CII Communique July 2011

corporate governanceperspectiveWhistleblower Helplines: A Toolfor Good Corporate GovernanceWhistleblower Helplines not only act as an effectiveinternal early warning system for organizations to detectand check malpractices, but also help create anon-threatening environment for persons to reportactivity detrimental to the organisation’s interestsThere can be no denying the fact that the mostcommon method of detecting occupational fraud orunethical behaviour within an organization is feedback ora tip-off from an employee, customer, vendor, associateor anonymous source, as they are usually the first onesto perceive it. The other is by default or accident-whichis often too late, resulting in loss of reputation, credibilityand confidence in the organization.Corruption, unethical behaviour and fraud do not occurin vacuum. There are people who know what is goingon but choose to remain silent. If such people breaktheir silence and report fraud by relaying the informationto the key personnel within the organization, then theexposure of the organization to potential financial loss,criminal proceedings, litigations and adverse publicitycan all be checked.No matter how much the HR Department might wantto believe to the contrary, perhaps the single biggestdeterrent for people who wish to expose wrong-doingwithin their organization is the fear of recrimination postrevelation of their identity. This is precisely the reasonwhy a secure and confidential whistleblowing system isessential to enable stakeholders to easily communicatetheir concerns with their top management.Whistleblower Helplines not only act as an effectiveinternal early warning system for organizations to detectand check malpractices but also help them create anon-threatening environment in which anyone whoperceives any activity detrimental to its interests feelsfree to report it. By opening an additional channelof communication, they complement the internal andexternal audit system and strengthen the existing systemof checks and balances within the organization. Moreimportantly these helplines augment the organization’sinternal risk radar and help it capture and mitigate risks.Besides, by demonstrating a willingness to listen, theorganization not only nurtures a business culture ofhonesty, integrity and compliance which is recognizedas a key driver of brand, reputation and performance,but also conveys the message that it takes fraud andmisconduct seriously.While many organizations have framed whistleblowerpolicies, most of them require the whistleblower to firstdisclose his identity and then assure him of protection.It is debatable as to whether such a condition actuallyencourages or, to the contrary, ends up deterringwhistleblowers. Organizations fail to realize that given thevarious modes of communication and different forumsavailable today, one cannot possibly prevent or prohibitanyone from reaching out and expressing concernsexternally or anonymously.Thus it is in their interest ifwhistleblowers express their concerns internally throughan institutionalized mechanism so that they can checkthe situation before it spirals and affects their reputationand bottomline. Instead of shying away from receivinginformation, organizations ought to strengthen theirinformation receipt and processing systems.The possibility of receiving a ‘flood of information’ oughtnot to deter an organization from being receptive. Thisconcern must give way to confidence in the ability to siftthrough the information and identify what is meaningful.A friendly whistleblower policy aided by a secure andconfidential helpline and a sensitive processing mechanismare vital for effective proactive vigilance and also a visiblemanifestation of the organization’s commitment towardstransparency and good governance.This article was contributed by Amit K Paul, Founder of theCorporate Whistleblower Initiative-India’s first web-based helplinefor receipt of confidential information from stakeholders,www.cwiportal.com. The views expressed are the author’s. He can bereached at amit@akppartners.comCommuniqué July 2011 | 33