Tuesday, February 27, 2018

The Democratization of Whistleblowing

The Democratization of Whistleblowing

When whistleblowing started up in the 1960s/1970s the actors were an elite group.  Back then it was Ralph Nader versus unsafe cars and Karen Silkwood against dangerous nuclear power plants.  The issues were big, and complaining could be dangerous.  They were proper heroes.  But times have changed.

As business worked more with government that lacked resources to keep its partners in check, our value became more obvious.  More laws came to protect whistleblowers against retaliation.  More people concluded they would be protected, and the number of people disclosing wrongs increased rapidly. 

In 2006 the number of corporate whistleblower reports averaged about 8 per thousand employees.  By 2016 the rate had increased some 75% to 14 per thousand employees.  Similarly, complaints to the Department of Labor rose 68% from 2008 to 2017. 

Reporting to federal programs that offer rewards also surged.  Between 2012, its first full program year, and 2017, the SEC saw a nearly 50% increase in tips.  False Claims Act suits are fewer and vary more from year to year.  The average number of new FCA cases in 2012-2016 (812) rose 158% over the 1987-1991 average (312). 

Awareness of and the courage to report acts of sex abuse have grown visibly in recent years.  Although the early focus was on Hollywood nasties, the problem is widespread.  In a national survey 81% of women and 43% of men said they had experienced sexual harassment or assault over their lifetimes. 

As whistleblowing became popular, the range of complaints widened.  They include disclosures of uncertain wrongs along with the flagrant.  Sexual misconduct charges against Harvey Weinstein seem pretty certain.  But those against Aziz Ansari[1], for example, are more controversial.  A mostly media-waged fight set Talia Jane against Yelp Inc.  Jane wrote an open letter to Jeremy Stoppelman, CEO of Yelp whose Yelp24 employed her in customer service.  Jane complained about her low pay.  She was promptly fired although Yelp soon increased salaries for positions like Jane’s.

In most cases the accused proclaim their innocence and dismiss whistleblowers’ complaints as untrue.  That’s what HomeFirst said in defense against my complaint.  And when BP Energy recently settled a False Claims Act suit about overbilling California for natural gas, it asserted it had done nothing wrong.  It agreed to pay the $102 million for the sake of convenience.

As our complaints multiply, they include more small-time cases like mine.  Some address acts that are more strictly moral, like not paying employees enough to satisfy them.  And behavior that may be gross but seems to stop short of illegality. 

Or they attack the organization with conflicting arguments.  On one side stands James Damore.  He was a Google software engineer when he internally published a memo criticizing Google’s culture of political correctness.  He suggested the gender gap in technology companies might result not from biases, but from the generally lower capabilities of women for tech work.  He recommended the company examine its biases in favor of women and diversity in general.  This did not go over well, and he was fired.  He had violated company policy, Google said, when he suggested women have traits that make them less biologically suited to the work.

On the other side stands Tim Chevalier, another former Google engineer.  Chevalier felt the company’s internal social networking programs were used to belittle and harass women, people of color, LGBTQ employees, and other minorities.  Google fired him too for violating its social norms and creating unacceptable stereotypes.

In his lawsuit, Damore offers evidence of Google’s intensely PC culture.  One piece was communication from Chevalier to Damore’s co-plaintiff in the suit.  And Chevalier’s lawsuit refers to grief he got for criticizing Damore’s memo.  These are young men.  So they spent no time on Google’s age discrimination problem.   Their biological and moral arguments might apply equally well to age differences.  What a mess of knitted wrongs and accusations!

A problem with the democratization of whistleblowing stems from the ambiguity of our small-time complaints.  When I asked if HomeFirst was violating state licensing laws, the CEO’s initial concern was not about legality.   She cared first whether obeying the law would limit the number of homeless shelter beds.  When she appealed to the board for support, she blew the whistle on me.  The State’s determination letter agreed with HomeFirst: I was not really a whistleblower.  Instead they had outed me as someone who had hoped to bring the company down.

Debates often focus on whether our complaints are valid.  Did the company intentionally overbill the government?  Did the government really engage in unlawful surveillance of its citizens?  Was a law actually violated, a person harassed, or a lie told?

