By Mustafa Yusuf-Adebola, CFE, CPA, CIA
Earlier this year, the President of the African Development Bank (AfDB), Akinwunmi Adesina was accused of “multiple abuses and breaches of the Bank’s code of ethics.” As reported by a French newspaper, among other things, Adesina was accused of “violation of the code of conduct” and “hindrance to efficiency (…) affecting confidence in the integrity” of the bank. The employees were reported to have made use of the bank’s Whistle Blowing and Complaints Handling Policy,which permits anonymous disclosures.
On January 19, they filed a complaint and forwarded an 11-page document to AfDB’s Integrity and Anti-Corruption Department, detailing 16 cases of alleged abuse. These whistleblowers cite that a friend of Adesina was appointed to a managerial position, even though the position was still held by his predecessor. This forced AfDB briefly to pay two salaries. Another individual, a childhood friend of Adesina’s, was awarded a contract of $326,000 for his Nigerian communications company, before he was recruited to AfDB a few months later. During an internal audit of the institution, the contract was reported as potentially falling under aconflict of interest.
The context and history of AfDB
The AfDB Group was founded by 23 member states on August 14, 1963, “to promote sustainable economic growth and reduce poverty in Africa.” Today, membership is comprised of 54 African countries and 26 non-African countries. Due to the nature of ownership of this institution, the accusation took a political angle because, not only was the bank’s president seeking a second term in office, member countries had interests in the issue.
While an internal inquiry cleared the president of these allegations, the Board of Governors Bureau approved an independent investigation into the whistleblowers’ allegations. The U.S. administration said it had reservations about the process that led the ethics committee to reject the whistleblowers’ accusations, which were judged to be “unfounded” or “unsubstantiated.” Once again, the president was cleared of all 16 allegations.
Key takeaways from the AfDB whistleblowing case
1. Independence and objectivity are vital.
As fraud examiners, it is important to always assume a position of independence and let the facts speak for themselves. When a whistleblower’s allegations are determined to be unfounded or unsubstantiated, as in the AfDB case, whistleblowers may not believe the reports from findings from internal investigations. While fraud examiners cannot assuage disgruntled whistleblowers, it should be in the back of every fraud examiner’s mind that your work can be checked and rechecked by an independent or external body. Thus, in carrying out reviews, due diligence must be exercised to ensure that — based on the available evidence — an external body will arrive at almost the same result when reviewing investigative processes.
2. Fraud examiners must distinguish between facts and coincidences.
Sometimes data suggests that someone is doing what they are being accused of, but when you investigate the process, governance documents and policies of an organization, there is no issue of noncompliance. In the AfDB investigation, the whistleblowers’ allegations appeared obvious and straightforward, but when the governance documents were reviewed, it was evident that while this may have appeared wrong (to the whistleblowers), it complies with the organization’s policies. Usually, this might be where investigations cause a review for process owners and internal auditors.
3. Regularly review conflicts-of-interest declarations for the C-suite.
When designing a fraud risk management framework, leaders and those charged with governance should pay close attention to the annual declaration of conflicts of interest. Leaders may have many contractors and staff, plus several other responsibilities, that it is quite impossible to know everyone. There could be obvious coincidences or the appearance of related-party transactions. For instance, in the case of AfDB, the president was accused of appointing relatives to “strategic functions” within the institution. To an independent observer, some relationships could appear conflicted, but when evaluated against internal policies, there may be no wrongdoing. This is one of the reasons financial reporting standards, for instance, provide for related parties disclosures. Because organizations are bigger than individuals, vendor management reviews and employee due diligence reviews should be designed (and updated) to assess potential risks that can emerge from a network of (potential) relationships.
4. Ensure there is a reliable feedback mechanism in place.
Lastly, as stated earlier, while you cannot force trust on a process, it is important to always encourage feedback and communicate with whistleblowers throughout the process (when possible). This encourages trust in the system and provides assurance that irrespective of the position or influence of the person accused, the system can independently check itself. Oftentimes, whistleblower allegations can lead to other independent investigations that were not considered. Thus, there is a spin-off from these in case management.