CHAPTER TWO

LITERATURE REVIEW

2.1 Literature

2.1.1 Conceptual Review

The Federal government of Nigeria introduced a whistle blowing policy in 2016 based on

the Whistleblower Act. The Minister of Finance, Kemi Adeosun, said that this is to enable

patriotic citizens report criminal acts such as mismanagement or misappropriation of public

funds and assets, like properties and vehicles; financial malpractice or fraud; collecting /

soliciting bribes; corruption; diversion of revenues; unapproved payments; splitting of contracts;

procurement fraud; kickbacks and over-invoicing. It also includes: violation of company’s

policy, law regulation, or a threat to life, national security or public interest (Taiwo, 2015).

The whistle blower can report to the authorities through a secure online portal which

would also conceal the identity of the blower. The minister said “If you whistleblow in public-

spirit and in good faith, you will be protected. If you feel that you have been treated badly

because of your report, you can file a formal complaint, if you report false or misleading

information, it will be referred to the enforcement agents for investigation and possible

prosecution” (Gobert & Punch, 2000)

To motivate Nigerians to participate in the whistleblowers’ scheme, the policy states: “If

there is a voluntary return of stolen or concealed public funds or assets on the account of the

information provided, the whistleblower may be entitled to anywhere between 2.5 per cent

(minimum) and 5.0 per cent (maximum) of the total amount recovered” (Taiwo, 2015).

1
2.1.2 Nigeria Whistle Blower Act

The Nigeria whistle blowers Act is a law that protects individuals who work for the

government or organizations and report misconduct in their organizations. They are encouraged

to expose any kind of information or activity that is illegal or unethical. The whistle blowers can

choose to operate within an organization or involve a third party.

Whistle-blower can be traced to the whistle a referee utilizes to indicate an illegal or foul

play. US civic activist, Ralph Nader, is said to have coined the phrase, but he put a positive spin

on the term in the early 1970s to prevent the negative connotations occurred in other words such

as "informers" and "snitches". However, the term developed originally from Bobbies (British

police officers, and later American police officers) blowing their whistle to alert the public to

criminals. Later private business owners would use their own whistles to alert and inform the

police of thievery and other criminal activities (Wordorigins.org.).

There have been several attempts to define whistleblowing, but certainly there is no

generally accepted definition. The term whistleblower comes from the phrase ‘blow the whistle`

which indicates an activity that is illegal or foul. The United State Civic Activity Ralph Nader

coined the phrase in the early 1970’sto avoid the negative connotations found in other words

such as “informers’’ and “snitches” (Nader, Petkas and Blackwell 1972). Uys (2000) asserted

that whistleblowing is seen as the disclosure of information about perceived organizational

wrongdoing, to parties that are in a position to take action, if this disclosure is in the public

interest’’ Whistleblowing Is a behavior that is characterized not only by intent but also by action

when employees are confronted with organizational wrongdoing.

2
2.1.3 Benefits of the Whistle Blowing Policy

Before this time, the Federal Government had spelt out the benefits awaiting

whistleblowers as it also pledged their protection. Any whistleblower whose information leads to

the recovery of up to N1 billion will receive five per cent of the amount. The reward for any

amount between one and five billion naira would be five per cent for the first N1 billion and four

per cent of the remaining N4 billion, and any amount over N5 billion will attract 2.5 per cent

reward. The Federal Government had promised that any whistleblower, whose information led to

the recovery of cash or assets worth N5 billion, would earn N210 million. The latest discovery at

Ikoyi was alleged to belong to a former Managing-Director, Operations at the Nigeria National

Petroleum Corporation , NNPC, Mrs Esther Nnamdi-Ogbue. But shortly after the media report,

Mrs Esther Nnamdi-Ogbue issued a statement denying ownership of the large sums of money.

