171784950 Ghillyer EthicsNow Notes Ch07 Blowing Whistle

8/17/2019 171784950 Ghillyer EthicsNow Notes Ch07 Blowing Whistle

1/25

CHAPTER 7

Blowing the Whistle

Table of Contents

Chapter Summary and Learning Outcomes.................................................................................2

Frontline Focus: Good Money Questions....................................................................................3

Learning Outcomes......................................................................................................................4

Lie S!ills..................................................................................................................................."#

$rogress Chec! Questions.........................................................................................................."#

%thical &ilemma Case '." ( )he *nsider..................................................................................."4

%thical &ilemma Case '.2 ( )he Cold+ ,ard -eality................................................................"

Frontline Focus: Good Money/0en Ma!es a &ecision Questions........................................."1

ey )erms.................................................................................................................................."1

-eie Questions......................................................................................................................"'

-eie %5ercises......................................................................................................................."6

*nternet %5ercises......................................................................................................................."7

)eam %5ercises...........................................................................................................................2#

)hin!ing Critically %5ercises.....................................................................................................22

'8"


2/25

Chapter Summary

)his chapter e5amines ho employees ho ind eidence o unethical conduct in their

companies go a9out 9ringing that inormation to the attention o the companies senior

management or the appropriate regulatory authorities. )his chapter e5plores ethical and

unethical means o histle89loing. ;histle 9loing came to its height in 2##2 ith the

Sar9anes8O5ley


3/25

$rontline $o!us

%oo# &oney 'uestions

". * 0en decides to raise concerns a9out the product >uality o the 0enield Aoyagers+ he ill

9ecome a whistle(blower. )he dierence 9eteen internal and e"ternal whistle(blowing ise5plained on page "34. ;hich approach should 0en ollo i he does decide to raise his

concernsB

Student ansers may ary. )he right thing or 0en to do i he decides to raise his concerns is

to ta!e the issue to his immediate superisors. uality o the tires hich could lead to harming a mem9er o

the pu9lic i the tires do not perorm as they should+ thus meeting the irst condition o ethical

histle89loing. 0en needs to ma!e sure hen he decides to address the issue that he clearly

e5presses hy he eels this 9rand o tires could in act 9e a dangerous choice or consumers.

* 0ens 9oss ohn does not ta!e immediate action+ 0en should not run right to the press. 0en

should ma!e sure he e5hausts all eorts internally o trying to sole the issue. 0en may ant

to get documented statements rom other tire proessionals ho agree ith -ic! to ensure

that hen he addresses the situation he has su9stantial eidence that the tires may not 9e o

decent >uality. Finally+ 0en must eigh the chances o succeeding and ailing. ,e must

determine i e5posing these tires as dangerous ill 9eneit 9oth the pu9lic and the company

or i he is misunderstanding the seerity o the issue.

'83


4/25

3. ;hat should 0en do noB

Student responses may ary. 0en needs to do some research to see i the Aoyager tire is o

lo enough >uality to cause concern. * 0en does ind that the tire could cause harm+ he

should address his concerns ith his immediate superisor. 0ased on eidence+ e canassume his superisor ill not agree+ in hich case 0en should continue up the corporate

ladder to address his concerns. * eidence shos that these tires are o a >uality that could

9ecome dangerous and the company reuses to act+ 0en should then consider ta!ing the ne5t

step and alert the media.

Learning ut!ome )* E"plain the Term Whistle(Blower an# +istinguish Between ,nternal

an# E"ternal Whistle(Blowing-

• )he opening Frontline Focus case shos ho a tire sales agent aces an ethical decision ith

a ne product his company is pushing to sell.

o )he term whistle(blower reers to an employee ho discoers corporate misconduct and

chooses to 9ring it to the attention o others.

o


5/25

o &iscoering potential harm to consumers is an immeasura9le 9eneit and thus one o the

reasons hy the media holds histle89loers to a standard o honor and integrity. Many

9eliee histle89loing can 9e motiated 9y 9oth appropriate and illegitimate reasons.

o

;histle89loing is considered ethical under ie conditions:E" ;hen the company ill cause serious harm to the pu9lic.

E2 ;hen the employee identiies a serious threat o harm he or she should report it

and state his or her moral concern.

