One of the main reasons companies and governments oppose whistleblower systems is the fear they could be abused by angry or vengeful employees. A major report dispels this belief.
A miniscule 4 percent of 700 German companies surveyed by KPMG said they had received deliberately false reports from their employees, or reports motivated by revenge. Depending on the size of the company, only 2-6 percent said they received hoaxes, 2-5 percent received vengeful reports, and just 1-3 percent received joke reports. Ninety percent of companies told KPMG they had received no malicious reports whatsoever.
These important findings are presented in KPMG’s report, “Bringing Light into the Darkness: White-Collar Crime in Germany” (Licht ins Dunkel bringen: Wirtschaftskriminalität in Deutschland).
At conferences, public hearings and policy briefings around the world, company executives and public officials routinely complain that setting up internal whistleblower channels would invite employees to file vindictive and phony reports. As a result, they contend, their reputations would be damaged by bogus allegations. In Germany, where most workers are required to sign confidentiality agreements and loyalty oaths, industry groups have stridently cautioned the Bundestag against expanding free speech rights for company employees. The KPMG report punctures these anti-whistleblower sentiments.
One of Europe’s top whistleblower policy experts said the report confirms what he and most of his colleagues already have long known.
“There is no evidence that whistleblower channels generate any significant number of malicious reports,” said Theo Nyreröd, an associated researcher with the Stockholm Institute of Transition Economics. “There are few incentives for people to engage in such reporting through these channels, which actually can be designed to disincentivize malicious reports. The results of the KPMG study should come as no surprise.”
In keeping with the false impression that most whistleblowers are instigators, KPMG found nearly one-fourth of companies in Germany haven’t set up a whistleblower system because they fear nurturing a “culture of denunciation.”
At the same time, many companies recognize that witnesses in the workplace can be helpful. Nearly one-fifth of companies with a whistleblower system in place said they had discovered a crime only because of a tip-off. “It can therefore be assumed,” KPMG wrote, “that a whistleblower system will sooner or later play a major role in the detection and investigation of white-collar crime.” KPMG further urged companies – four-fifths of which said Germany faces a “high” or “very high” risk of white-collar crime – to “strive to create acceptance” for whistleblowing.
Perhaps the most remarkable finding is that not a single company KPMG surveyed said it did not need a whistleblower system.
The report also dismisses the argument that whistleblower systems do not work. “In many cases,” KPMG wrote, “a timely tip-off can ultimately make a substantial contribution to mitigating damage, even if this sometimes initially entails seemingly negative consequences for the company or for individuals.”