Whistleblower (Protection)
Whistleblower (Protection)
IDEAS
№ 36
Febraury 2017
Christopher Leong
Abstract:
Despite the introduction of the Whistleblower Protection Act 2010 (the
Act), whistleblowing is still a rare occurrence in Malaysia. In fact, the
annual report from the Malaysian Anti-Corruption Commission (MACC)
in 2012 indicates that out of a total of 8,953 complaints received by the
Commission only 28 were from whistleblowers. However, data from the
US suggests that as a method of detection whistleblowing is the single
most effective means of uncovering graft. Considering the importance
of whistleblowers in discovering cases of fraud the low number of
whistleblowers as observed through the MACC statistics suggest that
whistleblowers in Malaysia remain hesitant.
In order to encourage more individuals to come forward and whistleblow, there must be
several changes made to Whistleblower Protection Act 20101. To achieve this, the following
three areas need to be reformed under the Act:
1
Protection for
2
Independence of the
3
Whistleblowing
Whistleblowers - Act - Mechanism -
the level of protection for the Act still remains a more
whistleblowers needs to be vulnerable to Ministerial comprehensive
improved and reinforced. action and it needs whistleblowing
to be made entirely mechanism needs to
independent of such be created - one that
influence. is more robust than
the current model.
Christopher Leong is a Board member at IDEAS and an advocate and solicitor of the High Court of
Malaya of more than 25 years standing. He is also the Managing Partner of Chooi & Company.
Christopher has extensive experience in the fields of corporate and commercial litigation, shareholders’ disputes,
banking litigation and insolvency. Additionally, he practices in the area of constitutional and administrative law.
In the field of dispute resolution, Christopher has been named as a Leading Individual/Lawyer in Malaysia by
Asia Pacific Legal 500 since 2004, Chambers Asia since 2009, by The Asialaw Leading Lawyer since 2008, and is
a Recommended Individual in the 2015 edition of Asialaw Profiles.
Christopher was the 30th President of the Malaysian Bar and the immediate past Chairman of the Bar Council
of Malaysia.
1
This paper is an adaptation of Christopher Leong’s speech at a Whistleblower Forum organised by the Malaysian Anti-Corruption Commission (MACC) on July 21, 2014
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 3
1. Introduction
As corruption is usually covert, it is difficult to combat it According
if there is limited access to crucial evidence in the form to the US
of confidential or insider information. The success of our Association of
enforcement agencies such as the police, or the Malaysian Certified Fraud
Anti-Corruption Commission (MACC) would in many Examiner's
instances depend on the information specifically given report to the
by people who are willing to come forward and inform Nation in 2008
enforcement agencies of a corrupt act or of organised
crime. These people are known as whistleblowers. 46.2%
of fraud cases are
David Lehmann, the former Head of Deloitte Forensics at Deloitte
Malaysia, has described whistleblowing as ‘the most significant means
discovered by
by which serious misconduct, such as fraud and corruption is detected’ tipoffs.
(Lehmann, 2015). The Watergate scandal would have never surfaced
in the United States (US) were it not for inside information from a
whistleblower, Deep Throat. He was an ex-Deputy Director of the FBI
and White House counsel, who gave crucial evidence which resulted in
the criminal prosecution of 69 government officials and the impeachment
of President Nixon (Marsh, 2005). In Malaysia, the financial scandal in the
early 1980s involving Bumiputra Malaysia Finance (BMF)2 which led to the
murder of its internal auditor, may have been uncovered before such a
fatal occurrence had there been a decent whistleblower protection law
in place.
2
In this case it was discovered that Bumiputra Malaysia Finance, a Hong Kong based subsidiary of state-owned Bank Bumiputra Malaysia Berhad, engaged in a wide range of suspicious dealings with the Carrian Group, a
major player in Hong Kong’s then booming property market. This case occurred in the mid-1980s. Details of this case included fiscally imprudent decisions such as lending to “connected” borrowers.