Through a statement by her lawyer, Emeka Etiaba, SAN, Mrs Ogbue had expressed shock at the

said recovery and saluted the courage and efforts of the EFCC in the war against corruption but

said the money was not her own. The statement issued on her behalf read: “The attention of our

client, Mrs. Esther Nnamdi-Ogbue has been drawn to the news making round in the news media

to the effect that the large sums of money to wit: $38,000,000.00 (Thirty-Eight Million Dollars),

N23,000,000.00 (Twenty-Three Million Naira) and £27,000.00 (Twenty-Seven Thousand

Pounds) uncovered by the Economic and Financial Crimes (EFCC) from an apartment in

Osborne Towers, Osborne Road, Ikoyi Lagos, Lagos State belong to her. “By this release, we

inform the public that the said sums of money and/or the apartment where the sums of money

were found do not belong to our client. Our client is as shocked as many other Nigerians at the

uncovering and recovery of the said sums of money and wishes to salute the courage and efforts

of the EFCC in the war against corruption. She also wishes to commend the whistle blowing

3
policy introduced by the Federal Government in the fight against corruption which policy has

resulted in large scale uncovering and recovery of monies and assets. “It is our client’s belief that

the source and ownership of the said uncovered sums of money is known or eventually will be

known by the EFCC in due course. There is therefore no need for conjecture or speculation”

(Sunday, 2015).

But on the same day she issued the statement, the Nigerian National Petroleum

Corporation, NNPC, announced her retirement , giving no reason for its action. In the throes of

corruption Indeed, Nigeria’s problems with corruption are no longer news. Anywhere he goes, a

Nigerian is perceived corrupt and treated with disdain until he proves otherwise. In rue of this,

the Ministry of Finance came up with the whistleblowing policy which allows citizens who

report corruption-related offenses to earn a cut from the recovered loot. And so far, Nigerians

have taken the bait. Since the policy came to be, this appeared to be paying off. The Economic

and Financial Crimes Commission has been on the voyage of discovery and recovery of looted

funds. Before the recent discovery at Ikoyi, the Minister of Information, Lai Mohammed, said

the whistle-blowing policy has led to the recovery of over $180 million from various corrupt

individuals. Whistle-blowers are required to provide key information via a secure online portal

involving mismanagement of public funds and assets, violation of financial regulations,

solicitation of bribes, and manipulating data and records. When tips lead to the successful

recovery of ill-gotten funds, whistle-blowers are entitled to between 2.5-5% of the recovered loot

(Sunday, 2015).

Whistle-blowers were also promised confidentiality to the fullest extent possible within

the limitations of the law. Catalogue of discoveries and recoveries According to the Minister of

Information and Culture, Alhaji Lai Mohammed, the Federal Goverment has recovered over

4
$151m (N46bn) and N8bn in looted funds courtesy of whistle blowers. Looted funds recovered

through whistle-blowing included €547,730 and £21,090 which were recovered from three

sources excluding the $9.8m recovered from a former Group Managing Director of the Nigerian

National Petroleum Corporation, Mr Andrew Yakubu and the recent recovery at Ikoyi Lagos ,

Wednesday. The Minister said that the biggest amount of $136,676,600.51 (N42bn) was

recovered from an account in a commercial bank, where he said the money was kept under a fake

account name. This, he said, was followed by N7bn and $15m from another person and N1bn

from yet another. Mohammed had said, “When we told Nigerians that there was a primitive and

mindless looting of the national treasury under the last administration, some people called us

liars. Well, the whistle-blower policy is a few months old and Nigerians have started feeling its

impact, seeing how a few people squirreled away public funds. It is doubtful if any economy in

the world will not feel the impact of such mind-boggling looting of the treasury as was

experienced in Nigeria.Yet, whatever has been recovered so far is just a tip of the iceberg.” After

the recovery in his premises on February 8, 2017, Mr. Yakubu had reported to the EFCC’s zonal

office in Kano and made a statement wherein he admitted ownership of the recovered money,

claiming it was gift from unnamed persons and had challenged the temporary forfeiture order

obtained by the EFCC from the court (Akinnaso, 2017).

