Updated: Aug 22, 2021
What could make the biggest impact on your anti-corruption programme and have a positive contribution to your organisation's risk assessment including economic, societal and environmental benefits?
Are whistleblower programs used to punish those who avail themselves of it
Do you have a risk management framework and do you have the ability to collect data to enable you to identify fraud and corruption. Does your organisation have adequate anti-corruption controls and are you able to measure the performance of your risk assessment and risk mitigation plan.
It can be common practice for Government organisations that are endeavouring to assist in identifying malpractice, criminal or unethical behaviour (whether it be tax, criminal justice, regulatory, or irregularity within public sector procurement) to introduce a whistleblower hotline, any yet is the true value to this solution understood.
The Association of Certified Fraud Examiners’ 2018 Report to the Nation estimated that up to 45% of fraud reports are received via tips, with 54% of those coming from employees.
In November 2018, with less than 3 years since the introduction of its whistleblower policy, the Economic and Financial Crime Commission, Nigeria announced that it had recovered over N$527 billion or approximately US$53 million.
Countries such as the United States of America, Canada, Nigeria and South Korea have introduced whistleblower reward programmes. The US Securities and Exchange Commission has awarded more than $300 million to whistleblowers since the inception of the agency’s whistleblower program in 2011. US Enforcement actions from whistleblower tips has resulted in more than $1 billion in financial remedies.
The European Union, within its impact assessment for the introduction of new whistleblower protection legislation, highlighted the economic, societal and environmental benefits of whistleblowing. It stated that whistleblowing will help to unmask and deter fraud and corruption within the EU budget (current risk in loss of revenue is estimated to between €179 and €256 billion). In the area of public procurement, it confirmed that the benefit of effective whistleblower protection in the EU is estimated to be between €5.8 and €9.6 billion each year.
In its 2017 report ‘Estimating the Economic Benefits of Whistleblower protection in Public Procurement’. The European Commission stated that the costs for setting up and maintaining whistleblower protection are quite low in comparison with the potential benefits. In the Netherlands, for example, the ratio of potential benefits to costs ranged from 22:1 to 37:1, while in Romania it ranged from 319:1 to 532:1. Specifically, for the €526,000 costs the potential benefits were between €168 and €280 million.
USE OF TECHNOLOGY
A greater use of technology is now being recognised as essential if an organisation wishes to maximise the receipt and analysis of data in order to map out its risk and to protect an organisation’s revenues. Initiatives such as ipaidabribe.com in India was set up to tackle corruption through public reports on the nature, number, pattern, types, location, frequency and value of corrupt acts. The reports are not only used to map out corruption but also to improve governance systems and procedures and tightening law enforcement and regulation where possible.
An organisation must first quantify what it wants to achieve from this data. Analytical solutions and technologies such as artificial intelligence, voice recognition and translation, location and data mapping give us significant opportunities to understand and picture current risks.
Global whistleblower protection programs and legislation has seen varying degrees of disparity in safeguarding individuals. The US has introduced legislation that punishes organisations and compensates individuals where retribution is taken in response to whistleblowing.
Australia has taken whistleblower protection a step further and introduced law that requires all public and large proprietary company to spell out how they will “support and protect” those who speak up before they begin to experience any detrimental effects.
Additionally, a company can now be held liable if it fails to prevent detrimental acts as a result of having no support plans in place or neglecting to implement those that are.
The Organisation for Economic Cooperation and Development (OECD) in Detection of Foreign Bribery: The Role of Whistleblowers and Whistleblower Protection also highlights good practice and areas where whistleblowers need greater protection.
THE VALUE PROPOSITION
The significant global research and action that has been undertaken in this area outlines the many benefits for the introduction of a whistleblower hotline and protection mechanisms. In addition to the significant opportunity for financial recovery, there are also many areas that include societal and environmental benefits and also positive action that supports the protection of an organisation’s reputation and enhances its ethics and anti-corruption culture.
Having additional information that will allow an organisation the ability to map out its risks, to plan and introduce the correct level of risk mitigation, can only be of benefit both financial and reputational.
Introducing a hotline and publishing this fact communicates within, and outside of an organisation that it has a strong culture of ethics and that it is serious about protecting organisation revenues. It is recognised globally that most organisations, large or small are targeted by fraud or other financial crime and the largest risk can be the insider threat. Hiding the fact that an organization has been the victim of these crimes, or that it does not have the facility for individuals to report such illicit conduct, may send the wrong message about an organisation’s values or make it a bigger target for criminals.
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