989 and its amendment in 1994, the United States of America enacted in 2002 the Sarbanes-Oxley Act which provides for a mandatory confidential anonymous whistleblower hotline to be made available for use by company staff. Four years earlier, in the UK the Public Interest Disclosure Act was enacted. In Australia, in 2001 the Whistleblowing protection Act was enacted.
Nigeria has had its own fair share of white collar crimes that by now the relevant regulatory authorities should be considering ways of creating a system whereby whistle blowing can thrive, effectively using the process to alert internal and external authorities of wrongdoing in a company before it leads to bankruptcy, insolvency or liquidation with attendant widespread economic implications.
Whistleblowers have attracted public commendation and even media awards as three women – Cynthia Cooper of WorldCom, Sheron Watkins of Enron and Coleen Rowley of the Federal Bureau of Investigation (FBI) were honoured by Time Magazine in 2002 as Persons of the Year. This was done in a remarkable recognition of their exemplary whistleblowing roles- which alerted relevant agencies and the public of the malpractices and lapses in their places of work. If there were whistleblowers- staff who had insider knowledge and were willing to reveal- may be the unhealthy banking practices that rocked the management of the five banks would have been open to the relevant agencies much earlier before the recent audit executed by the CBN. But, whistle blowing cannot thrive if the whistleblower is not guaranteed of protection or confidentiality.
More importantly, whistleblowing as a tool of corporate governance can only succeed in an environment where the process is clearly established. It is in this regard that the regulatory agencies like Securities and Exchange Commission, CBN, and Corporate Affairs Commission (CAC) and the EFCC should consider including provisions for whistleblowing in the codes of corporate governance and the relevant laws guiding the operations and conduct of public companies. Considering the negative impact fraudulent activities have on the fortunes of business investments and the economy in general, the consideration of fraud prevention or fraud alert mechanisms such as making it a statutory requirement for companies to make provisions for credible and confidential whistle blowing process should not be treated with levity as it will go a long way towards checking the incidence of white collar fraud.
Commenting on the correlation between good corporate governance and economic growth, Lopa Rahman, project director of the Bangladesh Enterprise Institute rightly notes "more efficient allocation of capital" is achieved through sound corporate governance practice. Rahman further remarks that such efficient allocation of capital would "help boost private sector development, create more jobs, improve quality of living, and ultimately lead to poverty alleviation."
Source: Checking white collar fraud in Nigeria: The need for a whistleblowing policy (http://www.businessdayonline.com/index.php?option=com_content&view=article&id=9251:checking-white-collar-fraud-in-nigeria-the-need-for-a-whistleblowing-policy&catid=1:latest-news&Itemid=18)