Small is as vulnerable

schemes were found to occur twice as often in small businesses.

However, for Horne, the pivotal issue is that the survey found that small organisations were less likely to have hotlines or internal audit departments than their bigger brothers.

In South Africa, this is a given as listed companies now have to have a whistle-blowing system in place by law. Small, medium and micro enterprises (SMMEs) don’t.

Nevertheless, the same statistics apply to employees of big and small businesses – 25 percent of people are dishonest, 25 percent would never do anything improper, and the remaining 50 percent could go either way depending on the culture of the organisation. Whistle Blowers focuses on training and education of staff to swing the percentage from dishonest to honest.

He believes a key reason smaller companies don’t take measures to detect dishonesty is why they are susceptible to it: decision-making is confined to a few key managers.

These key employees multitask and are often pushed for time, so fraud slips down the priority list. He says the general view of the founder of a small business, in particular a family business, runs along the lines of: “I’m the boss. Everybody respects me and they will tell me if something is wrong.”

He warns that this false sense of security often has its roots in a feeling that employees owe a business owner because he pays their salaries when that is a reason they would avoid telling him something’s amiss.

Then there’s the risk of being identified as the one who snitches to the boss within a small, closeknit organisation – which emphasises the importance of protecting the identity of a whistle-blower. “Our success over the past 15 years stems from our ability to protect the identity of whistle-blowers and have the skill to obtain enough information to get to the bottom of irregularities. There are guidelines on reports and who will handle these.”

Despite his concern that too few small businesses are fighting fraud in their own organisations, Horne says that over the past two years Whistle Blowers has seen growth of 50 percent in South Africa and 98 percent in Africa, as well as international growth.

He says small companies are following in the footsteps of their larger compatriots, with 60 percent to 70 percent of subscribers committed to preventing and detecting problems – 20 percent to 30 percent are SMMEs.

“There is growing pressure on small business to fall into line when it comes to ethics and corruption-fighting mechanisms. These bigger clients require them to have a whistle-blowing mechanism in place.”

He says large corporations see whistle-blowing as a means of protecting their companies’ good name and valued brands.

Contractors should also be brought into the fold, as they spend a lot of time on site. They could be responsible for theft, fraud or injuries on site, but it is the client business that suffers.

“More than 40 percent of all cases were detected through tip-offs – more than twice as much as any other detection method. Employees accounted for nearly half of all tips that led to the discovery of fraud.”

He says some small business owners believe his facility is unaffordable – probably because many are affiliated with big audit firms that have blue chip clients.

He says Whistle Blowers chose to be independent to avoid a conflict of interest. “Cost-effective solutions can be designed for companies with fewer than 50 employees. The service is cheaper than a security guard.”

This independence enables it to work closely with accounting and auditing firms that serve SMMEs.