Fifteen years down the road, people still wonder if Enron Corporation, the seventh largest company in the US in 2001, which sank into a sea of financial crisis, could have been saved had the company chairman Kenneth Lay, listened to Sherron Watkins, the company’s vice president, who whispered into his ear that an ‘elaborate accounting fraud’, was being perpetrated in the company.

Chairman Lay apparently did not take Watkins seriously. Enron went bankrupt, making it the biggest bankruptcy in American history. The domino impact on corporate America was enormous. But the job done by Watkins was greatly appreciated and it brought into sharp focus the merits of a ‘whistleblower’.

A whistleblower is a person who exposes illegal activity occurring in a company. The misconduct may be classified as a violation of law or outright fraud and corruption.

Rewards have been paid out only in two instances where the informants provided pertinent and material information that assisted the commission in its investigation

Under the ‘Competition (Reward payment to informant) Regulation, 2014’ the Competition Commission of Pakistan (CCP) announced rewards ranging from Rs200,000 to Rs2m to any ‘informant’ furnishing information about any prohibited activities of a company, including involvement in anti-competition practices and cartelisation.

To the various queries put to Ms Vadiyya Khalil, chairperson CCP, by this writer, a spokesman responded that ‘informants’ are expected to provide information about the involvement of an undertaking in an activity prohibited under Section 4 of the Competition Act, 2010.

The information should be about such activities, which are known to the undertakings’ directors, management and/or employees, but not to the public. The information can be in the form of documents, communication, or recordings.

Have informants (whistleblowers) come forward to volunteer information and how many of them have been rewarded so far? The spokesperson answered: “Informants approach CCP quite frequently. However, rewards have been paid out only in two instances where the informants provided pertinent and material information that assisted the commission in its investigation”. And, the CCP added, this tool (informants or whistleblowers) has been used to identify cartels in two very important sectors. However, the Commission declined to provide the identity of the cases, citing an obligation of confidentiality.

With no attempt to rob the CCP of the usefulness of its initiative of launching the ‘Competition (Reward payment to informant) Regulation, 2014’, just two pieces of relevant information to earn a reward over two years seem too few.

Yet it could also be due to the long, drawn out process set up under the regulations. Beside, the regulation provides that “It shall be within the discretion of the Commission not to accept the intended information provided by the informant, and it shall also be within the discretion of the Commission to grant the financial reward claim, based on the veracity and usefulness of the information supplied under these regulations.”

A corporate lawyer affirmed that there was no regulation relating to a whistleblower either in the Companies Act or the ‘Code of Corporate Governance’. An official of the Securities and Exchange Commission of Pakistan (SECP) said the “Surveillance, supervision and enforcement department of the Regulator’s ‘Securities Market Division’ monitors, inspects and investigates market participants (and listed companies)”.

Yet many companies have their own in-house methods of smelling fishy business. A company secretary of a multi-national company in the business of exploration of oil and gas said that the local subsidiary was required by the overseas parent to follow the guidelines of a ‘whistle-blowing policy’ that offers rewards to a person who provides advance information of a wrongdoing and saves the company from loss.

A senior official in a state-owned enterprise (SoE) confided that, in order to stem corruption, legislation on whistleblowing is an obligation for Pakistan under the United Nations Convention against Corruption (UNCAC).

The Federal Board of Revenue (FBR) on May 6 this year launched a reward scheme for the general public for reporting evasion in sales tax and income tax or corrupt practices of Inland Revenue officials.

Earlier, the government had announced a ‘whistleblower scheme’ in the budget 2015-16 and added it to relevant laws of sales tax and income tax. However, due to non-formulation of rules, the law could not be enforced.

But, for all that, there have been no epic cases in the country where whistleblowers may have stood out warning directors about corporate fraud or the tax authorities of tax evasion.

“Perhaps the biggest setback is that neither here nor anywhere in the world is there a procedure for the protection of the identity of the whistleblower”, said a person familiar with the subject.

In case of corporates, potential whistleblowers know that, if identified, they would have to endure a hostile work environment, reprisal and risk of loss of job at the hands of the organisation or groups that they have accused. To avoid trouble, most well-meaning and knowledgeable people prefer to look the other way and maintain a stony silence.

Published in Dawn, Business & Finance weekly, September 19th, 2016