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Whistle Blowing - Good or Bad

In: Business and Management

Submitted By nats
Words 3871
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Introduction
The purpose of this article is to increase awareness of the need for whistleblower policies for universities, governmental entities, and organizations. According to wikipedia, the free online encyclopedia, a whistleblower is a person who raises a concern about a wrongdoing occurring in an organization or body of people, usually this person would be from that same organization. Wikipedia states that whistle blowing is the disclosure to the public or to authorities, usually by an employee, of wrongdoing in a company or government department. Whistleblowing inside the workplace is the reporting, by employees or ex-employees, of wrongdoing such as fraud, malpractice, mismanagement, breach of health and safety law or any other illegal or unethical act, either on the part of management or by fellow employees, cited from wikipedia. A whistleblowing policy encourages staff to speak out if they have legitimate concerns about wrongdoings, as distinct from individual grievances, and establishes an accessible procedure for doing so. The policy may form part of a wider code of conduct. In order to encourage disclosure, many federal and state statutes prohibit employers from retaliating against an employee who files reports. The revealed misconduct may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistleblowers may make their allegations internally (for example, to other people within the accused organization) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues). Whistleblowers frequently face reprisal, sometimes at the hands of the organization or group which they have accused, sometimes from related organizations, and sometimes under law.
Establishment of a clear and specific definition of whistleblowing itself should be a fundamental component of every whistleblower policy. Many violations of the law, and many dangers to public health and safety, go unreported because people who know about them are afraid of retaliation. As our livelihoods, and often our health insurance, are dependent on our jobs, the fear of losing a job is pervasive. Whenever the law provides a remedy for victims of retaliation, it encourages employees to come forward with evidence that will make our world safer, healthier and more just.
Many, if not most, of the laws that protect workers, such as antidiscrimination laws, wage and hour protections, and health and safety laws, also make it illegal for an employer to retaliate against someone who engages in conduct which the law protects. Many laws protecting the public at large, such as environmental laws, taxpayer-funded programs, and government regulation of certain industries, such as nuclear power, trucking, and airlines, protect employees who disclose information that the employee reasonably believes is evidence of illegality, gross waste or fraud, gross mismanagement, abuse of power, or a substantial and specific danger to public health and safety.

History of Whistleblowing
The origins of whistleblowing go back well over a century. In fact, whistleblowing initially arose not in connection with corporate malfeasance, but in the federal government’s False Claims Act.

The False Claims Act’s influence (1863)
The False Claims Act was established to offer incentives to individuals who reported companies or individuals defrauding the government. It was introduced by Abraham Lincoln in 1863 to target sales of fake gunpowder to the Union during the Civil War. In 1986, the False Claims Act was brought back and Congress added anti-retaliation protections. The Act also specifies that the whistleblower can share in up to 30% of the proceeds of the lawsuit. According to the Taxpayers against Fraud (TAF) False Claims Act Legal Center, this Act has resulted in more than $17 billion dollars of recoveries for the U.S. government since 1986. Major nonprofits that have paid large settlements in recent years include major universities and government entities. Financial rewards to whistleblowers can, however, create an incentive to report bogus false claims. The Act imposes monetary penalties on bogus whistleblowers.

The Whistleblower Protection Act (1989 and 1994)
Under the Whistleblower Protection Act, passed in 1989 and amended in 1994, federal employees are protected from workplace retaliation when disclosing waste and fraud. The purpose of the Act and subsequent amendments was to strengthen the protections available to federal employees. Congress has considered reforms that would overhaul the act and enhance protections for federal employees who expose fraudulent activity, waste, and threats to public safety. Such legislation was debated last year, and in 2007, the House of Representatives approved the Whistleblower Protection Enhancement Act, which overhauls federal whistleblower law.