Despite the introduction of various legal frameworks, whistleblowing In 2012, out of a total of
in Malaysia remains rare in comparison to the number of complaints 8,953 complaints received
received by various enforcement agencies. Figures presented in Table 1
show that, in 2012, out of a total of 8,953 complaints received by the by the MACC only 28 were
MACC only 28 were from whistleblowers. For the Police, out of a total of from whistleblowers. For
1,475 complaints, 67 were from whistleblowers (MACC Annual Report, the police, out of a total of
2012). Considering the importance of whistleblowers in discovering cases 1,475 complaints, 67 were
of fraud, as exemplified by the US, these numbers suggest whistleblowers
in Malaysia remain hesitant. from whistleblowers.
Table 1: Number of whistleblowers complaints to various Malaysian enforcement MACC Annual Report 2012
agencies in 20123
NUMBER OF NUMBER OF
AGENCY
COMPLAINTS RECEIVED WHISTLEBLOWERS
Royal Malaysian
1,475 67
Police
MACC 8,953 28
KASTAM 375 0
JPJ 737 1
IMIGRESEN 125 0
SC 447 0
SSM 1,895 2
While the Whistleblower Protection Act 2010 has helped fill a key gap in
Malaysia’s anti-corruption landscape, it needs to be improved upon. This
paper discusses key features that can be incorporated into the Act to make
whistleblowing more effective and palatable to potential whistleblowers.
3
The latest MACC Annual Report available online is for 2012.
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2. An overview of the current
Whistleblower Protection Act
2010
2.1 An Act to Combat Corruption
The Act was enacted in 2010 as part of the Government Transformation
Plan (GTP)4 in a drive to eliminate corruption. The Act was aimed at tying
together previous whistleblowing legislations to create a more comprehensive
whistleblowing system.
4
The Government Transformation Programme (GTP) is a broad-based programme of change to fundamentally transform the Government into an efficient and rakyat-centred institution.
5
Malaysia signed the United Nations Convention against Corruption (UNCAC) on 9th December 2003 and ratified UNCAC on 24th September 2008.
6
The sections include: Administration, Whistleblower Protection, Dealing with Disclosure of Improper Conduct, Complaints of Detrimental Action and Remedies, and Enforcement, Offences and Penalties.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 7
2.4 Room for improvement
The Act has some positive do not extend protection to
features which are not included persons related to or associated
in whistleblower protection with the whistleblower. Whereas,
legislation in some other the Malaysian Act extends its
Commonwealth countries. For jurisdiction down to the state
example, India’s whistleblower level, provides fiscal incentives
protection act known as the Public and penalties as well as extending
Interest Disclosure and Protection protection to persons related to
to Persons Making the Disclosure whistleblower. The Malaysian Act extends
Act 2010, limits its jurisdiction to its jurisdiction down to the
the government sector at federal While the Act in Malaysia may be state level, provides fiscal
level, and does not provide financial said to be more comprehensive
incentives for whistleblowing than similar legislation in these
incentives and penalties as
or penalties for victimising a other countries gaps still remain. well as extending protection
complainant. The second example The whistleblowing mechanism to persons related to
is that of United Kingdom’s (UK) still has shortcomings. Further whistleblower.
Public Interest Disclosure Act 1998 modifications can strengthen the
(PIDA) (UK Legislation, 1998) and Act and increase the independence
the Employment Rights Act 1996 of the whistleblowing process. The
(ERA) (UK Legislation, 1996) proposals listed in the next section
which require the whistleblower aim to strengthen the Act and
to act in good faith and both encourage whistleblowing.
1
Protection for
2
Independence of the
3
Whistleblowing
Whistleblowers - Act - Mechanism -
the level of protection for the Act still remains a more
whistleblowers needs to be vulnerable to Ministerial comprehensive
improved and reinforced. action and it needs whistleblowing
to be made entirely mechanism needs to
independent of such be created - one that
influence. is more robust than
the current model.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 9
3.1.1 Allow disclosure by whistleblowers to a non-enforcement agency without
losing protection, or being subject to imprisonment or a fine
Moreover, Section 8(1) states that “any person who makes or receives a
disclosure of improper conduct or obtain confidential information in the
course of the investigation into such a disclosure of improper conduct
shall not disclose the confidential information or any part thereof ”. This
means that a whistleblower who has made a disclosure of improper
conduct to an enforcement agency may not at the same time or
thereafter disclose such information to anyone else. This would
presumably include a disclosure to the news media or a . Any person who
contravenes this rule, “commits an offence and shall, on conviction, be
liable to a fine not exceeding fifty thousand ringgit or to imprisonment for
a term not exceeding ten years or to both.
