Others’ Whistleblowing Experiences (Part 2) - Michael Hawkey

Others’ Whistleblowing Experiences (Part 2) - Michael Hawkey

When individuals talk about their whistleblowing, they do not dwell on comparisons to others’ experiences.  Each experience seems unique in the moment.  But the banality of whistleblowing means that what each of us goes through is pretty common and may be nearly duplicated in another’s experience.

Consider Michael Hawkey, who was CFO at Mental Health Systems, a San Diego, CA-based nonprofit.

Like HomeFirst Services of Santa Clara County, where I was CFO, Mental Health Systems (MHS) is largely an extension of government services:

-          $73 million of MHS’ total 2015 revenue came from government contracts; $2 million came from patient fees and just $256,000 from contributions. 

-          At HomeFirst revenue that came directly or indirectly from government sources accounted for $10 million of $11 million in total revenue and $1 million came from cash contributions, of which more than half was spent in getting those contributions in the door.

Both companies were under financial pressure when Hawkey and I blew our whistles:

-          At June 2015, MHS was in technical default on its $8 million line of credit.  Since 2012 it had burned through $8 million of cash – $3 million in 2015 – and with just $3 million left in the credit line, things were tight.  In March 2016, it missed its retirement payment due date. 

-          From 2012 to 2015, HomeFirst burned $1 million of cash, and it needed a special grant from Santa Clara County in order to cover its payroll in early 2015.

They both had smaller run-ins with government monitors in the past:

-          MHS had an overbilling problem in 2006 and an employee fraud, discovered in 2014, that resulted in $407,000 of invalid billings.

-          HomeFirst (then called EHC LifeBuilders) overbilled HUD by $1.2 million in 2003-2006 and had a licensing issue in 2008.

Neither company offered a systematic description of how money was spent in its programs or what results were achieved[1].  And both companies played loose in their financial reporting on their way to looking good[2]:

-          Despite its contribution revenue and its website, Facebook, YouTube, and Twitter presences, MHS reported no fundraising expenses.

-          As I claimed to the AICPA, in 2015 HomeFirst cut its general administrative expenses in half with an undiscussed change in its accounting practice.

Before we decided to become becoming whistleblowers, Hawkey and I had comparable work histories:

-          Hawkey, 58, had been CFO of MHS for 14 years when he wrote his April 2016 complaint letter.  He was named CFO of the year by San Diego Business Journal in 2007 and 2008, and he was nominated for the award again in 2011.  An MBA, his 26+ year career spanned nonprofit and international for-profit companies.

-          I was 65 and had been HomeFirst’s CFO for seven years when I made my disclosures.  I was a finalist for the CFO of the year award by the San Jose Business Journal.  I had worked in nonprofit and international for-profit companies during the 33 years since I received my MBA.

Our bosses were also comparable:

-          At MHS, Kimberley Bond, 42 and a licensed family therapist, was nominated for the “Most Admired Nonprofit CEO “award by the San Diego Business Journal in 2015.  She was paid just 11% more than Hawkey.  Bond was fired a month after Hawkey was terminated.

-          My boss, Jenny Niklaus, a licensed family therapist and 45 when she fired me, was named one of the “Top 40 Under 40” by the Silicon Valley Business Journal in 2004 and was called a “Woman of Influence” by the San Jose Business Journal in 2013.  Niklaus was paid 6% more than I was.  Niklaus decided to go to work for a much smaller nonprofit six months after she fired me.

Each of us accused our employers of committing a number of legal and ethical violations:

-          Hawkey complained to the County of San Diego that MHS was inappropriately funding a for-profit subsidiary, was billing for reimbursement of expenses that had not been paid or were unsupported (in violation of government rules), and had arranged for the undisclosed employment of the CEO’s husband in a well-compensated position reporting to her.

-          I complained to different public agencies about eight legal and contractual suspected misdeeds and two failures by local and federal agencies to recover money held improperly by HomeFirst.

Hawkey and I each knew about – or had reason to suspect – our company’s wrongdoings years earlier, and we had tolerated them.  Then something changed or the accumulated annoyance pushed us to where we had not been.  Our disregarded advice about negative cash flows – HMS’ for-profit subsidiary’s losses and HomeFirst’s own – increased the discomfort we felt.  From December 2015 until Hawkey was put on leave, Bond’s husband reported to Hawkey, which would have been a challenge.

