A new compliance benchmark report reveals some alarming findings for compliance and ethics officers: fraud and instances of retaliation against those who report it continue to rise.
According to the 2014 Corporate Governance and Compliance Hotline Report conducted by The Network, the percentage of fraud-related incidents across all reports increased from 23.6 percent in 2012 to 26.31 percent last year—marking an all-time high since 2005, when The Network first issued its Corporate Fraud Index.
Over the past five years, The Network has amassed a vast amount of data from the reports that come in through telephone and web-based hotlines. The latest data represents a compilation of 646,837 reports covering 2009 to 2013. In 2013, 141,852 reports were taken from 1,117 organizations representing 14,598,872 employees. Information and findings presented in the report reflect a wide variety of companies and industries from around the world.
Mobile-reporting applications are changing the way whistleblowers report allegations of retaliation. In 2013, 17.4 percent of reports were submitted via the web, an increase from 14 percent in 2012. “This is the highest one-year increase for the five years of the reporting period, and ties to the increase in mobile reporting applications,” the report stated.
When it comes to retaliation, the report revealed, despite greater protection for whistleblowers under Dodd-Frank, hotline calls concerning potential retaliation against employees who made reports increased for the second consecutive year—albeit minimally. Retaliation played a role in 2.2 percent of cross-industry reports covering a broad variety of ethics and governance-related issues in 2013, up from 2 percent the previous year. Still, this figure is lower than the peak level of 2.9 percent, reached in 2011.
The number and types of retaliation reports vary significantly from one industry to another. For example, the number of incident reports filed per 1,000 employees hit 18.73 within the construction industry, the highest reporting rate of all sectors. The second industry with the highest rate of retaliation was transportation, communications and utilities, which reached 17.42 retaliation reports per 1,000 employees
According to the report, 72 percent of all incidents reported in 2012 warranted an investigation, an increase of six percentage points over 2011. Of the total number of incidents that warranted an investigation, 44 percent resulted in corrective action, such as disciplining an employee or enhancing training.
“Organizations should continually reinforce their commitment to protect employees from any retaliatory activities, by including anti-retaliation messages in their ethics and compliance communications,” the report stated. "Non tolerance of any retaliatory activity should be a key message in any organization’s culture and training programs.”