What however has never been known is how much whistleblowers have been paid since

the commencement of the policy. It is believed in some quarters that one way the government

could encourage more whistleblowing is by being transparent on how much has been paid to

individuals who have gone on a limb to expose illicit transactions without disclosing their

identities. Bankers to the rescue Nigerian bankers and mainly account officers, are perceived as

the most useful instruments of the Federal Government’s whistle blowing policy and are

5
expected to report the wrongdoings of former and current public office holders suspected to have

embezzled public funds and stashed them in several Nigerian banks. Several former and current

public officers who had allegedly stolen from the treasury either hid the physical cash in safe

houses or used shell companies, close aides, associates and family members to stash the ill-

gotten funds in bank accounts using the names of the companies or their friends, family members

and associates. These looters although they use several account names usually operate the

accounts themselves, a fact that is well known by the bank account officers who help them to

manage the accounts. However, since the federal government unveiled the whistleblowing policy

as a means of recovering stolen public sector funds, a number of junior and middle-level bankers

have been quietly ratting on the true beneficiaries of the accounts in order to cash in on the

rewards derivable from the policy. As for the latest loot recovered at Ikoyi, the case has been

resolved by the court that the money be returned to government until real ownership is

established. Despite several key developments in the Nigerian banking sector, the same

symptoms of financial recklessness, unethical practices and weak corporate governance are still

characteristics of the industry. CBN in response has introduced a code of corporate governance

practices for banks post-consolidation, including a mandatory whistleblowing policy among

others (Sunday, 2015).

Whistleblowing provides several benefits to the individual, organisation, and the society.

For the individual, s/he emerges as an agent of change, with a sense of achievement and

satisfaction on the remediation of a negative course of event. The employee thus acts as a partner

in ensuring the sustainability of the organisation. The organisation benefits by prevention or

termination of fraud, corruption, illegal and illegitimate activities, which reduces exposure to

risk, losses and legal action. Also, the shareholders‟ confidence is increased, while the

6
organisation‟s image of being responsible is enhanced. In summary, the reputation of the

organisation (one of the most important assets it has) is kept intact. An organisation that loses its

reputation quickly disintegrates. Whistleblowing promotes public good, and a safer society.

Nigeria as a country for instance, stands to benefit from whistleblowing as an anti-corruption

tool through efficient allocation of resources, preservation of national wealth, and improved

well-being of the citizenry. These benefits lead to positive perception, improved ratings in global

indices, and ultimately the attraction of foreign investors (Sunday, 2015).

So far for the whistleblower policy, it is safe to say it has been a success. Whistleblowing

has added a fresh impetus to the anti-graft war. In less than a year of its inauguration, it has led to

the recovery of staggering amounts of looted funds, thus proving to be an effective and reliable

mechanism for combating the one singular vice that seems to have permanently arrested the

development of Nigeria since independence. As of June 2017, N11.6bn had been recovered and

about N375.8m paid to 20 whistleblowers. Going by figures available to AFRICMIL courtesy of

the Presidential Advisory Committee Against Corruption (PACAC), by June 5, 2017, total

communications received by the Federal Ministry of Finance, which is the implementer of the

policy, was 2,150. Of these, 128 came through the Ministry’s website that receives reports

(www.whistle.finance.gov.org); 1,192 was through phone calls (08098067946); 540 through

SMS and 290 by Email (whistle@finance.gov.ng). Total number of tips received was 337, out

of which 29 was classified and 308 unclassified. 53 of these tips came through phone calls, 105

through SMS, 120 through the website and 59 through Email. 205 tips from 205 agencies were

classified as actionable. Within two months, by the middle of August, total communications

received by the Ministry of Finance through the various channels rose from 2,150 to 5000,

representing 43% increase, while actionable tips jumped from 205 to 365, representing 56.2%

7
increase. More than half of the actionable tips received, according to the Minister of Finance,

Mrs. Kemi Adeosun, were from public servants (Akinnaso, 2017).

