Are fraud reporting hotlines worth it? Yes, according to the ACFE’s Report to the Nations, a biennial global study on occupational fraud. For more than a decade, the ACFE’s Report to the Nations has measured the effect of hotlines on generating tips about occupational fraud, and the data has consistently shown that frauds are more likely to be detected by tip when a hotline is in place. While 46% of cases in the report were detected by tip at organizations with a hotline, only 30% of cases were detected by tip in organizations without a hotline.Read More
The insurance company Aflac is probably known best for its ubiquitous duck mascot. It is also consistently ranked on Ethisphere magazine’s World’s Most Ethical Company list, and Fortune’s World’s Most Admired Companies and 100 Best Workplaces for Millennials lists. But in the coming months and years, it might also become well-known for fraud and worker abuses.Read More
Mustafa Yusuf-Adebola, CFE, ACCA
In reviewing organizations’ whistleblowing platforms, I have noticed two features that consistently affect a program’s success. One, reporters have no trust in the system due to fear of victimization or intimidation when/if the veil of anonymity is removed. And, two, reporters are not encouraged to speak out because there are no (appearances of) far-reaching actions after investigations are conducted. Consequently, there is less motivation to report wrongdoing.
Trust is the bedrock of any whistleblowing platform; as such, potential reporters are comforted by the assurance that cases will be treated with the utmost confidentiality. For instance, an employee of an organization once revealed to me that he would blow the whistle only after he had submitted his resignation letter because the subjects involved in the alleged fraud were top executives. According to him, this was his own way of "rocking the ship" before leaving.
To encourage reporting through an effective whistleblowing policy, a few challenges I have noted are:
- Low awareness: Organizations need to appreciate the importance of publicizing their whistleblowing policies and the reporting channels to everyone (including third parties).
- Poor infrastructure: Create and enable appropriate channels (emails, phone lines, suggestion boxes or internet links) to cater for the preference of the reporter. For example, some organizations have dead web portal links and nonfunctioning phone lines used for whistleblowing. One company published a reporting phone number in its annual report that was entirely different from the website’s listing. These are easy ways to show potential reporters that you want to hear from them.
- No follow-up messages: A program should include assignments of case numbers for each report to give the reporter assurances of activities taken after they have made a claim. In certain instances, a case could be investigated for a long period of time and the reporter should be routinely informed of updates.
- Ignoring data analytics: Data analytics is a very useful tool in proactively responding to fraud. Collating and recording all relevant data for established and unestablished cases on the whistleblowing platform can help anti-fraud professionals proactively address fraud indicators, assist in updating in-house training courses, and help in increasing employees' fraud awareness and reviewing of company policies.
Ultimately, the support and actions of top management will go a long way to provide a good framework for preventing and detecting fraud through whistleblowing programs.
ACFE Community Manager
This year during International Fraud Awareness Week, we hosted our first ever Twitter chat with the topic “You discovered fraud — now what?” Participants shared excellent advice on what to do if you or someone you know discovers a potential fraud. A few discussion contributors even shared real-life experiences they have learned from.
Read on to discover some of the top insights shared during the chat, and be sure to follow us on Twitter!
FROM THE PRESIDENT
James D. Ratley, CFE
I've met many whistleblowers in my time, and what’s always resonated with me is that they persist despite nearly impossible odds. Dr. Sam Foote, a physician with a genius mind and audacious spirit, persisted when he found himself facing Goliath: the Phoenix Veterans Affairs (VA) Health Care System. When scandal rocked the department in Arizona, he didn’t back down.
In 2011, Foote penned his first letter to the VA Office of the Inspector General (OIG) to report waste, fraud and abuse by Gabriel Perez, then-director of the Phoenix VA. Foote had heard rumors that Perez’s mismanagement of funds had put the hospital $12 million in the hole. The national inspector general for the VA investigated the allegations that same year and Perez retired while inquiries were underway.
Any whistleblower would sigh with relief at this point: The OIG listened, the alleged fraudster was ousted, and now Foote and the hospital could move on. However, during Perez’s tenure, seven physicians left the hospital, and he never replaced them, which left the hospital with a provider shortage.
In 2012, Sharon Helman, who’d previously served as director of the VA hospital in Hines, Illinois, joined as head of the Phoenix VA and nearly a year later was reporting a decrease in patient wait times. But in the next year, Foote discovered secret patient wait lists. “In April of 2013, they [Helman and senior staff] made two lists: They made one electronic list that they would take on and off about 150 names that they actually reported to central office,” says Foote in Fraud Magazine's latest cover article. “Then they had another electronic list that did not report to central office.” Helman and the other administrators were claiming bonuses for decreased wait times — and patients were dying while waiting for care.
Foote again brought his concerns to the attention of the VA OIG, but this time he faced some resistance. He then sent letters to several government officials, including Sen. John McCain, R-Ariz. Eventually, the office of then House Rep. Jeff Miller, R-Fla., the chairman of the Committee on Veterans’ Affairs, responded. Miller put Foote in touch with a CNN producer, and on April 23, 2014, CNN broadcast an interview with Foote, and the story went viral.
Thanks to Foote’s tenacious efforts, further investigations would reveal that 293 veterans died while waiting for care. Multiple high-ranking officials, including Helman, have been placed on administrative leave or fired. And Foote continues to speak out as the VA saga continues.
At the 28th Annual ACFE Global Fraud Conference in Nashville, Tennessee, this past June, Foote received the 2017 Cliff Robertson Sentinel Award “for choosing truth over self.” He might have taken on Goliath, but just like the result of that epic battle, Foote is taking down the giant.