Protecting Whistleblowers: Are You Ready for the Changes?

Vince Scopelliti - Wednesday, December 05, 2018

With new whistleblower protections to take effect in early 2019, it is essential that organisations understand the broad legislative changes to the Corporations Act 2001 due to be debated in Parliament. In addition to the requirement for formal mechanisms and strategies to protect and assist whistleblowers, both public and large private corporations will need to be able to 'spread the word' to staff in a practical way. 

Successfully embedding the changes to whistleblower protections into your organisation requires clear understanding, action and communication. With 2019 just around the corner, the time is right to ensure that you have all the information that you need to meet the new obligations.

WHat is the definition of a 'whistleblower'? 

Blowing a whistle has always been a common method for citizens to warn others of significant problems such as overcrowding, bad sportsmanship or dangerous waters. Whistleblowing has nevertheless developed some negative connotations in the corporate world. 

Despite the need to guard against corruption and corporate wrongdoing, corporations have in the past done little to actively protect those who speak up from being harmed. The new regime, due to be enacted in early 2019, includes compensation for any whistleblower who suffers statutorily-defined 'detriment'. 

No longer will the definition of whistle blower be restricted to current employees: past and present contractors, workers, suppliers, family members and many other stakeholders can rely upon the new protections.

who the changes apply to 

The proposed changes to the Corporations Act 2001 will effectively ensure that large employers provide the incentive, means and protection for individuals to blow the whistle when corporate wrongdoing is suspected. The changes formalise the legal protections that have been available in a relatively piecemeal manner across time. 

The new regime will mandate that all Australian public companies, large proprietary companies, and registerable superannuation entities will have compliant whistleblower policies in place by early 2019. Further, it will be necessary to demonstrate that stakeholders can safely and anonymously exercise their right to blow the whistle on corrupt practices. 

reach of the new bill

The demands on corporations flowing from the changes to whistleblower laws via the Treasury Laws Amendment (Enhancing Whistle-blower Protections) Bill 2017 can certainly seem daunting. As an example, the new Bill requires that corporations provide clear, comprehensive and anonymous pathways for any staff or stakeholders who wish to report suspected wrongdoing. 

This includes demonstrating that policies and procedures designed to promote and protect whistleblowing are accessible by all stakeholders. Further, access to an anonymous helpline is crucial to ensure that parties can talk freely about any suspicions of wrongdoing. 

The reach of the new Bill includes the ability to look at past corruption and in some cases to award damages to workers or others who have suffered detriment in the past as the result of blowing the whistle.

next steps? 

In the short time remaining between now and when the new whistleblower changes come into being, it is essential that all relevant organisations audit their current practices relevant to the new Bill. To assist our clients in understanding the proposed changes, we have published a white paper, which is available for free download. 

One core offering that we provide is our industry-leading Grapevine Confidential Whistleblower Hotline. Staffed 24 hours a day, 7 days a week, Grapevine provides employees with the opportunity to make anonymous complaints to trusted and experienced operators. 

WISE has provided Grapevine since 2016, and the hotline enhances the way our clients manage their business, but also allows them be legally compliant with the new regulations. January 2019 is fast approaching. If you would like any additional information or an obligation free proposal, contact WISE today! 

Procurement and Corruption - The Warning Signs

Vince Scopelliti - Wednesday, October 31, 2018

Effective procurement requires the ability to foster productive relationships and to secure the best possible terms within a contract or project. However, there can be a fine line between savvy negotiation and a gradual descent into corrupt and/or fraudulent behaviour. 

Despite robust legal and policy requirements relating to procurement activity, fraud is nevertheless an ever-present problem within the supply chain sector. We examine some of the danger signs of corruption to consider within any procurement arrangement.

procurement fraud

Corruption and fraud go hand in hand. In procurement work, tender processes can be circumvented or omitted altogether, documents altered subtly to benefit internal operatives, and bids and contracts massaged to create mutually beneficial gains. Fraud can begin with lazy practices or commercial white lies, growing to a tipping point where procurement officers enable a status quo of daily corruption. By favouring existing contractors or accepting inducements to deal with others, procurement divisions can become riddled with fraudulent and self-serving behaviour.

red flags of corruption 

So what are some of the conditions that enable procurement fraud? Time and money lie at the heart of procurement activities, and both can usefully serve as red flags for possible corruption. Shorter-than-usual timeframes for tender processes can be a tell-tale sign of a strategy to reduce competitive bids and give favour to a particular supplier. 

