Europeans reluctant to blow the whistle

Jun 04 2007 by Brian Amble Print This Article

Fraud and unethical behaviour are facts of corporate life. But with a new European survey finding employees still fearful of the consequences if they blow the whistle, it is clear that many large firms could be doing far more than they claim to be doing to combat the problem.

Accountancy firm Ernst & Young interviewed 1,300 employees of multinational companies in eight Western European and five Central and Eastern European countries to explore their views on how anti-fraud measures were implemented in their organisations.

While the survey found that there is almost total unanimity that whistleblower rights should be protected, barely more than half of Central and Eastern Europeans (55 per cent) and three-quarters of Western Europeans (76 per cent) believe their employer actually protect whistleblowers.

And despite plenty of evidence to show that whistleblowers are one of the best ways to identify and stop fraud, many employees fear reprisals, even loss of employment, if they do blow the whistle.

One in five said that fear of the consequences mean they would keep quiet if they suspected that colleagues were involved in fraud or corruption.

French employees are the least likely in Europe to report suspicions of fraud, the report found, with only four out of 10 willing to risk the consequences of them blowing the whistle.

In contrast, almost nine out of 10 (86 per cent) of British employees said they wouldn't hesitate to report wrongdoing, a figure that is matched by an absence of fear of reprisals.

Ernst & Young's John Smart said that this figure reflected the fact that UK law strongly protected those who blow the whistle.

"The UK has developed a very strong reporting culture based on anonymous informing of wrongdoing. It is supported by law, such as the 1998 Public Interest Disclosure Act, that forbids the sacking of whistle-blowers who acted in good faith," he said.

Across Europe, nine out of 10 staff believe companies should have a code of conduct to address fraud, bribery and corruption. Yet only half of Central and Eastern European respondents and two-thirds of Western European respondents have such a code or are aware of one.

"Employees are not hostile to corporate anti-fraud measures, indeed they positively support such programs," said Ernst & Young's David Stulb.

"However, they are crying out for their employers to provide clarity and encouragement for them to act positively in the interests of the company. Employees want strong codes of conduct and make high ethical demands on companies in return. Regrettably some employers are failing to persuade staff they feel the same."

Overall, just a third of employees are aware of a whistle-blower hotline in their company. But this figure hides huge variations, with awareness in the UK running at 72 per cent compared to just 27 per cent in Slovakia.

"Employers have a great opportunity to reduce the risk of fraud and create a healthy corporate culture but many are missing the trick," David Stulb said.

"Good education and awareness programs will help but in the final analysis it is how the company and its leadership behave that sets the standard for the whole organisation."