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Whistleblowing procedures are "crucial for companies"

Whistleblowing procedures are "crucial for companies"

All companies should consider having a structured whistleblowing procedure or mechanism through which concerns can be raised by employees in a confidential way that protects the whistle-blower from victimisation or retribution.

This is according to Alun Rich, Director of Statucor - a BDO associate company, providing company secretarial services.

“By implementing their own internal process or outsourcing it to a suitable third party – such as an audit or legal firm - companies can place themselves in a good position to quickly know when something is going wrong, with employees often providing the relevant tip-off or information.”

However, there is still a general perception that whistle-blowers can easily be identified and then be targeted by those whose actions have been uncovered. It is therefore vital that the integrity and confidentiality of the whistleblowing process is a top priority, giving potential whistle-blowers the necessary reassurance they need before they are comfortable to divulge information.

“Our research has shown that it is usually someone with some level of power in an organisation that is involved in illegal, corrupt or unethical activities. He or she is usually in middle to upper management where they have the opportunity to be involved in contracts, backhanders or benefiting family members,” Rich says.

“It is often middle management employees with considerable experience and knowledge of the organisation who are able to take advantage of loopholes that can benefit themselves or those that they want to benefit from their actions.”

Importantly, the oversight of whistle-blowing in the corporate arena has been appropriately brought under the wing of Social and Ethics Committees, highlighting its alignment with ethical values.

“Oversights for larger companies now form part of the responsibility of the Social and Ethics Committee, reporting into the Risk Committee where matters are deemed a risk to the company. However, oversights for smaller companies will fall under the Audit and Risk Committee.”

This change is significant as it increases the ethical consideration. For example, an employee may now report someone doing business with a family member, because they are aware that it is not within the company’s code of ethics. In the past, this sort of activity may not have been reported.

“As a result of several high profile cases that have been publicised in the media, and have even led to the downfall of some companies, there is a much stronger awareness in the corporate sector about the need to have formal whistleblowing solutions in place,” Rich adds.

Despite this increased awareness, it is still extremely important for employers to educate their staff about the need for whistleblowing and to assure them that reprisals and vendettas cannot be taken against them.

Rich concludes, “By getting staff actively involved in the whistleblowing process, companies have a much greater chance of protecting their reputations and stamping out unethical activity before it does too much damage.”

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