Risk Watch with Alberta QUARCOOPOME: Whistle blowing…a banker’s dilemma  (1)


“The world suffers a lot not because of the violence of bad people but because of the silence of good people” …..Napoleon Bonaparte.

What is Whistle blowing?

According to Wikipedia, “A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization that is either private or public. The information of alleged wrongdoing can be classified in many ways: violation of company policy/rules, law, regulation, or threat to public interest/national security, as well as fraud, and corruption. Those who become whistleblowers can choose to bring information or allegations to surface either internally or externally. Internally, a whistleblower can bring his/her accusations to the attention of other people within the accused organization such as an immediate supervisor. Externally, a whistleblower can bring allegations to light by contacting a third party outside of an accused organization such as the media, government, law enforcement, or those who are concerned. Whistleblowers, however, take the risk of facing stiff reprisal and retaliation from those who are accused or alleged of wrongdoing”.

The origins of the word date back to the 19th century. The word is linked to the use of a whistle to alert the public or a crowd about a bad situation, such as the commission of a crime or the breaking of rules during a game. The phrase whistle blower attached itself to law enforcement officials in the 19th century because they used a whistle to alert the public or fellow police. Sports referees, who use a whistle to indicate an illegal or foul play, also were called whistle blowers.

Whistleblower Act, 2006 Act 720

Ghana’s Whistleblower Act 2006 provides for the manner in which individuals may, in the public interest, disclose information that relates to unlawful or other illegal conduct or corrupt practices of others. The Act provides for the protection against victimization of persons who make these disclosures, and for a fund to reward individuals for doing so.

In a study by Haruna Ndebugri and Emmanuel Tweneboah Senzu, published in MPRA (Cape Coast Technical University, Frederic Bastiat Institute) Paper No. 85602, posted 30 Mar 2018, they examined the whistle blowing Act of Ghana, 2006, and its effectiveness in combating corporate crime. (Dennis, 2010, -source www.ghanaanticorruption.org.) Since the Whistle blowing “Act” was passed in October 2006, its implementation has witnessed a lot of controversies, mainly due to lack of understanding on the part of individual whistle-blowers and the organizations that handle or are supposed to handle the information provided by the whistle-blowers. It is reported, most Ghanaians who blew whistle, had passed through harrowing experiences. This has significantly contributed fears in future whistle-blowers, observed from the findings.

Public sector whistleblowing

Recognizing the public value of whistleblowing has been increasing over the last decades. In the United States, both state and Federal statutes have been put in place to protect whistleblowers from retaliation. Exposing misconduct or illegal or dishonest activity is a big fear for public employees because they feel they are going against their government and country.

Whistle blowing in the private sector

There is a general impression that private corporations usually have stricter regulations that suppress potential whistleblowers. An example of private sector whistleblowing is when an employee reports to someone in a higher position such as a manager, or a third party such as their lawyer or the police. In the private sector corporate groups can easily hide wrongdoings by their individual units. It is not until these wrongdoings worm its way into the top officials that corporate wrongdoings are seen by the public.

Whistle blowing policies in Banks

What are the implications for banks and bank staff? How easy and practical can these be, since many banks themselves already have whistle blowing policies? It appears it is easier when it is being done by the public. Can bankers tackle this issue without facing reprisals from their respective bank managements, as happened in the star case of Wells Fargo Bank in America. This week’s article will focus on whistle blowing from within an institution.

Why should it reach the whistle blowing stage?

Here are some pertinent questions for reflection:

“Why should we hang our company’s dirty linen in public”?

“How desperate can one be to go to that extent”?

“Are the responsible persons so heartless and callous that they can deliberately shut their eyes to the obvious or even look away despite the writings on the wall?”

“Why should some people sell their soul and trample on all others just to get fame or even declare false profits and enjoy self-gratification”

Dangers to the whistle blower

Whistleblowers are sometimes seen as selfless martyrs for public interest and organizational accountability. Unfortunately, some are called negative names and labelled as “traitors” or “defectors.” Some people even accuse them of solely pursuing personal glory and fame, or view their behaviour as motivated by greed.  Persecution of whistleblowers has become a serious issue in many parts of the world. Internal policies might pose threats of retaliation to those who report these early warnings. Private company employees in particular might be at risk of being fired, demoted, denied promotions and so on for bringing potential risks to the attention of the appropriate authorities. Generally people who choose to act as whistleblowers often suffer retaliation from their employers.

The Wells Fargo Case

Let us look at whistle blowing cases across the globe, especially the star case of Wells Fargo Bank in America:

In September, 2011, Wells Fargo fired its South California bank manager for excessive drinking and inappropriate behavior. Three weeks before her termination, she had reported to the company’s ethics line about bankers under her supervision who opened fake client accounts to meet sales goals. She reported that one of the personal bankers she supervised allegedly had filled out new client account forms using the Vermont Avenue address of a Los Angeles County building, non-working phone numbers and email addresses that repeated across unrelated customer accounts. An example is seen from this exhibit shown in court:

Former Wells Fargo bank manager Claudia Ponce de Leon’s handwritten note on a new client account document showing a purported home address, which is actually the location of the Los Angeles County Department of Public Social Services”.  Source: OSHA’s Dec. 6 preliminary decision sent to Wells Fargo.

At this point let me ask this question. If you a branch manager and supervisor and you notice such defects by an Officer in the account opening process, why can’t you just get it rectified? Yes, you should. However, the reason for this star case was that it was a deliberate or subtle means employed and to some extent encouraged by the bank’s management to open false accounts. To quote from the records: “This was almost exactly five years before regulators fined the bank for opening millions of bogus accounts nationwide for clients without their knowledge. Wells Fargo admitted that it opened about 2 million fraudulent accounts without the permission of customers. It agreed to pay $185 million to federal regulators and the City and County of Los Angeles to settle the case. The Bank’s CEO, John Stumpf, resigned over the controversy after the company fired about 5,300 middle level bankers nationwide.”

Some bank Relationship Officers go to the extent of manipulating account opening documents or close their eyes to ficticious documents submitted by prospective customers. This is just to open the account and clock it as a genuine sales deal. For all you know, the person could be a prominent and well-known money launderer. After all the bottom-line will be enhanced and that person’s name will be among the top scorers on the “league-table” for that period. What happens on the actual account operation sometimes shows exhibit cases of suspicious transactions, which end up being reported to the Financial Intelligence Center (FIC). The first question would be who opened that account?

What sleepless nights of worry and apprehension can cause some bank sales staff to resort to dirty deals. The irony of it is that when the figures churn out well, recommendations are promotions follow it but if they raise a red flag or blow a whistle, and you will find where power lies. In the Wells Fargo case, the manager was well-liked and received eleven promotions in her ten year work life there! What an irony!

I will pause here. Let us continue next week



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.


Website www.alkanbiz.com

Email:[email protected]  or [email protected]

Tel: +233-0244333051/+233-0244611343

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