E3 ;hen the employees immediate superisor does not act the employee should

e5haust the internal procedures and chain o command.

E4 )he employee must hae documented eidence that is conincing that the

practice+ product or policy seriously puts the pu9lic in danger.

E )he employee must hae alid reasons to 9eliee that reealing the rongdoing to

the pu9lic ill result in changed necessary to remedy the situation.

o ;histle89loing can 9e considered unethical i the employee is motiated 9y inancial

gain or media attention+ or i they carry a endetta against the company. *n this case the

legitimacy o their histle89loing must 9e >uestioned.

o < 1ui tam lawsuit is a lasuit 9rought on 9ehal o the ederal goernment 9y a

histle9loer under the Federal Ciil False Claims


6/25

Learning ut!ome 2* E0aluate the Possible Conse1uen!es of ,gnoring the Con!erns of a

Whistle(Blower-

• ;hateer the motie o the histle89loer+ the act remains employees are increasingly more

illing to respond to any >uestiona9le 9ehaior they o9sere.

o %mployers ace to choices in these situations:

E" )hey can ignore the arnings and ris! pu9lic em9arrassment or e5treme inancial

penalties.

E2 )hey can create an internal system alloing histle89loers to 9e heard 9eore

the case is ta!en pu9lic. )his option means hearing out the histle89loer instead

o iring them.

o $rior to 2##2+ saeguards against retaliation ere not part o the legal protection or

histle89loers.

o )he ;histle9loer $rotection


7/25

HSpecial &amages+I including litigation costs+ reasona9le attorney ees and costs+

e5pert itness ees+ and Hall relie necessary to ma!e the employee hole.I

Learning ut!ome 3* Re!ommen# How to Buil# ,nternal Poli!ies to A##ress the 4ee# of

Whistle(Blowers-

• %mployers are 9ecoming increasingly illing to respond to any >uestiona9le 9ehaior they

o9sere in the or!place.

o $rior to 2##2+ the only protection or a histle89loer as legislation that encouraged the

moral 9ehaior o employees to spea! out+ ithout oering any saeguards to the

employees.

o )he False Claims uired prompt payment o any portion o the settlement to hich the histle8

9loer ould 9e entitled+ een i the case ere still or!ing its ay through the

appeals process.

*t applied only to ederal employees until the Sar9anes8O5ley


8/25

o %mployees ho preail in histle89loer cases are entitled to damagesJ and the damages

can include:

-einstatement to the same seniority status that the employee ould hae had 9ut

or the aderse employment action.

0ac! pay

*nterest.


9/25

o * an employee is let ith no other option than to go pu9lic than the organi?ation has

ailed to address the situation internally or the long8term improement o the cooperation

and all o its sta!eholders.

o

Going pu9lic should 9e the last resort.

o )he allout o media attention and the oten irreersi9le damage done to the company

should 9e enough to pressure the e5ecuties to loo! deeper and i5 hat is 9ro!en.

o -egretta9ly+ many still choose to 9ury the truth+ hire a legal gunslinger+ or put the

employee in a position o such seere inancial ris! that sDhe decides not to spea! out.

o < study o 233 histle89loers 9y &onald Soe!en o St. %li?a9eths ,ospital in

;ashington+ &C+ ound that the aerage histle89loer as a man in his orties ith a

strong conscience and high moral alues.

o )he olloing statistics ere also reealed a9out histle89loers:


10/25

Life Sills

&aing +iffi!ult +e!isions

Many indiiduals+ such as those discussed in this chapter+ hae 9een aced ith situations here

there is a conlict in ethical standards and they cannot simply loo! the other ay. ;hat ould

you do in this situationB Could you lie ith your decisionB ;hat i there ere negatie impacts

on the company as a result o your decisionB )hen there are the conse>uences or you+ your

amily+ coor!ers+ etc. @o you can see hy whistle(blowers ace such emotional turmoil. *

you ind yoursel in such a situation+

Progress Che! 'uestions

". ;hat is a histle89loerB

< histle89loer is an employee ho discoers corporate misconduct and chooses to 9ring it

to the attention o others.

2. ;hat is internal histle89loingB

*nternal histle89loing is hen an employee discoers corporate misconduct and 9rings it

to the attention o his or her superisor+ ho then ollos esta9lished procedures to address

the misconduct ithin the organi?ation.

