What Do We Hope To Achieve? (Part 2)
Whether our preferred story is that of the whistleblower who
hopes to do good or of one who wants only to hurt the employer to whom she owes
her loyalty, the conclusion is most often not what the whistleblower sought.
When Eric
Ben-Artzi was a risk officer at Deutsche Bank, he observed overstatements
of the bank’s credit derivative portfolio.
After reporting the violations to an internal hotline and the bank’s top
compliance attorney, he was fired. As a
result of information he and two others provided to the SEC, the bank was fined
$55 million, of which Ben-Artzi was awarded $8.2 million. He refused the award because he wanted the
government to punish the responsible executives, not the bank and its shareholders.
JPMorgan urged its brokers to pitch
its proprietary products to all customers.
Johnny
Burris objected that the high-commission investments were inappropriate for
many of his elderly clients. After he
was fired, JPMorgan was fined $307 million (about .5% of its total noninterest
expense) for similar sales tactics, and Burris won $164,462 in back pay and
damages. That was not punishment enough,
though, to satisfy Burris, who claimed JPMorgan had no right to fire him.
David
Shepard and Bill Marvel filed a False Claims Act suit
alleging that Grand Junction Airport had misused FAA funds by falsely claiming
the construction of a perimeter fence.
The suit triggered an FBI investigation into numerous other possible
illegal actions by airport executives.
Although the CEO was terminated and the airport agreed to surrender
$500,000 in future FAA grants and pay a fine of $16,500, Shepard and Marvel opposed
the settlement. They contended that the
airport and its contractors should be liable for $5 million, of which they
might claim 15% to cover their legal costs.
Rodney
Lipscomb was fired after he objected to the way ITT Technical Institute
lured students to enroll. The law firm
of Martin & Seibert fired Christine
Blanda after she alleged it had overbilled clients. Both ITT Technical Institute and Martin &
Seibert were shut down in the midst of investigations and lawsuits. The corporate failures make uncertain the prospects
for lawsuits by Lipscomb, who thought ITT’s failure offered some sense of
justice, and Blanda.
The effectiveness of our revenge
can be limited when large companies are involved. After Diana
Duenas-Brown and others complained about fraudulent, Illegal, and deceptive
practices by Wells Fargo and were fired, they sued the bank. Wells Fargo was eventually fined $185M for its
misdeeds, and it agreed to review and modify its sales practices. But Senator
Elizabeth Warren and others
have questioned the bank’s commitment to making meaningful changes. Even multi-million dollar settlements, which
rarely include admissions of guilt[1],
amount to minor costs of doing business for companies like Wells Fargo, JP
Morgan, and pharmaceutical
companies who sign settlement agreements with the government.
Although payouts are touted, few actually
benefit from federal whistleblower reward programs. For example, the Dodd-Frank
Commission, which covers financial whistleblower tips about publicly owned
companies, received 4,218 tips in FY16 and made 13 awards during the year.
None of my ten complaints against HomeFirst resulted in any
harm to the company. Most of them were
ignored by authorities; a couple were rejected by the agencies I approached;
and two resulted in minor adjustments by the company. The Board Chair, who had directed
me not to make any more external disclosures and who argued for mytermination, remains Chair Emeritus. She
became CEO of American Leadership Foundation –
Silicon Valley, a $1.5 million nonprofit that arranges for meetings among
local executives. The HomeFirst CEO, who
fired me, left to become Chief Impact Officer, whatever that could mean, of ALF
– SV. HomeFirst has managed to survive
without me.
Although rewards have increased the number of whistleblower
tips in programs that provide them, like the SEC, IRS, and FCA, some still
prefer to think that whistleblowers are not doing it for money[2]
or glory. Although it is accepted that
wrongdoers are in it for financial benefit, extrinsic rewards are said to attract
the wrong types of whistleblowers and encourage frivolous, unsubstantiated
complaints.
C. Frederick Alford[3]
wrote, based on his interviews, that the whistleblower is launched into battle
by her ego ideal: the best, most nearly perfect part of herself. What she wants, he concluded, is to achieve
that moral perfection. But the whistleblower
morality story emerges at the end of her battle, not the beginning.
The whistleblower’s fight is typically long. Crowley’s whistleblower fight lasted 7 years;
Ben-Artzi’s lasted 6 years. Burris’ went
on for 4 years, as did that of Shepard and Marvel. The cases of Lipscomb and Blanda were apparently
cut short at two years when their employers went out of business. Robert
Purcell’s case ended at the door of the U.S. Supreme Court after 17 years.
The years of conflict enable both the whistleblower and her
opponent to pass off what actually happened and to confabulate flattering renditions
of what happened and why [4].
In HomeFirst’s
telling of my story, I did not really believe that the compliance issues I
raised were violations of regulations. Some
were not even confirmed violations, they noted.
If I had been honest in making my complaints, I would not have just
pointed out problem after problem; I would have worked diligently with staff to
correct them; I would not have reported them so abruptly to outsiders. According to their account, I was on my way
to being fired anyway and I played the whistleblower card only to
get a more lucrative severance package. They did what they had the right
and business obligation to do.
In my own narration, I became fed
up with mismanagement and disclosed externally what I thought were
violations. After sensing that they
suspected my turn of heart, I admitted having blown the whistle. Then they formed their plan to fire me. I did what I had a perfect right, and even an
ethical duty, to do.
The two perceived realities are seldom squared. The truth of what we want seems inaccessible.
Where whistleblowing exemplifies ethical courage[5]
and young people are trained to view standing up to illegal behavior as the
product of a moral struggle[6]
the crass reality of whistleblowing is underappreciated. Even when we are in the business of
disclosing wrongs, at least in part, for selfish reasons, we still serve the
public good, our complaints still deserve impartial investigation, and we
deserve meaningful protection under the law.
[1]
The January 2017 Deutche
Bank settlement was remarkable in its amount and in the bank’s admission of
misconduct. More typical was the nuanced
“without admitting or denying the findings of facts and conclusions of law” language
of Wells
Fargo’s September 2016 consent agreement with the Consumer Financial Protection
Bureau.
[2]
For example, Ebersole, Dave. “Blowing
the Whistle on Dodd-Frank Whistleblower Reform.” Ohio State Entrepreneurial
Business Law Journal. 6.1 (2011): 123-174.
Soloman, Steven Davidoff. “Whistle-Blower
Awards Lure Wrongdoers Looking to Score.”
New York Times. December 30,
2014.
[3] Alford, C. Fred. Whistleblowers: Broken Lives and
Organizational Power. Ithaca, NY: Cornell University. 2001
[4] French, Lauren, Maryanne Garry and
Elizabeth Loftus. “False Memories: A
Kind of Confabulation in Non-clinical Subjects.” In Confabulation:
Views from Neuroscience, Psychiatry, Psychology and Philosophy by
William Hirstein (ed.) New York: Oxford Press. 2009. Pp 33-66
[5] Mullane, Susan P. “Ethics
and Leadership.” The Johnson A. Edosomwan Leadership Institute University
of Miami. White Paper Series. 2009
[6] Comer, Debra R. and Gina Vega. “Using the PET
Assessment Instrument to Help Students Identify Factors that Could Impede Moral
Behavior.” Journal of Business Ethics 77 (2008): 129-145
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