Apparently not everyone was listening in school, and this seems to have cost some companies dearly. The VW emissions scandal has rocked the media over recent months. Yet it has just been reported that an employee alerted the former CEO of Volkswagen, Martin Winterkorn, in 2014 to the need to inspect the company’s cars emissions-test defeat device. Putting aside the overwhelming and possibly irredeemable reputational damage wrought by the failure to address this concern, the emissions scandal may have led to direct cost damages for the company to the screeching tune of USD 86 billion.
There is a reason laws exist to both protect and encourage whistleblowing by employees, such as South Africa’ Protected Disclosures Act. One of those reasons is to assist in mitigating against the financial costs to entities that result from corruption and fraud. As the VW case exemplifies, internal persons reporting within their organisations may be privy to better quality information than could be gathered by an external entity after an anonymous tip off. And companies themselves have identified whistleblowing as the most effective tool for fraud detection. (Ayagre, P & Aidoo-Buameh, J (2014) “Whistleblower reward and systems implementation effects on whistleblowing in organisations” in European Journal of Accounting Auditing and Finance Research, Vol.2, No.1, pp.80-90, at 82.)
However, the duty to protect whistleblowers is not just about preventing corruption, it is also about encouraging disclosure of a number of different types of information for the advancement of organisations. A corporate culture of openness that would include whistleblowing is responsible for the detection of 23% of the most serious economic crimes detected, but it also enhances the broader functioning of an entity. Allowing for different voices to be heard encourages divergent thinking and stimulates creative thought, even when these voices are ‘wrong’. Research done by Charlan Nemeth, examining the role of minority influences on decision-making in organisations, spoke clearly of how authentic dissent feeds innovation and improvement. In a study of seven “Fortune 500” companies top management teams, the most successful management teams were the ones which encouraged authentic dissent in meetings.
Yet, in spite of these findings, Nemeth notes sadly that many organisations still treat dissent as a “virus”. Many governments and political parties do the same. In South Africa, the language of “discipline” is often used to quell dissenting voices, instead of listening to them. In 2015, the Open Democracy Advice Centre (ODAC) provided legal support to a whistleblower, Mr. Motingoe, who – after raising concerns about massive irregularities in tender processes within the Department of Public Works, Northern Cape – was suspended on charges of insubordination. And the Department sought to defend these frivolous charges unsuccessfully all the way to the Constitutional Court; this in spite of the fact that they never disputed the contents of his original allegations. Replicating Mr. Winterkorn’s mistake, it is worth noting that this is the very province, which was ransacked by former MEC and ANC Northern Cape Chair MEC Johan Block during the same period that Mr. Motingoe’s allegations were being ignored. The courts have since found Mr. Block guilty of fraud and money laundering.
What is interesting is that there must have been a lot of people involved in the decision to ignore Mr. Motingoe’s allegations – and while some of them may have been complicit in the irregularity of course, what explains the behaviour of others? In social psychology they talk about “information cascades” as a way of explaining why we allow popular opinion to inform our own decision-making, rather than dissenting. There is also a special sanctity we place on keeping information secret: the secrecy heuristic means we think information is more valuable merely because it is secret, regardless of its content. Significantly in the context of whistleblowers, however, it is may also be fear of being the odd one out, the stranger, the out-group member that makes us shy away from listening to authentic dissent. It is also fear of taking a risk and nevertheless being ignored, which of course becomes a self-fulfilling prophecy as we in turn ignore others.
Organisations and departments will benefit from allowing for dissenting voices through properly implemented whistleblowing procedures. There is evidence to show that the powerful become singularly focused, whereas the powerless are forced to consider a multitude of information sources to move forward – giving them valuable perspective. But specific policies are needed to fight against our often counter-productive urges to ignore differing voices. As the report of PWC mentioned earlier noted, creating a corporate culture of openness is a necessity. In South Africa, although we have the Protected Disclosures Act, it does not currently create either a positive obligation on organisations to have a policy in place, nor a duty to investigate a complaint if it is made.
The Department of Justice and Constitutional Development have now placed amendments to this law before Parliament. There is still no positive duty to create a policy. And, in spite of creating a duty to investigate, it comes with the somewhat inane caveat that if you are unable to make a decision whether or not to investigate within 21 days, you can essentially delay such decision for a further six months. The truth is, the law is not doing enough to make organisations and departments listen to their employees. And it is those same organisations and departments that will continue to flounder because of it. DM
*The Open Democracy Advice Centre provides legal advice and support to whistleblowers. We are experts on issues of transparency and access to information. Read more about the organisation here.
Japan had a monster-collecting card game as far back as the Edo period (1603-1868).