Similarly, the acceptance of a higher bid with no meritorious justification can and should ring alarm bells. Other red flags include: poor communication protocols regarding procurement management; a lack of well-documented processes and outcomes concerning payment agreements and project costings.

a complex framework

In NSW, the procurement policy framework provides an extremely complex set of legal, governance and administrative requirements around procurement activities. 

While this has brought various authoritative sources of information into one structure, the framework does place considerable administrative demands on staff at the coalface. 

Management should understand and champion the framework, providing effective training and support to staff around ongoing issues of transparency and integrity.

Solutions to fraud and corruption

Establishing the right culture is the number one weapon against corruption. This includes fostering a work environment where transparency and integrity are at the core of business-as-usual. Staff training should be in depth and ongoing, with refreshers provided at regular intervals. Organisations need to audit and assess current internal controls, taking nothing for granted when designing mechanisms for combatting fraud. 

Anti-corruption controls already in place must be monitored for strength and efficacy at regular intervals. When red flags go up, a fraud response plan should be accessible, relevant and understood by the entire procurement division. Further, a thorough knowledge of current and potential suppliers should be developed and maintained, including detailed information on supplier capacity and sub-contracting. 

Perhaps most importantly - yet often overlooked - the procurement process itself must be monitored each step of the way, both for individual contracts and in terms of ongoing operations within the procurement division. A further enhancement possibility exists within business analysis programs; harnessing the power of data can provide an incredible means of monitoring procurement processes, picking up any suspicious activities through detailed analytics.

hear it on the grapevine

Grapevine is owned and operated by WISE Workplace. In 2016, we launched Grapevine to enhance the way our clients manage their businesses. The Grapevine Confidential Whistleblower Hotline provides employees with a safe and secure environment to report misconduct, enabling insightful management of complaints and the ability to bring about real cultural change and reduce risk. 

The Grapevine call centre is located in Queensland and staffed by trusted and experienced operators. The call centre is manned 24/7 and receives over 1,000 calls per week. For a free quote, call WISE today. And should you wish to learn more about methods for assessing potential fraud within your current procurement practices, we will be happy to assist.  

Protecting Whistleblowers During Workplace Investigations

Vince Scopelliti - Wednesday, July 12, 2017

Feedback from employees is crucial to employers wanting to keep their finger on the pulse of a business. It is essential for management to be aware of risky behaviours occurring within a workplace, such as bullying, circumstances giving rise to easily preventable worker's compensation claims, failure to comply with regulations, corruption, or even criminal activities such as embezzlement, theft or fraud. In many circumstances, this information will only become available through the cooperation of whistleblowers. 

In order to ensure that accurate information is conveyed, it is essential for businesses to make sure that potential whistleblowers are protected from persecution, ridicule or reprisals during the investigation. But how does this occur in practice?

WHAT IS A WHISTLEBLOWER?

A whistleblower is somebody who reports internal wrongdoing within an organisation, either to a senior member of the organisation or to an external authority, such as the police or the Australian Securities and Investment Commission (ASIC). 

Generally speaking, protection is afforded to those who are current employees, officers or even contractors who are engaged in providing goods or services to an organisation. 

Information which is provided to an employer by a whistleblower is considered a 'protected disclosure', which must remain confidential and which can only be passed on if specifically authorised by law or by the whistleblower. 

how are whistleblowers protected?

There are various sets of state-based legislation which provide different types of protection for whistleblowers operating in the public sector. However only in South Australia are those working in the private sector afforded similar protections. In SA, the Whistleblowers Protection Act steps in to protect people who provide information:
  • Which the genuinely believe is true.
  • Which can be considered to be in the 'public interest'.
  • Which is provided to an appropriate authority. 
Nationally, the Australian Standard AS 8004-2003 sets requirements for the implementation of whistleblowing schemes in private enterprises. Under these requirements, the identity of the whistleblower must not be disclosed unless specifically authorised by law, and the information provided must also be kept confidential. 

