Whistleblower Systems Examined in Conference Board Report

The Shareholder Activist - Whistleblower Systems Examined in Conference Board Report


Fredrick D. Lipman provides several insights to Conference Board readers drawn from his recent book Whistleblowers: Incentives, Disincentives, and Protection Strategies (Wiley Corporate F&A).

Lippman finds seven major problems with most current whistleblowers systems:

  • The tone at the top tolerates but does not encourage whistleblowers, particularly executive whistleblowers.
  • There is no meaningful reward or recognition for legitimate whistleblowers.
  • The inability to communicate with anonymous whistleblowers result in a failure to fully investigate anonymous information.
  • The system does not guarantee anonymity.
  • This system is not well advertised.
  •  The audit committee uses employee administrators and investigators who are not viewed as independent by whistleblowers and do not have forensic skills.
  • Whistleblowers motivations and personalities affect the investigation

Lippman goes on to provide a number of very important recommendations, primarily aimed at increasing the independence of whistleblower systems. It’s an important article for audit committees as they re-examine whistleblower and compliance policies.

From Enron to Lehman Brothers: Lessons for Boards from Recent Corporate Governance Failures should be helpful to many. Also worthy of considerations — programs from the Business Integrity Alliance as well as the possibility of establishing an organizational ombudsman program.

To contact James McRitchie directly, please email jm@corpgov.net

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