The African continent including South Africa is currently plagued by a culture of corruption that in Lala Camerer’s (1996: 48) words is "more damaging to the nation’s psyche than visible, violent street crimes." Ethical resistance, or whistleblowing, is an important tool in fighting corruption and the ethical lassitude that accompanies it. For whistleblowing to be an effective tool, however, it is important to take into account the social context in which it takes place. This paper deals with whistleblowing in the South African context and the central argument is that whistleblowing should be institutionalised as a means of dealing with the power struggle that the act of whistleblowing engenders.

We intend to address the topic of whistleblowing in two parts. We will begin by telling you the story of a South African whistleblower. The story constitutes a recent case study concerning whistleblowing in the sphere of financial regulation. The case study method is used because of the richness of data and the advantage of depth of analysis. The limitation of this method is that it focuses on the case in point and the results can therefore not be generalised. However, in this particular case the patterns that were found are confirmed by various other studies (Glazer & Glazer 1989; Jos et al 1989; Rotschild & Miethe 1994).

The second part of this paper is an analysis of the case study in terms of the theory of whistleblowing. An important part of the analysis is the way in which institutions use different forms of power in order to prevent or deal with whistleblowing. Organisations tend to use all means in their power to avoid addressing the issues raised by the whistleblower. These power plays should be taken into account when designing policy and institutional support for the effective use of whistleblowing as a tool for exposing corruption. The paper concludes with an evaluation of existing and envisioned support mechanisms and especially the role of the state in the protection of whistleblowers.

In March 1989 Judge L T C Harms, chairman of a judicial commission of inquiry published a report in which he commented on the functioning of the South African exchange (currency) control system (Republic of South Africa 1989). The Commission found that officials of the Reserve Bank ("the Bank") did not read the documents accompanying applications for foreign exchange received from the commercial banks, or if they did, they did so uncritically (Paragraph 131(b)). The Commission found that there was confusion about the mechanism of the exchange control system within the Bank and also between the Bank and the commercial banks (Paragraphs 128-130).

The value of the fraudulent foreign exchange applications approved by the Bank in the matter investigated amounted to over R100 million. The Commission’s report received much publicity at the time and the press reported a widely held view that the exchange control system was functioning dismally and ineffectively (e.g. Finance Week Jan 19-25, 1989).

The Bank’s management maintained that there was nothing fundamentally wrong with the system. A journalist remarked:

To put the public at ease, the Bank announced certain changes in its internal management and an external advisory committee was appointed.

George, an investigator in the Exchange Control Department of the Bank and a qualified attorney, agreed with the Commission about the confusion that existed relating to the functioning of the exchange control system. He felt that the Bank was not applying due diligence when considering applications. He was also concerned that the confusion in the system was seriously damaging the integrity of the criminal justice system as the prosecuting authorities could not cope with the many complex investigations relating to exchange control contraventions.

The Exchange Control Department was the biggest department in the Bank, but George was the only qualified attorney in that department. There were no chartered accountants. The fact that George felt himself bound by the norms of his profession and received no support or understanding in this regard, might have contributed to the problems that developed.

In September 1989 a colleague referred a suspicious looking application in the name of Mr X to George for legal advice. George noted that the commercial bank that submitted the application on Mr X’s behalf did not recommend an approval (the rules of the Bank required the commercial banks to state whether or not they recommended an approval). The previous year the Bank had reported Mr X to the Police for an alleged exchange control contravention. Knowing the background George, with the consent of his colleague, sent a letter to the commercial bank asking for documentary verification. Bank Management, however, acting on the advice of George’s supervisor and without consulting George phoned the commercial bank and withdrew the letter. The application was then partly approved at a meeting in the Bank with Mr X. George was not invited to be present.

In February 1990 George wrote a memorandum to express his concerns about the perceived lack of due diligence. The memorandum met with total silence from management. When he continued to push the issue, his supervisor gave him an oral warning in terms of the Bank’s disciplinary code for allegedly not observing the correct communication channels. Four months passed before George eventually succeeded in getting an interview with the Deputy Governor of the Bank who gave permission for an external legal opinion to be obtained in an apparent effort to gain more clarity on the Bank’s legal duties.

In the mean time tension mounted. George’s supervisor, whose task it was to seek the external opinion, waited another four months before he reluctantly took the necessary steps. He gave the instruction to the Bank’s own attorney at a meeting to which George was not invited.

The Bank’s attorney wrote a generalised opinion and declined to comment on the way Mr X’s application had been dealt with. He continued:

The Bank did not obtain a further independent opinion from an adviser who had the necessary experience. George suspected that the Bank would rather let matters stand as they were.

