Our Institute has been promoting the benefits of having effective whistleblowing channels for some years. This is not only fundamental to good corporate governance and ESG practices, but also brings real benefits to organisations in terms of risk mitigation. Employees are usually the first to witness malpractice, so establishing whistleblowing channels is a vital tool to help organisations detect and correct unlawful conduct or irregularities that occur in the workplace.
The good news is that the message on whistleblowing is starting to gain traction – helped of course by the growing regulatory pressure. Hong Kong Exchanges and Clearing Ltd (HKEX) recently upgraded the requirement for HKEX listed issuers to have a whistleblowing policy from a recommended best practice to a new code provision (CP D.2.6). As our cover story this month makes clear, however, the main obstacle to benefitting from the internal early warning system that a whistleblowing framework provides is that employees are often reluctant to speak up about misconduct. Building an effective whistleblowing system is therefore as much about creating a corporate culture that is conducive to whistleblowing as it is about the modalities involved in setting up whistleblower hotlines. The key issue to grapple with is to ensure that potential whistleblowers feel safe from retaliation.
The very real dangers that whistleblowers can be exposed to are highlighted by the story of Pavandeep Gill, the whistleblower who first exposed malpractice at the German payment processor and financial services provider Wirecard. His story is cited by our cover story this month, but I think it bears a closer look.
Very soon after Mr Gill took up his position as Wirecard’s senior legal counsel for the Asia-Pacific region in 2017, two employees came to him with suspicions of accounting irregularities. An investigation subsequently uncovered evidence that fake customers, contracts and invoices were being created to boost Wirecard’s apparent earning potential. Mr Gill informed his supervisors at the company’s headquarters in Munich of the fraud, but it quickly became apparent that the fraud went all the way to the top of the company. Not only was no action taken against the perpetrators, but Mr Gill found himself the victim of intimidation from Wirecard’s senior management.
For three years after he left the company in 2018, it appeared that Wirecard would be successful in hiding the evidence Mr Gill had uncovered. The company continued to go after him, however, undermining his future job prospects. In 2021 his mother, Sokhbir Kaur, who had supported her son throughout his ordeal, took the story to the Financial Times and the company’s accounting fraud was finally exposed.
The relevance of this story for members of our profession is not limited to our roles in establishing effective whistleblower frameworks – it goes deeper than that. As a governance professional, Mr Gill chose to stand up for ethical integrity despite the very real dangers that this exposed him to. In an article published by the Association of Certified Fraud Examiners late last year, Mr Gill summed up what he had learned from the experience. ‘Use your moral compass as your guide. If you have the truth and you have the ethics and the principles in your favour, then I think there’s nothing really to fear.’
The moral compass is of course our Institute’s new logo and Mr Gill therefore speaks to our aspirations as governance professionals. Technical expertise in governance is a basic minimum. Harder to learn, but just as important, is having the courage to act as the conscience-keeper of the organisations we work for.
The good news is that the message on whistleblowing is starting to gain traction – helped of course by the growing regulatory pressure. Hong Kong Exchanges and Clearing Ltd (HKEX) recently upgraded the requirement for HKEX listed issuers to have a whistleblowing policy from a recommended best practice to a new code provision (CP D.2.6). As our cover story this month makes clear, however, the main obstacle to benefitting from the internal early warning system that a whistleblowing framework provides is that employees are often reluctant to speak up about misconduct. Building an effective whistleblowing system is therefore as much about creating a corporate culture that is conducive to whistleblowing as it is about the modalities involved in setting up whistleblower hotlines. The key issue to grapple with is to ensure that potential whistleblowers feel safe from retaliation.
The very real dangers that whistleblowers can be exposed to are highlighted by the story of Pavandeep Gill, the whistleblower who first exposed malpractice at the German payment processor and financial services provider Wirecard. His story is cited by our cover story this month, but I think it bears a closer look.
Very soon after Mr Gill took up his position as Wirecard’s senior legal counsel for the Asia-Pacific region in 2017, two employees came to him with suspicions of accounting irregularities. An investigation subsequently uncovered evidence that fake customers, contracts and invoices were being created to boost Wirecard’s apparent earning potential. Mr Gill informed his supervisors at the company’s headquarters in Munich of the fraud, but it quickly became apparent that the fraud went all the way to the top of the company. Not only was no action taken against the perpetrators, but Mr Gill found himself the victim of intimidation from Wirecard’s senior management.
For three years after he left the company in 2018, it appeared that Wirecard would be successful in hiding the evidence Mr Gill had uncovered. The company continued to go after him, however, undermining his future job prospects. In 2021 his mother, Sokhbir Kaur, who had supported her son throughout his ordeal, took the story to the Financial Times and the company’s accounting fraud was finally exposed.
The relevance of this story for members of our profession is not limited to our roles in establishing effective whistleblower frameworks – it goes deeper than that. As a governance professional, Mr Gill chose to stand up for ethical integrity despite the very real dangers that this exposed him to. In an article published by the Association of Certified Fraud Examiners late last year, Mr Gill summed up what he had learned from the experience. ‘Use your moral compass as your guide. If you have the truth and you have the ethics and the principles in your favour, then I think there’s nothing really to fear.’
The moral compass is of course our Institute’s new logo and Mr Gill therefore speaks to our aspirations as governance professionals. Technical expertise in governance is a basic minimum. Harder to learn, but just as important, is having the courage to act as the conscience-keeper of the organisations we work for.
