MANILA, Philippines – The Securities and Exchange Commission has proposed to strengthen state protection for whistle-blowers as a means to deter corporate fraud and improve overall corporate governance in the country.
In a recent interview, SEC chair Teresita Herbosa said an improved whistle-blower provision – patterned after similar legislation in the US – had been written into the draft for corporate code reforms filed in Congress.
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The Securities and Exchange Commission is seeking a comprehensive reform of the antiquated law governing Philippine corporations to embrace modern global practices like giving a perpetual corporate term, allowing a single person to set up a corporation and easing doing business by allowing online registration. Giving more protection to whistle-blowers has likewise been included in the framework.
“It’s really just to protect the whistleblower from reprisal,” Herbosa said at the sidelines of the opening in Ali Mall Cubao of the SEC’s first satellite office on Tuesday.
“We’re not encouraging whistle-blowing . It’s just that if there’s really a big need for you to say something, that will be the mechanism so you will not be harmed later or nothing adverse will happen to you,” she said.
To protect the whistle-blower, Herbosa said provisions have been proposed so that any director or officer who would prevent the whistle-blower from talking or who would dismiss this person from employment could face criminal charges.
Asked how the company could protect itself from complainants who just wanted to malign the institution without solid basis, Herbosa said the provisions would refer only to the “serious cases.”
For whistle-blowers outside the corporate setting, Herbosa said these people would already be in the country’s witness protection program. Within the corporation, the SEC believes there are people in the audit committee, compliance officers or finance officers who knew better and should speak out instead of tolerate corporate wrong-doings.
“We feel that having those provisions in the law would deter companies from taking (bad) action… There won’t be any whistleblower if there’s nothing fraudulent happening in the company,” she said.
The country’s Corporation Code was last amended in 1980 and is seen in dire need of reforms to cope with the modern times. A review of this code started as soon as Herbosa assumed office as the SEC chief in 2011.
Herbosa said Sen. Bam Aquino who chairs the Senate committee on trade, has scheduled hearings on the bill to start by January 2015. Aquino’s counterpart in Congress, Rep. Mark Villar, had likewise committed to work on this legislation, which Herbosa was targeting to be signed into law before the end of President Aquino’s term in 2016.
Meanwhile, Herbosa said the opening of a new satellite SEC office in Ali Mall would contribute to easing doing business in the country and declog traffic at the head office in Ortigas. About 200 to 300 people come to the main office for registration purposes daily, excluding those who queue up to get true copies of corporate records required by other government agencies, according to Herbosa.
The corporate watchdog earlier launched the “SEC Express System,” an integrated application system for requests for both plain and authenticated copies of official documents using the Internet or via a call center.