Five months later, in March 1991, George after careful consideration of the external opinion wrote the following in a memorandum to his management:

Shortly afterwards George’s supervisor gave him a written warning in terms of the disciplinary code for allegedly not adhering to the communication channels.

In January 1992 George discussed the way in which exchange control applications were being processed with the Attorney-General (head of criminal prosecution) in Johannesburg who shared his concern. The Attorney-General wrote a letter to the Bank to request a meeting with senior Bank officials. Management regarded George’s conduct as reprehensible behaviour, a breach of trust and a breach of the secrecy provisions of the Reserve Bank Act. George was transferred to another section. The transfer was a constructive dismissal as no post existed for him in the new section.

George took on his management in a grievance procedure with no success. Realising that his career at the Bank was seriously threatened, he in February 1993 informed the Governor of the Bank of his intention to discuss the legal duties of the Bank, including the external legal opinion with the Minister of Finance. He furnished the Governor with a draft of the letter that he proposed to send to the Minister. The reaction of the Governor’s advisory committee was that George should accept the "culture" of the Bank.

Three months later George arranged a meeting with the Director-General of Finance to hand over his letter to the Minister. The Governor declined to attend the meeting or to send a representative. He objected to the proposed presence of George’s union representative (no staff member would dare to be associated with George for fear of reprisal) and said that the Minister and the Director-General "had no responsibility for the internal personnel matters of the Reserve Bank".

Suffering from the effects of stress, George left the Bank three months later in July 1993 on the basis of a "redundancy" and three months salary. He had to sign a secrecy undertaking. Nothing came of his approach to the Minister of Finance.

While still at the Bank, George received an offer from the Financial Services Board ("FSB") a statutory organisation in Pretoria that oversees financial services. George was well aware that a Deputy Governor of the Bank was chairman of the FSB board. On joining the FSB, he heard that the chairman had made negative remarks about his appointment.

In April 1994 South Africa had its first democratic election. In the spirit of a perceived new openness George, in June 1995, presented a document to a congress on economic crime in which he discussed the Bank’s perception of its legal duties (Alant 1996: 130). At the request of the editor of an FSB magazine George submitted an extended version of his paper for publication. The editor accepted the article, but later decided to refer the article to the Bank. The Bank objected and the article was not published.

In December 1995 George submitted a complaint against the Bank to the Public Protector. He complained that the Bank had failed to properly apply the exchange control regulations and that he was improperly prejudiced when his job was declared redundant. He expressed the fear that his employment at the FSB could also be prejudiced in view of the chairman’s negative attitude towards him.

The documents that George submitted later, once secrecy issues had been dealt with, to the Public Protector contained examples of how clearly suspicious applications were summarily approved by the Bank, resulting in major losses of foreign exchange. He showed how, for instance in 1987/88 the Bank received numerous applications in the name of a company called Swiftsure Limited for permission to transfer abroad large amounts of foreign exchange as payment for services. The commercial bank that submitted these fraudulent applications did not recommend approval. The Bank forthwith approved the applications. The millions of Rand that was lost consisted of funds provided by members of the South African public under the impression that they were investing in a bona fide boat building enterprise in Cape Town.

George enjoyed his work as an Inspector of Financial Institutions at the FSB and received excellent performance ratings. In March 1996 the FSB sent him to London to consult with the British financial regulators. This was the highlight of his career at the FSB.

In April 1996 things took a bad turn for George. The employment contract of the Executive Officer of the FSB, who had also had differences with Bank officials expired and was not renewed. These differences came to light during an investigation by the Commission of Inquiry into the affairs of the Masterbond group and investor protection in SA under the chairmanship of Judge H C Nel ("the Nel-Commission") (Beeld, 24 May 1994). A new Executive Officer known at the Bank was appointed. The chairman of the FSB at this stage was the same Deputy Governor of the Bank.

George’s paper to the congress on economic crime referred to above, was the main reason why he was also subpoenaed to testify before the Nel-Commission. During his testimony in August 1996 he testified about the functioning of the exchange control system and specifically the legal opinion furnished by the Bank’s attorney. He was also obliged (under questioning) to express opinions about the FSB and financial supervision in general.

In October 1996 the Governor of the Bank wrote to President Nelson Mandela to complain about statements made by Judge Nel to George and other witnesses when they gave their evidence.

A month later George received a sudden and drastic decrease in his annual performance appraisal rating - to half that of the 1995 rating. He was criticised in writing because of what he had said to the Commission about the FSB (the Bank was not mentioned) and he was accused of incompetence and insubordination pertaining to a range of matters.

