Whistleblowing in Latin America

June 3, 2014

Whistleblowing can be defined in a number of ways. In its simplest form, whistleblowing involves the act of reporting wrongdoing within an organisation, notwithstanding whether it is an internal or an external disclosure.

But the decision to “blow the whistle” does depend on national and political context.

In certain countries, whistleblowing itself may not be a problem, but the method of doing so – for example, reporting via a telephone conversation with a hotline operator – may be against the norm culturally. Very often, whistleblowers have been praised and even rewarded for revealing malpractices in organisations (for example, in October 2012 Bradley Birkenfeld was rewarded US$104 million from the United States International Revenue Service for his help in exposing tax evasion arrangements between UBS and its American clients). However, in certain countries, “blowing the whistle” can carry high personal risk – particularly when there is little legal protection against dismissal, humiliation, or even physical threat. Because of these factors, many people are deterred from speaking out.

 

Traditionally, Latin America has been seen as having a high level of collectivism, as opposed to individualistic regions. This implies that the role of institutions and government officials, and, more generally, the role of high-level deciders, has been seen differently from other regions. Given that corruption is prevailing within many official bodies, Latin America provides a difficult environment to encourage whistleblowing as most people are sceptical that doing so will have any positive effects.

Despite this, the concept of whistleblowing is covered by regional and international conventions that apply to Latin America, including Article III of the Inter-American Convention against Corruption and articles 13, 32 and 33 of the United Nations Convention against Corruption.

A certain number of Latin American businesses do encourage and accommodate whistleblowing. Major companies such as Petrobras (Brazil) and Pemex (Mexico) cover the standards internally.

 

Pemex (Mexico)

  • Whistleblowing is covered in the code of conduct
  • Methods: hotline, email and reporting through the corporate website
  • Protection through anonymity

 

Petrobas (Brazil)

  • Whistleblowing is covered in the code of conduct
  • Methods: general ombudsman, hotline, email, letter and reporting through the corporate website
  • Protection through anonymity

 

Walmart de México y Centroamérica (Latin America)

  • Whistleblowing is covered in the code of conduct
  • Methods: hotline and email
  • Protection through anonymity

 

Contrary to in the United States, where whistleblowing standards have been enacted for decades – the last texts being the 2010 Dodd-Frank Whistleblower Program and the 2013
National Defense Authorization Act – Latin American countries have a fragile background to support employees or civil servants denouncing illegal behaviours.

The whistleblower’s right to speak up is closely related to freedom of expression, freedom of conscience, and the principles of transparency and accountability; however, an obstacle to that is the fear of retaliation. Retaliation can vary from minor harassment at the workplace to much more severe consequences. Typically, once an employee has “blown the whistle”, increasing pressure will be placed on them to rescind their statement and refrain from further disclosures. In some cases, retaliation can be extreme.

An example of extreme retaliation is the case of Rodrigo Rosenberg Marzano, a Guatemalan attorney, and his direct involvement with his client Khalil Musa, a prominent businessman. Khalil Musa had been offered a position on the board of Banrural bank by members of the Guatemalan government. Guatemalan President Álvaro Colom Caballeros, First Lady of Guatemala Sandra de Colom, and members of the Colom Administration and their business associates were allegedly using Banrural as a front to embezzle and launder money. Khalil Musa’s uncompromising ethics posed a risk to parties with stakes in the institution and it was alleged that he had received multiple threats as soon as his nomination was internally mentioned. In turn Musa and his daughter Marjorie were assassinated. Khalil Musa had not yet been in a position to blow the whistle. On the other hand, Rodrigo Rosenberg Marzano documented full charges against the Colom administration before he was shot in Guatemala City in May 2012. Prior to his death, Rosenberg recorded an 18-minute video outlining the direct implication of President Colom in the deaths of Khalil and Marjorie Musa. An investigation was led by a United Nations commission, however no definite conclusion was made.

