ETHICS & FRAUD
The King IV Code on Corporate Governance strongly recommends that all organisations have a whistleblowing mechanism in place to establish an ethical corporate culture. Whistleblowing hotlines are particularly important for municipalities given their crucial socio-economic role, says Philippus Fouché, CEO, Advance Call.
Whistleblowing hotlines for municipalities
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ccording to a 2018 Association of Certified Fraud Examiners (ACFE) global study on occupational fraud and abuse, tip-offs are the primary method of fraud and corruption detection. Fraud losses are 50% lower at organisations with whistleblowing hotlines. The Protected Disclosures Act (No. 26 of 2000) protects employees from retaliation should they report any
suspected wrongdoing or misconduct within their organisation. To encourage employees to report such misconduct, they need to be convinced that all disclosures will be dealt with appropriately. Accordingly, using an independent whistleblowing hotline, or safe report line, creates trust and affords employees and other stakeholders the opportunity to report ethical transgressions without fear of being victimised.
On the other hand, such a safe report line protects the organisation by offering the opportunity to deal internally with ethical issues. This can pre-empt public exposure of organisational scandals and prevent potentially harmful reputational damage.
The importance of blowing the whistle Blowing the whistle on suspected unlawful and unethical behaviour may seem very daunting and overwhelming. Whistleblowers fear possible retaliation or isolation. However, employees and other stakeholders play an important role in rooting out fraud and corruption in municipalities. Blowing the whistle is vital for the following reasons: Reporting fraudulent and corrupt behaviour can put an end to it Transparency International compiles an annual Corruption Perception Index, which measures the perceived level of corruption in each countr y. In 2019, South Africa received a score of 44/100, indicating a high level of perceived corruption, and ranked 70 out of 180 countries. Fur thermore, according to the PwC Global Economic Crime and Fraud Survey 2018, 77% of South African companies repor ted experiencing a form of fraud or economic crime within the last 24 months. This is in comparison to the global average of 49% of companies.
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What is the Advance Call process?
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IMIESA July 2021