A further complaint in the performance appraisal warrants specific mention. George had previously expressed concern that his management had not forwarded an inspection report to the prosecuting authorities. The report contained a finding that the managing director of the financial institution concerned had committed a criminal act (mismanagement of client funds). During the performance appraisal he was accused of disrespect and insolence for having objected to his management’s conduct in this regard. Interestingly, and rather ironically, the same suspect in January 1997 (two months after the relevant performance appraisal) defrauded the Beith Process & Phototype CC Pension Fund of R1,6 million.

George, assisted by the same trade union as before, disputed the performance appraisal. The Executive Officer instructed an FSB manager to conduct an investigation with regard to the issues raised in the disputed appraisal. The manager did not identify the witnesses he spoke to during the course of his "investigation" and the witnesses were assured anonymity. The report, finalised in February 1997 contained vague findings that were devastating to George’s career, but did not disclose the evidence on which the findings had been based. George in two memoranda on the subject criticised the investigation and rejected the report.

In March 1997 the Executive Officer wrote to the Nel-Commission to record his disagreement with what George had said to the Commission. The Secretary of the Nel-Commission replied to the letter and tried to put George’s evidence into perspective.

In July 1997 the Executive Officer stated that in his view the relationship between the FSB and George had broken down irretrievably. George’s attorneys (appointed by the trade union) requested reasons for the statement and repeated previous requests for the Executive Officer’s reaction to the improper procedure of the manager’s "investigation" and George’s rejection of the report.

George informed the Public Protector that the FSB had penalised him in a performance appraisal because of what he had said to the Nel-Commission. He explained that he was again being pushed out of his job. The Public Protector acknowledged receipt and said that the matter would receive attention in due course, but he did not offer to intervene.

In August 1997 the FSB formally refused to react to George’s criticism of the manager’s "investigation" or to explain its allegation of an irretrievable breakdown, and by implication objected to the involvement of George’s attorneys. The attorneys explained that the FSB had a legal duty to provide the information. They also re-affirmed George’s right to have external legal representation.

It is necessary to stop our discussion of this history for a moment to say something about the rights of an employee under the FSB’s grievance procedure. The procedure provides that an employee who feels aggrieved by a decision of the Executive Officer may appeal to the chairman of the FSB board. Theoretically George should therefore have been able to appeal to the chairman regarding, for instance, the refusal of the Executive Officer to furnish the information requested. In view of the attitude of the chairman towards George as set out above, he however felt that an appeal to the chairman would not serve any purpose.

In September 1997 the FSB notified George of its intention to bring disciplinary charges against him relating to the matters mentioned in the disputed performance appraisal. The chairman of the disciplinary hearing would not be an independent person, but a member of the FSB board. The disciplinary code did not allow for external legal representation.

In November 1997 the FSB informed George that his salary increase for 1997 (that had been withheld by the FSB) would only be paid to him as part of a retrenchment agreement. By this time George had again been working in a very stressful environment for more than a year. He dreaded the next annual "performance appraisal" meeting, the proposed disciplinary action and the further inevitable labour-relations proceedings. George felt that the real reason for the attack on him was reprisal by the Bank and the FSB for resisting and exposing irregularity. In the absence of an investigation by the Public Protector the real reason would not become known. He felt that the FSB, supported by the Bank had succeeded in creating a farcical labour-relations dispute to get rid of an employee who posed a threat to vested interests. Further labour-relations proceedings would not restore the damage to his professional reputation and even if such proceedings did result in a bigger retrenchment package, it would not be worth the stress and humiliation that lay ahead. He accordingly entered into the proposed retrenchment agreement. It contained a secrecy clause. He left the service of the FSB at the end of 1997 with nine months salary.

In March 1998, 27 months after George had lodged his complaint against the Bank the Public Protector for the first time called him in for an interview. It was suggested to him that in view of the staff shortage at the Public Protector’s office the investigation of his complaint about the Bank would have to be finalised before a complaint against the FSB could be considered. The Public Protector then commenced an inquiry at the Bank relating to George’s complaint.

In August 1998 the Governor of the Bank wrote letters to George in which he referred to the Public Protector’s investigation. The Governor accused George of breaching his secrecy undertaking to the Bank and threatened to take legal action against him for having copies of Bank documentation in his possession.

In November 1998 and January 1999 George furnished the Deputy Minister of Finance and the Public Protector with details of the attack on him by the FSB. The FSB reacted in a letter by accusing him of making disparaging or negative remarks about the FSB to the parties concerned in conflict with the terms of the retrenchment agreement. As with the letters received from the Governor of the Bank referred to in the previous paragraph, George argued that the validity of the settlement agreement was in question because of the unlawful methods employed to push him out of his job. The secrecy clause could in any event not be used to cover up irregularities.