At federal level, the Commonwealth Corporations Act 2001 also provides specific protections for whistleblowers, which prohibits any action, including personal or professional retaliation, from being taken against a person who has disclosed wrongdoing. In the event that any such retribution occurs, the Act provides a civil right for whistleblowers to sue reinstatement of employment. 

Alternatively, if a whistleblower suffers any other loss as a result of their disclosure, they can claim compensation for damages suffered directly from the alleged wrongdoer. 

The Act stipulates that whistleblowers cannot be subjected to criminal prosecution or civil litigation because of their involvement in providing protected information.    

However in order to fall within the protections set out in Paragraph 1317AA of the Act, it is necessary for:
  • The whistleblower to provide their name.
  • There to be reasonable grounds to suspect a breach of the Act and the report is to be made in good faith.
  • The whistleblower to be a current employee or director (of course, this is problematic in circumstances where the person was recently sacked or otherwise resigned from their employment)
In June 2017, the federal government announced its intention to introduce legislation which updates and improves on whistleblower protections, including potentially incentivising whistleblowers with financial rewards for providing information which has resulted in successful prosecutions.   

HOW YOUR ORGANISATION CAN ASSIST WHISTLEBLOWERS

Although Australia has some legal provisions in place to ensure that whistleblowers are protected from reprisal or other involvement in litigation, there is still much more that can be done to encourage the reporting of wrongdoing observed within a company. 

If you are concerned that your workplace may not provide sufficient incentive to employees to report wrongdoing, or provides insufficient support to those who do reveal sensitive information, sign up to WISE Workplace's 24/7 whistleblower program, Grapevine. The program offers independent monitoring of complaints and assessments of appropriate methods of dealing with complaints, as well as advice on how best to advise your employees that they are entitled to whistleblower protections. 

Ensure that your organisation is strengthened internally by implementing a strong whistleblower policy to guarantee that all staff feel comfortable providing information relating to misconduct or inappropriate behaviour. 

Is Your Complaints Procedure Effective?

Vince Scopelliti - Wednesday, July 05, 2017

Risk management is an important aspect of running a successful business: Whether this takes the form of ensuring compliance with corporate governance programs, reducing instances of workplace fraud or financial misconduct, or eliminating bullying or other forms of harassment. 

Having a strong and coherent whistleblower program in place can help protect your organisation's interests in all of these situations. 

An ineffective complaints system could in fact be preventing your employees from raising any complaints. 

So what are the hallmarks of an effective whistleblower program?

Provide confidentiality and support

An effective complaints system should enable your business to identify hotspots, respond to critical incidents and communicate confidentially with reporters. It should also provide employees with a safe and secure environment to report misconduct, enable insightful management and the ability to bring about real cultural change, and reduce corporate risk. 

Perhaps the most crucial component of a successful complaints system is that complainants are guaranteed confidentiality and employer support throughout the whole process. This is particularly important as those who are considering blowing the whistle on co-workers or supervisors may be concerned about reprisals or the potential impact on their employment. 

This is especially likely to be the case in circumstances where the reported conduct involves sexual harassment, workplace bullying or criminal behaviour, such as fraud or theft. Employees considering making a complaint should be offered the opportunity to make anonymous complaints to reduce the fear of retaliation. 

The following statistic are particularly insightful: 

  • A third  of all reports made through whistleblower programs relate to bullying and harassment
  • 67% of people experiencing bullying or harassment do not report it
  • 42% do not report it for fear of negative consequences
  • 49% of misconduct is reported by employees. 

ESTABLISH CLEAR PROCEDURES AND GUIDELINES

It is crucial that reporting systems in your workplace are clearly identified and communicated to all staff. This includes making it clear to all employees how a complaint should be made (including an anonymous complaint), to whom, and what the follow-up process will be once a complaint has been lodged. 

This information should be readily available and easily accessible. 

DON'T MAKE EMPTY PROMISES

Once a whistleblower program is in place in your business, it is important for those utilising the service to feel that their complaints are being taken seriously and will be dealt with and responded to in an appropriate fashion.  