Supreme Court decision (2006)
In May 2006, the Supreme Court ruled in Garcetti v. Ceballos that whistleblowers who make statements while performing their jobs may not be constitutionally protected. Richard Ceballos, a supervising deputy attorney, was asked by defense counsel to review a case where defense counsel claimed the affidavit used by the police to obtain a search warrant was inaccurate. Ceballos concluded upon his review that there were significant misrepresentations in the affidavit, and he communicated his findings in a memo to his supervisors, the petitioners, and the trial court. Ceballos later claimed that the petitioners retaliated against him for his memo. Reversing the ruling of the Ninth Circuit Court of Appeals, the Supreme Court found that the memo was not protected because Ceballos wrote it while performing his employment duties. Congress has approved legislation (the Senate approved an amendment to the 2007 National Defense Authorization Act and the House approved the Whistleblower Protection Enhancement Act) that addresses the possible ramifications of this decision.
Why Implement a Whistleblowing Policy?
Whistleblowing complaints focus on conduct prohibited by a specific law and/or conduct that may cause damage to public safety, waste tax dollars, or violate public trust in an honest, accountable government. Whistleblower complaints seldom include an employer's retaliation for complaints about personal dislikes or issues that affect only a single person. All organizations, including universities, governmental entities, and nonprofits, should consider implementing whistleblowing provisions. According to the Association of Certified Fraud Examiners’ 2006 “Report to the Nation on Occupational Fraud and Abus”:
· More than $600 billion in annual losses is attributed to fraud.
· Anonymous reporting mechanisms are the antifraud measure with the greatest impact on reducing losses: Companies with anonymous reporting mechanisms reported median losses of $100,000, while those without reported median losses of $200,000.
· Tips from employees, customers, and vendors and anonymous tips account for: o 34% of the detection of all fraudulent activity; o 34% of the detection of fraudulent activity for not-for-profit organizations; o 39.7% of the detection of fraudulent activity for government agencies; and o 48% of the detection of owner/executive fraud schemes.
Most small businesses struggle with an appropriate level of segregation of duties, making a whistleblower policy a good mitigating control. A whistleblower policy and effective enforcement has the potential not only to significantly reduce fraudulent activity but also to send a signal to both internal and external constituencies that the organization exercises good corporate governance. Just as corporations must answer to shareholders, universities, government entities, and nonprofit organizations must answer to the public regarding the stewardship of resources. Whistleblowing can significantly affect a whistleblower’s life and livelihood. The authors believe that the potentially huge personal impact whistleblowing can have on individual whistleblowers means there is an even greater need for organizations to develop clear whistleblower policies.
Many professional organizations associated with universities, government entities, or nonprofit organizations have recognized certain mechanisms as a best practice and recommend that their constituents implement whistleblower polices. The following are a few examples.
Institutions should publicize the complaint mechanism and have it periodically reviewed by the audit committee. Institutions could incorporate the complaint mechanism within existing human resource communication policies. Colleges and universities should also consider establishing hot lines, anonymous voicemail, and anonymous e-mail or secure suggestion drop boxes to facilitate the complaint process. Regardless of the specific mechanisms selected, there should be a process for communicating with employees, receiving information, and addressing identified concerns.
Nonprofits must develop, adopt, and disclose a formal process to deal with complaints and prevent retaliation. Nonprofit leaders must take any employee and volunteer complaints seriously, investigate the situation, and fix any problems or justify why corrections are not necessary.
Whistleblowing policies should cover the following areas: responsibility for reporting violations, preventing retaliation against whistleblowers, methods for reporting violations, the compliance officer’s duties, applicable areas of complaints and those responsible for addressing them, the involvement of the audit committee in complaints involving internal controls and auditing, the treatment of malicious or false allegations, confidentiality, and procedures for acknowledging reported violations.
Developing a Whistleblower Policy
A whistleblower policy may be drafted and implemented by management, but it should then be submitted to the audit committee or board of directors. The foundation of any whistleblower policy is a clear and specific definition of whistleblowing. Other key aspects of a whistleblower policy include the following:
· Clear definition of individuals covered by the policy. A whistleblower policy should cover individuals within the organization as well as external parties who conduct business with the organization. For example, for a university, those covered could include faculty, staff, student employees, vendors, and customers.
· Nonretaliation provisions. Whistleblower policies should prevent discrimination or retaliation against employees who report problems. Policies should also include methods to encourage employees, vendors, customers, and shareholders to report evidence of fraudulent activities. In addition, a whistleblower policy should include a disclaimer that anyone filing a claim must have reasonable belief that an issue exists and act in good faith.
· Confidentiality. Protecting whistleblowers’ confidentiality is an important part of any whistleblower policy. Confidentiality is of great concern because the goal is to create an atmosphere where employees will feel comfortable submitting their names with claims to allow for further questioning and investigation. Allowing employees to file anonymous claims may increase the possibility of claims actually being reported; however, it may also increase the possibility of false claims being filed. The policy should explain how the claims will be investigated once received and whether the employee should expect to receive any feedback.
· Process. A whistleblower policy needs to address the process employees should follow in filing their claims. Organizations may require whistleblowers to direct their claims to a certain person, such as a compliance officer, or, alternatively, to follow a ladder of reporting until they reach the top of management. The latter helps ensure that the employee addresses the claim with a supervisor before heading straight to the CEO or an external party. Specific reporting mechanisms within the process could include telephone or e-mail hotlines, websites, or suggestion boxes.
· Communication. A whistleblower policy cannot be effective unless it is communicated to employees, vendors, customers, and shareholders. Employees can be informed through employee handbooks. Training could be provided internally during the human resources orientation process or by an outside party. Information can be posted throughout the company and on intranet sites. Customer service representatives can be trained to answer questions about the whistleblower policy.
The following action checklists should be used when developing a whistleblowing policy:
1. Create an ethical, open culture
Write, publish and communicate a code of conduct and ethics. Top management must make it clear that the organisation will not tolerate fraud and corruption and will deal with them seriously. The code should encourage employees who become aware of possible wrongdoings to report that information to designated parties inside the organisation, and assure them that their concerns will be treated seriously and that they will be protected. Apart from reinforcing an ethical environment, encourage an open and communicative culture where employees are not afraid to speak up. Provide guidelines, however, to assist staff in exercising their judgement, thus avoiding the reporting of all sorts of trivial matters.