In the ten years that he spent at the Bank and the FSB George was never promoted.

Over the years he discussed his plight with Members of Parliament of the African National Congress, the National Party, the Democratic Party and financial journalists, but they were generally not prepared to become involved. One article appeared in a financial journal after he left the Bank. It was written in an uncritical manner and there was no public reaction to it (Financial Mail, November 12, 1993).

The Public Protector’s inquiry at the Bank is still continuing at the date of submission of this paper.

Whistleblowing is generally defined as "…the disclosure of illegal, unethical or harmful practices in the workplace to parties who might take action" (Rothschild & Miethe 1994:254). In general, an activity is seen as whistleblowing if the disclosure of the information is considered to be in the public interest. This would entail information about criminal activity, a contravention of any statutory requirement, improper or unauthorised use of public and other funds, miscarriage of justice, abuse of power, maladministration, danger to the health or safety of any individual and any other misbehaviour or malpractice (Kloppers 1997: 240-241). The information can also refer to personal harm reportedly done to the whistleblower. The whistleblower is usually a member or former member of the organisation about which information is disclosed (Dandekar 1991: 90).

Some theorists argue that whistleblowing only takes place when the information is placed on record publicly. Dandekar (1991: 91), however, argues that "…managers define whistleblowing to include going outside the normal chain of command even if not actually going public with damaging information". The reporting of information can therefore be internal where the whistleblower talks to people higher up in the organisation or external where it is reported to the media, enforcement agencies or public interest groups (Weiss 1994: 207). The correct procedure for a whistleblower to follow is often described as "internal first, law enforcement agencies second, and news media last" (Callahan & Collins 1992:942).

Let us now analyse the nature of the whistleblowing referred to in our case study.

While at the Bank George first tried to argue the issue of due diligence with his management. When he realised that the external legal opinion had been manipulated and that he was steering into troubled waters with his management, he talked to an Attorney-General who was sympathetic to his cause. This time the full force of the Bank was unleashed upon him. It is clear that George rather patiently over a period of two years attempted to raise his objections internally before speaking to the Attorney-General. What George, after leaving the Bank said to a conference on economic crime and the Nel-Commission about the Bank can in our view also be regarded as whistleblowing.

George’s whistleblowing at the FSB was of a different nature. He did not "take on" his management in the same way as he did at the Bank by pushing for an external legal opinion or complaining to the Minister. He had no fights with his management. What he said to the Nel-Commission about the FSB was only the expression of his own opinion relating to matters of financial regulation. The objection about the inspection report not forwarded to the prosecuting authorities was merely a verbal expression of concern to his supervisor.

What the FSB experience does in our view show is how management, once it decides that an employee has become a threat, may use a mere opinion to a judicial commission of inquiry or expression of concern to a supervisor to launch a full blown attack on the employee. It becomes a matter of "everything goes" in order to get rid of the employee.

In a front-page article in the Saturday Star of 5 February 1994 it was said that officials of the Attorney General’s office in Johannesburg were investigating 44 companies in regard to exchange control fraud. These companies appeared to be involved in fraudulent applications made to the Bank between 1987 and 1988. The initial amount involved was R200 million, but the final amount could be double that, according to the report.

Some journalists believe that the instances of exchange control fraud of which the authorities are aware might only be the tip of an iceberg (Finance Week, January 19-25, 1989).

It is clear that our whistleblower’s concerns about the lack of due diligence at the Bank was not only legitimate, but that the scale of the fraud must have had a disastrous effect on societal values and the functioning of the criminal justice system.

In the case of the FSB as well, the tragedy of the loss of R1,6 million to the Beith pension fund could most likely have been avoided. All it needed was for the management of the FSB to forward the relevant inspection report to the prosecution authorities and to authorise the inspectors to provide them with the customary assistance.

It is important to keep in mind that a lack of due diligence could result in maladministration and eventually pave the way for corruption. A definition of corruption submitted to the Public Sector Anti-Corruption Conference held between 10-11 November 1998 in Cape Town reads as follows:

The irony of whistleblowing is that the whistleblower usually expects the organisation to respond positively to his or her report of corruption or maladministration. What often happens, however, is that the reporting of this information is met by fierce retaliation from management. This is especially the case where "…the whistleblower’s information points to systemic abuses in the organization’s way of doing business, as opposed to a one-time ‘bad apple’ claim…" (Rothschild & Miethe 1994: 264). Our whistleblower’s objections at the Bank clearly exposed systemic abuse.

