Some of the world’s most significant cases of corporate fraud and misconduct first came to light as a result of whistleblower disclosures.
Sherron Watkins and Cynthia Cooper, then-employees of Enron and Worldcom respectively, were key to exposing the massive accounting fraud schemes underlying the businesses.
Jeffrey Wigand was Vice President of Research and Development at Brown & Williamson Tobacco Co. when he blew the whistle on the true addictive quality of cigarettes and exposed deeply unethical business practices within the industry.
In Australia, Jeff Morris was a former financial planner at the Commonwealth Bank of Australia who in 2008 reported his experiences of corruption to the Australian Securities and Investments Commission (ASIC). This disclosure is often credited with instigating what would become the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (also known as the Banking Royal Commission or the Hayne Royal Commission).
Multiple studies across the private and public sectors in Australia and overseas have shown that whistleblowing is the most effective way of identifying wrongdoing in organisations. A PricewaterhouseCoopers survey of 3,000 in 54 countries found that whistleblowers were the most common source of identification of internal wrongdoing. Research from universities including the Chicago School of Business and the University of Toronto, supports a similar conclusion, with findings that employees were the number one fraud detection mechanism when it came to corporate wrongdoing.
The Australian government has enacted new amendments to strengthen the protections for whistleblowers across a range of circumstances. Under the new laws, public companies, large proprietary companies and registrable superannuation entities must have a whistleblower policy containing specific information about how disclosures can be made and will be dealt with. Those entities will also be required to ensure that persons who make disclosures that are within the scope of the law do not suffer a reprisal as a result of having made the disclosure.
But protecting whistleblowers should be more than a matter of statutory compliance. Early identification of misconduct is key to minimising adverse impacts on the organisation, but staff and third parties are less likely to report if they feel like they’ll be subject to retaliation. So it’s in all businesses’ best interests to remove barriers to making internal disclosures and ensure whistleblowers’ safety and, if relevant, anonymity.
Contact GRC Solutions today to learn more about training your staff on how to deal with and make whistleblower reports.