Privacy concerns and operational strategies may mean that complainants are not privy to all aspects of any ultimate disciplinary or punitive processes imposed on those against whom complaints are sustained. It is nonetheless important to confirm with the complainant that it has been duly and independently investigated, and that it has been resolved to the business' satisfaction.

CRACK DOWN ON REPRISALS

It is equally important for your organisation to have a strong and transparent policy to deal with reprisals or victimisation of whistleblowers. In some circumstances, even if confidentially is offered, only a little bit of logic may be required to deduce who made a complaint against another staff member. This maybe particularly relevant if your business is small or if the circumstances surrounding an allegation involve only a few people with detailed knowledge of the facts. 

If anyone involved seeks to retaliate either physically, verbally or by affecting the whistleblower's employment, it is crucial for your organisation to demonstrate a swift and clear zero-tolerance response.  

IMPLEMENTING A PROGRAM CAN BE CHALLENGING

Ensuring easy communication and the ability for staff to raise complaints where necessary, benefits all employees by improving an organisation's ability to deal with risks and increasing employee satisfaction. 

However, implementing an effective whistleblower program can be difficult, particularly in a smaller business with limited resources. It can also be a complicated task to provide a program that responds quickly and is impartial. 

At WISE Workplace, we offer an independent whistleblower hotline program that is ready to take complaints 24/7, provide assessments on the urgency of complaints, and offer expert advice on the dealing with complaints. Contact us to find out more.   

Corrupting Legitimate Processes: What's Really Going On?

Jill McMahon - Wednesday, June 29, 2016
Corrupting Legitimate Processes

Corruption is a huge problem for Australian organisations because it exists in so many places and in so many forms that the average manager may not even consider it an issue. 

Left unchecked, even minor corrupt behaviour can spiral out of control. 

Using legitimate processes is one way that corruption can be concealed, making it easy to justify and difficult to detect.  

Defining corruption and legitimate processes

Workplace corruption can be broadly defined as behaviour that violates the trust that organisations place in their workers. It can range from serious fraud and abuses of power to minor issues such as fraudulently claiming sick leave. 

Legitimate processes are processes, policies and procedures that a workplace uses to function. They can sometimes be manipulated for corrupt purposes. 

For example, an employee who makes a complaint about a manager may be transferred to another work station, have their overtime hours reduced, or be placed on continuous night shift. The decision-maker justifies the change by saying that there was an operational need for the change, but the timing indicates that it was made because the employee complained.

Detection is difficult
Because the corrupt activity is concealed by legitimate processes, it can be very difficult to prove. It is only by uncovering the background to the decision that corruption may be established.

For example, if our employee was put on permanent night shift just a week after making the complaint against the manager, surrounding relevant factors may be: 
  • There was no warning that the decision was about to be made. 
  • No one discussed the matter with the employee. 
  •  The manager and the shift manager are known to be good friends. 
  • There are emails between the managers about changing the employee’s shift because of the complaint. 
All of these factors are important to consider as they establish context for the decision being made.

Other legitimate processes

Corrupt legitimate processes can also exist in other forms. For example, there might be a strict requirement for payment of invoices to be signed off by two people before being approved. If two employees work together to create and approve false invoices and then pay the money into their bank accounts, this is corruption of a legitimate process. 

If a group in a workplace regularly engages in corruption, for example using a company credit card to buy items for personal use, there may be pressure on other workers to join in or collude. If they refuse, the group may organise for the workers to be transferred.
What is the impact?
Incidents of workplace corruption in Australia are increasing. The Transparency International Corruption Perception Index recently noted that in the past four years, Australia has dropped from 8th to 13th position. Public sector corruption is a key contributor, the ABC reports, but there are also widespread problems in the private sector, notably the banking industry. There have been recent calls for a Royal Commission into the industry to investigate its practices. 

The impact of corruption is huge. In 2012, KPMG’s survey of fraud, bribery and corruption estimated that Australian and New Zealand organisations lost $373 million to corruption. Employees were thought to be responsible for 75% of corrupt activities.
What can be done?
It is important to understand that corruption is usually not spontaneous. There is often a perfect storm of events and situations that causes employees to engage in corrupt activities. 

