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Fraud increases when times get tough

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Don’t cut back on fraud and corruption reporting mechanisms during tough economic times.

This is the word from Dale Horne, head of independent whistle-blowing service provider Whistle Blowers, which has received accreditation by the Ethics Institute of South Africa for the sixth consecutive year.

A 2014 global fraud study entitled the ACFE Report to the Nations on Occupational Fraud and Abuse, found that employees accounted for nearly 50% of all whistle-blowing tips.

It also showed that organisations with hotlines were not only much more likely to detect fraud through a tip off, but experienced frauds that were 41% less costly and detected them 50% more quickly, resulting in significant savings.

Horne points out that companies can expect more theft, fraud and corruption as cash-strapped or heavily-indebted employees resorted to dishonesty. An unethical workforce could also undermine productivity and erode competitive advantage while compromising earnings.

“Right now, businesses have to look after what they have. There is no room for lost income and increased costs,” Horne says. “Your team needs to be honest to survive. A few bad apples can cost a company dearly. But you can clean up an organisation through your own good people and let an ethical culture take over.”

He adds that most employees within an organisation are hardworking and honest with just a small percentage likely to stray. During tough economic times management should appeal to employees to uphold their ethics and report dishonest practices that could undermine a company’s profitability and hence jeopardise jobs.

However, he stresses that in order to do this effectively, companies needed to implement a structured whistleblowing programme and reiterates the importance of awareness training.

Whistle Blowers provides a 24/7/365 call centre manned by multi-lingual staff who establish a trust relationship with whistle-blowers. Employees of subscribing clients can report not only irregular activities such as theft, fraud and bribery but any unethical behaviour in the workplace, remaining anonymous and with their identities protected.

Operations manager Ntokozo Mngadi says interaction with whistle-blowers is key, as they need to feel confident in order to make full disclosure of sensitive information.