Hotlines Can Help Government Agencies Control Misconduct

Article excerpt

Illegal and unethical behavior-fraud, theft, discrimination, bribes, kickbacks-can do significant damage to the reputations and bottom lines of any business in any industry. A renewed interest in corporate governance, sparked by legislative mandates like the Sarbanes-Oxley Act, has spread beyond publicly traded corporations. Even those that are not statutorily required to comply are increasingly realizing the benefits of controlling employee misconduct. Government agencies are part of this growing trend and are steadily adopting proactive methods to fight unethical and illegal acts. While most may not be mandated to do so, many are instituting anonymous hotlines because they see how extraordinarily effective they can be.

According to research conducted by the Association of Certified Fraud Examiners (ACFE), government agencies stand to lose an average of $82,000 per fraud scheme, primarily through billing schemes (procurement fraud) and non-cash theft.1 The researchers point out, however, that organizations with an effective hotline program or other anonymous reporting mechanism in place can cut fraud losses by as much as 50 percent.2 Those kinds of results have attracted the attention of governmental entities at all levels.

For example, in March 2007, Buncombe County, NC, became one of the first local governments in that state to begin using an anonymous whistleblower hotline to uncover fraud, theft and other illegal or unethical behavior. "This is one more way to be open and transparent in the way county government is run," said County Manager Wanda Greene.4 It offers an option to people who might not otherwise come forward and it can be made available to all stakeholders, including employees, vendors or the public. As Nathan Ramsay, chairman of the county's Board of Commissioners, points out: "Most people are honest and try to do their jobs, but there certainly are those who make bad choices, and they need to be held accountable for that."5

Officials from Montgomery Country, MD, echo similar sentiments. "Independent fraud hotlines are being used to send a positive message to employees, vendors and taxpayers that government leaders are committed to protecting public resources," said Inspector General Thomas Dagley. "With implementation of the Inspector General hotline, taxpayers here in Montgomery County can be assured that preventing and detecting fraud, waste and abuse is an important part of our governance system."6

The Social Security Administration's (SSA) hotline program has been in place since 1995. This federal agency encourages its more than 50 million recipients to report fraud or misconduct when they see or suspect it. "Only a small percentage of our hotline allegations are made internally by employees about other employees," said Bob Meekins, deputy assistant inspector general for Resource Management at the SSA. Our workload is different from what many hotlines encounter, in that the majority of reports come to us from the public, and the vast majority of allegations involve disability or supplemental security income fraud."7


An anonymous option offers employees and others the opportunity to report without fear of reprisal. According to the 2006 Corporate Governance and Compliance Hotline Benchmarking Report, more than half of the nearly 200,000 reports from 500 organizations were disclosed anonymously. The researchers suggest that a number of factors may affect an individual's decision to remain anonymous, such as the level of trust that the information they provide will remain confidential, the significance of the issue being reported, or the degree of confidence that the information will be acted upon.8


Regardless of how an agency sets up a hotline, one thing is clear-ongoing, targeted communication is essential to its success. At first glance, disseminating information about the hotline seems fairly simple, but there's more to it than publicizing a phone number. …