Corruption Checkmate: Whistle-blower’s Policy

Organizations, both public and private are faced with a serious challenge, the disease of corruption; an act of betrayal can be the most painful. Corruption encompasses illegal activities perpetrated by smart, trusted and polite people. Corruption is an unwelcome activity in the society and an enemy of development. Today many institutions have closed down, some suffered financial loss and individual lost their jobs because of corruption. Self-enrichment caused organizations to find themselves in the ‘intensive care unit’ waiting to take their last breath, any time. As you read this article, many organizations headed by crooks are in the ICU.
So long as humanity and the devil coexist on earth, there will be no end to corruption. What we must all strive to achieve is reduction of the incidences and impact to negligible levels; and it is only possible through an effective whistle-blower's policy. Trust me, corruption is not an agenda of any organization or government; it is the intellectual dishonesty of individuals. This is the reason legal instruments are enacted to combat corruption but they seem to be more passive.

It is very disturbing to note that ill activities only happened to be detect long way after they happened and the loss has been endured.  The artificial person keeps on suffering because leaders are not proactive and mainly they rely on annual audit as the only check and balance. The fascinating thing is that audit is performed only ones a year. For instance, a corporate scandal, which is initiated in March, literally, without proactive policy it can only be uncovered in December (Audit calendar month) and at this stage huge loss could have been recorded. Good risk governance is more on a notion of prevention is better than cure; a point of departure in governance should be prevention of potential loss or damage. If we can prevent, why should we wait to suffer? Prevention and early detection of fraud is better than investigation since investigation is risky and too expensive.

Company directors are the heart, mind and soul of an entity, they have to think and make decisions on behalf of the artificial person. The decisions should be in the best interest of the organization at all-time while taking into account the reasonable needs, interests and legitimacy expectations of the stakeholders. The biggest obstacle to risk governance is mindless and passive approach. Board of directors and management are to spend more time understanding the possible risks, particularly human associated risks that their organization may face.  Many of the corporate sins happen as results of ineffective controls. In fulfilling their mandate, governing bodies should consider Whistle-blower's policy as a checkmate to corruption. Whistle-blower's policy will strengthen organization’s controls, encourage transparency, promote openness, and manage risk.  

One of the hard forensic reality is that, Fraudsters think seven times a day whereas the average manager or staff of an organization or government thinks rarely or none at all. To assist managers and staff to think creatively at least once a month or quarter, an organization should set up anti-fraud council in organization and give it a meaning; it should be very inclusive for it to succeed. Employees from lower positions within organization should feature in order to trust and feel ownership of the system. Whistle-blower's policy will enable an individual, usually an employee, to report concerns about misconduct or misdemeanors by someone in an organization. The policy should encourage whistle-blowers to report genuine (non-malicious) concerns about suspected misconduct or misdemeanors, and it should give whistle-blower protection against retaliatory/punitive action by the employer.

Some organizations have whistle-blower's policy in place yet are now and then victims of fraud and other forms of corruption. Having whistle-blowing mechanisms with no alerts coming through is not an indication that the organization is free from malpractices and it should not be celebrated; it is rather that the mechanisms are not effective nor users do not trust them at all. For the policy to be relevant, it must first be trusted. Whistle-blowing is an early warning system to avert possible risks to the organization. An effective policy that encourages whistle-blowing enables employees to detect malpractices in time to take necessary action.

Corruption being clandestine activities, the perpetrators of fraud or corruption do not want to be exposed and therefore try to conceal their schemes’ trail as much as possible. This is why, without proactive and creative procedures and policies, it is not easy to prevent and detect fraud or corruption. These vices cannot be eliminated from business, government or social life since they are the product of the devil and humanity. Leaders of organizations must come up with proactive systems and policies that will allow the staff to report corruption scandals in time instead of overlooking while the fraudsters are working hard to defraud their organization.

‘I cannot teach anybody anything; I can only make them think.’ (Socrates).

By:

Onesmus K Joseph - ACIS/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com

Intellectual Property (IP) Governance

Good governance brings about desired results of good performance and effective control among others. To this end, IP is one of the subjects that never enjoyed cold air of many boardrooms. Many believe that nothing relates to IP within their company, but on the contrary, Mideva a Kenyan Lawyer once said, “The presence of a creative mind denotes IP existence”.  For a minute just think and think again, have you protected the entity’s logo? What about the monthly journal? How do you document company IP? What about the new software?  I challenge you today to look up for annual financial statements and see how companies do not appreciate IP. 

An entity may own IP just like any other property, the difficulty is that IP is an intangible property, and this is the main reason it is often overlooked. The competitive advantage of nearly any Namibian business can be tied to its IP Assets; be it their software applications, brands, patented processes goodwill, trade secrets, corporate knowledge, copyright materials e.g. fliers, newsletters, photographs etc. and product designs. An entity may obtain intellectual property protection by registering the work with the Registrar of Intellectual Property as prescribed in relevant Acts. Registration is however not mandatory for copyright works since the protection is vested in the work once it is in a concrete form, notwithstanding the fact that registration is recommended.

It is the primary responsibility of the governing body to set, steer strategies and approve policies that give effect to IP management. Many of the Boards and organizations that promote best practices fail to consider the stewardship of IP-related assets; you may find that they do not include them in their books of accounts despite their existence. Typically, Board directors and management prioritized non-IP issues on the corporate agenda; however, legal requirements and market activities suggest that this might be a serious misstep simple because IP as much as it is intangible, if it is well managed it could be a messiah to many financial troubled entities.