3. ;hat is e5ternal histle89loingB

%5ternal histle89loing is hen an employee discoers corporate misconduct and chooses

to 9ring it to the attention o la8enorcement agencies andDor the media.

4. *s histle89loing a good thingB

• Many indiiduals+ especially the media 9eliee that histle89loing is a good thing+ not

only 9ecause it can sae an organi?ation millions o dollars+ 9ut 9ecause it can oten

preent su9stantial harm to consumers.

• ,oeer+ some indiiduals may argue that whistle(blowers are motiated 9y money or

hae egos and a Htrou9lema!erI personality. uealerI ho has 9ro!en the trust and loyalty o their employer.

'8"#


11/25

. List ie conditions or histle89loing to 9e considered ethical.

E" ;hen the company ill cause serious harm to the pu9lic.

E2 ;hen the employee identiies a serious threat o harm he or she should report it and

state his or her moral concern.

E3 ;hen the employees immediate superisor does not act the employee should e5haust

the internal procedures and chain o command.

E4 )he employee must hae documented eidence that is conincing that the practice+

product or policy seriously puts the pu9lic in danger.

E )he employee must hae alid reasons to 9eliee that reealing the rongdoing to the

pu9lic ill result in changed necessary to remedy the situation

1. =nder hat condition could histle89loing 9e considered unethicalB

;histle89loing can 9e considered unethical i the employee is motiated 9y inancial gain

or media attention+ or i they carry a endetta against the company. *n this case the legitimacy

o their histle89loing must 9e >uestioned.

'. * you 9lo the histle on a company or a personal endetta against another employee 9ut

receie no inancial reard+ is that more or less ethical that doing it Kust or the moneyB

Student ansers ill ary. $ersonal endettas andDor inancial reards are unethical reasons

or 9loing the histle on corporations. ;histle89loing should 9e a9out anting to preent

unethical 9ehaior that ill aect numerous sta!eholders 9y Hshedding lightI on 9ehaior

un!non to others.

6. ;ould the lac! o any inancial reard ma!e you more or less illing to consider 9eing a

histle89loerB ;hyB

Student ansers ill ary. 0loing the histle on someone or on an organi?ation should not

9e a9out the reard. *t is important or the health o the company and its sta!eholders to

report unethical 9ehaior.

'8""


12/25

7. * an employee 9los the histle on an organi?ation on the 9asis o a rumor+ is that ethicalB

@o+ one o the conditions or ethical histle89loing states that there must 9e documented

eidence that is conincing to a reasona9le+ impartial o9serer.

"#. * that inormation turns out to 9e alse+ should the employee 9e lia9le or damagesB %5plain

your anser.

Students ansers may ary. * an employee 9los the histle on an organi?ation 9ased on a

rumor and the inormation is alse+ then the employee should 9e held lia9le or damages. )he

employee ill hae cost the organi?ation its reputation and hae to spend time mending and

re9uilding trust. ;histle89loing should only ta!e place i there is documented eidence that

is conincing to a reasona9le+ impartial o9serer.

"". Compensation to Hma!e the employee holeI under SO isnt as clear as a percentage o the

unds recoered or a goernment histle89loer. &oes that ma!e it less li!ely that ell see

more histle89loing under SOB

Students ansers ill ary. *t may or may not promote more histle89loing+ 9ut the

inancial reard aspect should not 9e the primary motiation. )he primary motiation should

9e to do the right thing and preent an organi?ation rom going through a corporate scandal

hen it can 9e preented.

"2. =nder SO+ complaining to the media isnt recogni?ed as histle89loing. *s that ethicalB

Students ansers ill ary. Complaining to the media is dierent rom histle89loing.

Complaints should 9e addressed and ta!en care o 9y the organi?ation+ hereas+ the

inormation displayed 9y the histle89loer ill 9e ta!en into consideration and dealt ith

9y legislation.

"3. ,o should managers or superisors respond to an employee ho 9rings eidence o

>uestiona9le 9ehaior to their attentionB

Managers should tell the employee a9out the companys deined process and ensure the

employees conidentiality. )hey should then ta!e the employee through the ne5t steps o the

companys outlined process or reporting >uestiona9le 9ehaior.