Understanding what constitutes corruption and taking preventative measures to avoid corruption can help organisations to minimise its effects.   

Corruption is an important issue for all organisations and the better it is understood, the greater the chance of minimising the harm that it can cause. Using legitimate processes is a great cover for corrupt employees. Detection is difficult and there are usually plausible explanations for their actions. If you suspect corruption in your organisation, WISE Workplace can assist with independent investigations and expert advice.  

How Silence and Censorship Can Enable Workplace Corruption

Jill McMahon - Wednesday, June 08, 2016
How Silence and Censorship Can Enable Workplace Corruption

While workplace corruption can take many forms, it can also exist in silence and censorship. A corrupt group of workers may keep silent about their activities, or they may impose silence or censorship on others to ensure that their conduct is not reported. 

This makes corruption very difficult to detect, and it also leads to other issues such as workplace bullying and worker safety. 

How does it happen?

Workplace corruption can be very effective when perpetrated by a group of workers. Once a group is operating within a workplace, they can cover up their own activities and insist on the silence of others. This is often closely linked to bullying.

The activity may be concealed by the attitude ‘this is how we do things around here’.

Employees may be pulled into a web of corruption because the behaviour is seen as normal, fear of bullying or the desire to be accepted by the corrupt group. If left unchecked, it can be a cycle that becomes entrenched. 

Why does it happen?

In addition to the pressures that can be applied by a corrupt group, there may be other issues at play when an employee is silenced or censored, and they may occur well before the corruption becomes apparent. 

Organisations naturally depend on employee input to improve services and efficiency. But sometimes employees don’t feel that they can speak up. 

There may be a range of contributing factors to this, including fear that:

  • Any suggestions for change will be viewed as a personal criticism of the manager or boss.
  • Any suggestions for change must fully solve the problem and strong evidence of this is needed before the employee has the right to speak up.
  • Any suggestion will be viewed as insubordination or embarrassing to the boss or manager.
  • There may be retribution or negative career consequences for speaking out. 

According to an article in the US Journal of Organisational Behaviour, there is also evidence that reluctance by employees to speak out may result in stress and depression, poor job satisfaction and lowered commitment to the job and organisation.

From here, it’s a slippery slope to corruption. 

The spiral into corruption

Just think. An employee, Dave, notices that five colleagues take petty cash on a daily basis to buy their lunch. It doesn’t appear to be sanctioned by the company. As the colleagues are good mates with the manager, Dave is concerned that telling the manager would create trouble for him. Dave worries that going to the manager’s manager would be seen as insubordinate, and in any event, he doesn’t have a bulletproof suggestion for how to fix the problem. He thinks the company is losing around $300 per week in petty cash.

As a result of his concerns, Dave chooses to say nothing and becomes increasingly stressed that if the employees get caught, he’ll be blamed for not speaking up. He’s also scared that he will be bullied as he’s seen this happen to another worker. Dave keeps quiet and by his silence, acquiesces in the corruption. 

How to stop it from happening

In our previous articles on corruption, we have canvassed a number of ways to stop the practice from spiralling out of control. 

More: Corruption and Deviant Behaviour in the Public Sector.

Building stronger relationships with employees can also go a long way towards keeping things in check.

Managers and supervisors can: 

  • Encourage employees to speak up when they see something that can be changed.
  • Reward suggestions for change.
  • Talk honestly to employees about the desire to have their input and how those strategies might be implemented.
  • Tell employees that they want to know what they observe and keep in touch with employees about the progress of their suggestions for change. 

Silence and censorship of employees as a means to cover-up corruption is a well-used strategy that means that organisational corruption remains difficult to detect. But organisations that adopt a “grassroots” approach by encouraging employees to participate in organisational improvements may find that they have developed an effective means of preventing and detecting corruption. 

WISE Workplace has much experience in developing such strategies. Call us today to discuss your options. 

Wall of Silence: Banding Together to Avoid Detection

Jill McMahon - Wednesday, May 18, 2016
Protection from Detection

The saying “safety in numbers” can apply to so many situations. For example, a group of students may be more empowered than an individual to stand up to a school bully. Walking dark city streets with a group of people may be safer than walking alone. The list goes on.

