Billionaire Whistleblower

Billionaire Whistleblower

Whistleblowers are generally underdogs, not top dogs.  They speak truth to power.  They don’t usually have power.  With the democratization of whistleblowing, though, standards have shifted.  The richest man in the world is now a whistleblower.

This month, Jeff Bezos, Amazon CEO and owner of The Washington Post, went public in a blog post.  The National Enquirer had revealed Bezos sent intimate texts to a woman with whom he was having an extramarital affair.  Bezos didn’t like having his privacy violated and began investigating who leaked the material.  This apparently upset the paper’s publisher, David Pecker. 

Officials from AMI, which owns the Enquirer, got involved.  They told Bezos that more photos would be published if he didn’t stop his investigation.  They also wanted him to say there was nothing political in the Enquirer’s reporting.  Pecker, you see, has close connections with Trump, and Trump has attacked Amazon and The Post, which has published reports critical of the President.

Bezos responded as a whistleblower might:  If in my position I can’t stand up to this kind of extortion, how many people can?  As happened in the #MeToo movement on a much larger scale, others also stepped forward talking about AMI’s threats to them.  Ronan Farrow was one, and Huffington Post named others.

Now federal investigators are reported to be looking into AMI’s and the Enquirer’s possible extortion.  The stakes for Pecker and AMI are high.   Acts of extortion could violate the company’s immunity agreement over hush money paid to AMI by Trump’s attorney Michael Cohen.

Like other whistleblowers, Bezos is principled.  He defends his privacy, and he stands up to scumbags.  Unlike the rest of us, he has a lot of money to devote to his project.  He asked three attorneys to review his blog post.  He engaged bodyguard-to-the-stars Gavin de Becker to help him.  Also unlike the rest of us, he doesn’t have a big piece of his wealth at stake in the fight.

It’s puzzling why anyone blows the whistle on what we think is wrongdoing.  Especially a guy who has $112 billion to play with.

Maybe something like an existential crisis is in play.  Challenges to the essential roles we play set us off.  You can see hints of that in my case.  At HomeFirst Services, I was increasingly critical of its CEO Jenny Niklaus’s leadership.  The company was on a downward financial slide, and as CFO I was responsible.  You might read it in stories of other whistleblowers.  Environmental scientist Joel Clement couldn’t work for the Trump administration after it called climate change a hoax.  It was impossible for elementary school principal Sarah Lynch to do her job when district spending provided inadequate safety staffing for her school. 

In these cases, the company, government, or school district want to go their ways and not the ones we propose.  Rather than simply yield, we resist.

In Dostoyevsky’s Notes from Underground[1], the narrator describes an officer who regularly strides down Nevsky Prospekt in St. Petersburg.  Imperious, he expects others to move from his path.  Having always to back down angered our narrator.  What rule says this officer must always get to humiliate the others, he asked.  Why must I always be the martyr?  The officer never even notices me as I step aside.

Our hero made plans.  He took an advance on his salary to buy fancy new clothes.  He will be impressive.  Walking along Nevsky, he will be powerful.  This time he will not step aside.  The officer approaches.  Our hero stands his ground.  But the officer knocks him away like a ball and continues down the avenue.

But Bezos is no sniveling runt.  He is an officer used to having his way.  He is used to receiving breaks, not giving them.

In this light, the National Enquirer is the whistleblower.  The Enquirer is the one who disclosed wrongdoing – the extramarital kind.  Like whistleblowers everywhere, it exercised its right of free speech.  Standing up to Bezos’ screed, it fervently defended its lawful disclosure of the texts.

Still. raising a sleazy, supermarket tabloid to whistleblower status seems wrong, too.  The Enquirer is no Washington Post.  Unless you buy that free speech means more to it than business craft.

Likewise, Bezos’ defense of privacy rights could be just a maneuver.  Whatever the game, he expects to have his way no less than Dostoyevsky’s officer.

Our claim to being whistleblowers is always contested.  Despite my many complaints, HomeFirst denied I was one and the State agreed.  Even we can find our ventures hard to justify after the sacrifices we make.  While I'm sure the organizations that treat us roughly are scumbags, I admit the underground narrator is a little crazy.

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[1] See also Very Bad Wizards

Whistleblowing and the Justifications

Whistleblowing and the Justifications

One of the awkward truths of whistleblowing is that both sides think they are doing the right thing.  We whistleblowers believe that we are disclosing a misdeed by our employer.  Our employers are jerks that think they did nothing wrong and firing us was a great idea.

In “Ruthlessness in Public Life” Thomas Nagel observes that the great modern crimes are committed by officials in political, military, and business organizations[1].  As group members, they can do far greater harm than as private individuals.  They can oppress, murder, and steal far more than imaginable by most individuals.

Nagel wrote not long after the U.S. arguably committed war crimes in southeast Asia, resulting in the deaths of more than one million people.  And not long after fraud by Enron executives destroyed $11 billion in shareholder value.  Most of us small time whistleblowers are not involved in such grand misdoings, although stakes can still get pretty big.