'8"2


13/25

"4. Should that employee 9e gien any reassurances o protection or ma!ing the tough decision

to come orardB

es+ as it is stated in SO+ retaliation against histle89loers is prohi9ited and thecompanys policies should stress this along ith e5treme conidentiality.

". &o you thin! a hotline that guarantees the anonymity o the caller ill encourage more

employees to come orardB

Student ansers may ary.


14/25

Ethi!al +ilemma

Case 7-) 8 The ,nsi#er

". &r. ;igand as initially unilling to go pu9lic ith his inormation. ;hat caused him to

change his mindB


15/25

Case 7-. 8 The Col#9 Har# Reality

". ;ho too! the greater ris! here: Christine Casey or &aid ;elchB

Student responses ill ary. ;hile Casey stated her concerns and later resigned+ ;elch iled

or histle89loer protection under SO. Casey as ruled against 9y the Kudge 9ecause she

made constructie proposals to senior management rather than iling e5plicit complaints.

;elch as ired or raising his concerns ithin the organi?ation+ and thereore+ could 9e

aarded histle89loer protection.

2. ;as the alleged 9ehaior at Mattel more or less unethical than the 9ehaior at the 0an! o

FloydB

Student responses ill ary. 0oth included alsiying inancial inormation.

3. &o you thin! Casey and ;elch regret their decisions to go pu9lic ith their inormationB

;hy or hy notB

Student responses ill ary. ;hile ;elch commented that his orst ears ere reali?ed and

he ould neer again or! in the industry+ i his 9elies outeigh the inluence o money he

pro9a9ly does not regret his decision. ;hile Casey pro9a9ly regrets that the company settled

ithout haing to admit any rongdoing+ i she stands 9y her 9elies she also pro9a9ly does

not regret her decision.

4. &o you thin! their 9ehaior changed anything at either companyB

Student responses ill ary. *t seems as though the outcome o these to scenarios ould

discourage people rom histle89loing 9ecause neither had a positie outcome rom Hdoing

the right thing.I

'8"


16/25

$rontline $o!us

%oo# &oney:Ben &aes a +e!ision 'uestions

". ;hat do you thin! ill happen noB

Student ansers ill ary. )he amily ill pro9a9ly sue the tire company or damages. )he

more direct eect ith 9e ho 0en handles the pressure o !noing he could hae stopped

this.

2. ;hat ill the conse>uences or 0en+ -ic!+ their tire store+ and 0enieldB

Student ansers ill ary. 0enield and potentially the store could hae lasuits on their

hands. 0en and -ic! ill hae to lie ith !noing they should hae stepped up and

reported hat they thought.

3. Should 0en hae spo!en out against the Aoyager tiresB

Student ansers ill ary. 0en should hae called the company hotline so that the company

could ollo procedure and inestigate the situation.

;ey Terms

E"ternal Whistle(Blowing* ;hen an employee discoers corporate misconduct and chooses to

9ring it to the attention o la8enorcement agencies andDor the media.

,nternal Whistle(Blowing* ;hen an employee discoers corporate misconduct and 9rings it to

the attention o his or her superisor+ ho then ollos esta9lished procedures to address the

misconduct ithin the organi?ation.

'ui(Tam Lawsuit* < lasuit 9rought on 9ehal o the ederal goernment 9y a histle9loer

under the Federal Ciil False Claims


17/25

Re0iew 'uestions

". ;hy are histle89loers regarded as models o honor and integrityB

Student responses ill ary. ;histle89loers can 9e regarded as models o honor and

integrity 9ecause they put their careers and personal lies at ris! to do the right thing.

2. ;hich histle89loing option is 9etter or an organi?ation/internal or e5ternalB ;hyB

Student responses ill ary. *nternal histle89loers do not receie a tremendous amount o

attention and it is harder to trac!. )hey aoid pu9lic em9arrassment. %5ternal histle8

9loing e5ploits the company and it typically creates more pu9lic aareness o an issue or

incident at a particular organi?ation.

3. ;hy ould an organi?ation decide to ignore eidence presented 9y a histle89loerB

Student responses ill ary.


18/25

Re0iew E"er!ises

@O)%: some >uestions allo or a num9er o dierent ansers. 0elo are some suggestions.