12
Member of Parliament Rafizi Ramli revealed information to the media about the National Feedlot Corp case and was unable to seek protection under the Act. He was subsequently charged under the Banking and
Financial Institutions Act 1989 (Bafia) on secrecy.
13
Section 7 is Whistleblower protection and Section 8 is about Protection of confidential information.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 11
Textbox: An Alternative Solution
• The disclosure to other persons comprises substantially the same
information provided to the enforcement agency;
• The identity of the whistleblower is made public by the whistleblower;
• The enforcement agency either decided not to investigate or did not
complete investigation within a reasonable time;
• The enforcement agency has failed to reasonably update the
whistleblower of the status of the investigation, or inform the
whistleblower within six months of the disclosure, as to whether the
matter is being investigated or not;
• The enforcement agency has investigated but not recommended any
action, or recommended no action to be taken;
• The appropriate disciplinary authority or other appropriate authority or
employer takes no action or decides not to take action; or
• The Public Prosecutor takes no action or decides not to prosecute.
Ultimately, the Act does provide safeguards against frivolous disclosures, and provides
that a whistleblower would not be accorded protection, or would lose protection,
under the Act in the event the whistleblower knowingly makes a false disclosure or
does not believe the information to be true, or the disclosure is frivolous or vexatious.
Section 614 of the current Act provides that a person may make a
disclosure of improper conduct to an enforcement agency “provided that
such disclosure is not specifically prohibited by any written law”. A person who discloses
information or evidence
In the context of Malaysia, this proviso would in effect make it almost would not only be disentitled
impossible to whistle blow when it concerns acts or omissions of to protection under the Act,
public officials and governmental bodies. This is because a substantial
amount of government documents, information and data are automatically but would likely face arrest
classified as official secrets under the OSA, and any person who may or prosecution for alleged
observe or have evidence of misconduct or of any corrupt practices by breach of the OSA.
a public official would likely not be able to disclose such information or
evidence to the appropriate authorities. Such a person would not only
be disentitled to protection under the Act, but would likely face
arrest or prosecution for alleged breach of the OSA.
14
Section 6 is Disclosure of improper conduct.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 13
Given that the objective of the Act is to encourage the uncovering of
misconduct and corruption, the proviso to Section 6(1) should be deleted.
Instead, provisions for in-built defenses for whistleblowers should be
included for where the disclosure of improper conduct involves disclosure
of information that may be protected or prohibited from disclosure under
other laws, if the disclosure is with respect to evidence of corruption or
a serious crime, and it is in the public interest to make such a disclosure.
Section 416 of the Act provides that the Minister may give to the
enforcement agency directions of a general character not inconsistent
OUR PROPOSAL
with the Act as to the exercise of the powers, discretions and duties
conferred on enforcement agencies, and the said agencies are required to
comply with such directions. The oversight function
of the Act should be
Section 1317(3) of the Act states that if an enforcement agency is not placed in the hands
satisfied with steps or action taken, or the inaction of any disciplinary or of an independent
other appropriate authority after the enforcement agency has provided
them with its investigative report and recommendations, the enforcement authority, such
agency may report or complain to the Minister.18 The Act does not as the office of
however provide for what the Minister is to do in such a circumstance. an ombudsman,
established for these
Section 2719 of the Act gives the power to the Minister to make any
regulations as may be necessary or expedient for the purpose of carrying specific purpose.
into effect the provisions of the Act.
It can be discerned from the above that the Minister plays an important
function in the workings and implementation of the Act. The manner in
which the enforcement agencies are to act and discharge their powers
and perform their duties under the Act should be free from Ministerial
oversight.
16
Section 4 is Power of Minister to issue directions.
17
Section 13 is Finding of enforcement agency after investigation of improper conduct.
18
Section 13(3) applies only to disciplinary offences. It does not apply to instances where the improper conduct constitutes a criminal offence, and which is referred to the Public Prosecutor.
