SEC’s proposed whistle-blower policy to award ‘bounty’ to corporate staff spilling beans
Amid a growing number of scams and corporate swindling in listed firms, Sri Lanka’s securities watchdog is to make it mandatory for listed firms to have a whistle-blower policy for their employees and directors in a bid to take would-be perpetrators to task, officials said. “This is popular in many developed nations and provides an opportunity for employees to report any misdoings and misconduct within their company. We want to introduce it in the new laws (Act),” a Securities and Exchange Commission (SEC) official told the Business Times this week. He said those who alert the authorities will be rewarded with a ‘bounty’. “We wanted to make the extent of trouble attractive for the staff member and in terms of this gleaned some best practices from other jurisdictions.
So we came up with a bounty for those who ‘shout-out’,” he said. He said that the US has been encouraging at a national level both the incidence of whistle-blowing and the protections and incentives that are open to whistle-blowers over a long period. He said that India has also adopted this policy through the Whistle-Blowers Protection Act, 2011, an Act of the Parliament of India which provides a mechanism to investigate alleged corruption and misuse of power by public servants and also protect anyone who exposes alleged wrongdoing in government bodies, projects and offices. The wrongdoing might take the form of fraud, corruption or mismanagement. The Act will also ensure punishment for false or idle complaints.
The whistle-blower policy provides a guided process for any employee to make a written or verbal complaint on any familiarity or suspect of illegal or unethical employment or business practices exercised by a colleague in any capacity in their company. According to the official, a whistle-blower policy allows the SEC to minimise the harm to investors, better preserve the integrity of the capital markets, and promptly hold accountable those responsible for dishonest conduct. The employee is assured of confidentiality and anonymity and the employer’s onus is to take necessary safeguards to protect whistle-blowers from victimisation according to the proposed provisions in the new Act. The official said that while checks would also be required against any misuse of this facility, the move to come forth with discriminating information won’t be taken lightly; hence original information by a whistle-blower qualifies for a ‘bounty’.