Fighting Secrecy

Fighting Secrecy

Defenders of whistleblowing support their argument by pointing to the individual’s right to free speech and the social benefits that result from whistleblowing.  They contend that when whistleblowers shine a light into dark spaces we all benefit from what is seen.  Notwithstanding their justifications, it is a deeply opaque business when organizations demand confidentiality, as the case of Ben Barlyn demonstrates.

Following 11 years as New Jersey Deputy Assistant Attorney General and 2 as head of the State Commission to Review Sentencing, Barlyn joined Hunterdon County (New Jersey) as Assistant Prosecutor in 2007.  In May 2010, Hunterdon County Sherriff Trout and two of her staff were indicted after a grand jury identified 41 counts of official misconduct and other crimes.  Governor Christie, who had political ties to Trout, put his Deputy Attorney General O’Grady in charge of the Hunterdon Prosecutor’s Office, and the indictments were dropped three months later.

On August 23, 2010, Barlyn approached O’Grady and objected to his dropping an ironclad case for, he believed, political reasons.  The next day he was suspended and escorted out of the building.  On September 15, he was fired.

When Barlyn sued for wrongful termination, he requested copies of the grand jury evidence.  The State fought the request and suit for three years.  Then interest in the case was displaced by the Bridgegate scandal – in which Christie appointees conspired to cause a traffic jam in Fort Lee, New Jersey, as reprisal for that mayor’s refusal to endorse Christie for reelection.

In early October 2016, the public learned of Barlyn’s settlement with the State of New Jersey, which agreed to pay him $1.5 million after expending $3.8 million for its own legal fees.  The contents of that settlement, however, were concealed by a confidentiality clause in the agreement.  The following week, the New Jersey Assembly began work on Bill 4243, which would require that settlement agreements and related claims involving government employee whistleblowers be made public.

The New Jersey law, which still requires a Senate vote, covers only government employees and, of course, applies only within the state.  Nationally, the Securities and Exchange Commission has addressed confidentiality requirements embedded in the employment agreements of publicly traded companies.  In April 2015, the SEC announced an enforcement action against KBR Inc., its first defense of whistleblower protection.  

KBR had warned witnesses in certain internal investigations that they could face discipline and even be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department.  That confidentiality could impede the investigation of security violations, giving the SEC authority under the Dodd-Frank Act to intervene.

Since the KBR case, the SEC has challenged other companies’ confidentiality stipulations, including severance agreements at BlueLinx, Health Net, Merrill Lynch, and Anheuser-Busch InBev, and an undisclosed matter at Barnes & Noble.  But its interest in confidentiality is limited to securities-related issues at public companies.  Further, its ability to investigate confidentiality agreements is severely constrained by its limited resources to pursue more than 4,000 whistleblower tips a year.  It is, then, an open question whether other companies – for example, Wells Fargo, Advanced Micro Devices, and Fifth Third Bank – have violated SEC guidelines in their severance agreements.

Why do confidentiality agreements offend?  My attorney advised me that the deal he arranged with HomeFirst was typical of settlement agreements he worked on.  What he proposed included:

“Veuve agrees to regard and preserve as confidential and will not divulge, at any time after his employment, information, or anything of a secret, confidential, or private nature connected with the business of HomeFirst without the written consent of HomeFirst’s Board President, or unless required to do so by legal process or court order.  Included within the meaning of the foregoing are matters of a technical nature, such as computer programs, software and documentation; matters of a business nature, such as information about programs, costs, profits, markets, and employees (including salary, evaluation, and other personnel data); plans for further business development; and any other information of a similar nature.

“Veuve agrees that he will make no disparaging comments about HomeFirst, its officers, directors, or employees. Veuve agrees that he will not speak or write disparagingly about any programs of HomeFirst, nor will he encourage others to do so.

“Veuve acknowledges the confidential nature of this release, and agrees that the existence and terms are to be treated as confidential.”

These agreements can be infuriating.  This one angered me, anyway, by threatening me with a lawsuit if I ever said anything about my experience at HomeFirst.  The millions that the State of New Jersey paid for legal fees fighting Barlyn is one example of the expense that organizations are willing to incur in dealing with their whistleblowers.  After I refused their offer, HomeFirst sent a letter in March 2015, responding to my continued pursuit of my complaints, threatened lawsuit again.

Other than commonly ignored internal policies, the two main approaches to encouraging whistleblowers have been penalties imposed on organizations that retaliate against whistleblowers and rewards for relators from the fines and penalties imposed on wrongdoers.  These approaches fail to recognize whistleblowing as a game of information. 

New Jersey’s Assembly Bill 4243 and the SEC’s actions against restrictive employee agreements are two examples of ways in which the effectiveness of whistleblowing can be enhanced by promoting the flow of information.  Over the past 40 years, disclosures have increased as supportive technologies have advanced. 

In 1969, Daniel Ellsberg laboriously photocopied batches of 7,000 pages of the Pentagon Papers and concealed them in his briefcase as he left his office each night, but Edward Snowden and Chelsea Manning were able to copy electronically hundreds of thousands of classified documents in moments.  From my office desk, I reviewed emails of the HomeFirst CEO colluding with the President of a competing nonprofit and planning with the Board to fire me.  Although documents may be disclosed through trustworthy established media, they can also be released anonymously through Wikileaks, which claims to have a store of 10 million documents, and an assortment of other sites.

As new technologies emerge, whistleblowing is likely to increase.  Government agencies can boost the effectiveness of these disclosures by publishing on a timely basis more information about complaints.

But agencies too often stumble in reporting these matters.  An example: the 2014 Retaliation Complaint Report (the most recent available) of the California Department of Industrial Relations, with whom I filed my complaint, stated that it had closed 1,508 cases in the year.  Of those, only 227 resulted in determinations by the Department and just 47 – 3% of closed cases – concluded in favor of complainants.  Details about the parties, complaints, and final actions are not published.

Actions by the New Jersey Assembly and the SEC illustrate how more information about whistleblower complaints can serve the public interest.  Although they might do more, states and federal agencies can continue this work by promptly making available to the public detailed decisions and settlements relating to whistleblowers.