This article was orignially published in the Fighting Bribery and Corruption on the Global Stage Market Report
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.
Support from the top
As well as being trained in ethics and compliance management, the board and senior executives should receive regular updates on the reported incidents, including case-closure times and substantiation rates. Are particular regions seeing a spike in reports? Are trends appearing in certain types of complaints? This information is vital not only to assessing the performance of an internal speak-up system, but also allows compliance teams to measure management’s commitment to building a responsive and ethical organisational culture.
“You must have support from leadership teams,” says Aster Kamp, EMEA compliance officer at ASICS. “They must also acknowledge failures, and show how to resolve difficult issues by tackling the root cause. Sharing the outcomes of compliance programmes, both good and bad, is an essential step towards improving business culture.”
With close links to employees and leadership teams, frontline managers can play an important role in establishing the right behaviour throughout the company.
With close links to employees and leadership teams, frontline managers can play an important role in establishing the right behaviour throughout the company. Organisations must focus on training their managers on how to handle reports made by their employees and how to identify, and deal with, any sign of retaliation. “Cultural change is possible to do incrementally,” says Geert Vermeulen, CEO at Ethics & Compliance Management & Consulting. “Organisations must connect with their employees — especially on the frontline, where managers need to be given the tools and guidelines to understand and demonstrate the importance of behaving ethically.”
The pressure to compromise on ethical standards means an organisation must help its staff to recognise the importance of achieving success in the right way. Kamp explains: “To enhance the culture of compliance within a company, it is particularly powerful to try and connect your compliance goals with the values of the company. For ASICS, as we are a sports company, we have several values that stem from the principles of good sportsmanship: ‘work as one team’, ‘be prepared’, ‘respect the rules’. This helps to bring the topic of compliance to life with our employees.”
Tracking employee breaches of your code of conduct and policies, and analysing your whistleblowing data and attestation rates, will tell you a lot about the state of your culture, but ultimately you have to speak to your employees. “Do you know what your employees feel? Are they comfortable about reporting a concern? Do they fear retaliation?” says Carrie Penman, CCO of NAVEX Global. “The key is to ask the end users of the whistleblowing programme — the employees — what they think about the culture of your organisation.” Where they stand on these questions will reveal the true strength of your programme.
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