New fraud hotline for employees

Employers urged to tackle internal fraud

UK businesses will be able to provide their staff with a new confidential whistle-blowing service in an effort to stamp out internal fraud.

The KPMG service, named Ethics Line, is an independent hotline designed to enable employees to raise concerns about possible fraudulent conduct in confidence. This will allow their company to take prompt and effective action, according to KPMG.

The accountancy firm suggests that the hotline will reduce the risk of employees going outside the business with their concerns, which may cause financial damage and harm the company’s reputation.

The 24-hour hotline service was launched after KPMG’s Fraud Barometer showed that insider fraud committed by management or staff accounted for over half (£330m out of £650m) of all fraud coming to court in the first half of 2006.

The number of general fraud cases increased dramatically in 2006. In the first half of the year, 123 cases worth £653m reached court, compared to 88 cases worth £250m over the first half of 2005.

David Luijerink, director at KPMG Forensic, said: “Colleagues sometimes suspect that fraudulent activity is going on but are reluctant to report or ‘blow the whistle’ due to lack of confidence in internal reporting systems, or fear of victimisation or retribution.

“Employers should do all they can to remove these obstacles, and a whistle-blowing hotline is one element of the solution. Statistics suggest that up to 50% of frauds are discovered following an employee blowing the whistle.”

© Crimson Business Ltd. 2006

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