|
| Hire consultants to unearth wrongdoing in your company | | Outsourced whistle-blowing services a growing market as more weight attaches to good corporate governance |
| Reghu Balakrishnan / Mumbai Feb 02, 2012, 00:49 IST |
|
 Ernst & Young (E&Y) has started a whistle-blowing service to monitor irregularities in Indian companies.
E&Y's independent hotline will receive all complaints and even anonymous calls on irregularities in companies which register themselves for the service. After going through the issues, E&Y officials will work with the company on these, while updating the whistle-blower.
KPMG is the other agency running independent whistle-blowing services in India. A global fraud survey conducted by the Association of Certified Fraud Examiners in 2010 discovered that 40 per cent of fraud cases were detected through tips given by people, half of whom were employees. Around two-thirds of these cases were communicated through anonymous tips reported via the organisation’s hotline.
In India, employees are hesitant about complaining through internal hotline services. “Though companies already have their own whistle-blowing services, employees hesitate to use such services and prefer independent ones where entire details of the complainant are kept secret,” said Arpinder Singh, partner & national director of E&Y India’s fraud investigations & dispute services.
He said E&Y was in talks with eight mid-sized companies to sign contracts for availing of whistle-blowing services. The service charge will be about Rs 10 lakh a year for an organisation with 4,000-5,000 employees. Hotlines are the number 1 channel for fraud detection and account for 30 per cent of all the tips. In Asia, 43 per cent of all fraud is captured through a hotline, Singh added.
The E&Y service provides 24/7 availability of hotlines, as 40 per cent of all calls take place outside business hours. They also have multilingual capabilities.
Rohit Mahajan, executive director, forensic practice, KPMG India, said, “Regulators have not mandated whistle-blowing services for Indian companies, though these are mandatory for listed companies in developed economies. However, as part of the good governance perspective, many Indian companies prefer to set up such services internally or outsource these to third parties.”
KPMG has 12 clients which have outsourced the service. Mahajan says private equity players, who hold controlling stake in portfolio companies, prefer to launch whistle-blowing services in these companies as part of good practices.
I Unnikrishnan, managing director of Manappuram Finance, the country’s largest listed gold loan company, said their credibility and reputation increased after they outsourced whistle-blowing services four months earlier. “Whistle-blowing serves as a deterrent for improper conduct among employees,” he added.
Vidya Rajarao, executive director and national leader, forensic services, Pricewater-houseCoopers India, said, "Due to a global increase in anti-bribery sanctions, there has been a greater awareness of forensic services among companies, especially companies that are working across jurisdictions. With the enactment of the UK Bribery Act, there is a heightened awareness among global companies in pro-actively addressing issues such as fraud and corruption, rather than reactively responding to allegations.”
PwC assists its clients to set up multi-modal (telephone, e-mail, fax, post box) 24x7 whistle-blowing mechanisms, compatible in multiple languages.
Sandvik India, part of the Swedish engineering group with presence in 130 countries, has also outsourced whistle-blowing services.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