In Namibia IP is registered and protected within the provisions of Industrial Property Act 01/2012 and copyright and neighboring right Protection Act 6/1994. It is alarming to note that despite the laws in place, many entities (private and public) have failed to protect their work that meets requirements of protection under of IP laws and this is a miscarriage of good governance. Disregarding IP within entities invites criticism and exhibits board failure to run an entity effectively, noting that well-established companies around the globe appreciate IP as key to success. Poor management of IP exposes entities to risk such that of losing Its IP to competitors and non-registration of new IP. In the absence of IP policies unnecessary litigation and disputes may arise such as in an event where an employee comes up with an invention or creation within the scope of the employment, without a policy, it would be difficult to determine the ownership of the work.

We should view IP in the same way we visualize the tangible assets because they are all entity’s resources that are acquired due to past events from which future economic benefits are expected to flow into the business. To give effect to IP within the organization, board of directors should adopt “Tone at the top” principle on IP during the execution of their fiduciary duty. IP management or governance include enactment of an effective policy on IP regulation. A policy should set out procedures of IP protection: the registration process of IP to gain exclusive rights, enforcement or procedures in an event of IP infringement, IP Register, IP valuation, Audit and most importantly IP commercialization. Entity must adopt a principle of keeping IP register, because it aids in determining the value of IP and enhances compliance such as renewal and maintenance.

Benefits of having a good and well-coordinated IP management in place cannot be overemphasized. Having effective practices and policies that regulate the IP in an entity reduces corporate risk. Well-managed IP can be used as collateral in obtaining financial leverage. An entity may, maximize its profit by commercializing their IP and they may discover new market opportunities.

An organization can only be a responsible corporate citizen if it prioritizes issues that will drive it towards success and sustainability of which IP is not exceptional. It is factual that globally; the business agenda is no longer set by the financially powerful but by those who are intellectually powerful; therefore, IP governance is essential.  

By:

Onesmus K Joseph - ACIS/ACFE/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com

Today’s face of Corporate Governance

The face of corporate governance in the world has shifted from traditional habits of complying with rules, regulation and all governance requirements in order to stay out of troubles; to corporate governance which is driven by ethical and effective leadership that enable the organisation to achieve desired outcomes. The new era advocates for a judgment call to a practice, as to why a practice or principle should be applied? What are the end results of implementing such practices? Is the end result, the desired governing outcome? A board of directors as a governing body of an organization must first certain itself on a question of why this practice? As a matter of fact, a mere application of a governing practice doesn’t automatically result in good corporate governance.

King IV Report is one of the governing tools supplementing the Company Act and SOEs Governance Act. The report highlights an outcome based approach as a method that Board directors or Trustees may adopted in selecting governing principles for implementation. Good corporate practice application and results that may be achieved vary from entity to entity. The approach placed a responsibility on the governing body to attain the governing outcomes of an ethical culture, good performance, effective control within the organization and legitimacy, good reputation and trust by the stakeholders.

In Namibia, many Private and Public companies have at certain degrees correctly adopted good corporate governance practices, but failed to deliver on their mandate despite having many practices in place. The board of directors and managers need to indoctrinate a culture of navigating towards the governing outcome in the execution of their primary responsibilities. An organisation can only be said to be good governed if it is performing well, trusted by the shareholders and its controls are effective, and remember the judgment call is not based on the number of practices nor principles in place.

An element to principle of corporate governance that all governing body need to understand is that; not all corporate practices are to be implemented; organisations may only choose some that they think will work for them. It is much better to implement two or three principle that bring about the desired outcomes instead of a cluster practices that jeopardise the governing process. A notion of ‘monkey see monkey do’ should vacate the boardrooms.

A common example; there are entities especially in some SOEs that have implemented a practice of having Risk Officer, Chief Information officer and Compliance Officer in their structure as check and balance icon,  but yet, such entities have no effective controls in place, the opposite may be true. This happens because entities are only mindful of fulfilling what is referred as governance checklist without measuring the value addition by adopting a practice and the end result is not favourable.

“Nothing is wealthier than having sight in our vision”. It is therefore an institutional benefit for a governing body to understand the desired results of corporate governance and the activities that will drives them in achieving the corporate governance outcomes.

By:

Onesmus K Joseph - ACIS/ACFE/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com

Governance bowed to corruption

Many times when scandals happen in an entity, particularly an entity established within the provisions of the Companies Act; as a Governance Practitioner, the questions I ask myself are; where were the governance checks and balances (Company Secretary, Governing body/ the board, Auditor and ethical officer among others)? Why didn’t the internal or external auditor pick up the dubious deals? Where was the company secretary? How effective is the whistle-blowers policy of the company? Why did it take so long for corruption to be detected?

The four mainly recognized governance checks and balances positions are the;

CEO

Chairman of the Board

Company Secretary 

External Auditor 

King IV in its own ways advocates for these positions to be independent with the aim of promoting transparency and above all to make ethical decisions. This is an international recognized control system. In Namibia, many of the state owned enterprises (SOEs) are established in terms of their respective parliament Acts, of which many are not compelled to be formed as duly companies in terms of the Companies Act. Consequences of this serious governance gap are evidently seen. When governance is compromised by poor legislation, organizational structures and policies on it is own is an inducement to corruption. 

The other issues that disturb me a lot is the fact that the Namibia Company Act (28/2004) provisions do not make it mandatory for a company to have a company secretary. For us to curb corruption we first have to strengthen our governance tools, and thereafter enjoy favorable results. As a nation we could now learn from Enron, ESKOM or Steinhoff cases and kickoff to sharpen, our governance tools like an artist sharpen a pencil for a quality drawing. 

By:

Onesmus K Joseph - ACIS/BAP/CFIP/PPL

MPHIL Candidate - KNUST (Kumasi; Ghana) 

Governance Practitioner

josephonesmus@yahoo.com