If you look at whistleblowers from the standpoint of popular culture, it seems like book deals, movie rights, and huge jury awards are part of the common scenario.
But in real life, it’s not all rainbows and unicorns!
Just recently, the former auditor of the City of Miami won a whistleblower lawsuit, but that didn’t mean the legal drama was over.
Instead, it just started a new round of legal wrangling after the auditor cooperated with an SEC investigation nearly a decade ago and arguably lost his job as a result.
Is it true that “no good deed goes unpunished” for whistleblowers?
Unfortunately, all studies we reviewed indicated that whistleblowers surveyed and interviewed frequently reported significant negative consequences as the result of blowing the whistle.
As a matter-of-fact, some studies indicate that whistleblowers began to experience negative consequences almost from the moment they brought the issue or issues to their superiors.
In other words, it didn’t take going to a governmental agency – the simple act of bringing a problem to the attention of others in the organization was often enough to launch severe reprisals and retaliation.
The reality for whistleblowers is not pretty!
After completing an 8-year study, Joyce Rothschild, a professor of sociology at Virginia Tech reported that 69% of the 300 whistleblowers who responded to her survey stated they were either immediately or eventually fired from their positions.
Rothchild states that respondents indicated employers “began a race to discredit the would-be whistleblower before the whistleblower could discredit them.”
In the process of being discredited and harassed, whistleblowers as a class have experienced financial loss, been blackballed within their profession and industry, as well as experienced deterioration and/or loss of family relations (including a high incidence of divorce.)
Is whistleblowing still the right call?
While the statistics and studies conducted paint a bleak picture, it is refreshing to note in a study conducted by psychiatric social worker Donald R. Soeken and his wife statistician Karen L. Soeken they report most whistleblowers, no matter what the consequences, state they would do it again.
The costs of waste, fraud, and abuse costs are huge!
It is estimated that 5% of revenues are lost in business to frauds.
The cost of waste, fraud and abuse of taxpayer funds is even more egregious.
The Government Accountability Office (GAO) reported that the federal government lost $124 billion in waste, fraud, and abuse in 2014 and over $137 billion in improper payments in 2015!
This staggering figure means that over 20 cents of every $1 of federal spending are lost!
How can we change this trend?
The Association of Certified Fraud Examiners (ACFE) in their 2016 Report to the Nations reports that tips are the number one way that frauds are detected.
If you aren’t providing a method for suspected waste, fraud and abuse to be reported through a variety of methods and open to a variety of sources, you are missing out on one of the most important detection methods.
- The ACFE reports that more 40% of tips came from non-employees.
- Phone tips made up 40% of tips, while email comprised 34% of reports and online forms captured another 24% of the tips.
So if your organization is serious about supporting whistleblowers, ask yourselves:
- How are we making it easier to deter waste, fraud, and abuse?
- Are we supportive of whistleblowers or have we created a climate of fear for people who want to do the “right” thing?
A whistleblower hotline may be a solid first step to reducing risk at your organization.
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Lucy Morgan CPA, MBA
CEO, Compliance Warrior