But the term can also be turned on its head and applied in more sinister circumstances. We have seen this in instances of workplace corruption, in which a group of corrupt employees commits workplace fraud and then closes ranks to prevent detection. It is a wall of silence that enables powerful alliances to be formed. Its success depends upon members keeping quiet about the activities of the group.  

Strength of the “in” group

We think of these alliances as “in” groups. Their power is derived from peer group pressure, and mutual benefit of identifying within the group which is a concept explored in social identity theory.

But it goes further than this. In cases where there has been a complaint or an investigation by management, the “in” group can close ranks by providing false evidence or even applying upward pressure on management to abandon the investigation. 

The “in” group may also work to ensure that there are narrow terms of reference for any investigation into corrupt conduct. This may have the effect of limiting the number of witnesses who can be interviewed or limiting the questions that can be asked. As a result, the investigation may be rendered ineffective. 

The group may ensure that any complaints to a human resources manager are filed as trivial. In our article on alliances and networks, we illustrated how a web of corruption can be extended to include managers and additional departments as a corrupt employee is promoted through the ranks. 

In this scenario, the HR manager would be part of the “in” group. They can create the impression that they properly investigated the complaint by informally discussing the matter with some witnesses and making a file note that the matter has been considered and closed. But in reality the issue still exists.

 Is it really an issue?

Because corrupt conduct can be so difficult to detect, it is hard to determine how bad it really is. 

In its Global Economic Crime Survey 2016, PwC reported that there has been a marginal decrease in economic crime. 

But it noted that this may have been due to organisational detection and control programs failing to keep pace with changes in the ways that economic crimes are now being committed. 

As evidence of this, around 22% of respondent organisations said that they had not conducted any fraud risk assessments in the two years prior. This was despite more than one-third of respondents saying that they had experienced economic crime in that same period. And it also appeared that one in ten economic crimes were accidentally discovered, rather than being uncovered by management controls. 

What can be done?

We’ve said it before and we’ll say it again – preventing workplace corruption lies in effective management controls and early detection. 

Early detection can be assisted by organisations implementing:

  • Supervision and checking processes.
  • Sound internal reporting systems.
  • Complaint and grievance procedures that are properly followed.
  • Internal audits.
  • Work review programs. 

Corruption is ever-changing. It is clear that if organisations are to be successful in detecting and combatting corruption, their safeguards must also evolve and be checked regularly. Otherwise, detecting corruption becomes a matter of luck which is ideal for networks of employees who rely on a wall of silence to protect each other from detection.

WISE Workplace has much experience in investigating corruption issues and also developing and implementing anti-corruption strategies. Call us today to discuss the issues that are affecting your organisation. 

Corruption in Company: The Use of Alliances and Networks

Jill McMahon - Wednesday, May 11, 2016
Corruption in Company: The Use of Alliances and Networks

Teamwork. It can really lift the performance of an organisation. But what happens when employees use teamwork to act against an employer or other employees who refuse to engage in corrupt conduct? 

When employees start using their alliances and networks for corrupt activities, we have seen the concept of teamwork sour – and organisations can suffer huge financial losses when this behaviour goes unnoticed or unchecked. 

How alliances and networks are used

Corruption can range from minor things like using a company credit card to buying a small personal item, to major fraud involving millions of dollars. Because it is difficult to define, it is also difficult to detect. And when employees form alliances and networks, they can work together to both facilitate the corrupt acts and also cover up the corrupt activities of a group. 

The group gains its strength from ensuring that no one speaks out about its activities. There are many ways that this can happen and some include: 