A couple of whistleblowers found problems at venerable Walgreens.  S. Christopher Schulte, a Walgreens pharmacist, and Adam Rahimi, a pharmacist formerly employed by Walgreens, brought a false claims lawsuit against the company.  They charged Walgreens intentionally overfilled prescriptions for insulin injection pens.  If a customer required 7 pens, Walgreens would dispense 2 boxes of 5 and then remind the customer to refill the prescription after 7 were used.  The result was that Medicare was overbilled millions of dollars.  Walgreens admitted its misbehavior and agreed to pay $209 million to settle the claims.

Recently Walgreens settled a false claims suit brought by Marc Baker.  Baker saw Walgreens encourage its Medicare customers to sign-up for its Prescriptions Savings Club so they’d renew prescriptions at its pharmacies.  But instead of charging Medicare discounted prices, it used its regular list prices.  Walgreens again admitted its wrongdoing and agreed to pay a settlement, this time $60 million.

Even a man as prominent as Stefano Pessina, Walgreens’ CEO, might have trouble stealing $269 million from taxpayers on his own.  But with the help of the world’s largest pharmacy company, the task was easier.

On a much smaller scale, Jenny Niklaus, CEO of HomeFirst Services during part of my time there, could not have stolen large sums as an individual.  As CEO, though, she employed HomeFirst to grab $130,000 from Santa Clara County and $138,000 from the City of San Jose.  Unlike Walgreens, though, HomeFirst never returned the money or admitted guilt.

For Nagel, these seemingly frequent bursts of immoral action derive not just from the capacity of officials to do more wrong than private citizens.  It comes as a by-product of their duties.

The actions of an official or an organization can appear brutal but still be proper, Nagel says.  Take taxation, for example.  It can be seen as little different from highway robbery: the theft of wages or wealth.  But the morality of the taxing agency – judged by the equity of its actions and its use of money for the common good – can justify the taxation.  When those principles are violated – if taxes are unfairly drawn or the money is wasted – then the ruthlessness can lose its right.

An organizational leader – in the U.S. military, Walgreens, or even HomeFirst – must submit to constraints on her behavior.  She should put the organization’s interests above outsiders’.  She must not use her position to enrich herself unduly.  She is bound to treat members of the organization equitably. 

Nagel writes that an official can sometimes forget the limits on her actions.  She might decide that all those restrictions on her behavior give her the moral cushion to commit unethical acts.  She might decide that she has no obligation to consider anything other than the interest of her group.  Or she might be confronted by such a complex array of interests and responsibilities that she fails to weigh the consequences of her actions appropriately,

Nagel’s list of ethical lapses seems plausible.  Niklaus objected to my concern about HomeFirst’s possible violation of licensing regulations.  She argued that the good done in the company’s homeless shelter should not be lost to petty rules.  She and HomeFirst’s Board discussed how to deal with me for telling authorities about possible legal violations.  Their attorney advised firing me right away because of damage I might do with my complaints.  Niklaus saw the danger but chose to defer action just a little.  She recommended to the Board that HomeFirst should not be constrained by laws protecting whistleblowers.

Nagel’s list has been confirmed and expanded by psychologists, including Dan Ariely, Max Bazerman, Joshua Greene, Jonathan Haidt, and Ann Tenbrunsel.  But outside of research studies, it can be difficult to get into the minds of organizational leaders.  Although I thought I had proof of HomeFirst’s illegal intent, the Department of Justice and the State of California were not interested.

Unlike Walgreens, most companies and officials deny wrongdoing even after they are caught.  Sunoco recently agreed to pay $5 million to settle a lawsuit over 5,000 barrels of crude oil that spilled from its pipelines and to spend money to avoid future spills.  Still, it refused to admit having done anything wrong.  Paying the $5 million was just expedient.

Officials regularly come up with justifications that fit into Nagel’s list of moral failures.  In 1995 José Arias was hired by Angelo Dairy in Acampo, California.  A couple of years later he told Luis Angelo he was leaving for a job at another farm.  Angelo got upset and threatened to tell immigration the dairy hired undocumented workers if he left.  So Arias stayed on. 

In 2006 Arias sued Angelo Dairy for failing to provide overtime pay and rest and meal breaks.  Just before the trial in 2011, the company’s lawyer Anthony Raimondo alerted ICE that Arias might not be properly documented.  Spooked, Arias settled.  Then he filed a new suit charging retaliation by Raimondo.  That case dragged on for 6 more years until a federal appeals court ruled in his favor and he settled for $1 million.

Raimondo, though, denies any wrongdoing.  He claims he took the same approach for many of his clients and it was legal until 2013.  He said, “All I ever did was tell the truth to law enforcement.  Is that illegal?”  With this, Raimondo sounds like a whistleblower.  He wanted to make sure taxpayer money wasn’t used improperly defending illegals.  He’s a moralist.  He’s the only one in the case who didn’t break the law, he claims.

There are at least two sides to every whistleblowing case.  Each takes the high moral ground.  One may eventually be declared victor.  But that is a matter of convenience, not probity.  The judgment will not settle the matter in the minds of all parties.  Indeed, there may be no entirely convincing way to determine which is right, or even more right than the other.  In the end, the competing players may remain standing angry at the edges of the field[2].

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[1] Also listen to Very Bad Wizards on the topic.

[2] Cf. Tessman, Lisa.  Moral Failure: On the Impossible Demands of Morality.  Oxford: Oxford University Press.  2015.  Especially her discussion of Bernard Williams’ “moral remainder.”