Dangerous precedent of Olympus and questions over whistle blowing hotline

This entry was posted on Wednesday, November 9th, 2011 at 5:43 pm

Former Olympus officials could face a substantial prison sentence if they are found guilty of corporate fraud, Bloomberg News Service reports.

Investigations are currently underway following a number of serious fraud allegations levelled at senior members of the company by former CEO, Michael Woodford, who was dismissed from the company on October 14.

This raises a very serious question about business practice, ethics and loyalty. If the allegations are indeed true, then Mr Woodford should be commended for highlighting the issue. However, we are still left in an uncomfortable position whereby it seems that any employee of a company could, for reasons both sincere or disingenuous, level accusations at current or former employers.

If reports were made to the Serious Fraud Office regarding a company by a disgruntled individual, there could arise a situation whereby the ever-dwindling budget of the SFO would be wasted on investigating claims against a company that is entirely innocent of any wrongdoing.

This would not only waste the time and resources of that company, but fundamentally damage its integrity and reputation forever. A dangerous precedent is, therefore, currently being set whatever the outcome of the Olympus investigations.

Elsewhere, the SFO’s new whistle blowing hotline that purports to provide a secure and anonymous means to report any suspected instances of corporate fraud has come under fire since it was launched last week.

Lawyers have questioned whether the SFO would ever be able to guarantee the anonymity of those individuals who used the service to report suspected serious fraud. In the event that a case was brought before a criminal court, it would be the judge who ultimately decided whether the informant’s identity was unveiled.

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