Whistleblowers: Truth, Justice, and the American Way

Executive Summary This paper describes and discusses whistleblowing, examining the significant factors in the whistleblower's decision-making process and ethical reasoning. A discussion is presented on the current state of our corporate culture - fertile ground for whistleblowing. Focused on nongovernmental, external whistleblowing, this paper also describes the protections and administrative processes provided by Sarbanes-Oxley. Finally, this paper presents cases for discussion and offers several take-away ideas. Introduction Truth, Justice and the American Way. How else does one explain whistleblowing? The frenzy of Enron, the passage of Sarbanes-Oxley and, of course, Time magazine's naming of whistleblowers (Watkins, Cooper and Rowley) as its "Persons of the Year 2002," have created a new level of awareness, respect and even enthusiasm for whistleblowing. This new wave of consciousness has also created an opportunity, for both the employer and employee, to examine the reasoning, protections and risks of whistleblowing. Driven by various motivations, whistleblowers have exposed dozens of foul companies over the last two years. As stated by Quarrels (2003, P. 7), however, "telling the truth in public is still a dangerous business." Past studies confirm that a whistleblower's life after whistleblowing can be a harrowing experience. For example, figures from 1991 denote that 90% of whistleblowers lost their jobs or were demoted; 26% sought medical care; 15% got divorced; 10% attempted suicide and 8% went bankrupt (Mead, 2002). A 1999 study, conducted by Rothschild and Miethe, denotes that 69% of whistleblowers lost their jobs or were forced to retire. In spite of the above, whistleblowing complaints have increased more than 200% since 1999 (Freed, 2003). Whistleblowing is commonly perceived as both a positive and negative action. For example, a Time/CNN survey cited by Jennings (2003) indicates that 59% of respondents considered whistleblowers "heroes," yet 18% considered them "traitors." Regardless of one's view, whistleblowing is serious business. As discussed by Baynes (2002, P. 11), whistleblowers are in a position to "inflict harm on the corporation in a way that strangers cannot." Whistleblower actions can convert proprietary information, erode public image, subject the company and its management to civil or criminal sanctions and, worst case, result in corporate collapse. Whistleblowing reflects a failure in the subject corporate culture, an unchecked wrongdoing. Significant to business is an employee's tendencies to blow-the-whistle: critical factors, ethical reasoning, options, and so forth. Of equal significance is the subject corporate culture and why it failed. An understanding of whistleblowing provides management with insight and direction when formulating lines of communication, reporting protocols, and defining management structure. The balance of this article progresses as follows. Part two examines the significant factors in the whistleblower's decision-making process and ethical reasoning. Part three discusses the current state of our corporate culture - fertile ground for whistleblowing. Part four focuses on nongovernmental, external whistleblowing and describes the protections and administrative processes provided by Sarbanes-Oxley. Part five presents cases for discussion. Part six presents the conclusion and take-away ideas. Whistleblowing Defined Whistleblowing, as defined by Boatright (2000, p. 109), is "the voluntary release of non-public information, as a moral protest, by a member or former member of an organization outside the normal channels of communication to an appropriate audience about illegal and/or immoral conduct in the organization or conduct in the organization that is opposed in some significant way to the public interest." This definition can be broken down into six significant elements: (1) Voluntary release by a current or former employee; (2) Disclosure of non-public (insider) information; (3) Moral protest; (4) External disclosure; (5) Disclosure regards illegal or immoral conduct; and (6) Conduct is adverse to the public interest. …