". ou or! or a meatpac!ing company. ou hae discoered credi9le eidence that your

companys deliery driers hae 9een stealing cuts o meat and replacing them ith ice toensure that the deliery meets the stated eight on the deliery inoice. )he company has "2

driers and+ as ar as you can tell+ they are all in on this scheme. our company has a ell8

adertised histle89loer hotline. ;hat do you doB

Student responses ill ary. * you do not hae su9stantial eidence you should report the

situation to the hotline so that they may do an inestigation. * you do hae eidence and eel

comorta9le doing so you may ant to ta!e the eidence to your direct manager.

2. ;hat ould you do i your company did not hae a histle89loing policyB

Student responses ill ary. )he right thing to do ould 9e to ta!e the inormation to your

direct superisor. ou must ma!e sure you hae eidence and are not Kust going on rumors or

suspicions.

3. ou later discoer that one o the driers as not a part o the scheme 9ut as ired anyay

hen the inormation as made pu9lic. ;hat do you doB

Student responses ill ary. ou may ant to report hat you !no to a superisor to try

and help the drier get their Ko9 9ac!. )his is hy it is important to !no all o the acts

9eore ma!ing accusations.

4. Should the drier get his Ko9 9ac!B ;hy or hy notB

Student responses ill ary. *t ill 9e hard to proe the drier as not inoled. *t ill also

9e hard to proe i he as aare o the scheme and turned a 9lind eye or i he as unaare

o the situation.

'8"6


19/25

,nternet E"er!ises

". Aisit the Goernment


20/25

c. )here are no to histle89loing ;e9 sites separated 9y only one letter. Summari?e

their dierences and propose hich one oers the greatest assistance to a potential

histle89loer.

Students responses ill ary.

Team E"er!ises

". %uilt by mission-

&iide into to groups and prepare arguments or and against the olloing 9ehaior:

You work for a large retail clothing company that spends a large amount of its advertising

budget emphasizing that its clothes are “Made in America.” You discover that only ! percent of its garments are actually “made” in America. "he other #! percent are actually

either cut from patterns overseas and assembled here in the $nited %tates& or cut and

assembled overseas and imported as completed garments. Your hometown depends on this

clothing company as the largest local employer. %everal of your friends and family work at

the local garment assembly factory. %hould you go public with this information'

Student responses ill ary. *t is not o!ay to use alse adertisement. )his goes deeper into

deciding hether the statement Hmade in


21/25

behaving ethically in putting the welfare of its stakeholders in the +estinghouse deal ahead

of its obligation to support )r. +igand'

Student responses ill ary. < corporation should neer act in a ay that ould negatielyaect their shareholders. ,oeer+ some may eel that C0S should not hae agreed to

support &r. ;igand and then 9ac!ed o the case.

3. A 4ew Approa!h to $reshness-

&iide into to groups and prepare arguments for and against the olloing 9ehaior:

You work in the meat department of store 2345! of a large retail grocery chain. "he company

recently announced a change in the meat-handling protocols from the primary supplier.

%tarting in *anuary 3115& the meat will be gassed with carbon mono6ide before packaging.

"his retains a brighter color for the meat and delays the discoloration that usually occurs as

the meat begins to spoil. You understand from the memo that there will be no information on

the product label to indicate this protocol change and that the company has no plans to

notify customers of this new process. %hould you speak out about the procedure'

Student responses ill ary. )his ould depend on the health eects o the car9on mono5ide.

* doing so might cause people to 9uy meat that ill go 9ad earlier+ or i the gas itsel ill

harm consumers+ you should spea! out a9out the procedure.

4. California rgani!.

&iide into to groups and prepare arguments for and against the olloing 9ehaior:

You work in the accounting department of a family-owned mushroom grower based in

alifornia that sells premium organic mushrooms to local restaurants and high-end retail

grocery stores. "he company/s product range includes both fresh and dried mushrooms. Your

organic certification allows you to charge top-dollar for your product& but you notice from

invoices that operating costs are increasing significantly without any increase in revenues.

"he market won/t absorb a price increase& so the company has to absorb the higher costs and

accept lower profits. 7ne day you notice invoices for the purchase of dried mushrooms from

a *apanese supplier. "he dried mushrooms are not listed as being organic& but they are

'82"


22/25

apparently being added to your company/s dried mushrooms& which are labeled organic and

alifornia-grown. %hould you speak out about this'

Student responses ill ary. )his is a prime case o alse adertising. )he company cannot

claim their mushrooms are organic and Caliornia8raised i they are imported rom apan.

