More help needed to protect fraud whistleblowers

Whistleblowing is the main reason for most fraud being detected but those who speak out often find themselves paying a heavy price also.

Will Davies, forensic investigation partner at Grant Thornton, told JLT’s London seminar on Fraud: the unseen threat, he had “never met a whistleblower who was better off after the event”.

He said that more needed to be done to protect those people prepared to reveal fraud and also to encourage others to talk.

“If you have a good and effective whistle-blowing policy you will detect more fraud,” he said.

Just 3% of frauds were detected by annual audit and only 11% by internal audits. Whistleblowing snared far larger numbers but would be even more effective if it was made easier for those looking to speak out.

Davies cited the whistleblower programme within the US Dodd-Frank Act, which aims to reward individuals who act early to expose violations and who provide significant evidence that helps bring successful fraud prosecutions.

Looking at the overall situation for the UK, Davies said “all the warning signs are red hot for fraud right now”.

He said the recessionary environment, globalisation and advances in technology had created the “perfect storm” for fraud.

Tougher action was also needed to combat the problem yet all the regulators were “overstretched and under-resourced”.