  • Promotion: If a corrupt employee is promoted, the promotion brings the opportunity to further extend the employee’s network of friends. This means more people to assist with the perpetration of corruption. The promotion of a corrupt employee also means that corrupt activities become an accepted part of the organisation’s culture – the worse the person’s behaviour, the more they are rewarded.
  • Jobs for mates: There is also the ‘jobs for mates’ concept. To protect a corrupt activity from being detected, a group of employees may put pressure on management to appoint a friend into the role. Or a corrupt manager may ensure that only friends are appointed, in order to assist with the corrupt activity. The effect can be that people are appointed to roles for which they are not qualified. 
  • Greater scope in roles: Sometimes in the public sector, the scope of a role may be increased. For example, an assistant commissioner role might turn into a deputy commissioner role. On paper, the role has expanded to include new tasks befitting a deputy commissioner. But in reality, the job has stayed the same. The upshot is that the employee is performing the same job with better pay and more seniority. 
  • Acting positions: The same is true of an acting position. For example, if someone is appointed as an acting deputy commissioner, there is no requirement for transparency. It is an acting role so there is no need to advertise. In some cases, public sector acting positions can go on for years without being reviewed. 
The key is the network of like-minded employees – ensuring there are plenty of people in place to engage in the corruption or help conceal it. 

The relationship with bullying

There can be a close relationship between a group engaging in corrupt conduct and bullying.

For example, if an employee is new to a workplace, a corrupt group may seek to enlist their help to conceal the conduct or to take part in it. If the employee refuses, or threatens to expose the conduct, they may be subject to bullying by the group until they eventually resign or are transferred. Spreading of gossip or rumours and damaging professional reputations by the group is one way that group bullying can occur. 

The employee may complain about the bullying, only to be ignored if the corrupt network extends to management and they protect the group.

Because so many aspects of bullying can be corrupt conduct, it is important that organisations have in place a range of preventative measures to deal with both issues. 

A 2009 University of Western Sydney study into the bullying of nurses found that: 

"… the nexus between bullying, group anti-social behaviour and the need for trust and networking aligns as the abuse of official power for personal gain - a recognised feature of corruption."

This research makes it clear that while organisations must be vigilant in trying to prevent corrupt conduct, they must also tackle bullying. Both issues must be properly addressed in order to minimise harm, or potential harm, to an organisation. 

At WISE Workplace, we have significant experience in dealing with bullying and corruption, and can assist you to implement a custom-designed strategy for your organisation.

Social Identity and the Spiral into Corruption

Jill McMahon - Wednesday, April 13, 2016
Social Identity and the Spiral into Corruption

Imagine this. Alice, new to her workplace, is given a company credit card for expenses such as client entertainment and work-related travel. 

She notices that other employees use their credit cards to purchase lunch, even when they’re not entertaining clients, and has heard a couple of people saying that they use it to buy petrol for their family cars.

Alice is told by her workmates that everyone does it, no one ever checks and that the company expects and budgets for it. So Alice starts buying her lunch with her company credit card and uses it to buy petrol for personal vehicle use.

Alice has just stepped onto a slippery slope, spiralling into corruption. And this kind of ‘harmless’ activity can cost an organisation millions of dollars. 
What is social identity?
Social identity stems from peer group pressure. 

If the ‘in’ or popular group within a workplace is engaging in corrupt activities, some workers will identify with them and go along with the activities, help to cover up the activities, or simply remain silent.

Their need to be accepted as part of the group is a higher priority than their own personal values. 

Enforcement of social norms

Like Alice, a worker can be unwittingly drawn into corruption. The attitude that “this is how we do things” can normalise the corrupt behaviour. 

When the norms are enforced by the group, further issues can arise, the most common one being bullying, especially group bullying. This can occur when:

  • A group of workers gangs up on one worker. 
  • One worker is carrying out the bullying while others passively witness the behaviour but don’t stop or report the conduct.  

An example of group bullying is the spreading of gossip or rumours about an employee. 

Another way that employees unwittingly join in corrupt activity is when they don’t wish to rock the boat. They may feel pressured to take part, or keep quiet about it, because they fear being bullied. 

Management acquiescence

Sometimes, management may be aware of corruption but decides to ignore it because the corrupt group is performing well and meeting targets. 

Highly skilled workers remain a big issue for organisations as well, because they are so valuable that potentially they may be able to get away with corruption. It can be extremely difficult to bring these employees back into line without losing them to competitors. 

There’s also the issue of losing highly skilled employees because they are being bullied. This could be damaging to an organisation, not just because of the loss of the expertise, but also because of any potential workers’ compensation claim for stress, or any application made under the anti-bullying provisions of the Fair Work Act.

What can be done?

