Friday, June 16, 2017

The Enticements of Whistleblowing

The Enticements of Whistleblowing

On June 1, 2017, two Bloomberg articles described contrasting approaches to the discovery of organizational misdeeds.  In the first, U.K. regulators explained their refusal to pay financial industry whistleblowers for what they ought to do anyway.  They cited the costs, complexity, and moral hazard involved in such payment schemes.  The second told of a former Caterpillar Inc. accountant who may be eligible for a $600 million reward for having revealed the company’s evasion of $2 billion in U.S. income taxes. 

Another contrast: while articles on whistleblowing often discuss the penalties suffered by those – Veteran Administration employees, for instance – who disclose organizational wrongdoing, others extol the expansion of protections for whistleblowers, most recently for staff of the VA.  Until the Civil Service Reform Act of 1978, the country’s only whistleblower protection was provided to federal employees who brought information to members of Congress under the Lloyd-La Follette Act of 1912.  Now every state has at least one whistleblower protection law, and 22 federal laws protect informants, but still they regularly experience retaliation.

A final contrast: organizations commonly disparage whistleblowers as disgruntled employees, but our defenders know that we are principled.  Big-time actors like Edward Snowden and Chelsea Manning are described by some sources as traitors and by others as heroes.

These two poles exist: one warns us to run for cover and the other attracts.  Which way we should lean seems less clear than years ago.  When Ralph Nader gathered stories of informants in 1972[1], the stakes were high: the public was deceived about the costly war in Vietnam, the largest car manufacturer in the world knowingly sold unsafe vehicles, leading companies conspired to conceal the dangers of smoking, private contractors grossly overbilled the U.S. military, and our government misled the public about nuclear safety.  With so much at risk, Nader recommended that every employee have the right to object to the activities and policies of his employer and to go public if his complaints were not answered.

If we hear more stories of exposed wrongdoing today than were available 45 years ago, we can thank the multiplying government-private interdependencies that can trip up either side, the proliferation of instruments for presenting complaints, and (as Nader observed 45 years ago) the social dominance of organizations that fuels individual discontent.  There are more but smaller violations, more ways to document and expose misdeeds, and more people upset enough to make disclosures, but there are also more enticements to become a whistleblower, including the U.S. pay-for-tips strategy.

When I identified HomeFirst’s overbilling of the County of Santa Clara in July 2013, I did not immediately think to expose any wrongdoing.  That possibility emerged as HomeFirst’s CEO resisted addressing the problem, after the board Chair directed me not to inform outsiders of future violations, and after the Audit Committee chair assured me that, as a former bank president, he was sensitive to the need to address the concerns of whistleblowers.  These events played out during news accounts of Edward Snowden's release of purloined NSA files and his escape first to Hong Kong and then to Russia.

Global queries into whistleblowing surged during this period, and my own interest in the subject took shape.  A desire to do good had attracted me to work with nonprofits and at HomeFirst, specifically, and correcting wrongs seemed consistent with that.  Moreover, fixing the misdeeds seemed a reasonable part of my job as CFO and Compliance Officer.  Although I was unaware that financial rewards might be paid to informants, others’ admiration of my noble actions seemed likely.  I had always felt a kinship with rebels despite a career spent in corporate environments.  HomeFirst’s policy and State law promised whistleblower protection, as did, I thought, my position as a valued executive.  Although I had no real plan, these incentives eased my way along the small-time whistleblowing path.

Twenty-five year-old Reality Leigh Winner entered the news because she sent a top secret NSA document to The Intercept.  Following a four-year tour in the Air Force, Winner had been working at Pluribus International, which performs contract work at NSA, for less than three months when she saw a report that detailed Russian interference in U.S. elections.  It revealed facts that went well beyond the public story.  In the days before the appointment of Robert Mueller as special counsel to investigate the matter, she might have thought the information would be concealed by the administration.  Like me and unlike Edward Snowden, Winner had no real plan.  She was caught by the FBI hours after The Intercept published the material.

While her disclosure provided new grist for the journalism mill, it exposed no government wrong and opened her to the possibility of years in prison.  Winner’s youth, apparent rashness, and prompt arrest led some to find her motivations disappointing, and she has been judged not a whistleblower at all but merely a leaker.  In that assessment her critics echo Malcolm Gladwell’s dismissal of Snowden as a mere hacker, and they insist on the overblown concept of the whistleblower as moral hero.

The radical version of organizational free speech offered up by Ralph Nader in 1972 and by Julian Assange today suggests that recommending changes, complaining, leaking, whistleblowing, and other expressions of voice[2] are variants on a single theme: opposition to the intrusion of organizations into human lives.  All are techniques inspired by obscure, conflicted impulses, and none is morally exalted above the others.

A corollary of the expectation that we accept only virtuous inducements to blow the whistle is permission for our employers to justify retaliation against us by their own lofty values of loyalty, respect, and teamwork.  But if Winner, Manning, Snowden and others deserve to be jailed for violating the law with their disclosures, then so should organizations and managers be punished for their unlawful retaliations.  Making the individual whole – a standard too seldom reached – is inadequate to provide either real vindication[3] or justice regardless of what enticed the whistleblower to act.



[1] Nader, Ralph, Peter Petkas, and Kate Blackwell (eds.).  Whistleblowing: The Report of the Conference on Professional Responsibility. New York: Grossman Publishers.  1972.  Measuring how times have changed, Nader cited two causes of complaints that seem common today: corporate contributions to political campaigns and government spying on citizens.
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