[Report] Multinationals Neglect Whistleblowing Risks

- Leadership - Dec 27, 2014

Multinational companies need to move whistleblowing up their risk agendas after a global survey of more than 2,500 middle and senior managers reveals high levels of corporate complacency.

The survey, carried out by international law firm Freshfields Bruckhaus Deringer, found that more than one in ten (12 percent) employees have blown the whistle, while almost half of employees (46 percent) would consider blowing the whistle.

However, less than one in ten (seven percent) say whistleblowing is currently an important issue for their organisation and less than half (44 percent) say their companies either don’t have a whistleblowing policy or fail to publicise it if there is one.

Commenting on the study, Caroline Stroud, global practice group leader for Freshfields’ employment, pensions and benefits group and a member of the firm’s global investigations team, said: “Despite a recent spate of high-profile whistleblowers and an increase in the number of instances leading to global investigations and fines, companies are ill-prepared to deal with concerns raised by their employees.”

“Corporates need to adopt sufficient internal reporting systems to recognise and manage these matters more effectively. Given the high-level nature of whistleblowers’ issues such as financial mismanagement, corruption or criminal activities, and the related major reputational risks, adequate whistleblowing procedures are clearly a board-level issue.”

The survey data also shows that employees continue to fear reprisal for blowing the whistle. More than one third (37 percent) of all employees surveyed believe senior management at their organisation would either treat them less favourably or look for ways to terminate their employment if they blew the whistle.

Four in every ten (40 percent) employees say their organisation discourages or actively discourages whistleblowing.

Caroline Stroud further commented: “It’s surprising that employees continue to fear unfavourable treatment. In many countries, including the UK, the right to blow the whistle on particular violations without suffering detriment is protected by law. Boards need to create a culture in which employees are not only protected but genuinely encouraged to make disclosures to their superiors.”

Although more than half of respondents (53 percent) said they would primarily encourage employees to go to their direct boss if they saw wrongdoing within their company, one in four employees (25 percent) said they would go directly to a regulator, external organisation or the media.  

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