Organisations retaliate in various ways. Glazer & Glazer (1989: 133-166) discuss blacklisting, dismissal, transfer, personal harassment and sexual exploitation as ways used by organisations to discredit and destroy whistleblowers. Rothschild & Miethe (1994: 265) argue that any challenge to management’s judgement is usually immediately followed by retaliation. The employee would be fired immediately or processes would be set in motion, which would justify the termination of employment such as abruptly downgrading evaluations of their job performance.

Organisations often isolate the whistleblower as a form of intimidation. They do this in order to separate whistleblowers from their peers, subordinates, and superiors. Whistleblowers therefore have less impact on the organisation and cannot mobilise any support for their position amongst their colleagues (Gummer 1985: 97).

The case study before us is a text book example of this kind of retaliation. While at the Bank, George was given an oral and later a written warning for allegedly not adhering to the communication channels. After speaking to the Attorney-General he was constructively dismissed by transfer to another section where he was overqualified for the post. He lost his private office and was moved to an open-plan environment. He had no more contact with investigators or lawyers in the department. Eventually he had no alternative to accepting a redundancy package. Interestingly, the Bank issued him with a certificate stating that he had resigned from the Bank of his own accord.

The Bank unsuccessfully tried to prevent George from being employed by the FSB. The Bank, however, bided its time until a new Executive Officer was appointed. George was still considered a threat. With the support of the new Executive Officer the whole cycle started again. George’s job performance was downgraded, character assassination resulted from a secret "investigation", the Executive Officer stated that the relationship had "broken down irretrievably" without providing any substantiation for his statement, the threat of a disciplinary hearing, the withholding of George’s salary increase, etc. Eventually this again led to a parting of the ways, this time by means of a "retrenchment" package.

Central to the power struggle between the whistleblower and the employer is the choice of battlefield. The whistleblower wants attention to be focused on his or her complaint, whereas the employer prefers to fight a separate battle in the labour-relations field. In George’s case management of both organisations attempted to classify the dispute as an internal matter. George’s frustrations at the Bank were ascribed to a personality clash with his supervisor and an inability to accept the culture of the Bank. When George wanted to see the Director-General of Finance, the Governor of the Bank argued that the Director-General and the Minister had no responsibility for the "internal personnel matters" of the Bank. The Executive Officer of the FSB regarded the opinions expressed by George in his evidence to the Nel-Commission as a performance appraisal issue and he objected when George involved an attorney in his defence.

It is clear from the case study that George could not manage to focus the employer’s attention on his complaint. Both the Bank and the FSB refused to deal with George’s memoranda. At the Bank George waited in vain for his management’s reply to his memorandum of February 1990 or any discussion about the way in which his management had dealt with the application of Mr X. The Executive Officer of the FSB was never prepared to debate the opinions expressed by George during his evidence to the Nel-Commission and refused outright to reply to his memoranda. The employer defined the issues to be addressed and through prolonged pressure on the whistleblower exhausted him to the point where he was prepared to settle on the employer’s terms. Can a settlement agreement signed under these circumstances be enforceable? The answer is no, because the employer used illegal and improper means to induce the employee to enter into the settlement.

Seeing that the union also focused on labour-relations issues in their advice to George it may appear as if the union went along with the employer’s choice of battlefield. We however doubt whether the union had much of a choice in this regard.

We believe that only an external investigative agency such as the Public Protector can investigate a whistleblower’s complaint effectively. Unions and the organs created by the Labour Relations Act do not have the powers and cannot be expected to perform the functions of agencies such as the Public Protector. In the absence of such investigation the employee is bound to end up where our whistleblower ended up – signing a settlement agreement to escape from the prolonged stress of an artificially created battle.

Literature on whistleblowing suggests that whistleblowers should try to rebuild their lives through finding another job, pursuing a new career or opening a private practice (Glazer & Glazer 1989: 206-237). George in our case study tried to find another job in the corporate environment. After 15 months he came to realise that despite his qualifications and experience in financial regulation he was going to find it difficult to continue working in this field. Prospective employers were concerned that he was twice retrenched. There can be no doubt that they made enquiries at the Bank and the FSB on an off-the-record basis. Initial encouraging and positive interviews were then typically followed by silence from the prospective employers.