So far things have progressed in similar ways for each of us.

-          Hawkey was placed on a paid leave for three months during an investigation and then fired.  Perhaps because of MHS’ size and the types of violations he disclosed, his complaints received coverage in the local press.  In addition, a County of San Diego investigation confirmed some of his complaints with the result that the company fired the CEO and her husband and said it would fix things going forward.  Hawkey was, of course, fired in May 2016, but it is too early to see what legal actions he will take,

-          I was fired in June 2014, three months after I told my boss that I had blown a whistle on two issues.  During that delay I disclosed more suspected wrongdoings.  Two of my complaints were investigated, and HomeFirst agreed to fix them going forward.  The others were mostly ignored by government agencies, and they got no traction with media.

-          MHS’ website made no mention of Hawkey’s allegations, the County investigation, or the terminations of Hawkey, the CEO, and her husband.

-          HomeFirst did not publicize the departure of its CEO or other officers or its need for a special County grant to make payroll.

During your whistleblowing project, you may consider yourself unique and heroic, and the results are likely to be personally tragic.  Still, you are only one among millions who observe corporate wrongdoing, one among hundreds of thousands who report the wrongs, and one among tens or hundreds of thousands who are punished each year in the U.S. for whistleblowing.  It happens all the time.

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[1] See also Stern, Ken. With Charity for All. New York: Doubleday. 2013

[2] See also Krishnan, R., M. Yetman and R. Yetman. “Expense misreporting in nonprofit organizations.” The Accounting Review 81.2 (2006): 399-420

Others’ Whistleblowing Experiences (Part 1)

Others’ Whistleblowing Experiences (Part 1)

Popular media accounts of whistleblowers tend to involve public enterprises where federal laws are violated, and the National Whistleblower Appreciation Day praises federal whistleblowers, not small-time players like me.  Stories of big-time whistleblowers can seem striking, but they are also uncommon. 

When disclosing suspected wrongs is seen as a fundamentally banal project, the experiences of whistleblowers become unexceptional and they fall into familiar narratives.  The tales of small-time whistleblowers are difficult to locate, but they can be found.  Over the past week, several stories echoed my experiences in dealing with the wrongs that I alleged HomeFirst committed.

As I found at HomeFirst, wrongs are not isolated incidents but they generally extend over long periods.  Multiple wrongdoings often build on each other until a whistle is blown:

1.       Patrick Leonard was a City administrator who was paid less than he had been promised.  His complaints about that led to more promises that were not kept and more discontent.  Then he began to identify legal violations.  He is not a retiring man, and he was warned not to speak out at a public meeting.  He did anyway and was fired.

2.       Mark Nelson continued his internal complaints about operations for two years before he was finally fired.

3.       Timothy Prescott & Troy Whitney were fired after they testified that a fellow employee had been injured by unsafe equipment 2½ years earlier.

4.       When wrongdoing continues in a variety of forms, it can indicate an amoral culture.  George Moore recommended that a man under investigation for sexual harassment not be promoted as the State Attorney General’s Chief of Staff.  The Attorney General, who is fighting criminal charges on other matters and whose law license was suspended, fired Moore shortly afterward and promoted the accused man as planned.

5.       Kenneth Bouchard, a city planner, investigated possible wrongdoing at the request of a councilmember and found himself the object of ostracism and disciplinary actions because he didn’t behave in the way “we do things around here.”

6.       On the other hand, Richard Patton was abruptly suspended and investigated days after he reported two complaints, five years after he was first hired.

The whistleblowers’ stories usually strike me as compelling and believable, but when you accept that whistleblowers are ordinary individuals who are fallible, you can sometimes have your doubts.

7.       Michael Hollett had been a university police officer for five years when a new chief was hired.  His new boss, who is black, wanted to shake up the underperforming unit – “out with the old and in with the new,” he said.  Hollett, who is white and Mormon, was eventually fired, and he sued, claiming that he was fired for racial, religious, and age reasons.  Another employee, who is black, claimed that she was fired based on age, gender, and disability.  I can imagine arguments on all sides of this situation.

8.       Police Officer Steven Blakeney cooperated with the FBI’s investigation of corruption charges against the city’s mayor.  He suffered retaliations and was eventually fired.  The city claimed that he was fired for criminal violations – two women he’d met in a bar were in his home the next morning and he asked another police officer to transport them away.  Blakeney was convicted on federal charges.