Organisations need to identify what causes corruption in the first place. Usually one of the biggest causes is opportunity – if no one checks up on employee activities, the opportunity exists. Employers need robust systems for accountability. 

Another cause can be workplace culture. If employees are unhappy in their work environment and see others benefitting from corrupt activities, they may more readily commit corruption. Employers need to educate staff about unacceptable behaviour, and foster a positive work environment.

Anti-bullying measures are also very important.
Whistleblowing
An employee reporting corruption is often the only way that it can be detected and stopped, particularly if it is embedded. 

The federal government leads the way, with legislation that allows employees to report corruption via a whistleblowing hotline without fear of retaliation or reprisal.   

Employers can also set up internal whistleblowing systems to encourage reporting. 

Employee corruption in the workplace can be a difficult and complex issue. The reasons an employee may engage in corruption are not clear-cut and may highlight underlying issues.

If you suspect employee corruption or would like to take steps to prevent it, WISE Workplace can help with education about corruption and prevention strategies, including a mechanism to allow employees who witness corruption to report it. 

Can IBAC Become a Corruption Watchdog with Bite?

Harriet Witchell - Wednesday, March 30, 2016
Greater powers for corruption watchdog

With corruption costing the world economy an estimated 2.6 trillion dollars per year, you can bet that organisations are sitting up and taking note. Plenty of them are losing big money, and a lot of individuals are getting rich by underhanded means. 

The Victorian Government took action to stem the scourge of corruption in 2011, setting up the Independent Broad-based Anti-Corruption Commission (IBAC) to investigate the Victorian integrity system with the aim of improving accountability and transparency. 

But the body has been criticised as being a toothless tiger, and with the release of its first report to the Victorian Government, the question now is whether IBAC will become a watchdog with bite. 

What is corruption?

Corruption is a broad term which, in a workplace context, may range from serious frauds and abuses of power to lower level activities that violate the trust that an employer places in employees. 

The report defines corruption as the exploitation of public or private office for personal gain. It can take many different forms, including bribery, extortion, embezzlement, fraud and conflict of interest. 

Corruption can be so widespread and occur in so many forms that the report estimates that it adds a staggering 10% to the running costs of organisations worldwide. 

IBAC’s powers

IBAC has the power to investigate serious corruption in the public sector or police misconduct. But it does not have the power to investigate:

  • Matters in other states or territories.
  • Federal politicians or Commonwealth Government departments or agencies. 
  • Matters in the private sector. 
  • Minor issues concerning police officers.
  • Court judgments or traffic decisions. 

Some commentators have criticised IBAC’s powers, saying that the definition of corruption is too narrow, and that corrupt conduct has to be “serious” and also criminal in nature before IBAC can investigate. 

IBAC’s powers are also much more limited than its NSW equivalent body, the ICAC. 

The report’s recommendations

In all, the report made 13 recommendations to the Victorian Government, including that the definition of corruption be broadened to include additional criminal offences. 

It recommended an ongoing review of the definition of corruption to include non-criminal conduct in the future. 

The government’s response

A new Bill  is currently before the Victorian Government. If passed, the new legislation will:

  • Expand the scope of IBAC’s powers so that suspicion of “serious” corrupt conduct is not required. Suspicion on reasonable grounds that the conduct is corrupt will be enough for IBAC to become involved. 
  • The scope of people who can be investigated by IBAC will include non-public officials.

But commentators continue to express doubt over how effective the proposed changes will be, even if they are enacted. 

Corruption is a pervasive issue that is increasingly costly to organisations worldwide. It has perhaps gone unchecked for far too long. The Victorian Government took a positive step to remedy this by establishing IBAC, but even with the anticipated expansion of its powers if the legislation is passed, there are doubts about whether it has enough bite to address this huge issue. It is fair to say, however, that IBAC is here to stay, and the Victorian Government may have a few more attempts at amending its watchdog’s powers. 

WISE Workplace can assist organisations to respond  to fraud and corruption threats by enrolling in the Cert IV Government Fraud Control. This specialised program offers participants the opportunity to cover all core competencies in an intensive 3 day short course followed by self paced online study. Book your place for our next course in Melbourne on 18-20 May 2016