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Five tips for reporting fraud through internal corporate channels

Thursday, November 4, 2010

whistleblower protection“Why didn’t you say something to HR or your boss?”  If you’re blowing the whistle on your company for fraud, expect to hear that question asked, including your whistleblower lawyer.

If your employer has a meaningful corporate whistleblower policy that offers true protection to you, reporting what you know through this internal whistleblower protection channel may be your best option, but it’s important to know how credible the program is before running the risk of fracturing a relationship with your company. 

Here are five tips (neither conclusive nor exhaustive) to consider when reporting fraud through internal corporate channels:

  1. Are the internal corporate whistleblower protection policies formally memorialized in your employment manual and policies and does the corporation specifically state in writing that you cannot be harassed, demoted, mistreated or terminated if you report facts that may amount to corporate misconduct?  No wiggle words.  No legalizes.  
  2. Does the human resources department run the internal corporate whistleblower program?  If so, I would be concerned.  With apologizes to the many great HR executives out there, HR reports to management and that management may have a vested interest in the misconduct.  In a large corporation, the HR executive operating in a subsidiary or a remote location is often times hired by the manager running the subsidiary or off-site location.  That HR executive reports to that manager.  The solid corporate whistleblower programs that I have seen are independent of HR and report to either a specific executive tasked with investigating fraud or even a committee of the Board of Directors. 
  3. Are there examples of fellow employees successfully using the corporate whistleblower program?  If so then this may be a good indication of its value.
  4. How actively does the corporation promote its whistleblower policies to the employees?  Active, open communication of the program may be a strong sign of that program’s effectiveness.
  5. What assurances do your have that your name will remain anonymous?  Anonymity is the only way to practically avoid backdoor mistreatment.

In short, you need to consider how meaningful the corporate whistleblower protection policy is at your office. Is the program viable, or does it amount to a “suggestion box” located near the men’s room?