Blowing the whistle on suspected unlawful and unethical behaviour in the workplace may seem very daunting and overwhelming. Whistleblowers fear possible retaliation or isolation in the workplace. However, employees play an important role in rooting out fraud and corruption in their organisations. Blowing the whistle is vital for the following reasons:
- Reporting fraudulent and corrupt behaviour can put an end to it
Transparency International compiles an annual Corruption Perception Index, which measures the perceived level of corruption in each country. In 2019, South Africa received a score of 44/100, indicating a high level of perceived corruption, and ranked 70 out of 180 countries. Furthermore, according to the PWC Global Economic Crime and Fraud Survey 2018, 77% of South African companies reported experiencing a form of fraud or economic crime within the last 24 months. This is in comparison to the global average of 49% of companies.
Although fraud and corruption are a global problem, South Africa seems to be even more prone thereto. Reporting this kind of behaviour can help bring the crimes to light and put an end to it.
2. Fraud and corruption can cause an organisation serious damage
Organisations that are victims of fraud and corruption can suffer serious harm, including the cost of the actual crime; investigative costs; legal costs; and reputational damage. Over and above the cost of the actual crime, in 30% of cases, the cost of investigating the crime is more than the cost of the actual crime. Should an organisation decide to take legal action after an investigation, it will also incur further legal costs. Apart from the financial loss, an organisation can also suffer extensive reputational damage, which is incredibly difficult to recover from.
The longer fraud and corruption crimes go unnoticed, the higher the cost of these crimes. One of the biggest problems with fraud and corruption is that in the majority of cases it is impossible to recover the losses. Therefore, it is essential to report any suspected wrongdoing, in order to minimise the potential loss.
3. Whistleblowing is crucial for detection
It is imperative for organisations to have proper corporate controls specifically designed to detect fraudulent and corrupt behaviour. However, even in organisations with good corporate controls, at least 30% of fraud and corruption is detected by way of tips-offs. Research also shows that in the majority of cases, fraud and corruption is reported by employees, as opposed to clients or vendors.
One of the most valuable sources of information to an organisation is its employees and they play a crucial role in identifying and alleviating fraud and corruption.
Blowing the whistle can be a very intimidating experience for employees. It is however a vital part of identifying and addressing fraud and corruption in organisations. Employees are thus encouraged to report any suspected wrongdoing in their organisations and should also keep in mind that they are protected from any form of retaliation by the Protected Disclosures Act.