The act of whistleblowing identifies serious deficiencies in the structure of an organisation. Davis (1989:7-8) points out that whistleblowing is evidence of the inadequacy of the communication channels in the organisation. It is also evidence of the failure of management to deal satisfactorily with the whistleblower’s complaint. Moreover those against whom the complaint is laid have to spend a lot of time in damage control and explanations of what has happened. Whistleblowers move from being loyal employees to people who feel that the organisation has betrayed them. This means that they now distrust the organisation and do not recognise the authority of the organisation. The whistleblower "is now an enemy within" (Davis 1989: 8). The act of whistleblowing also has a detrimental effect on interpersonal relations between the whistleblowers and their co-workers. Some might become enemies, others might avoid the whistleblower in order not to become tainted, others might start looking at the whistleblower "as they would someone dying of cancer" (Davis 1989: 8). The whistleblower therefore becomes isolated in the organisation, a loner, a pariah.

We suggest that if this is the way in which companies respond to whistleblowing, any attempt to reduce fraud and corruption in South African society by this means would have to be accompanied by measures to protect whistleblowers against retaliation. The state plays an important role here.

When considering what measures the State can implement to empower the whistleblower, it is important to discuss the relevant provisions of the Open Democracy Bill [B67-98] that was submitted to the South African Parliament in 1998. According to the Bill the proposed Act will apply despite the provisions of any other legislation. We will first briefly summarise the most important provisions of Part 5 of the Bill, which relates to the protection of whistleblowers.

The Bill provides for the protection of a person who in good faith discloses contraventions of the law, corruption, dishonesty or serious maladministration in a governmental body (widely defined) to certain entities. These entities (hereafter referred to as "the named entities") are a committee of Parliament or of a provincial legislature, the Public Protector, the Human Rights Commission, the Auditor-General and an Attorney-General. Disclosure of information to the news media must take place on clear and convincing grounds (for which the informant bears the burden of proof) that it is necessary to avert an imminent and serious threat to the safety or health of an individual or the public. Disclosure is also allowed in certain circumstances when the public interest in disclosure clearly outweighs any need for non-disclosure.

The Bill proposes that a person, who has made a disclosure in the aforementioned way, may not be detrimentally affected in respect of his or her employment as a result thereof. An official of a governmental body who has made a disclosure can also ask for a transfer to another division or governmental body.

The protection applies whether or not the person who disclosed the information concerned has used or exhausted any other applicable external or internal procedure. A provision in a contract of employment or other agreement, which excludes this protection, is void.

If a contravention or threatened contravention is alleged, the aggrieved person may lodge an application to the High Court for relief. The Human Rights Commission may assist illiterate persons and may appoint a person to represent an individual who has lodged an application for relief.

The Bill does not extend whistleblower protection to the private sector and it does not provide for the whistleblower to remain anonymous.

Protection under the Bill is only afforded if the information is given to one of the named entities. If the whistleblower informs a person within the relevant governmental body, the protection under the Act against reprisals does not apply.

There is an important message here for an employee of a governmental body who, perhaps out of loyalty to the employer decides to first inform a person within the organisation. If that person does not react favourably and within a short time, the employee might be well advised to inform one of the named entities without delay. Failure to do so would give management the time to create a dispute in the labour-relations field in an effort to force the employee out of the system. In this way the whistleblower’s complaint becomes entangled with other issues. The fact is that whistleblowers, often naïvely believe that "somebody in the organisation will eventually support me", and for that reason may to their detriment postpone informing one of the named entities.

The failure of a named entity to take action may of course give the employer that additional confidence to push the employee out of his or her employment. The labour-relations dispute may eventually be brought before an arbitrator or judge in terms of the South African Labour Relations Act. The arbitrator or judge may regard the failure of the named entity to act as an indication that the named entity did not view the employee’s complaint as having enough merit to warrant an investigation. An incorrect decision by a named entity that the employee had experienced no prejudice may have the same negative effect.

The fear that these named entities may be understaffed or otherwise unable or unwilling to deal with the whistleblower’s complaint, is in our view a very real one.

It is interesting to note that none of the whistleblowing actions performed by George while he was at the FSB would qualify for protection under the proposed Act. The implication is that somebody who blows the whistle while giving evidence under oath after being subpoenaed is, from a protection point of view at a disadvantage to somebody who merely discloses an irregularity to one of the named entities. This is an untenable situation. We suggest that consideration be given to an amendment of the proposed Open Democracy Act in this regard. In the mean time and provided the Bill becomes law, an employee of a governmental body who after being subpoenaed realises that he or she will disclose an irregularity during evidence, would be well advised to first make the disclosure to one of the named entities.

Gummer (1985:99) refers to another purpose of retaliation by the employer that is of particular significance to the judicial system. He mentions that while the primary goal of retaliation is to silence or discredit the whistleblower, an organisation may also retaliate in order to discourage potential whistleblowers. This may impact on the quality of evidence that employees may thereafter present to the law courts and commissions of inquiry.

