Saints or Sinners? Whistleblowers’ Difficult Position in the Asia-Pacific Region
/Whistleblowers can be divisive characters. Celebrated by some as heroes and denounced by others as snitches, few other elements that come up during a fraud investigation can spark such polarizing labels. During her session at the 2016 ACFE Fraud Conference Asia-Pacific, Jessica Sidhu, CFE, Llb, explored the precarious position whistleblowers are in. “Is a whistleblower a good person or a bad person? Is he a traitor or is he a patriot?” she asked the audience. “Only when you’ve answered this question will you be able to take a whistleblower seriously.”
The topic was especially pertinent to discuss during the conference in Singapore, as the government of neighboring Malaysia has been involved for a few years with the 1Malaysia Development Bhd (1MDB) scandal. Global investigators believe that millions of dollars from the state investment fund 1MDB entered Malaysian Prime Minister Najib Razak's personal bank accounts.
Sidhu herself was formerly head of administration and finance at the Malaysian Attorney General's Chambers (AGC) and was involved with a special task force investigating various financial cases, including a probe into 1MDB. She was reportedly fired “suddenly” in late 2015 and had her permanent residency revoked by the Immigration Department of Malaysia.
During her remarks at the conference, Sidhu discussed Andre Xavier Justo, a former PetroSaudi International executive who is believed to be the main whistleblower in the 1MDB case. He allegedly leaked documents to independent media site Sarawak Report, which established a link between Prime Minister Najib and the missing funds from 1MDB. Justo is currently in jail but is expected to be pardoned at the end of 2016.
Sidhu explored the challenges that whistleblowers face from the very first decision they make: whether to tell someone what they know or suspect. She said, “Sixty-five percent of whistleblowers are insiders and eighty percent of them have approached [their bosses or oversight bodies] internally, but were rejected or turned back.”
It is common for even the most well-intentioned investigators to ignore or discount the reports of whistleblowers for a variety of reasons. Sidhu described a situation her team experienced where one male employee made multiple reports against a female coworker for suspected fraud. Each report was investigated; however they were unable to find any evidence to back up his claims until the tenth report.
“Maybe he just had an agenda against this lady colleague of his, but nevertheless, our job is to investigate,” she said. “Now came the tenth report, and by this time everyone is sighing ... and it just seems like a wild goose chase, and guess what? He was absolutely correct. I don’t know how she managed to cover her tracks nine times but he was right all along … we were listening but we just didn’t have enough to go on.”
Even when whistleblowers are heard, they often face doubt, suspicion and even hostility. Sidhu said whistleblowers are often gaslighted, or manipulated into doubting their own memory, perception and sanity. “You’ll find this happens very often to whistleblowers,” she said. “It may range from the denial by the [fraudster] that a previous [fraud] incident ever took place up to the staging of bizarre events by the [fraudster] for the purpose of disorientating the [whistleblower].”
While a number of countries, such as the U.S., offer wholescale legal protection for whistleblowers, it is not that simple in all jurisdictions. “In Malaysia if you are whistleblowing within the organization, you will be safe, but if you are whistleblowing outside of the organization, you will be afforded no protection,” Sidhu said.
While whistleblowing remains a contentious topic, data from the 2016 ACFE Report to the Nations on Occupation Fraud and Abuse shows that tips are consistently the top fraud detection method in every region. In the Asia-Pacific region, they accounted for the detection of nearly half of the fraud cases reported. As fraud examiners, regardless of region, it is important to ensure that your organization has policies in place to encourage whistleblowers to come forward in order to create an effective anti-fraud program.