Corporate Whistleblowing and Whistle-Blower Protection

Corporate whistleblowing refers to the act of an employee or insider disclosing information about unethical, illegal, or fraudulent activities within an organization. Whistleblowers play a critical role in exposing wrongdoing that may harm individuals, violate laws, or damage the reputation of a company.  

Whistleblowing serves as a mechanism for promoting transparency, honesty, accountability and ethical conduct in institutions. It serves as a safeguard against corruption, corporate malfeasance, corporate abuse, and various forms of wrongdoing that can harm companies, individuals, communities, or society at large.  

From uncovering financial fraud and environmental violations to revealing violations of human rights, whistleblowers play a pivotal role in holding institutions and individuals accountable for their actions. 

Whistleblower protection laws, regulations and policies are designed to shield individuals from retaliation for reporting such misconduct. Whistleblower protection typically involves legal safeguards and mechanisms to ensure that individuals who come forward with information are not subjected to adverse actions such as termination, demotion, harassment, or other forms of retaliation. These protections encourage individuals to speak up about wrongdoing without fear of reprisal. 

Developing a corporate whistleblower framework involves careful consideration of various factors to ensure effectiveness, fairness, and compliance with legal and ethical standards. Some key considerations are:  

1. Clear Policies and Procedures: Establishment of  clear and comprehensive policies outlining the process for reporting misconduct, including who to report to, how to report, and protections for whistleblowers. 
2. Confidentiality and Anonymity: Provision of mechanisms for whistleblowers to report concerns confidentially/anonymously to protect them from retaliation and maintain trust in the process. 
3. Investigation Protocol: Execution of a structured and impartial process for investigating reported concerns, ensuring thoroughness, fairness, and confidentiality throughout the investigation. Entities should adhere to data protection considerations regarding the collection, processing, and storage of personal data obtained through whistleblowing channels. 
4. Training and Awareness: Provide multiple communication channels for reporting misconduct, including anonymous hotlines, online portals, and designated contacts within the organization. Additionally, there is need to educate employees about the whistleblower policy, their rights and responsibilities, and the importance of reporting misconduct.  
5. Legal Compliance: Ensure that the whistleblower framework complies with relevant laws and regulations governing whistleblowing. 
6. Continuous Improvement: Regularly review and update the whistleblower framework to incorporate feedback, address emerging issues, and adapt to changes in the organizational and regulatory environment.  

In Kenya, the foundation for whistle blowing is found in the Bribery Act of 2016,  the  Proceeds of Crime and Anti-Money Laundering Act, Leadership and Integrity Act, 2016 Public Officer Ethics Act, 2003, Public Finance Management Act, 2012 among other critical legislation.  

The Bribery Act, 2016 was enacted to address the prevention, investigation, and punishment of bribery, as well as related matters. In 2021, the Attorney General in collaboration with the Ethics and Anti-Corruption Commission (EACC) published Guidelines pertaining to the Bribery Act. These guidelines sought to implement Section 9 of the Act, which mandates both public and private organizations to develop procedures for preventing corruption and bribery.  

Part II of the Guidelines outline the principles to be included in the framework for prevention of bribery and corruption which provide a guide for institutions on how to implement a whistleblower system. The Guidelines require establishment of written procedures; risk assessment and management; implementation structures; reporting mechanisms; protection of whistle blowers, informants and witnesses; awareness creation through communication and training; enforcement procedures; monitoring, evaluation and review and cooperation and collaboration by various actors.  

The legal consequences for not establishing a whistle-blower framework are outlined in Section 9 and 18  of the Bribery Act, 2016. The Act provides that a director or senior officer of a private entity, or someone acting in such a capacity, is deemed to have committed an offense if they fail to develop procedures for prevention of bribery and corruption. This offense carries a penalty of a fine of up to Five million Kenya Shillings (KES 5 million), or imprisonment for a maximum of ten years, or both. 

Bellmac Consulting LLP provides an extensive array of professional services, encompassing Corporate Governance and Compliance, Company Secretarial,  Board Evaluation, Governance Audits, Management Consulting, Financial Advisory Services, and Human Resource Consultancy. Our services cater to a diverse clientele spanning various sectors in Kenya and the broader East and Central Africa region. 

We provide proactive strategies for ensuring legal compliance and assist organizations in preparing essential documents including Board Charters, Conflict of Interest Policies, Codes of Conduct and Ethics and Whistleblowing Policies. We assist organisations establish robust whistleblowing frameworks, empower Board, management and employees to foster a culture of transparency and accountability and  assist entities safeguard their integrity and reputation.