THE Securities and Exchange Commission (SEC) has endorsed whistle blowing policy for quoted companies in the country, while promising to protect employees and shareholders who expose any illegal activity of companies listed on the Nigerian Stock Exchange.

Whistle blowing policy as a corporate guard enables staff and shareholders of companies to raise certain concerns about the activities of companies directors and management which include: crimes, fraud, bribery and corruption; contravention of the code of business conduct and ethics such as insider dealing, conflict of interest, etc; abuse of office or responsibility in connection with unauthorized activity for personal gain; sexual or physical abuse; other unethical behaviour in a confidential way, and receive feedback on the action taken.

A prominent feature of the whistle blowing process is the need to maintain confidence and protect the identity of a reporter where possible.

Meanwhile, to further underscore the importance of whistle blowing in corporate governance the Investment and Securities Act (ISA) 2007 in one of its provisions provides statutory backing for whistle blowing in Section 306 as follows:

"An employee of a public company shall have the right to disclose any information connected with the activities of his work place which tends to show that criminal offence has been, is being, or is likely to be committed; that a person has failed, is failing, or is likely to fail or omit to comply with a legal obligation, or that such crime failure or omission is likely to be deliberately concealed."

The Act also makes provision for protection of such employees in section 306(5). According to it: "No employee shall be made to suffer any detriment on the ground that he has made a disclosure under the Act.

"Where an employee suffers any detriment for such a disclosure, he can make a complaint to the SEC, and the Commission after investigation on the matter finds that this provision has been contravened , order the reinstatement and payment of compensation to the employee; where the employee is dismissed shall be entitled to compensation which shall be calculated as if he had attained the maximum age of retirement or had served the maximum period of service."

It should be noted however that such reports made by employees should be in good faith. It does not matter that the report is wrong as long as the reporter had an honest belief that the report is genuine.

Whistle blowing is a critical tool for exercising control over corporate entities, by exposing wrong-doing, and setting the machinery in motion for punishment of such wrong-doings.

It provides the platform for which prevention of such wrongdoing in the future can be put in place.Meanwhile, some of the famous whistle blowers include the following: Jeffrey Wigand, a Brown & Williamson executive who exposed the Big Tobacco scandal, revealing that executives of companies knew that cigarettes were addictive and approved the addition of carcinogenic ingredients to the cigarettes.

Also, David Franklin, a former Parke-Davis employee (a division of Pfizer) who exposed illegal marketing of Neurontin (gabapentin), an epilepsy drug, for relieving pain, headaches, bipolar disorder and other psychiatric illnesses.

The case revealed that the company marketed the drug for these illnesses. After initially denying wrong-doing, Pfizer pleaded guilty to criminal violation of the Food, Drug and Cosmetics Act and paid criminal and civil fines of $430 million dollars.