It may happen that a former employee of a governmental body wants to report an irregularity committed by his or her former employer to the Public Protector or some other entity. The person now realises that there is a secrecy clause in an agreement between himself and the former employer or a statutory provision prohibiting disclosure of the information. We believe that such secrecy provisions cannot legally be used to prevent or delay the disclosure of irregularity to an investigating agency. Camerer (1996: 50) puts it as follows:

Fact is, however that employers, while denying that they have committed any irregularity, may use secrecy provisions in an attempt to intimidate former employees as is evident from the case study. The Bill provides no protection against this sort of intimidation or other reprisals by employers. We believe that this is a serious shortcoming.

The drafters of the Open Democracy Bill did not favour vesting the responsibility to protect whistleblowers in a single entity (Task Group on Open Democracy 1995: 23). We believe that the protection of whistleblowers is a highly specialised function that has to be performed with speed and understanding. An investigation carried out once the employee has lost his or her job greatly reduces the value of protection. A superficial enquiry by an entity that is not equipped for the job may do more harm than good.

One has to consider that a specific named entity, because of the nature of a complaint may not be in a position to investigate the complaint at all. Serious maladministration, for instance is normally not a criminal offence. It is difficult to visualise a Director of Public Prosecution (previously called an Attorney-General) investigating an activity that does not in itself constitute a criminal offence.

The media is generally considered to be an important ally in the whistleblower’s struggle, but does not always perform as expected. In a discussion of the "Absa lifeboat scandal", the Mail & Guardian (February 5-11, 1999) comments as follows:

We would suggest the formation of an entity that specialises in and takes final responsibility for whistleblower protection. Such an entity can support and guide the whistleblower protection activities of the named entities and conduct investigations in instances where the named entities are unable or unwilling to act.

Davis argues that the creation of formal protection will not prevent bias from building up against the whistleblower. Instead of focusing all attention on laws and the formal protection of whistleblowers, Davis (1989:9-16) believes that organisations should attempt to "avoid the tragedy of whistleblowing". The main way in which this can be achieved is by institutionalising a climate where the reporting of bad news is encouraged as part of the regular way of going about the organisation’s business. This implies that the organisation should be restructured in order to facilitate the disclosure of bad news. This also means that the communication channels of the organisation should be opened up so that nobody is in a position to prevent bad news from filtering through to the highest structures. These highest structures should be required to deal with the bad news instead of just sweeping it under the rug. It is clear from our case study that although the information eventually reached the top, it was ignored and the whistleblower victimised.

The question may be asked to what extent it is really necessary to rely on whistleblowing to expose irregularity. This question may be particularly relevant to the financial sector in view of the fact that public companies and statutory corporations have external auditors who have a statutory duty to disclose irregularities encountered during the auditing process.

The Nel-Commission found "an astonishing degree of dishonesty, inefficiency, lack of professional integrity and lack of independence" on the part of some of the chartered accountants involved with the Masterbond group (Republic of South Africa 1997: 9). In another context the Commission found that the Bank donated money to certain commercial banks on the pretext that these were loans. The Commission found that the auditors of the Bank and the auditors of the recipients must have been aware of the true state of affairs, but they none the less did not disclose them. The Commission comes to the conclusion that the Bank’s conduct could only have had a negative influence on the auditing profession in South Africa (Republic of South Africa 1997: 68). It would appear as if auditors are not good whistleblowers.

As far as financial supervision is concerned, the Commission points out that although the Bank and the FSB have formal inspection powers, very few inspections are carried out. The South African Registrar of Companies has no inspectorate at all. The Commission concludes that adequate supervision under these circumstances is impossible (Republic of South Africa 1997: 38 – 39).

One may ask whether the deficiencies referred to above cannot be remedied without relying on whistleblowing. The allocation of more money to financial supervision, the appointment of lay members to the regulating bodies of professions and the appointment of auditors for each significant interest group are some of the proposals discussed by the Nel-Commission (Republic of South Africa 1997: 41, 77; 1998:40). The South African Institute of Chartered Accountants has for some time argued that accounting standards should be given the force of law (Sunday Times February 21 1999). While these measures certainly have their own merit, they are at present only proposals. Fact is that there are serious deficiencies in the framework of financial supervision and financial reporting. Against this background the act of whistleblowing is a potentially very powerful tool in the process of transforming authoritarian bureaucracies.