Civil society worldwide is particularly engaged in the assurance that whistleblowers are adequately protected from reprisals. It is acknowledged that effective protection of whistleblowers against retaliation will facilitate disclosure and encourage open and accountable workplaces. Trade unions have an important role to play not only in policy making but also in acting as representatives for whistleblowers and as a channel for whistleblowing.

Article 33 of the United Nations Convention against Corruption commits Latin American signatories to implement appropriate legislation to ensure and promote the disclosure of information as well as to provide protection for whistleblowers. More generally Article III of the Inter-American Convention against Corruption sets out requirements for the member states to adopt the systems for protecting those who report acts of corruption into national legislation.

Contrary to this, it appears that high-level commitments made by governments are often not followed. In Global Integrity’s scorecards (2009–2011), which are related to the protection of employees against recrimination or other negative consequences when whistleblowing, Latin American countries achieved the following scores:

  • Brazil: 0/100

Although the constitutional text clearly limits the prohibition to the expression of thought (opinions), the Supreme Court has ruled that it encompasses denunciations (whistleblowing). Thus, most organisations refuse to accept anonymous charges. In addition, there are no specific laws to protect private sector employees who report such cases.

  • Mexico: 13/100

The violence and insecurity of the past years in Mexico make it complicated for private employees and ordinary citizens to report corruption within public offices and companies.

  • Guatemala: 25/100

There is no Guatemalan legislation about whistleblowing. The Organized Crime Act gives special protection to those who have collaborated in the investigation of a crime or criminal prosecution, but only on criminal facts.

 

The Second Central America and Dominican Republic Forum for Transparency, held in 2011, led to the implementation of a list of measures which would improve whistleblowers’ protection. Although Costa Rica, El Salvador and Panama had initiated standards related to or similar to the protection of whistleblowers, the measures taken were unanimously considered as insufficient.

There are also legal obstacles to the unauthorised disclosure of information in many countries. These include the notions of responsibility to employers, secret acts, and other policies. These standards are often used to impose sanctions on whistleblowers and to deter more people from speaking out. According to an analysis published by the Institute for Social Research at the National Autonomous University of Mexico, the duties of loyalty and fidelity to their employer can prevent an employee from expressing a personal opinion or revealing internal information. More particularly, numerous Latin American countries have criminal laws prohibiting the disclosure of state and military secrets. These laws are a significant barrier to anti-corruption efforts since they prohibit the disclosure of any information without permission. Libel and defamation laws can also be used to deter whistleblowers from making disclosures; however, it appears that Latin American countries have initiated the decriminalisation of libel in the country, starting with Mexico in 2007 (while led by President Felipe Calderon). Other regulations, such as trade secret or confidentiality clauses, limit the release of information by implying criminal or civil charges.

Commonly, the cultures and legal frameworks of Latin American countries are prone to hinder the development of whistleblowing and protection of those who report. However, in the momentum of international and regional organisations’ consciousness of the importance to fight against corruption, and the support of civil society in ensuring that the participants in that battle are guarded, the principles of whistleblowing are ensured to be grasped and expanded.

The corporate cultural change in Latin America needs to join the legal one, meaning that business leaders must accept and take advantage of whistleblowers’ new and protected rights.

The following are items which companies should give serious consideration to when implementing a whistleblowing programme:

  • Have appropriate procedures been set out to dictate how reports of malpractice will be handled within the organisation?
  • Have any report handling processes been documented so as to reassure potential whistleblowers how reports will be treated and what the next steps are?
  • Do you have a clearly stated and publicised non-retaliation policy assuring potential whistleblowers that they will not be vindicated for making reports in good faith?
  • Do you have a mechanism available by which detailed but confidential reports can be made?
  • Have the individuals who will handle reports and subsequent investigations (if required) been identified and tasked with this role?

 

These are but a few items which companies should be giving consideration to not only encourage individuals to speak out about illicit behaviour, but to also ensure that matters are handled in the correct manner, therefore optimising the use of whistleblowing reports for the benefit of the organisation. Above all else, implementing elements such as the above is a major step in improving the culture of ethics within a company.

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