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The whistleblowers website – use with caution!

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FTdynamo.com In this week’s feature article FTdynamo tells us of a new website for whistleblowers, but adds a cautionary reminder.


Remember the Bank of Credit and Commerce International, Barings and trading company Versailles? They carry the infamous label of prominent businesses that have collapsed and gone bankrupt through internal fraud.

According to the specialist practice Forensic Accounting, companies in the UK lose hundreds of millions of pounds each year through internal fraudulent practices, and up to 6% of their turnover. UK bookshop Foyles was the victim of a fraud that was carried out over seventeen years, between 1982 and 1999, where millions were siphoned away, seemingly for books that were never delivered to the shop.

Employees are often the first to spot fraudulent activities – but often the last to admit they spotted it first. Official enquiries into collapsed firms, such as BCCI, have revealed that some employees were aware of numerous fraudulent practices, but were too afraid to speak out for fear of being victimised, or losing their job.

Too often, companies have no official channels in place for employees to report any financial wrongdoings, or employees may find it difficult to discuss their concerns with their employers.

But fraudulent practices that go unreported affect everyone in an organisation, and ultimately lead to what every employee fears – loss of jobs, insolvency and calamity for shareholders.

A new website, Fraudhotline.net, launched by Forensic Accounting, is aiming to stem the spread of corporate crime and encourage employees to become whistleblowers without fear of reprisals. By using the website, employees will be able to report confidentially and/or anonymously on any suspicious financial activity they come across. Forensic accounting claims that the website could encourage people who are otherwise wary of the consequences to come forward and report on any financial crimes.

Forensic will then contact the relevant companies – which rather begs the question, whom at the accused firm will they contact? – and pass on details of the alleged fraud. Forensic is also willing to offer advice on whether the complaints appear genuine or not. The service will be free of charge, and companies that sign up to it will be given a password for accessing the site to circulate amongst employees.

The website will undoubtedly make it easier for employees to blow the whistle on any suspicious activity, and may even encourage companies to set up their own system for reporting fraud in-house. The danger is that employees, under cover of anonymity, may use the service as a way of discrediting an otherwise fraud-free company or fellow employee.

But beware the big brother mentality that is becoming more and moreprevalent in companies. Employers are now making increased use of government legislation giving them the right to monitor employees’ emails, internet use and phone calls. If you suspect that your company is keeping close tabs on your internet and email activity, then using your company computer to tap out your anonymous email might not be the best idea. Instead, advises Forensic Accounting, take yourself off to your nearest internet café, or better still, use a home computer.


FTdynamo features writing and research from leading business schools and management consultancies with expert insight and analysis from FTdynamo. A free trial of its services is available at www.ftdynamo.com

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