The whistle-blower serves a vital function in government and business. When

corporations and government agencies step over legal and ethical lines, whistle-blowers can

make these practices public knowledge, which can lead to violators being held accountable. The

added scrutiny that comes with criminal investigations, civil lawsuits and media attention can

influence the behavior of similar organizations. Companies and government offices that engage

in similar misconduct may have previously believed they could get away with their bad behavior,

but the ripple effect of the whistle-blower's efforts can bring about reforms. The federal

government's Whistleblower Protection Program protects employees who report violations of

various workplace safety, environmental, financial reform and securities laws. The program

protects from retaliation workers who blow the whistle on their employer's behavior. Retaliatory

action can include dismissal, demotion, denial of benefits and reduction of working hours.

Companies found to be in violation of the whistle-blower protection laws can face fines,

suspension of government contracts and civil lawsuits (Anumaka, 2016).

2.1.4 Challenges of the Whistle Blowing Policy

In about nine months of its engagement with the whistleblower policy, it has noted three

issues that should be of great concern to well-meaning citizens as they pose serious threat to the

survival of whistleblowing in Nigeria. One is the lack of awareness of the whistle-blower policy.

Take a walk around town and ask Nigerians, chances are that nine out of ten would not have

heard about the policy much less have any idea of how to submit tips. The second is the glaring

absence of commitment to the safety and protection of whistleblowers. Unfortunately, as we

8
have observed, public servants face one form of victimization or the other for disclosing

wrongdoings in their various offices. And finally, the refusal, in most cases, of anti-corruption

agencies to act diligently on reports made to them by whistleblowers. Most of those who are

reported are often left to walk free and never invited for questioning, much less suspended from

office as the public service rules recommend (Ujah, 2017).

We can’t emphasize enough the fact that whistleblowing can only make the desired

impact and survive if whistleblowers enjoy full protection from persecutions of any kind, and

those against whom reports are made are punished for their crime. So, it is important, going

forward, that the usual fear nursed by potential whistle-blowers that their safety may be

compromised, or that they could be short-changed (where there is a recovery) and officials in the

agency responsible for managing and implementing the policy may undermine the rules of the

system, among other things, is addressed (Ujah, 2017).

The attention that a whistle-blower case brings, both to the employee and the company,

can have a downside. Media interviews, legal testimony and government investigations can

affect the whistle-blower's career prospects. While the outside world may view whistle-blowers

as heroes for revealing corrupt behavior, industry insiders and hiring managers may see them as

disloyal or indiscreet for not keeping company secrets and industry practices under wraps. The

media attention may lead to the whistle-blower being blacklisted in his industry (Oyebade,

2016).

Although whistle-blowers may understand that their revelations serve the greater good,

they also often endure personal problems from their actions. Media outlets in search of a story

will delve deeper into the whistle-blowers' personal lives. Legal complications from criminal

9
investigations and civil lawsuits against the company might require them to hire attorneys to

defend themselves. They may also receive threats of retaliation from former supervisors and co-

workers. All of this added stress can cause severe health problems and fractures in their

relationships (Ujah, 2017).

The cons of encouraging whistleblowing at work include the potential for reputational

damage to the business, particularly if the exposure occurs in the public domain. Any kind of

wrongdoing within your business will, if exposed publicly, reflect badly on your integrity and

your brand, and may harm your profitability. Whistleblowing can also have financial impacts in

terms of costly court cases, fines imposed by regulators, or compensation payouts, depending on

the nature of the activity exposed. In some cases, it could even open up staff or managers to

criminal proceedings. All of this is likely to seriously damage the company’s reputation and

employee morale (Oyebade, 2016). Generally speaking, most Nigerians are still skeptical about

the sincerity of the government or the intentions behind the whistle blowing policy and are

reluctant to participate in the program because of the lack of clarity around the moral

justification for blowing the whistle as well as the administrative and implementation processes

that were designed to manage the program.

