guidelines for whistle blowing for banks and other financial

Newsletter
December 2014
GUIDELINES FOR WHISTLE BLOWING FOR BANKS
AND OTHER FINANCIAL INSTITUTIONS IN NIGERIA.
On May 16, 2014, the Financial
Policy and Regulation Department
of the Central Bank of Nigeria
(CBN) published a circular on the
Guidelines for whistle blowing
for banks and other financial
institutions in Nigeria.
Whistle-blowing can be defined
as the reporting of alleged
unethical conduct of employees,
management, directors and other
stakeholders of an institution by
an employee or other person to
appropriate authorities.
The objective of this newsletter
is to highlight the guidelines on
whistle blowing and our views on
them under the following headings:
the scope of the policy, the whistle
blowing procedures and the
protection of the whistle blower.
1. Effective date of the
guidelines for whistle
blowing
According to section 1.2 of
the guideline, compliance is
mandatory from October 1,
2014. Banks and other financial
institutions are required to
forward copies of their whistle
blowing guidelines to CBN
within three months effective
from the date of issuance of
the guidelines. In essence,
all banks and other financial
institutions must submit their
guidelines August 16.
enable stakeholders of banks
and other financial institutions
to report any act of impropriety
to appropriate authorities. Such
acts include, impropriety or
fraud, failure to comply with
a legal obligation or statutes,
improper conduct or unethical
behavior, failure to comply with
regulatory directives, other
forms of corporate governance
breaches, amongst others.
They are all aimed at promoting
good corporate governance,
enhancing levels of compliance
by banks as well as promoting
investor confidence in the
capital market.
Also, Banks and other financial
institutions are required to
render quarterly reports on
their compliance with the
provisions of the whistle
blowing guidelines along with
their corporate governance
compliance status returns.
By implication, the first set of
quarterly reports would be due
by December 2014.
Furthermore, the external
auditor of each bank and
other financial institutions are
required to report annually
to the CBN on the extent of
its compliance with these
guidelines. Our view is that it
would be submitted alongside
the report of the auditors on
the financial statements due in
March 2015.
2.1Scope of Whistle blowing
policy
The policy is designed to
2.2Whistle Blowing
Procedures (section 3.0)
Below are the highlights of the
procedures for whistle blowing
based on the guideline:
•
The Board of Directors of
banks and other financial
institutions have the
responsibility to implement a
whistle blowing mechanism
and set up a whistle blowing
policy which shall be made
known to employees,
management, directors and
other stakeholders.
© 2014 KPMG Professional Services, a partnership registered in Nigeria, and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a swiss entity. All rights reserved.
Newsletter
December 2014
•
•
•
The established whistle
blowing procedures must
encourage stakeholders to
report malpractices by giving
assurance of confidentiality.
The whistle blowing
mechanism shall include a
dedicated hot-line or e-mail
address and other electronic
devices that can be used to
anonymously report unethical
practices.
The Head of Internal Audit
shall review reported cases
and recommend appropriate
action to the MD/CEO and
shall take appropriate action
to redress the situation within
a reasonable time. Also, he
shall provide the Chairman of
the Board Audit Committee
with a summary of cases
reported and the result of the
investigation.
Whistle blowing is recognized
as a very important tool that can
be used to maintain checks and
balances in banks and expose
illegal practices being perpetuated.
2.3Protection of the Whistle
Blower (section 4.0)
The guidelines protect the
whistle blower with the
following measures:
•
•
•
•
Banks and other financial
institutions are required to
keep the identity of the whistle
blower confidential.
Stakeholders are encouraged
to disclose their name when
filling their reports in order
to make it more credible.
However anonymous
disclosures may be considered
on discretionary basis.
The individual making the
report should exercise due
care in reporting his concern,
no action shall be taken on
malicious allegations.
No bank or other financial
institution shall subject
a whistle blower to any
dismissal, redundancy,
•
•
•
termination, undue influence,
duress, withholding of
benefits, and any other act that
may have a negative impact on
the whistle blower. Where this
occurs, the individual can make
a complaint to the CBN.
Banks and other financial
institutions shall make quarterly
returns to the CBN and NDIC
on all whistle blowing reports
and corporate governance
related breaches.
Banks and other financial
institutions shall include a
whistle blowing compliance
status report in their audited
financial statements.
Banks and other financial
institutions should review
their whistle blowing policies
every three years and notify
the regulatory authorities on all
such reviews.
The key ingredient for whistle
blowing is anonymity. A whistle
blower would only be encouraged
and empowered to make
disclosures only on the assurance
that adequate protection would
be enjoyed. In the past, there
has been insufficient protection
for whistle blowers in Nigeria. It
is hoped that when the Whistleblower protection bill is passed,
whistle blowers would be duly
protected from victimization and
fear of intimidation.
3.Conclusion
The guideline on whistle
blowing is expected to assist
in entrenching good corporate
governance in Banks and other
financial institutions. Their
compliance with these will go a
long way to demonstrate how
seriously it takes adherence to
codes of ethics and conduct.
It is clear that with the right
framework in place, whistle
blowing would become the
most important means of
promoting good Corporate
Governance in Banks and other
financial institutions.
Compliance with the guideline
is mandatory for all banks and
other financial institutions
as they are expected to
submit copies of their whistle
blowing guidelines and
quarterly compliance reports
as appropriate. In addition,
effective financial year ending
2014, the external auditors are
expected to report to the CBN
on an annual basis the extent
of Banks and other financial
institutions’ compliance
with these guidelines. The
implication of this guideline is
that Nigerian banks and other
financial institutions would
need to proactively engage
with their external auditors to
agree scope of this assurance
report based on section 17 and
18 of International Standards
on Related Services (ISRS)
4400.
For inquiries on the above,
please contact:
Ayodele Othihiwa
T: 0803 402 0935
E: [email protected]
Akinyemi Ashade
T: 0803 402 0944
E: [email protected]
Okunlola Kabir
T: 08034020954
E: [email protected]
Omolola Oloye
T: 07034067923
E: [email protected]
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www.kpmg.com/ng
© 2014 KPMG Professional Services, a partnership registered in Nigeria, and a member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a swiss entity. All rights reserved.