A majority of companies in India have put in place whistle-blowing hotlines to detect frauds, but many of them are unable to utilise this mechanism effectively due to a 'casual tick-in-the-box' approach, a survey by global consultancy major Deloitte has found.
Despite global recognition for whistle blower hotlines, Deloitte survey found that India has had very little success in harnessing this channel to detect frauds.
"One of the key reasons for this is the casual 'tick in the box' approach that companies adopt while planning and implementing a whistle blower program," Deloitte said.
According to the survey, about 68 per cent of the firms were found to be equipped with whistle blowing hotlines, while another 90 per cent agreed that such channels could help reduce frauds.
However, respondents with whistle blowing programs indicated their inability to utilise such systems effectively.
"One of the major reasons for this lies in the approach that companies take when they set out to implement such a hotline," Deloitte India, Senior Director and Head Forensic, Rohit Mahajan said.
"When an initiative is commenced with an aim to 'tick in the box', it is unlikely to succeed. That is what seems to be happening with the majority of Indian companies trying to implement a whistle blowing program," he added.
As per Deloitte, generally, companies with some form of a hotline in place experienced frauds that were 41 per cent less costly and detected frauds 50 per cent more quickly.
Mahajan said India Inc needs to understand that "whistle blowing channels are perhaps the only source that can help detect fraud in their early stages".
For this purpose, company managements need to build an employee-friendly whistle blowing program such as ensuring confidentiality and communicating the actions taken on the complaints.
"To demonstrate this, they may publish internal suitably anonymous examples of where a whistle blower 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 said.
Deloitte said many operational aspects were overlooked by companies while implementing hotlines such as dysfunctional hotlines that function only for specific durations, 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 whistle blowers," Mahajan said.