As De Maria (2005) points out, corruption in Africa has been so routinized and

organizationalized that whistleblowing policies are predominantly addressing non-systematic

corruption thereby rendering them inefficacious. Corruption has become so organizational in

most countries, including Nigeria, that very few people in government, schools, businesses and

society in general still have the moral standing to crack the moral whip against perpetrators of

malpractices in their midst (Taiwo, 2015).

10
 Ideally, whistle blowing ought to be an ethical and moral duty. The moral obligation to

blow the whistle may need to be justified and supported by cultural, social, religious and legal

norms to gain acceptance in any society. The question of motive is critical and needs to be

addressed if the whistle blowing policy in Nigeria is going to succeed in the long run.

Unfortunately, the policy appears to be silent on this matter. While it describes the type of

information that should be submitted through the program and the procedure for doing that, it

does not say anything about the motive of the whistle blower apart from the warning that: “If you

report false or misleading information, it will be referred to the enforcement agents for

investigation and possible prosecution” (FMF-Whistle Blowing FAQs, 2016). Thus, as long as

the information provided is correct, it does not matter to the government if the whistle blower

was inspired by greed for the monetary reward, envy, vengeance or sheer malevolence. Although

De George (1986) does not specifically address the issue of motives, he does suggest that there

should be a ‘moral motivation’ when one blows the whistle, e.g., the whistle blowing should not

be out of revenge. This is contrary to Bowie’s (1982) criteria for morally justified whistle

blowing which insists that the desire to expose harm to society and illegal actions must not be

motivated by one seeking profit or attention. As important as the monetary reward for whistle

blowing may be, especially in terms of incentivizing whistle blowers, this paper argues that it is

too constricted to drive wider participation and sustainable support for the policy in Nigeria. A

moral springboard that will inspire citizens to see the blowing of the whistle as a civic duty and

obligation is necessary and must be effectively communicated to boost the chances of the

policy’s success. It is imperative, therefore, that the whistle blowing is perceived more as a

means of reducing the menace of corruption than as a ticket to sudden wealth.

11
 The danger in neglecting to build a strong moral case for the whistle blowing policy lies

is in the fact that it may attract more of individuals seeking to profit from the program

(‘snitches’) than those genuinely concerned about public good. Even if such whistle blowers

eventually help the government to recover looted funds, it is doubtful if their intervention will

contribute to curbing corruption in the long run. On the contrary, it may instigate resentment

against whistle blowers, distort the purpose of the policy, exacerbate the demise of ethical

principles which fuels corruption, and discourage morally upright individuals from participating

in the program (Vandekerchove, 2006).

Another fundamental issue of interest in the whistle blowing policy that is capable of

affecting its success is the adequacy of the provisions for the protection of the whistle blower

from reprisals. Whistleblowers suffer in various ways including ostracism, harassment,

punishment, punitive transfers, reprimands and dismissal (Taiwo, 2015). Bosses and top

managers are responsible for many attacks of whistleblowers but coworkers often join in or do

nothing due to the fear that they could be the next victim (Premeaux & Bedenan, 2003). In the

United States, the National Business Ethics Survey in 2013 discovered that while 41% of

employees witnessed illegal or unethical misconduct in the previous year, a significant

percentage (37%) did not report it (Ethics Resource Centre, 2014). It was also revealed that the

range of illegal and unethical activity that goes unreported is extensive and includes corruption,

bribery, receiving and giving gifts and entertainment, kickbacks, extortion, nepotism, favoritism,

money laundering, improper use of insider information, use of intermediaries, conflicts of

interest, fraud, aggressive accounting, discrimination, sexual harassment, workplace safety,

product safety, and environmental pollution (Ethics Resource Centre, 2014). These acts of

misconduct are also very common in both the private and public sector organizations in Nigeria.

12
2.1.5 Empirical Studies Review

Sims and Keenan (1998) administered a questionnaire on a convenience sample of 248

adults senior staff enrolled in a college level, under graduate and or business class. They

discovered that student with personal ideal values favourable towards whistleblowing were more

likely to engage in external whistle-blowing. Similarly, Chiu (2003) posted and found a positive

relationship between the judgements that whistleblowing was ethical and whistleblowing

intention.

