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Tough times increase employee fraud - expert

Feb 16 2016 11:46
Carin Smith

Cape Town - Companies could expect more theft, fraud and corruption as cash strapped or even heavily indebted employees resorted to dishonesty, according to Dale Horne, head of Whistle Blowers.

An unethical workforce could also undermine productivity and erode competitive advantage whilst compromising earnings, in Horne's view. He, therefore, suggest that companies do not cut back on fraud and corruption reporting mechanisms during these tough economic times.

“Right now, businesses have to look after what they have. There is no room for lost income and increased costs. Your team needs to be honest to survive. A few bad apples can cost a company dearly. But you can clean up an organisation through your own good people and let an ethical culture take over,” said Horne.

He added, however, that most employees within an organisation were hardworking and honest with just a small percentage likely to stray.

Horne said whistleblowing has come of age and is being utilised more and more by employees who do not condone unethical behaviour being regarded as an efficient and effective means of detecting fraud and corruption in the workplace.

The 2014 ACFE Report to the Nations on Occupational Fraud and Abuse, for instance, found that employees accounted for nearly 50% of all tips. It also showed that organisations with hotlines were not only much more likely to detect fraud through a tip off, but experienced fraud that was 41% less costly and detected it 50% more quickly, resulting in significant savings.
 
Operations manager Ntokozo Mngadi said interaction with whistleblowers is key, as the whistleblower needs to feel confident in order to make full disclosure of sensitive information.

Employees don’t only make use of a toll free facility, but sometimes feel more comfortable using alternative reporting mechanisms, such as online reporting, fax, email, post or an SMS “callback” facility.
          
Mngadi emphasised that priorities should be protecting a whistleblower’s identity and ensuring that a client received accurate information.

"During tough economic times management should appeal to employees to uphold their ethics and report dishonest practices that could undermine a company’s profitability and hence jeopardise jobs," said Horne.

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