When is whistleblowing wrong

When Congress first created The False Claims Act the original idea was that it should provide incentives for whistleblowers to come forward and report fraud committed against the government.

Honest contractors are of course allowed a profit. Fraudulent contractors calling others greedy, when they undercut honest business takes a lot of nerve. Despite the incentives built into the law, most whistleblowers come forward because they see wrong-doing and want to stop it. They often report to the government after they have been the subject of retaliation, and as a result of the retaliation feel that they must try and prevent illegal activity.

Even on the occasion that a whistleblower comes forward as a result of the financial incentives, that was the design of the law. It was meant to provide an incentive for whistleblowers to report fraud. It should not be controversial to reward telling the truth. Nobody questions that private companies have an incentive to make money. Usually, it made be thought of as a good thing. Most companies who make money honorably from the government have an incentive to provide a good product or service at a competitive price and make a healthy profit.

Some get into the business of cheating and defrauding the government and that is a different matter. Yet, somehow, a whistleblower has an incentive to come forward, an incentive to do the right thing, is depicted in a different light. Often, the reason why whistleblowers suffer a bad reputation is that they are the key reason for uncovering significant fraud and seeing that those who are guilty are held accountable for their actions.

Whistleblowers are the key factors, the key people with the information that has brought the ability to the government to regulate securities fraud, Medicare, Medicaid fraud, government contracting fraud , tax fraud and the people they catch simply are not happy about that.

There are other reasons, as well. Certainly, some whistleblowers have engaged in the activity of providing classified information and that has its own particular risks. They turned in companies that were cheating the Centers for Medicare and Medicaid Services affecting taxpayers , the IRS affecting government revenues , and private health insurance affecting premiums. The public saved far more than the reward paid to the whistleblowers.

Most whistleblowers do not get paid until the lawsuit and all appeals have concluded and the full amount of any monetary penalty has been paid to the government. Many complex cases of business fraud can go on for several years before a verdict is rendered and appealed or a settlement is reached.

An employee whose identity has been disclosed and who has been unofficially blacklisted may not see any reward money for several years. Enron is one of the most infamous examples of corporate fraud in U. Sherron Watkins, an officer of the company, discovered the fraud and first went to her boss and mentor, founder and chairperson Ken Lay, to report the suspected accounting and financial irregularities.

She was ignored more than once and eventually went to the press with her story. Because she did not go directly to the SEC, Watkins received no whistleblower protection.

The Sarbanes-Oxley Act was not passed until after the Enron scandal. Watkins talks openly about the risk of being an honest employee, something employees should consider when evaluating what they owe their company, the public, and themselves. We did feel like we were on a battleship, and things were not going well, and the captain had just taken a helicopter home. The fall of was just the bleakest time in my life, because everything I thought was secure was no longer secure.

Visit the National Whistleblower Center website and learn more about some of the individuals discussed in this chapter who became whistleblowers. Watch this video about one of the most famous whistleblowers, Sherron Watkins, former vice president of Enron to learn more. Sometimes employees, including managers, face an ethical dilemma that they seek to address from within rather than becoming a whistleblower. The risk is that they may be ignored or that their speaking up will be held against them.

However, companies should want and expect employees to step forward and report wrongdoing to their superiors, and they should support that decision, not punish it. Sallie Krawcheck, a financial industry executive, was not a whistleblower in either the classical or the legal sense.

She went to her boss with her discovery of wrongdoing at work, which means she had no legal protection under whistleblower statutes. Read her story in the following box. The team at Merrill had made a mistake by managing the fund in a way that assumed a higher risk than was acceptable to its investors, and the fund ended up losing much of its value. According to Krawcheck, she had two options.

Option two was to bail out the investors by pouring money into the fund to increase its value. Krawcheck had already been burned once by trying to be ethical. Rather than supporting her decision, however, CitiGroup terminated her, in large part for making the ethical decision rather than the profitable one. Now she was in the same predicament with a new company. Should Krawcheck risk her job again by choosing the ethical act, or should she make a purely financial decision and tell the k investors they would have to take the loss?

Krawcheck began talking to people inside and outside the company to see what they thought. Most told her to just keep her head down and do nothing. He agreed to back her up and put company money into the depleted stable-value funds to prop them up. Krawcheck opted to be honest and ethical by helping the small investors and felt good about it. But the story does not really have a happy ending.

However, speaking out did come at a cost. Suppose you are a supervising engineer at a small defense contractor of about one hundred employees. Your firm had barely been breaking even, but the recent award of a federal contract has dramatically turned the situation around.

Midway through the new project, though, you realize that the principal partners in your firm have been overcharging the Department of Defense for services provided and components purchased. You discovered this accidentally, and it would be difficult for anyone else to find it out. You take this information to one of the principals, whom you know well and respect.

He tells you apologetically that the overcharges became necessary when the firm seriously underestimated total project costs in its bid on the contract. If the overcharges do not continue, the firm will again be perilously close to bankruptcy. You know the firm has long struggled to remain financially viable.

Furthermore, you have great confidence in the quality of the work your team is providing the government. Finally, you feel a special kinship with nearly all the employees and particularly with the founding partners, so you are loath to take your evidence to the government. What are you going to do? Will you swallow your discomfort because making the overcharges public may very well put your job and those of one hundred friends and colleagues at risk?

Or would you decide that fraud is never permissible, even if its disclosure comes at the cost of the survivability of the firm and the friendships you have within it? People should not be treated unfairly or lose their job because they 'blow the whistle'. Whistleblowing is only meant for reporting criminal offences, regulatory breaches, health and safety including environmental breaches, or cover-ups.

If you're reporting any of the above, then you will be protected by law. Anything else is out of scope. If you think that it might be too late to report a concern, be assured that you can raise it at any time, whether it's about an incident that happened in the past, is happening now, or you believe it will happen soon.

Your company's whistleblowing channels shouldn't be used as an outlet to air grievances or make false reports. If you have a complaint about your manager or colleague, your workload, a third party or some other issue, it's covered by your grievance procedures, so raise it with your manager or HR instead. Ultimately, personal grievances are not covered by whistleblowing law unless the particular case is in the public interest.

Your company handbook should explain how to make a report and to whom. In most cases, your first port of call will be your manager. But you may also be encouraged to report to HR, Compliance, Legal, senior management or the board via a whistleblowing helpline, website, email, or to an independent third party.

Going straight to the media or putting it online may undermine the message and damage your reputation - think Edward Snowden , the whistleblower and former CIA agent who leaked classified!

You're not there to gather inconclusive evidence of wrongdoing. You're a witness and observer, so don't delay because you want to gather that extra evidence. You may tip off the suspects and thwart the entire investigation. If you're not believed, if no action is taken or there's a cover-up, or if lives are at risk, then it's OK to escalate your concerns to others such as the CEO, the Police, a regulator, or even sometimes the press.

Anyone can blow the whistle if they suspect wrongdoing or unethical behaviour. And though it isn't easy, the law is designed to protect you from reprisal or unfair treatment.