Thining Criti!ally 8 E"er!ise 7-)

'uestionable &oti0es

". 0ir!eneld is adamant that his prison sentence is unair hen compared to the act that no

one else EOlenico+ =0S 9an!ers ent to Kail. &oes he hae a pointB

Students responses ill ary. 0ir!eneld ithheld pertinent data related to Olenicos

9usiness dealings. ,e did not disclose the nature o his relationship ith Olenico to the

=nited States ustice &epartment.

2. ;hy did =0S elect to settle ith the =.S. GoernmentB

Students responses ill ary. =0S did not ant to lose its access to a large mar!et and it

anted to remain a glo9al 9an!ing entity. =0S also sought the interention o the Siss

Goernment to help its case.

3. Gien that there as an immunity agreement in place+ hat did the ustice &epartment gain

rom prosecuting 0ir!eneldB

Students responses ill ary. Students should recall that 0ir!eneld as charged ith

helping Olenico 9y reerring him to a =0S specialist in the creation o oshore Pshell

corporations designed to hide the true onership o =0S accounts. )he ustice &epartment

charged 0ir!eneld ith conspiracy to commit ta5 raud.

4. Critics are concerned that 0ir!enelds prison sentence ill discourage other ta5 histle8 9loers rom coming orard. *s that a alid concernB ;hy or hy notB

Students responses ill ary. *t is a alid concernJ hoeer+ 0ir!eneld as not honest ith

the ustice &epartment 9ecause he ithheld pertinent inormation a9out the case.

'822


23/25

Thining Criti!ally 8 E"er!ise 7-.

Wiileas* Prin!iple# Leaing>

". Critics hae argued that ;i!iLea!s is no attac!ing secrecy on all ronts+ ith no concern

or the conse>uences o the inormation posted on its site. &o those actions align ith the

ethical principles o histle89loingB

Students responses ill ary 9ased on their perception o the case. *n some responses+ the

students should agree that the actions align ith the ethical principles o histle 9loing. On

the other hand+ some students ill argue that its actions does not align ith the ethical

principles o histle89loing.

2. &oes ;i!iLea!s hae an o9ligation to censor postings to protect innocent indiiduals ho

may 9e harmed 9y ma!ing the inormation pu9licB Should the site ta!e steps to eriy the

accuracy o the posted documentsB

Students responses ill ary. Some students may argue that it does hae an o9ligation to

censor postings to protect indiiduals+ and other students may argue that it ould ruin the

purpose o the ;e9 site. * anyone can post anything on the ;e9 site+ there is no telling hat

could end up on it. ,o ould anyone !no i the data is really accurateB

3. ;ould ulilling the ision o a Hi!iI community Eith editors and act chec!ers reduce the

criticism directed at the siteB ;hy or hy notB

Students responses ill ary. Some students may eel that editors and act chec!ers ould

reduce the criticism directed at the site. Other students may eel that the editors and act

chec!ers ould reduce the eectieness and the apparent Hhands8o editorial policyI at the

site.

4. &oes the decision to ithhold "+### documents in a Hharm minimi?ation processI indicatethat ;i!iLea!s is deeloping some sense o the potential conse>uences o its actionsB ;hy

or hy notB

Students responses ill ary 9ased on their perceptions o the case.

'823


24/25

Thining Criti!ally 8 E"er!ise 7-2

The li0ieri Case

". ;as it ethical or


25/25

. ;hat do you thin! ould hae happened i &r. Oliieris ello academics had not supported

her in her ightB

Students responses ill ary. Oliieri ould hae neer 9een reinstated nor had the

complaints ithdran or legal ees coered i her ello academics had not supported her inher ight.

1. ,o could this situation hae 9een handled dierently to aoid such a lengthy and 9itter

9attleB

Students res ponses ill ary. &r. Oliieri should not hae signed the agreement ith

171784950 Ghillyer EthicsNow Notes Ch07 Blowing Whistle

Documents

Transcript of 171784950 Ghillyer EthicsNow Notes Ch07 Blowing Whistle