By Ian Painter …
Take a look at the contexts of the top-10 FCPA fines of all time and you will soon spot a trend: mostly European-based organisations where corrupt activity has been uncovered within the day-to-day running of the business. Bribery and corruption creeps in through the disconnect between personal integrity and the pressure to bend the rules for the sake of achieving company targets. When asked about the payment of bribes, a former accountant from one of the top-10 fined companies explained: “It was about keeping the business unit alive and not jeopardising thousands of jobs overnight.”
PROVIDING A MECHANISM FOR EMPLOYEES TO REPORT POSSIBLE CORRUPT PRACTICES IS ONE OF THE MOST POWERFUL TOOLS AVAILABLE TO AN ORGANISATION TO PUT A STOP TO MISCONDUCT.
Providing a mechanism for employees to report possible corrupt practices is one of the most powerful tools available to an organisation to put a stop to misconduct. According to the Association of Certified Fraud Examiners’ most recent global fraud study, whistleblower reports are responsible for the highest volume of fraud detection by a wide margin, accounting for 39 percent of cases.
Setting up a whistleblowing hotline can be relatively simple. The harder part is creating a culture where employees feel they can speak out freely without fear of retaliation, and trust that their reports will be taken seriously.
Historically, employees in certain parts of Europe have often been reluctant to “blow the whistle”; the idea of reporting a colleague can bring back uneasy memories of police informers. Although attitudes towards whistleblowing are beginning to improve and reporting rates have been increasing across EMEA and APAC, Europe was still only responsible for 3.2 percent of all whistleblowing reports made globally in 2017, as noted in NAVEX Global’s 2018 Ethics and Compliance Hotline & Incident Management Benchmark Report.
Protecting the whistleblower
Even the most advanced anti-bribery and corruption programme will fall short if its employees do not speak up. A lack of whistleblowing reports is not a sign of success; it can indicate a systemic failure of the reporting process. So what can organisations do to encourage an appropriate level of reporting?
While there is legislation in Europe to protect whistleblowers, it is somewhat patchy, which can cause concerns for employees about the personal consequences of reporting. “You must demonstrate the controls that are in place to provide security around the information gathered and the confidentiality of the individuals involved,” says Antoinette Gutierrez-Crespin, fraud investigation partner at EY. “You must also resist any request to share information outside of the investigation’s core team.”
IF WHISTLEBLOWERS FEEL THAT THEIR CONCERNS ARE NOT BEING LISTENED TO, TAKEN SERIOUSLY, OR THAT NO REMEDIAL ACTION HAS BEEN TAKEN, THEY MAY THEN TURN TO EXTERNAL SOURCES
Communication is key. It’s important that whistleblowers are kept informed of how investigations are progressing, so they do not become frustrated with the process. “Stay in touch and let them know how the process will be handled from the start, including how long it will take and what is involved,” suggests Maria Lancri, counsel to GGV Avocats à la Cour Rechtsanwälte. “Every report needs to be handled in a similar way and thoroughly investigated, as any perceived failure on this front could undermine people coming forward in the future.”
If whistleblowers feel that their concerns are not being listened to, taken seriously, or that no remedial action has been taken, they may then turn to external sources. External reports can thoroughly shake a company, its reputation and its culture. “If just one case is badly handled, through channels such as social media, it will become public and undermine all whistleblowing cases,” warns Gary Davies, chief risk and operations officer for Bibby Financial Services.
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