- people on the move
By Daniel Schoonmaker
GRAND RAPIDS — The role of the whistleblower has stormed into the business world in recent years, helping to generate a landslide of high-profile cases and corporate disasters.
Recognizing the importance of the whistleblower in protecting the interests of company stakeholders, lawmakers aimed a number of provisions in the Sarbanes-Oxley Act to require publicly held companies to provide an outlet for employees to anonymously report financial irregularities.
Grand Rapids-based security firm DK & Associates has developed a third-party service that can help companies become compliant with those regulations.
The Honorline Hotline provides a toll-free number as a means for employees, employees' family members, vendors and consumers to safely report suspected criminal and unethical conduct.
In accordance with Sarbanes-Oxley's provision that submissions be kept confidential and anonymous, callers need not identify themselves, are not recorded and cannot be traced.
Callers are not obligated to become further involved after their report, but they do receive a reference number if they desire to report additional information or inquire about the progress of their complaint.
"If I'm an employee and I observe some wrongdoing by either employees or management, and I'm upset about the situation and want to do something about it, this gives me an easy and confidential way to do so," explained Sue Chu, DK's vice president of human resources.
"It might be hard to direct the information along. There might not be an opportunity to do so, or they might just not want to be seen as the snitch.
"They can just call and talk to someone who knows what questions to ask to begin an investigation."
DK isn't staffing its hotline with cheap outsourced labor, either. The calls are taken by current or former law enforcement professionals equipped to understand and report the accusation the employee has presented.
From there, the company in question's CEO or vice president of human resources receives a report of the situation. The company can then conduct an internal investigation or outsource that process to a company like DK. Either way, liability is limited and the allegations are kept in-house.
This service may prove equally beneficial to privately held companies as well.
One recent example includes Global Futures & Forex Ltd., winner of Ernst & Young's Entrepreneur of the Year award.
This past fall, Global won a two-year-old case in the Michigan Court of Appeals brought by Steve Kunkler, its former director of business development and director of marketing.
In May 2002, Kunkler threatened to report his employer's alleged violations of federal laws to the National Futures Association (NFA). Global responded by firing Kunkler, who sued under the Whistleblower's Protection Act (WPA).
Global eventually prevailed on the basis that the WPA did not protect Kunkler against reporting allegations to non-public regulatory bodies like the NFA.
Litigation is practically never a good thing in the business world, and the Honorline or a similar structured process can help prevent cases brought by current or former employees.
Chu suggests that having a reliable process in place to handle legitimate allegations could have prevented actions like Kunkler vs. Global Futures.
Looking past the Enron-style concerns, she said any CEO would appreciate knowing about embezzlement, waste, theft or fraud.
Chu said other benefits can be seen in allowing employees an opportunity to report grievances concerning harassment, discrimination, working conditions or other labor issues before their frustrations elevate into civil suits or regulatory actions.
Chu explained that besides the threat of litigation, a system like DK's hotline could provide other benefits as well.
"Sometimes employees need someone to call just to vent," she said.
"We can lend them an ear and we can find out what's bothering them. Sometimes when an employee is upset, it may show that management isn't acting consistently or appropriately, and this will expose those issues."