2. Establish safe routes for communication of concerns
Appoint individuals or groups outside the normal chain of command to receive complaints of irregularities or other concerns. These people should have appropriate seniority and be well respected. They need diplomatic skills and should enjoy a reputation of honesty, impartiality and fairness. Make sure employees know who they are and how they can be contacted in confidence. Remind staff of other safe channels if they do not have the confidence to raise the issue internally, such as Public Concern at Work (see useful addresses) or an external auditor. These channels can also be used if the business is too small to accommodate impartial, confidential routes internally.

3. Protect the whistleblower
Make it clear you will support and not discriminate against concerned employees. Although they should identify themselves to the safe channel, otherwise give them anonymity where at all possible. The employee should be advised, however, that in many cases other people will know or guess who has raised the matter, in which case being open throughout may be more sensible. Protect them from reprisals by letting others know that harassment will be treated as a disciplinary matter.

4. Establish a fair and impartial investigative procedure
Make sure you respond to the concern by focusing on the problem, rather than denigrating the messenger. Take action to investigate and correct the problem or explain why management has chosen not to act if no action is warranted. Act quickly to reassure the whistleblower that action is being taken, to lessen the period of inevitable stress caused by the complaint, and to reduce the risk of retaliation against the employee.

5. Remind staff of their duty of confidentiality
The duty of fidelity is implied by the law in every contract of employment and prohibits employees from publicly disclosing employers confidential information, unless it is in the public interest that information is disclosed. Remind staff that approaches for confidential advice to outside parties, such as lawyers, unions or other external safe channels is acceptable, but that the policy is designed to prevent any unnecessary public disclosure of concerns.

6. Safeguard against abuse of the policy
Make it clear that the malicious raising of unfounded allegations is a disciplinary offence. Protect managers from disgruntled poor performers by documenting performance reviews, disciplinary action and dismissal procedures. Remember, however, that some genuine concerns will be misconceived because an employee will never know all the facts.

7. Involve staff in developing the policy
In order to be effective there should be a sense of organizational ownership of a whistleblowing policy. Discuss the issues at the beginning, explaining the reasons behind the policy and dealing with objections and worries. Circulate the draft policy to employees or make it available for comments and suggestions. When the policy is complete make sure it is communicated to all staff and reinforced by permanent reminders such as attractive posters.