South Africa’s Deputy Executive President, Mr T M Mbeki is acknowledged as the author of the concept of the African Renaissance that also serves as the theme of this conference. Perhaps it is fitting that it was the same man who at the Public Sector Anti-Corruption Conference in Cape Town last year suggested that the practice of whistleblowing should be institutionalised.

The idea of an open democracy is one of the central ideas of the South African constitution. Efforts to achieve this are hampered by the authoritarian tradition and secretive culture inherited from the previous regime (Task Group on Open Democracy, 1995: 1-3). The Truth and Reconciliation Commission, which was part of the transition process, focused on political violence. Fraud perpetrated by the apartheid government and its agencies was not investigated. The extent to which fraud remains hidden will unfortunately influence the ability of South Africa to bolster the African renaissance. The Mail & Guardian (February 5 to 11 1999: 16) in referring to South Africa’s financial system puts it as follows:

The problems facing the whistleblower pose challenges in the fields of law, sociology, psychology and ethics. A multidisciplinary approach would therefore be necessary if whistleblowing is to be successfully institutionalised.

We conclude that in combating fraud and corruption the state should provide formal whistleblower protection. The message to organisations must be clear: They cannot hide unethical or harmful practices in the workplace behind bureaucratic principles, retrenchments and secrecy clauses. Organisations should be required to provide proof that they have investigated the whistleblower’s complaints and have dealt with the merits. The creation of a support group and the possibility of providing free legal services to whistleblowers should also be investigated.

The state must also encourage organisations to create and strengthen a climate of openness in the work environment. It will then not be necessary for any employee to endure the agony of having to blow the whistle. This is essential especially in the case of public sector institutions but should also be promoted in the private sector.

Alant, N.G. 1996. "Legal duties of the South African Reserve Bank as an administrator of financial systems with specific reference to the prevention and investigation of economic crime." In Transactions 25: Economic crime in Southern Africa, edited by J.J. Henning. Bloemfontein: UOFS.

Beeld. 1994. 24 May.

Callahan, E.S. & Collins, J.W. 1992. "Employee attitudes toward whistleblowing: management and public policy implications." Journal of Business Ethics, 11(12): 939-948.

Camerer, L. 1996. "Ethics and the professions: blowing the whistle on crime." Africa Security Review, 5(6): 48-54.

Dandekar, N. 1991. "Can whistleblowing be FULLY legitimated? A theoretical discussion." Business and Professional Ethics Journal, 10(1): 89-107.

Davis, M. 1989. "Avoiding the tragedy of whistleblowing." Business and Professional Ethics Journal, 8 (4): 3-19.

Finance Week. 1989. "Control furore: SA can’t plug forex barrier holes without risking big new problems." January 19-25: 7-8.

Financial Mail. 1993. November 12.

Glazer, M.P. & Glazer, P.M. 1989. The whistleblowers: exposing corruption in government and industry. New York: Basic Books.

Gummer, B. 1985/86. "’Committing the truth’: whistleblowing, organizational dissent, and the honourable bureaucrat." Administration in Social Work, 9(4): 89-102.

Jos, P.H.,Tompkins, M.E. & Hays, S.W. 1989. "In praise of difficult people: a portrait of the committed whistleblower." Public Administration Review, 49: 552-561.

Kloppers, P. 1997. "Behoort die whistle blower beskerm te word?" Stellenbosch Law Review, 8(2): 237-248.

National Anti-Corruption Initiative. 1998. Anti-corruption conference – 10-11 November 1998. Draft resolution.

Mail & Guardian. 1999. "The Broederbank?" February 5-11, 15(5): 18.

Republic of South Africa. 1989. Commission of Inquiry into certain possible irregularities: Main report by Judge L.T.C. Harms. Pretoria: Government printer.

Republic of South Africa. 1997. First report of the Commission of Inquiry into the affairs of the Masterbond Group and investor protection in South Africa. Cape Town: Nel-Commission.

Republic of South Africa. 1998. The role of the auditor: The elimination of the expectation gap and the appointment of auditors by all significant interest groups: Consultation paper. Cape Town: Nel-Commission.

Rothschild, J. & Miethe, T.D. 1994. "Whistleblowing as resistance in modern work organizations." In Resistance and power in organizations, edited by J.M. Jermier, D. Knights & W.R. Nord. London: Routledge.

Saturday Star. 1994. "Massive finrand fraud uncovered." February 5:1.

Sunday Times. 1999. "Accounting standards need legal clout." February 21: 6.

Task Group on Open Democracy. 1995. Open Democracy Act for South Africa: Policy proposals. Unpublished document.

Weiss, J.W. 1994. Business ethics: a managerial, stakeholder approach. Belmont, Calif.: Wadsworth.