Trevinno et al (1993) in their studies on peer reporting, also demonstrated that both the

inclination to report a peer and the actual act of peer reporting, were positively associated with

role responsibility.

Shelvin (2012) argues that stakeholders who play an important role in the effective

running of a Organization need to recognize the value that the Organization brings to the

economy and the wider society. Therefore, the interests of all stakeholders should not be

jeopardized by improper management of whistle blowing practices.

Bond and Manyanya (2003) incited and excited debate on the moral justification of

whistle blowing. Proponents of whistle blowing have advanced lines of argument to vindicate the

contentions that whistle blowing is morally justifiable. Whistle blowers are morally justified to

report immoral business practices if they have good reasons to think that they are potentially

harmful to the health and well-being of the public. However, when freedom of speech is pitted

against the obligation of loyalty and obedience, it gives to a serious moral conflict. The

obligation to whistle blow is prima facie in some situation can overridden by other moral

considerations (Martin and Schinzinger 2005). Alternatively, one may abide by the mandatory

requirements expressed in codes of ethics martin (2002) and make whistle blowing a moral

13
obligation. Likewise, to (De George 2006) the difference between possible and mandatory

whistle blowing is independence of the employee.

A sample of 296 Korean police officers, the analysis showed that attitude, subjective

norm, and perceived behavioral control all had significantly positive main effects on internal

whistleblowing intentions but for external whistleblowing intentions only, subjective norm was

significant (Conner 2003). When research is designed to capture the experiences of wider range

of whistleblowers, managers and case handlers a more varied picture of whistleblowing is found

in which the outcomes for both organizations and whistleblower is sometimes negative but often

times positive (Miceli and Near 2002; Miceli et al 2009).

2.2 Theoretical Framework

Researchers and scholars have confirmed that whistle-blowing lacks theoretical framework.

However, Near and Miceli [2009] stated that researchers can draw from the study on behavioural

theories that are to some extent similar to the mechanism of whistle-blowing. The theoretical

framework underpinning the current study is derived from pro-social behaviour study along with

ethical climate theory.

2.2.1. Prosocial behaviour Theory

The pro-social hypothesis of whistle-blowing has provoked much empirical and conceptual study

on whistle-blowing Near and Miceli [2009]. Exclusively, Brief and Motowidlo [2006] refers to

pro-social behaviour as behaviour which is (a) carried out by a member of an entity, (b) directed

toward a person, group, or entity with whom he or she interacts while performing his or her

organizational duty, and (c) carried out with the intention of promoting the welfare of the person,

group, or entity toward which it is directed. With reference to whistle-blowing, it is classified as

a positive social behaviour Miceli, M. P., Near, J. P., & Dworkin, T. M. (2008) whereby, the

14
whistleblower engages in action to stop the wrongdoing within the entity with the intention of

promoting persons within and outside the entity. Dozier and Miceli [2005] explains that whistle-

blowing is a kind of pro-social behaviour as the act entails both selfish (egoistic) as well as

unselfish (altruistic) motives on the side of whistleblowers. In other words, whistleblowers’ acts

are not purely altruistic but to a certain extent the actors may also have motives to achieve

personal gain or glory.

Specifically, the pro-social approach of whistle-blowing is based on Latane and Darley’s [2008]

work on the bystander intervention model. The model proposes that a bystander will respond by

helping in an emergency situation. According to Latane and Darley [2008], the decision process

for whistle-blowing behaviour goes through five steps and each step is critical in making the

whistleblowing decision. The five steps are: (1) the bystander must be aware of the event; (2) the

bystander must decide that the event is an emergency; (3) the bystander must decide that he or

she is responsible for helping; (4) the bystander must choose the appropriate method of helping;

and (5) the bystander implements the intervention. These are the five processes in ethical

decision-making for the would-be whistleblower and in doing so highlight the ethical dilemmas

inherent in the decision to whistle-blow.

15