Justice is likely to be served better if we look to how power is used in these situations.  Power that resides primarily with the accused wrongdoer and is employed to quash the whistleblower.  Blocking its violence can be inconvenient for those used to having their way.  Yelp, Google and HomeFirst hoped to cut off discussion on their terms, and they fired their accusers.  Those accused of sexual harassment or worse too often succeed in switching the conversation.  Their accusers are the guilty ones, they say.

Our battles should not be about one side winning or losing.  Solutions that silence the parties waste an opportunity.  Continuing our discussions is a painful but necessary cost of social life.



[1] Plus related, impassioned criticism of and support for Jane.

Tuesday, February 20, 2018

Whistleblowing, Clean and Messy


Whistleblowing, Clean and Messy

In his NY Times column, The Ethicist, Kwame Anthony Appiah responds to ethical questions posed by readers.  In a recent issue, a middle school student asked about becoming a whistleblower.

During a test the student witnessed three fellow students cheating while their teacher was out of the room.  He[1] wanted to be honest but also feared the consequences of reporting the violation – to the three cheaters and his friendship with them.  His school has no official honor code.

This seems to be the typical whistleblower’s dilemma.  An honorable person sees misbehavior and must weigh the personal consequences of disclosing it to authorities against the social benefit produced by disclosure. 

It is the problem cleansed of emotion that academics have addressed for years[2].  Here the individual has time to consider the issues and seek advice from wise people.  The significance of the wrong can be evaluated objectively, which Appiah does.

Appiah, commends the student for his values and suggests that cheaters eventually pay for their dishonesty.  He agrees that the student has no moral obligation to report the incident and the personal effect of reporting could be painful.  He does not point out, but readers understand, the misbehavior is not really egregious.   He may stay silent.  To soothe his conscience, the student could write his principal a letter recommending teachers not leave test sites without monitors.

Appiah might also have counseled me against ratting on HomeFirst.  I might have heeded his caution that the personal ramifications would be significant.  I was probably going to retire about a year after I started pushing the violations I found.  I could have used that time, if I really wanted to file complaints, to gather proof to support my claims.  He might have mentioned HomeFirst’s violations were not time-sensitive and probably not all that significant.  I was, after all, just a small-time whistleblower.

Moral judgments form not in a reasonable head but out of emotion[3].  Likewise, whistleblowing cases are dirtied by emotions on both sides.  If the student had been bullied by the three cheats earlier, he might never have sent Appiah his letter.  He might have decided he’d found the opportunity he was looking for.

Companies usually claim the whistleblower is unclean.  He is disgruntled and sullied by poor performance.  HomeFirst’s response to my complaint also said I wanted to bring the company down by blowing the whistle.  The State’s determination letter accepted HomeFirst’s claim: I did not act based on good faith belief.  I did not perform in the company’s interest.

You can suspect that destructive desire in some big-time whistleblowers.  Sometimes the perceived violation seems so enormous the organization must be torn down before things can be righted.  Enron and WorldCom rightly fell to ashes.  Chelsea Manning and Edward Snowden hoped to upset broad swaths of government.

In my case, and I suspect many others’, what sparked whistleblowing was ire directed not at the company, but at one particular person.  Company misbehavior provided a context, but my whistleblowing would not have happened without that special person.

Jenny Niklaus arrived after we had reduced the number of employees by 40% trying to put HomeFirst on a solid financial footing.  She appeared to be the best of three CEO candidates.  She was bubbly and cried at the plight of homeless people. 

In 2010, Niklaus’ first full year as CEO, HomeFirst lost $1.8 million (before gains on the sale of assets).  I suggested we’d have to trim more expenses, but we didn’t.  It lost $.4 million in 2011, $1.1 million in 2012  and $1.6 million in 2013.  Donor contributions continued to drop.  I said more firmly we needed to cut expenses.  We had nasty exchanges over the 2014 budget when I again recommended cuts without effect.  I said we could run out of cash, but she was unmoved.  A former development director reminded me, she’s an idiot, you know.

I thought I would win as the company’s financial position visibly worsened.  When violations started piling up, I expected I would surely win.  I thought, wrongly, the board would fire her, not me.

