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Using Internal and External Reporting Procedures

In many companies and public bodies, there are internal and external reporting procedures that could be used to challenge corrupt activity that has happened in that company or public body. These include:

1. Internal complaints procedures within the organisation, including to the supervisory board or to an independent service provider contracted to receive and act upon complaints of wrongdoings;

2. Reporting to an external regulator, higher level authority in the sector the organisation or institution is in.

1

Internal Complaints

If you think a colleague, someone in your workplace or an individual that you know is part of a company/public body involved in corruption, you may be able to:

  • Complain to their employer or supervisor.
  • In bigger companies, it may also be possible to raise the issue at the board or directors in a larger company.
  • There also be an internal compliance officer or department that receives complaints about employee misconduct, such as suspected corruption.
  • Sometimes companies contract independent external service providers to receive complaints and after proper assessment take these to as high in the organization’s hierarchy as needed to trigger an independent investigation. 

Example: Petrobras Ethics & Transparency Reporting Channels

Petrobras, a multinational energy company based in Brazil, has a number of “dialogue channels” in which stakeholders (e.g. employees, customers etc) can make reports or complaints about corruption. These include:

  • The General Ombudsman’s Office, which is linked to the board of directors. Their website states they hear anonymous complaints and requests for information; and
  • The Reporting Channel. The website states this is an independent reporting mechanism where stakeholders can make reports about ethical breaches 24/7. The website says the complaints will be investigated, the person who made the complaint will be informed of the progress, their anonymity will be protected and there is protection against retaliation.

However, there can be a difference between what a website says and reality. It will often be wise to seek advice before deciding whether to use the internal reporting channels of a company.

As a result of the “Car Wash” corruption scandal, Petrobras had to improve their reporting system by making their compliance departments and internal investigations procedures more robust.

Similar bodies also exist within public bodies in many countries:

Example: Internal Control Bodies (Mexico)

In Mexico, each administrative body has its own public entity responsible for investigating public servants and institutions involved in corruption acts at a national and local level called Órganos Internos de Control. 

These bodies can receive complaints about suspected corruption in the relevant public body or agency they are responsible for.

Check if there is a similar body or procedure that exists in your company/public body or in the company/public body that is involved in the corrupt activity.


(a) Is Using an Internal Reporting Procedure Right for Me?


ADVANTAGESDISADVANTAGES
Anonymity. In some countries, complaints can be made without having to reveal your identity. Time. ACA receive a large number of complaints, thus, it can take time for your case to be reviewed.
Low cost. It’s free to make a complaint and the ACA will be responsible for taking further action.Lack of funding. In some countries, ACAs don’t have the necessary funds to effectively respond to all credible reports of corruption.
Expertise. ACAs are specialised in corruption investigations. They are often the most effective body to take action against corruption.Insufficient investigative powers. In some countries, ACAs don’t have broad enough investigative powers and have to rely on other authorities for obtaining evidence.
Powers. Reports can lead to investigations, criminal prosecutions, or a range of other penalties.Authority to bring charges is missing. It is more an exception than the rule that an ACA can press charges in court and in case a corrupt prosecution service has monopoly over indictments it can prevent a criminal prosecution regardless the quality of the evidence the ACA gathered.
Independence. ACAs are independent from police and prosecutors. If general law enforcement is tainted by corruptions, ACAs can still be effective.

For the use of such mechanisms to be effective, there will have to be fair procedures and have a genuine commitment from the management of the organisation to address corruption. If you think the organisation as a whole is involved, this type of complaint could be ineffective, eventually counterproductive or dangerous.

The resource below can help you assess whether an internal reporting procedure in your organisation is effective and fair:

Key Resource: Transparency International Topic Guide on Internal Whistleblowing Mechanisms

This Topic Guide goes into detail on the best practices of internal whistleblowing mechanisms, the procedures they may follow and provides guidance on practical considerations you should think about before making a complaint to one of these bodies.


(b) What Could Happen after Using an Internal Reporting Procedure?


This is the most informal type of complaint. This could lead to:

  • A disciplinary process being started, a warning being issued or a more serious action;
  • The individual wrongdoer being ordered to undertake training, being suspended or fired;
  • The supervisor of the individual wrongdoer being punished for allowing the wrongdoing to occur under their watch;
  • Changes in policy across the company to ensure that the same corrupt acts do not happen again, such as company-wide training or increased safeguards;
  • Self-reporting of the company to investigative and/or regulatory bodies to investigate the responsibility of the company and at the same time avoid higher penalties.
  • An internal investigation into the complaint or corruption more broadly within the company; or
  • The referral of the issue to the police to investigate the conduct of particular employee(s).
2

External Complaints Procedures, Oversight and Regulatory Bodies

External complaints procedures and oversight mechanisms are those that enable an outside independent entity to investigate allegations of misconduct by an institution’s personnel and recommend disciplinary sanctions or eventually escalate it to law enforcement authorities. 

Oversight bodies include procurement authorities, financial oversight bodies, regulators of various sectors such as telecommunications, mining, public health, environmental protection.

Example: Kenya Revenue Authority

The Kenyan Revenue Authority can receive complaints either in person, in writing or by telephone to start investigations into tax fraud in Kenya. The authority also provides a reward scheme for successful complaints, providing people with an incentive to make genuine complaints.

Tax fraud is related to corruption because higher tax rates can induce more corruption by incentivizing tax evasion, individuals have stronger incentives to accept and pay more bribes from the private sector instead of paying taxes, which has a negative impact on tax revenue.


(a) Is Reporting to an External Complaints Procedure or Oversight Body Right for Me?


ADVANTAGESDISADVANTAGES
Anonymity. In some countries, complaints can be made without having to reveal your identity. Time. ACA receive a large number of complaints, thus, it can take time for your case to be reviewed.
Low cost. It’s free to make a complaint and the ACA will be responsible for taking further action.Lack of funding. In some countries, ACAs don’t have the necessary funds to effectively respond to all credible reports of corruption.
Expertise. ACAs are specialised in corruption investigations. They are often the most effective body to take action against corruption.Insufficient investigative powers. In some countries, ACAs don’t have broad enough investigative powers and have to rely on other authorities for obtaining evidence.
Powers. Reports can lead to investigations, criminal prosecutions, or a range of other penalties.Authority to bring charges is missing. It is more an exception than the rule that an ACA can press charges in court and in case a corrupt prosecution service has monopoly over indictments it can prevent a criminal prosecution regardless the quality of the evidence the ACA gathered.
Independence. ACAs are independent from police and prosecutors. If general law enforcement is tainted by corruptions, ACAs can still be effective.

Before reporting to an external complaints procedure, ask yourself the following questions:

  • Is there a relevant complaints procedure or regulator that I can report corrupt activity to?
  • Does the body have powers to achieve the outcome you want? (e.g. investigate, take legal action, issue fines etc)
  • Is the body independent and does it have a good track record?

If the answer to these questions is yes, it may be appropriate to report the corrupt activity to an industry regulator.


(b) What Could Happen after I Make a Report?


Once an external complaints body or regulatory agency receives a report of a misconduct, they may:

  • Conduct an administrative investigation to establish facts;
  • Consider withdrawing that company’s licence to operate in that industry;
  • Issue a fine;
  • Issue an injunction to stop the harmful activity;
  • Order the perpetrator of the misconduct to restore the original condition of something that was harmed; 
  • Refer the issue to an investigative authority or prosecutor; or
  • Withhold a trading or quality assurance standard that they give to ethical companies.
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