Corporate Governance

Executive Summary

Whistleblower policy is one of corporate governance tools and through this policy former or current member of organizations have the permission to disclose fraud actions, wrongdoings, misconducts, maladministration or unethical behaviors of their employers. Recent corporate scandals reveal that more wrongdoings, frauds, and corruptions uncover by whitleblowers than audits. In Australia, the first whisteblower protection Act put in place by South Australia Jurisdiction in 1993. Since then, some other legislative frameworks have been developed that encourage public disclosures. Implementing whistleblower policy enhances honesty and transparency within the organization. This report introduces the 8 stages method for developing and implementing this policy in public agencies. The main objective of each public agency is delivering high quality services to the people. Providing an organizational culture which insists on accountability, honesty, transparency, and employees' participation can be a sustainable infrastructure for whistleblower policy. Next steps are establishing required procedures for reporting, investigating the reports, and communication channels. Whistleblowers should be protected against retaliation reaction by managers and co-worker of whistleblower while simultaneously confidentiality of information should be respected by whistleblowers. Employees should be also aware of the results of malicious allegation and abuse of policy. Managers and employees usually face different issues in whistleblowing environment. Employees sometime feel disloyalty to organization by being a whistleblower and sometimes they worry that if their action constitutes a crime or not. Outcomes of the policy vary from agency to agency. It depends on employees' characteristics and type of the business. Surveys show that whistleblower often treated well by managers and co-workers but they are still dissatisfy with results of their reports. It shows that it may take longer for Australian public sector to completely understand concept of whistleblowing. However condition in Australia is much better than all developing and some developed countries. It is recommended by author to develop a whistleblower policy in public sectors. It will increase transparency and encourage honesty and ethical behavior of managers and employees. But it should be planned in details and particularly impact of this policy on employees' characteristics and organizational culture should be well predicted because people play the most significant role in whistleblower policy and employees' response to the policy is the only key success factor.

Table of Contents Page

1. Introduction 1

2. Whistleblower Policy and Law 2

3. Objectives of whistleblower policy in Public Sector 3

4. Developing and implementation of the policy 3

4.1. Creating an open and ethical organizational culture 4

4.2. Establishing safe routes for communication 4

4.3. Protecting the Whistleblower 5

4.4. Establishing proper investigative procedure 5

4.5. Duty of Confidentiality 5

4.6. Employees training and safeguard again abuse of policy 6

4.7. Employees participation in developing policy 6

4.8. Policy Review 7

5. Whistleblower policy, challenges and critics 7

6. Outcomes of Whistleblower policy 8

7. Conclusion 10

Referenced 11

Appendix 1. 13

List of Tables Page

Table 1. Australian public sector whistleblowing legislation 2

Table 2. Changes in organization as a result of whistleblowing 8

1. Introduction

The main differences between public sector and private sector are the range of shareholders and stakeholders and organizational approach to profitability. While in non-public sector (private or even publicly-listed companies) a number of people are shareholders and greater number are stakeholders, in public sector all the people who hold the country's nationality are shareholders. Managers in public sector should be more responsible, accountable, and transparent. Governance issues arise more in public sector where the ownership and management are completely separated. People usually do not have enough information about technical parts of decision making process in public sector and bureaucracy also does not let them know enough. Therefore, managers in public sector are facing unpaved way in acquiring general public's trust. As Gualtiery (2005) argued, people have just 50% chance of defeating the bureaucracy, even if they have God, law, and facts on their side. But in my point of view there is another reason behind the lack of trust to public managers. People usually decide on their experiences rather than information they have been given by government. While a number of corruptions and misconducts occur every year in public sector of different countries with different cultures and backgrounds, from poor African societies to modern American and European countries and from hard-line totalitarian regimes to most democratic ones, it is not easy for people to rely on their public sector. Corporate governance discusses the definite right of shareholders as the real owners of public organization to know all the facts of it and also role of the mangers as trustees on behalf of shareholders. Corporate governance in era of globalization is not just the letter of law enlisted in statues and should go to further interests of general public (shareholders of public sector) in order to make a responsible corporate citizenship (Mehrotara, 2009).

Whistleblowing policy is one of corporate governance tools and through this policy former or current member of organizations have the permission to disclose all the frauds, misconducts, maladministrations or unethical behaviors of their employers. These Employees and individuals are called whistleblower. They have valuable information about corporate activities in the past or potential fraud and