Calls for Whistleblower Fund Emerge Amid Government Pensions Agency Controversy

The suspension of a financial manager at the Government Pensions Administration Agency (GPAA) due to his concerns about alleged irregularities highlights the urgent need for improved protections for whistleblowers, according to Nicolaas van Wyk, CEO of the Chartered Institute for Business Accountants (Ciba).

In light of this incident and the subsequent industry backlash, Ciba has proposed the establishment of a dedicated whistleblower protection fund in South Africa. This fund would provide legal, financial, and psychological assistance to finance professionals who report corruption and misconduct.

Read: Godongwana suspends pensions agency head over questionable lease contracts

Van Wyk advocates for contributions from both the financial community and corporate administrators to finance this initiative, which could cover legal fees, temporary income support, and trauma counseling for whistleblowers who often face dismissal or harassment after stepping forward.

According to Moneyweb, Finance Minister Enoch Godongwana has placed GPAA CEO Kedibone Madiehe on precautionary suspension amid serious misconduct allegations related to high-value transactions. The Portfolio Committee on Public Service and Administration recently acknowledged that internal whistleblowers—like a financial manager who raised concerns over a R21 million payment—faced retaliation rather than having their issues properly addressed.

CIPC levy proposed

Van Wyk mentions that financial institutions expect financial managers and auditors to follow a code of conduct and correct reporting processes. “These are global standards we have adopted, and individuals entering the profession commit to uphold them.”

“However, we do not provide adequate protection. Currently, when someone speaks out, they might receive initial support, but later struggle to find employment as companies hesitate to associate with them. It’s a high price to pay for doing the right thing.”

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Van Wyk proposes that the Companies and Intellectual Property Commission (CIPC) introduce a mandatory levy of around R200 per year—similar to the Road Accident Fund levy—potentially raising hundreds of millions of rands to provide legal and financial support to whistleblowers.

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He notes that Ciba has communicated with the CIPC about the potential levy to create a whistleblower fund.

“We will also advocate to government officials, including the Department of Justice and National Treasury. If that effort falls short, we may consider voluntary contributions,” Van Wyk adds.

He emphasizes that financial crime in South Africa amounts to billions of rands. “If businesses contribute to such a fund, it will bolster the fight against financial fraud. I believe companies would back this initiative as it would be beneficial for all and highlight the importance of whistleblowers in the financial system.”

Fear of retaliation

Van Wyk stresses that few individuals are willing to blow the whistle when they have families, children in school, and financial obligations. “They refrain from reporting because they fear job loss. If they knew there was support available, many more would come forward,” he explains.

While South Africa has the Protected Disclosures Act (PDA)—also known as the Whistleblowers Act—it’s often deemed insufficient for genuinely protecting those who report misconduct. A planned amendment bill aimed at improving the existing whistleblower protection framework is expected to be introduced in parliament this year.

The United Nations Convention against Corruption (UNCAC) Coalition recently spotlighted South Africa, among other African nations, for inadequate protections for whistleblowers.

Babita Deokaran, Athol Williams, Jimmy Mohlala, Cynthia Stimpel, and Martha Ngoye have been specifically acknowledged as individuals who revealed misconduct in state institutions or state-owned enterprises, yet were left unsupported and vulnerable—tragically in the cases of Deokaran and Mohlala, both of whom were murdered.

Read: IDC challenges order preventing it from interviewing ARTsolar-linked whistleblowers

International examples

Van Wyk refers to U.S. legislation such as the Dodd-Frank Act and the Sarbanes-Oxley Act as significant international benchmarks for whistleblower protection.

The Dodd-Frank Act of 2010, enacted following the 2008 financial crisis, prohibits retaliation against whistleblowers and includes provisions for compensation if fines are levied.

The Sarbanes-Oxley Act of 2002, introduced in response to corporate scandals like Enron, protects employees of publicly traded companies from retaliation when they report fraud.

Read: Protecting whistleblowers: A national imperative [Jan 2024]
Listen/read: Whistleblowers: There’s scope for more legislation [Jul 2023]

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