19
Section 27 is Power of Minister to make regulations.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 15
In maintaining the overall independence of the operations of the Act
and securing the confidence of the public, as well as whistleblowers,
the oversight function of the Act should be placed in the hands of an
independent authority, such as the office of an ombudsman, established
for this specific purpose. This has been mentioned earlier in the context
of evaluating and conferring protection for whistleblowers.
d if insufficient action/
f In case of detrimental action no action taken reports to c The result of the action taken will be revealed
to the enforcement agency.
seek assistance to apply for remedies
Whistleblower
Disclosure/ Enforcement d If the action taken is deemed insufficient,
Complaint Agency the enforcement agency may report to the
Minister in the Prime Minister’s Department.
a Investigate,
c Update prepare report
e The enforcment agency will continue to
e Update status/outcomes status/
outcomes update the whistleblower on actions taken.
20
Please note that there is no provision for this in the Act. The report to the PM is only in respect of non-criminal offences. In the situation where the Public Prosecutor does not prosecute or take insufficient or no action,
there appears to be no recourse in the Act. Therefore, the diagram below is not entirely accurate.
Although this process for investigating disclosure has been set out it can
be vastly improved with amendments in the following areas:
The MACC has an easily accessible and readily available website dedicated to
helping whistleblowers, however it does not provide information regarding
a dedicated unit to which whistleblower can report to (Malaysian Anti-
Corruption Commission website). Unfortunately, enforcement agencies
such as the police do not even have a clear mechanism for potential
whistleblowers. Such inconsistencies on the part of enforcement
agencies must be improved, ironed out and made uniform.
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 17
channel disclosures made to them, but which are not within the purview
of the enforcement agency, to a centralised unit or body. At present,
section 521 of the Act provides that any enforcement agency may co- OUR PROPOSAL
operate with any other agencies in its investigations. This pertains only to
the situation where the enforcement agency has accepted the disclosure Establish a one-stop
and commenced investigations.
point for whistleblowing,
The centralised unit or body would assist and facilitate in a confidential this should be managed
manner the handling of the disclosure and the whistleblower to the by an independent
appropriate enforcement agency. This would avoid the situation where a centralised body to:
whistleblower is turned away by an enforcement agency or required to
start over again the approach, any formalities and re-make a disclosure • Make it more
to another agency. Again, such a centralised unit or body should ideally accessible for
take the form of an independent body, which may also have oversight whistleblowers
functions (in place of the Minister), for example, in the form of the office • Streamline and
of an ombudsman.
make whistleblowing
Such an independent body would also itself be empowered to receive process uniform
disclosures of improper conduct, with the attendant protections provided • Inform public and
to a whistleblower under the Act. It would also be the task of such a raise awareness
body to streamline and make uniform the procedures and mechanisms
for whistle blowing, to provide comprehensive information to the public on proper
as to how the whistle blowing provisions work, what it provides, how whistleblowing
information would be dealt with, how whistleblowers would be handled, procedures
what their rights are and what they may expect from the process. In
general, the entire process from the disclosure of information of improper
conduct until potential prosecution or disciplinary action should be clearly
set out and explained to the public. This independent body would thus
also function to educate and raise public awareness. In a way, this creates
a one-stop-point.
21
Section 5 is Co-operation with other agencies.
It is understood and accepted that it is not possible to set firm timelines for
the investigation of a matter or to set a date for its conclusion. However,
providing for and informing the whistleblower of general timelines as a
guide for attending to the investigations is important because it reassures
the whistleblower that action is being taken, that the information is not
being suppressed, and that there is an ongoing investigation into the matter,
especially if the disclosure pertains to high-level corporate executives or
government officials.
22
Section 26 is Rewards
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 19
3.3.3 Offering greater remuneration to whistleblowers
4. Conclusion
While the Act fills a vital gap in Malaysia’s anti-corruption
landscape, whistleblowing statistics continue to show
Malaysians remaining hesitant to come forward. In
order to encourage whistleblowing and the discovery
of corruption, it is imperative that the Act is further
improved upon.
Repeal the proviso to Section 6(1) of the Act, and allow disclosure of information
that may in normal circumstances fall under restrictions of other legislation;
A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 21
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A critical look into the Whistleblower Protection Act 2010 MAINSTREAMING MARKET IDEAS | 23
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