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India's success in corporate whistleblowing dismal: Deloitte

57% employees are dissuaded to blow the whistle due to various reasons, the report says

BS Reporter Mumbai
Despite global recognition for whistleblower hotlines as a key channel to detect frauds, India has had very little success in this area, says Deloitte Forensic's survey report, "Lead by example: Making whistleblowing programs successful in corporate India".

One of the key reasons for this, the report explains, is the casual'tick in the box' approach that companies adopt while planning and implementing a whistleblower program.

While 90% of survey respondents agreed that establishing a whistleblower hotline could help reduce fraud, only 68% said they were actually equipped with such a hotline or policy.

Data from whistleblower hotlines, if continuously monitored and integrated into the larger fraud risk management system, can detect even small irregularities early. However, survey respondents with existing whistleblowing programs indicated they were unable to utilise this channel effectively to detect frauds.
 
"Companies see a whistleblowing channel as one among the many sources that can detect fraud. Hence a whistleblower program often remains a cosmetic addition to the plethora of fraud risk management measures taken by the company - a tick in the box among several other initiatives. What they need to understand is that whistleblowing channels are perhaps the only source that can help detect fraud in their early stages. Accordingly, companies need to build an employee/stakeholder-friendly whistleblowing program," said Rohit Mahajan, Senior Director and Head, Forensic, Deloitte in India.

To build confidence among employees and encourage them to use a whistleblowing hotline the survey report emphasizes on the need for senior management commitment to the program and periodic communication about the actions taken on whistleblower complaints, a view backed by 94% of survey respondents.

"Companies should focus their communication on assuring employees that their tips will remain confidential. To demonstrate this, they may publish internal suitably anonymous examples of where a whistleblower system report led to an investigation and appropriate disciplinary action against those found to have violated the companies' policies. This helps to build the necessary trust among employees," Mahajan added.

The report also outlines some common operational aspects overlooked by companies while implementing a whistleblower blower program, such as dysfunctional hotlines that function only for specific durations (as opposed to 24X7 or 365 days a year), limited medium for access, limited local language support and lack of trained call handlers.

"We have seen several instances where hotlines are managed by Administrative or Human Resources professionals within the company, posing challenges to the anonymity of complaints and whistleblowers," said Mahajan. Hotlines handled by third parties were seen as a solution to this concern by 43% of survey respondents.

The report also details the measures companies can take towards building a supportive environment for whistleblowers, drawing from the firms' experience and prevalent best practices.

Highlights:

* 90% of respondents agreed that establishing a whistleblower hotline could help reduce fraud,

* Only 68% were actually equipped with such a hotline or policy

* 57% employees are dissuaded to blow the whistle due to various reasons

* 43% respondents felt that a helpline run by an independent service provider reporting to the Audit Committee would be Most effective

* 38% respondents preferred a service that offered varied platforms as modes of access/communication channels are crucial for an effective whistle blowing hotline

* Others preferred communication modes are e-mail based service (28%), by post (20%), toll-free number (8%), via website (5%) and fax-number (1%)


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First Published: Jun 24 2014 | 12:14 PM IST

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