Her laziness annoyed me.  She was inept and frustrated me.  She refused to fix anything; she pissed me off.  She inspired my whistleblowing when I witnessed HomeFirst’s violations.  That’s the way I see it.

It’s hard to be sure my sense of how people become whistleblowers – our unhappiness opens us to report misdeeds when we observe them – is generally true.  It seems to describe how Debra Halbrook was launched after she was offended by her boss.

Then there’s Francisco Alsonso, a West Palm Beach (FL) police lieutenant.  He started blowing the whistle after he was reprimanded for not stopping a fellow officer from driving while intoxicated.  Ann Tarafas and Elizabeth Fox worked as paraprofessionals in a financially troubled Pennsylvania charter school.  They didn’t like cuts and reassignments the principal made, so they complained.  Dr. Julian Craig, a former chief medical officer, had a gripe over his pay on the way to testifying to District of Columbia lawmakers about the hospital’s problems.

Ethicists have suggested that whistleblowers should be pure of heart and resist desire for revenge[4].  But employment-at-will ended company loyalty as reason for hesitating to blow the whistle.  Then government-sponsored rewards for reporters quashed assumptions about our pure hearts.

The new world is messy.  We report perceived wrongs with much or little pause.  We blow our whistles on a variety of sites.  Damning documents are uploaded.  Complaints fly over Facebook, blogs, and tweets.  Criticisms posted on Yelp, Trip Advisor, and any number of other media routinely call out our disappointments.

The realm of Appiah’s innocent student is attractive but not easily located.


[1] The sex of the student was not stated.
[2] See, for example, Hoffman, Michael W. and Mark S. Schwartz.  The Morality of Whistleblowing: A Commentary on Richard T. De George.”  Journal of Business Ethics 127 (2015):771-781; and Bok, Sisella. “Whistleblowing and Professional Responsibility.” New York University Education Quarterly 11.4 (1980): 2-10
[4] Bouville, Mathieu.  Whistle-blowing and morality.”  Journal of Business Ethics.  81.3 (September 2008): 579-585; Hoffman and Schwartz, ibid;  Bok, ibid.

Wednesday, February 14, 2018

Whistleblowers Become the Accused


Whistleblowers Become the Accused

When we blow the whistle, we expect trouble.  We just don’t know its full extent.
Blowing the whistle usually leads to some form of retaliation.  That’s to be expected.  We broke the group’s rules.  We betrayed our boss or coworkers by exposing someone’s mistake or an outright wrong.  We blew the whistle on our team.

We expect to be shunned.  At times throughout our lives we’ve been rejected when we offended others.  Or we have snubbed another when he annoyed us.
In business it’s natural to make these punishments financial.  By refusing her a promotion, a pay raise or overtime.  By relocating her office.  We can be shocked when positive performance reviews turn negative, but that is a conventional way to send a message.  You don’t belong here.

In some industries the injuries can become physical.  It happens in law enforcement.

We can even expect to be fired.  We are shocked, offended, but not entirely surprised.  Many of us have fired people in the past.  We can’t be naïve.
We know that our boss will not give us a good job reference when we resist company misbehavior.  Some whistleblowers drop the company from their resume and their linkedin page.  That gets tricky when it leads to misstating job histories.  We work around the problem.

Those are all issues we can anticipate because we have worked in organizations for years.  But there are legal troubles we don’t usually anticipate.  They can be nerve wracking and expensive.

Debra Halbrook worked as a legal assistant for a North Carolina district attorney.  The guy was offensive, the way he always carried his Glock and disrespectfully adopted images of her strict Christian faith.  She reported behavior she thought was wrong to State authorities.  The DA fired her.  She sued.  Her attorney went full bore.  He charged him with wrongful termination but also with racketeering offenses, obstruction of justice, civil conspiracy, and more. 

Now the DA has gone after Halbrook and others.  His suit charges Halbrook with racketeering, obstruction of justice, and civil conspiracy.  He also sued her attorney for abuse of process.  Pursuing a whistleblower lawsuit can be expensive, but defending yourself against a rabid former employer involves costs you never imagined.