8. Review the policy
The project manager should: talk to any employees who have had reason to invoke the whistleblowing procedure; find out if they were happy with the way their concerns were dealt with and if they experienced any harassment; run an employee attitude survey (see a related checklist) to find out if staff are comfortable with the nature of the corporate culture and if they think it supports the airing of concerns; ensure that the policy is not being used in preference to other pre-existing, complementary policies and; remind staff of the policy annually.

In order to effectively implement the whistleblowing policy, there will probably need to be a culture shift within the organization. Whistleblowers may fear retaliation even though the policy strictly proscribes it. A policy will not work if it is simply a piece of paper which is filed away and neither communicated nor acted upon. Upon completion of the whistleblower policy, the organization should develop implementation and enforcement mechanisms that are consistent with the policy. Although the first step—creating an environment where a whistleblower will report problems that exist—is the crucial one, to be fully effective a whistleblower policy must be consistently implemented, claims investigated and evaluated, and proper enforcement taken when necessary.

Benefits of Whistleblowing
The three main ethical theories: deontological ethics, consequential ethics and virtue ethics can be used to describe the benefits of whistleblowing. From a deontological ethics point of view, the normativity of a legitimation rests with the idea that the policy allowing whistleblowing is necessary because the act of disclosing information is valuable in itself. Consequentialist ethics place the normativity of the legitimation of whistleblowing policies in allowing whistleblowing because the disclosure of information contributes to a greater good than when the whistle is not blown. Finally, virtue ethics normatively legitimates whistleblowing policies that allow whistleblowing because the disclosure of information about organizational processes is a constitutive and hence inalienable part of those processes themselves. Whistleblowing as a human right falls under the header of deontological ethics. Whistleblowing as a human right is built on three rationales: truth, self-expression and democracy – which acknowledge human dignity and equality, value in themselves. Whistleblowing is a way to balance power. Hence, whistleblowing policy is an integral part of network governance, ensuring trust building through interactions. In spite of the often ambivalent attitude held towards whistleblowers, there are practical reasons for treating whistleblowing as a policy issue. In organizations, wrongdoing will occur and there will be employees who will desire to stop it. Legislation (Public Interest Disclosure Act 1998) protects employees who blow the whistle on activities that are against the public interest. Whistleblowing is on the increase. Retaliation against the whistleblower is neither desirable nor effective. Whistleblowing policy can be of a greater good to organizations. Whistleblowing challenges wrongdoing thus preventing its debilitating effect on an organization and its reputation. It demonstrates that the organization is determined to be fair and honest. It provides a mechanism for whistleblowers to voice their concerns without making them public. It saves the costs and bad publicity associated with public disclosure and legal action. It promotes accountability and deters bad practice. It improves the quality of customer care, particularly in service organizations. Whistleblowing policies outlines the applicable procedure for raising concerns and reassure staff that they will not be subject to reprisals if they raise concerns about a violation of internal rules, external laws or good practice. They act as an early warning system and make it more likely that concerns will be raised internally, thus reducing the risk of involvement by external regulators or adverse media publicity. They indicate to those outside the organization, such as investors and customers, that good practice is being followed.
Whistleblowing policies are important in the organizations despite the fact that implementing a whistleblowing policy, whether as a stand alone policy or as part of a comprehensive code of conduct, is often a balancing act between the clear benefits to the organization of having a policy and the practical means of implementation clashing with specific national requirements. It is easiest to think about introducing a whistleblowing policy or code of conduct before receiving expensive claims or unwanted publicity, as implementation is likely to be less rushed and more considered.
Both employers and employees may have a lot at stake when whistleblowing occurs. Whistleblowers may fear that management will be tempted to 'shoot the messenger'. A clear procedure for raising issues will help to reduce the risk of serious concerns being mishandled, whether by the employee or by the organization. It is also important for workers to understand that there will be no adverse repercussions for raising cases with their employer. In addition, there are in some sectors separate legal requirements requiring a whistleblowing policy and employers who do have a policy are less likely to be taken to an employment tribunal.
Various cases have shown the damage that fraud and business malpractice can cause. They also highlight the need for organizations to ensure that whistleblowing procedures are in place and supported by the management culture. Business ethics are increasingly seen as an issue that can build or destroy a company's reputation. If public trust is withheld, the business consequences can be extremely serious.
The existence of a policy, together with evidence that the employer was concerned to deal effectively with any malpractice, will make it less likely that a tribunal will find that an employee was behaving reasonably by making disclosures to an outside body or person. The employer will usually be the best person to investigate and, if necessary, put matters right. An internal procedure will also help to forestall the serious damage to an employer's business or reputation that can occur as a result of public disclosures.

