A New Whistleblower Ethic (Part 1)

A New Whistleblower Ethic (Part 1)

For years after her decision to disclose a wrongdoing, the whistleblower will wrestle with the question whether she should have made her disclosures for reasons beyond the practical considerations of financial and emotional costs.  Debate over whether whistleblowers are heroes or villains points to the question of the ethics of whistleblowing.

The existing whistleblower ethic constrains whistleblowing because it violates an employee’s duty of loyalty to her employer and it might hurt the organization and her colleagues[1].  Famously, Richard T. de George[2] advised that external whistleblowing is morally permissible (but not required) if:

1.       The organization will seriously harm its employees or the public

2.       The observer of the wrongdoing has reported it to her supervisor

3.       If the supervisor failed to act, the observer has exhausted all internal reporting options, including notifying the board of directors

After she has taken those three steps, she becomes morally obligated to report the matter externally if:

4.       She has documented evidence that would convince an objective person that the wrong is serious danger to the public

5.       She has good reason to believe that going public will lead to the necessary changes and will be worth the risk of retaliation.

I propose that de George’s initial assumption of loyalty to the organization is faulty.  I contend that the organization’s at-will employment policy, its retaliations against dissenters, and its wrongdoings destroyed any bonds of loyalty that might have existed before the whistleblower was thrown into her project.

Whether company loyalty is deserved as de George believes or doubted as others contend[3], different loyalties and higher duties can inspire the whistleblower – including the company’s mission, the community or public good, family, professional standards, and ethical or religious principles[4].  But just as philosophical reasoning follows, rather than leads, our decisions[5], appeals to duty, such as to family, can be cited to discourage whistleblowing or, in the case of professional values, to encourage it. 

I suggest that possible harm to the organization should not affect the whistleblower’s calculations.  In the history of whistleblowing, firms that have been hurt significantly by whistleblowing are far outnumbered by those that escaped penalty entirely or that settled suits with modest fines and the denial of any guilt.  If a firm does cease to exist following a whistleblower’s actions, its legitimate business activities will be taken up by competitors, illegitimate activities will be discontinued as they should be, and employees will move to other firms as they probably should have done earlier.  In the case of a nonprofit like HomeFirst, financial failure would mean only the transfer of contracts, assets, and employees to other nonprofits with little real disruption to the community.

De George limits ethical whistleblowing to behavior that causes serious and considerable harm, but that restriction gives too much room to corporations that claim their wrongs were not serious at all.  Too often a wrong – a theft, an act of sexual harassment, a lie to the public – can seem minor in itself but is part of a pattern of wrongdoing with broader effects. 

One example: the robo-signings and irresponsible credit verifications that Bank of America and other banks claimed were actions limited to a few individuals or offices although together they contributed to the 2007 financial crisis[6].  Another: Volkswagen’s emissions test fraud was the product of many bureaucratic decisions made in offices around the world but now appear to have been supported by the company’s senior management[7].  HomeFirst contended that the wrongs I alleged were minor or not even real, yet they composed a pattern of greater concern.

De George calls on the whistleblower to work her way through her chain of command, giving superiors adequate opportunity to fix the problem, as do some state laws[8].  The history of whistleblowing has made clear the painful consequences of following his advice.  The retaliations come in many forms, many of which are difficult or impossible to prove, leaving the whistleblower defenseless and the wrongdoer unpunished.  By identifying problems, the whistleblower shows herself to be an untrustworthy employee; she seeds doubts about her reliability in concealing other misdeeds and her ability to be a team player.  Once she suggests that something is wrong – not inefficient or unprofitable, but wrong – she identifies herself has having standards potentially at odds with the organization’s.

De George’s moral expectation that the whistleblower will stand up if she has clear, convincing evidence seems commonsensical.  If you have good, solid evidence, you should share it with authorities.  But evidence is seldom as clear and convincing as it initially seems to the whistleblower.  Wrongdoers will resist the introduction of evidence on grounds of confidentiality.  Even after it is presented, evidence is subject to conflicting interpretations, or it is contested with conflicting evidence.  The evaluation of evidence is necessarily subject to personal and politically-influenced biases, which in history have disadvantaged whistleblowers[9].

Nearly every whistleblower begins with the belief that her disclosure will begin a process of correction in the organization.  But whistleblowers are too often disappointed.  In media accounts, whistleblower successes are those where the employee receives some compensation for the retaliation she suffered.  Correction of the wrongdoing is seldom discussed, and the organization seldom admits to having done wrong even if a penalty is paid.  Of the ten issues that I raised at HomeFirst (the eight alleged violations and the failures to repay the City of San Jose and HUD), only two resulted in minor changes in company behavior after more than two years.

The federal and state protections offered to whistleblowers intensifies the moral obligation, in de George’s view, for observers to disclose wrongs.  The protections, though, are rarely effective.  A potential whistleblower cannot know she will be protected from the consequences of her whistleblowing any more than she can know that her whistleblowing will do any good.  It is far easier for the ethicist on the sidelines to claim that a person is morally required to make a disclosure than for the whistleblower herself to know what she should do.

The existing ethical guidelines for those who consider whistleblowing seem to me grossly out of touch with the reality faced by whistleblowers.  Even if advice is ambiguous or suspect, the witness must still choose for herself what action to take[10].  In response to that dilemma, I suggest that a new whistleblowing ethic is needed.

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[1] 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

[2] De George, Richard T.  Business Ethics.  6^th edition.  Upper Saddle River, NJ: Pearson Education.  2006

[3] For example, Duska, Ronald. “Whistleblowing and Employee Loyalty.” In Contemporary Issues in Business Ethics. DesJardins, Joseph R. and John J. McCall (eds.) Belmont, California: Wadsworth Publishing Company. 1985.  And Larmer, Robert A. “Whistleblowing and Employee Loyalty.” Journal of Business Ethics. 11.2 (Feb 1992): 125-128

[4] Ewin, R.E. “Corporate Loyalty: Its Objects and Its Grounds.” Journal of Business Ethics 12 (1993): 387-396.  Johnson, Roberta Ann. Whistleblowing: When It Works and Why. Boulder: Lynne Rienner Publishers. 2003

[5] Knobe, Joshua, Wesley Buckwalter, Shaun Nichols, Philip Robbins, Hagop Sarkissian and Tamler Sommers. “Experimental Philosophy.”  Annual Review of Psychology 63 (2012): 81-99.  Alexander, Joshua. Experimental Philosophy: an Introduction. Cambridge UK: Polity. 2012

[6] Weise, Karen. “Mortgage Fraud Whistle-Blower Lynn Szymoniak Exposed Robosigning’s Sins.” Bloomberg News, September 12, 2013.

[7] Ewing, Jack.  “Volkswagen Says 11 Million Cars Worldwide Are Affected in Diesel Deception.”  New York Times.  September 22, 2015.  Ewing, Jack, and Hiroko Tabuchi.  “Volkswagen Scandal Reaches All the Way to the Top, Lawsuits Say.”  New York Times. July 19, 2016.

[8] For example, Florida, Indiana, Louisiana, New Hampshire, and New York.  In addition, the State of California investigator seemed disturbed that I had reported problems without letting HomeFirst take care of them.

[9] Moberly, Richard. “Sarbanes-Oxley’s Whistleblower Provisions: Ten Years Later.” South Carolina Law Review, volume 64, number 1, Autumn 2012, p. 2-54. 

[10] Bouville, Mathieu.  “Whistle-blowing and morality.”  Journal of Business Ethics.  81.3 (September 2008): 579-585