Others have been sued over their whistleblower claims.  Theodore Schiff won his FCA suit against dermatologist Gary Marder, who settled with the Department of Justice for $18 million.  Marder said he would sue Schiff for things he had said.  MJS and Associates, a health care consulting company, lost $65 million in an FCA suit brought by Matthew Master.  It then sued Master for breach of contract and breach of fiduciary duty, among other things.  Fortunately for Master, a court dismissed the suit.

Sometimes companies sue employees for their whistleblowing actions before they were fired.  Nick Ramler’s former employer claimed he tried to use his evidence of wrongdoing to blackmail his boss into not firing him.  Todd Barretta, chief compliance officer for NJ Transit, was sued for breaching his duty of loyalty to the agency.  Elderick Brass, a former prison guard, was charged with a felony for releasing a video of a guard firing a tear gas canister at an inmate.

Organizations always try to justify firing the employee for reasons unrelated to whistleblowing.  That can protect them from the eventual wrongful termination lawsuit.  And the wrongs they find can prove expensive for the whistleblowers.
Johnny Burris accused JP Morgan of pushing its investment products to customers for whom they were inappropriate.  The bank fired him, and he sued.  As justification, the bank said Burris misused JP Morgan letterhead paper and he failed to execute a customer trade causing the customer to lose $624.  Fighting that charge at FINRA cost him $50,000 plus the $5,000 fine.

Megan Elizabeth NIsewarner called out contract irregularities in her school district among other wrongdoings.  Unfortunately, a search warrant resulted in finding marijuana in her home.  Possession charges were eventually dropped, but the district still used the discovery as reason for firing her.

If the whistleblower loses her suit, losses can mount.    Parsippany (NJ) township charged James Carifi illegally downloaded files he used as evidence of misdeeds.  He had to defend himself against that.  Then when he lost his whistleblower suit, he had to pay the township $164,000 for its legal costs.  Janice Marrin claimed her complaints about lax hospital procedures led to her being fired.  After she lost her lawsuit, she was ordered to pay the hospital’s defense costs.

Organizations like to hold the threat of lawsuits over former employees who might talk about their cases.  HomeFirst proposed a settlement agreement to me that barred me from discussing the settlement or my employment with HomeFirst.  A friend of a friend of mine settled with a large bank that insisted on nondisclosure.  The bank requires annual depositions to make sure she hasn’t discussed it with anyone.  Otherwise she can deal with them in court.

I refused HomeFirst’s settlement, but still it blustered.  When I continued to follow-up on my complaints about its behavior, it sent me a letter threatening legal action.  I did not stop, and I never heard from it again.  The California Bar said the HomeFirst attorney had the right to threaten legal action if I defamed the company.  But, of course, that was not exactly the warning its attorney intended.

Sometimes whistleblowers are burned when they don’t stop.  Blue Shield of California fired Michael Johnson after he complained the nonprofit behaved more like a for-profit company.  Johnson has continued to be publicly vocal.  And he battles Blue Shield’s lawsuit trying to get him to stop revealing what it considers confidential information.

When we start on our whistleblowing ventures, we envision a limited field of action.  We simplify.  We see ourselves as moral champions, not as dissatisfied and a little vengeful.  We ignore the fact that the organization will quite reasonably seek its own revenge against us.  Its attacks will be fueled by resources we cannot always match.  It will attempt further acts we don’t imagine.

Tuesday, February 6, 2018

Significance in Retrospect


Significance in Retrospect

Jesselyn Radack, joined the Department of Justice after graduating from Yale Law School in 1995.  In 1999 she moved to DoJ’s Professional Responsibility Advisory Office.  She felt forced out of the DoJ in 2002 following her involvement in the government’s interrogation of John Walker Lindh, an American citizen captured with Taliban forces in Afghanistan.  She became a very public whistleblower.

In her telling, the story was straightforward.  She was asked whether Lindh could be interrogated without an attorney being present.  She advised, no, not under U.S. law since his parents had secured an attorney for him.  The FBI went ahead and interrogated him anyway.  Her boss suggested she leave or else.  Lindh’s attorney’s later requested copies of relevant DoJ communications, but DoJ didn’t provide copies of all Radack’s emails, which might have strengthened Lindh’s defense.  Radack, then with a private law firm, leaked her emails to Newsweek, which published them and her name.  For years afterward, the government made Radack’s life a hell of attacks, inconveniences, and legal expenses.