Conclusion
“Whistle blowing” has its rightful place and is a good action if it corrects situations which may be hazardous or detrimental to employees, customers or the public. However, being a 'whistle blower' can be viewed as a bad thing if it has dire consequences to the blower - say a job loss or rejection by peers, coworkers and employers. Therefore one has to decide whether one prefers to or can afford to face the personal consequences of a morally right choice or whether one will allow a terrible injustice or wrongdoing to continue.
People have different stances or convictions at different stages of their lives –some will make their choices based on these regardless of the personal or societal outcomes, while others will make the choice based on the potential personal losses. Die-hearted religious persons may stick slavishly to the conviction of doing what is right. Mature/older individuals, who have already acquired much material wealth, may find it easier to face material losses, but harder to face rejection of peers. Younger persons who are building a future with financial obligations heavily dependent on employment may find it hard to whistle blow.
Yet, there may be all round positive outcomes, after whistle-bowing. Usually, if one does the right thing one usually feels better and surprisingly, many whistle blowers find, after the initial backlash, that they are respected and their colleagues actually admire them.
Certainly, it is not easy to become a whistle blower. There is a moral question that an individual needs to ask him or herself – “Will I be able to live with the knowledge that something is wrong and I can fix it but take no action so everyone remains all right or will I be able to live with the consequences of exposing a wrongdoing?”
Our position is that whistle-blowing is morally justified if:
i. There is clear, substantiated, and reasonably comprehensive evidence that the organization is engaged in some activity that is seriously wronging or will seriously wrong other parties; ii. Reasonably serious attempts to prevent the wrong through internal whistle-blowing have been tried and have failed; iii. It is reasonably certain that external whistle-blowing will prevent the wrong; and iv. The wrong is serious enough to justify the injuries that external whistle-blowing will probably inflict on oneself, one’s family, and other parties.
There should be legislation by the government of a country spelling out for the employee the methodology for whistle blowing and putting measures in place to protect the employee who follows the rules and does society a good turn. We therefore conclude that whistle blowing is a good action if the perceived immoral practices are potentially harmful to public health and well-being and the action of the whistleblower arrests or prevents such harm.

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...Is it worth blowing the whistle? Ethics, values and beliefs all play a role in accounting. But when it comes being a whistleblower you can see where these things can start to conflict with one another. Even though there are laws to protect a whistle blower very few people do and those who do blow the whistle aren’t always happy after it’s done. At the same time those who do report do receive benefits and can say they truly have honesty and integrity. Ethics is more than just what’s right and wrong. What is right to one person can be considered wrong to another. Ethics are based off of what we know to be morally right or wrong. Smoking marijuana is wrong in the United States but considered ordinary or right in Amsterdam. Some ethical decisions go further than knowing what is the right thing to do, sometimes our emotions can get the best of us and leave us making poor decisions. When deciding the ethical thing to do in a situation you must set your emotions aside and base your decision on what you know or consider being right. Ethics is a large part of accounting. You are constantly faced with decisions where you need to decide the ethical thing to do. Whistleblowing involves the act of reporting wrongdoing within an organization to internal or external parties (Eaton & Akers, 2007).As a whistleblower your ethical decisions are what decide if you should blow the whistle. You know that adjusting numbers such as Enron did is wrong and unethical. Many people are......

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Potential Predictors of Whistle-Blowing Intention Among Public Sector Agencies

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