But ambiguities of Radack’s story are as striking as those of most whistleblower cases.  The government debated whether her emails constituted formal advice.  Whether an attorney engaged by Lindh’s parents, unbeknownst to him, was really his attorney.  Whether DoJ intentionally withheld emails from Lindh’s defense.  And whether Radack was really forced out of DoJ.  Government lawyers contended Radack violated attorney-client privilege by disclosing the emails to Newsweek.  They claimed actions against her were justified because she violated her professional ethics.

That the government challenges Radack’s depiction doesn’t make her rendition wrong.  That the government echoes most accused companies by saying Radack misunderstood situation and she misbehaved doesn’t make her telling right either.  We will never get to what is really true in the matter.

The government case against Lindh arguably fell apart.  In 2002 he received a 20-year sentence, not the multiple life sentences initially sought.  That some of the evidence against Lindh was obtained through torture may have been why.  Maybe Radack’s whistleblowing contributed.  Whatever the reason, Lindh retains his faith in global jihad and will be released next year.

It can be hard to see how our whistleblowing had any impact on the situation we wanted to change.  While I was CFO at HomeFirst Services, I suggested we do a better job of reporting results but I got nowhere.  HomeFirst continues that lack of transparency by not publishing its 2017 audit report[1], which shows a $1.4 million loss before noncash activities, until after its big winter contribution season ends.

While CFO I argued unsuccessfully for expense reductions to avoid financial problems.  But annual administrative costs were increased by $1.4 million, and HomeFirst’s June 2017 cash balance wouldn’t cover even one biweekly payroll.

While Compliance Officer, I reported eight legal violations and identified a dozen more.  None resulted in action against HomeFirst or in any meaningful change in its operations.  HomeFirst’s largest financial violation – overbilling HUD by $1.2 million – was mostly forgiven by HUD[2].  The company’s misuse of $138,000 of City of San Jose money was entirely forgiven.

Nothing was accomplished by my whistleblowing.  Nearly everyone else involved has moved on.  Now that the State has rejected my complaint, my footnote to the HomeFirst audit report will vanish.  The entire incident can be forgotten.

America was caught up in post-9/11 frenzy over terrorism, torture of suspected terrorists, and the Bush Administration’s lurch to war in Iraq.  Radack rode a pretty minor misdeed into whistleblower fame.  Her story has been told in Newsweek, The New Yorker, The New York Times, NPR, among many media outlets.   Three years after she was first attacked, she recovered professionally to join the D.C. Bar Legal Ethics Committee.  She went on to serve as director of National Security & Human Rights at Government Accountability Project, where she represented NSA whistleblower Thomas Drake.  She traveled to Moscow to meet with Edward Snowden.  She won awards.

Few whistleblowers win awards, see their stories told in The New Yorker, or mix with big-time whistleblowers.  But, like Radack, the results of their whistleblowing are slight.

This can be true even of big-time whistleblowers.  Daniel Ellsberg, the patriarch of whistleblowers, released the Pentagon Papers in 1971, hoping to stop the war in Vietnam.  Responding to widespread public pressure, the Nixon administration began to draw down troops years before the release, but the war continued for nearly four more years.  Like Radack, Ellsberg is justifiably a whistleblowing celebrity despite doubtful results.

We go through life uncertain of the meaning of our efforts.  We perform jobs, raise families, accumulate some assets, and form friendships.  The significance of any of our accomplishments is open to great doubt, our whistleblowing no less than anything else.

I appreciate the encouragement Radack, Ellsberg, Government Accountability Project, and others give to whistleblowers.  Having hope for a successful outcome can make it easier to undertake a dangerous project.  But I also think that the ability to launch a project we expect will fail can be a valuable life skill.



[1] The report, issued on October 31, 2017 and available at Federal Audit Clearinghouse, was not available on HomeFirst’s website as of February 5, 2018.
[2] HomeFirst’s 2017 audit report stated that HUD had forgiven about $800,000 of the amount and the balance is payable in three installments beginning in 2018.