The whistleblower’s effectiveness is determined not by absolute morality but by the legal enforcement authorities.

9.       Sharee Santorineos complained that employees at the hog and pig farm where she worked beat the animals.  Her complaint led to an investigation that found no problem.  The Chicago Tribune reported that the result was typical: a 50% reduction in the number of State Bureau of Animal Health and Welfare inspectors coincided with a drop in identified animal welfare violations from 200 in 2005 to 29 in 2015, only one of which in 2015 resulted in a prosecution.

10.   A village claimed that police officer Wade Proctor did not qualify for protection as a whistleblower under New Mexico’s laws (specific public disclosure & proof of punishment for the disclosure he made).

11.   The U.S. Office of Special Counsel, an independent federal investigative unit, supported Anthony Salazar in his suit saying that evidentiary standards on whistleblowers are too high.

Some whistleblowers escape the usual pattern of staying put until retaliations result in their terminations and lawsuits.

12.   Helen Dragas waited until she was off the Board before she spoke out publicly on the problem.

13.   Martha Fitzwater Pigott apparently avoided a lawsuit and achieved an amicable separation agreement.

Sometimes wrongs occur by accident.  At HomeFirst, the County overbilling and the California licensing requirement incidents happened largely by accident (although perhaps an indifference to whether actions were right came into play).  A reading of the experiences of other whistleblowers (and other incidents at HomeFirst) tell a different story: there is just a lot of wrongdoing that goes on – first, the wrong that is initially alleged and then the retaliations.

Reports of whistleblowing activities 

Whistleblower (Date of recent report)	Alleged Wrongdoing	Retaliation	Employer contentions	Status
Blakeney (8/3/16)	Extortion & other corrupt acts	Picture of rat on office door, computer clearance removed, banned from city property	Criminal violations were the reason for termination	Fled suit; convicted of federal violations
Bouchard (8/6/16)	Improper use of government funds	Ostracism, disciplinary actions, constructive termination	Talked to people he should not have	Filed suit
Dragas (8/7/16)	Concealment of university investment fund		She miscategorized the fund	Left Board and went public
Hollett (8/4/16)	Racial, religious & age discrimination	Denied training & overtime, threatened in front of peers, fired	Performance deficiencies, “get rid of old & bring in new”	Filed suit
Leonard (8/5/16)	Illegal health benefits paid, conflicts of interest, kick-back payments	Denied raises, office moved to remote abandoned trailer (2 mi from main building, w/o bathroom)	Used profanity on job	Filed suit
Moore (8/6/16)	Promotion of person accused of sexual misconduct	Fired	Fired for cause	Filed suit
Nelson (8/4/16)	Order to falsify water test results	Write-ups, suspension, reduced pay, unsafe job assignments, fired	Lack of responsibility, job performance deficiencies	Settled suit for $300,000
Patton (8/5/16)	Illegal contract splitting, improper residency of Board member	Suspension, investigation, diminished duties, failed to renew contract	Misconduct & other performance concerns, disrespectful & threatening tone	Filed suit
Pigott (8/5/16)	Violation of federal contracting rules	Fired		Negotiated six months emergency pay
Prescott & Whitney (8/4/16)	Unsafe work conditions	Fired	Failed to report use of defective equipment	Filed suits
Proctor (8/4/16)	Ordered to change investigation report	Fired	Made threatening comment, does not qualify as whistleblower	Filed suit
Salazar (8/5/16)	Missing vehicles, misused fleet cards	Set new performance standards, fired	Failed to satisfy performance improvement plan	Filed suit
Santorineos (8/7/16)	Abuse of animals			State investigator found no abuse

Following the New Ethic

Following the New Ethic

When the whistleblower is viewed first as a hero and an ethical champion, the consequences of his action take second stage to the morality he portrays.  But when morality is stripped from whistleblowing, the ineffectiveness of his action can sting.

HomeFirst Services of Santa Clara County, which employed me for seven years and fired me after learning I disclosed several suspected wrongdoings by the company, is a nonprofit company.  Like whistleblowers, nonprofits are often viewed as social heroes, but they too should be seen more simply.  HomeFirst contracts with government agencies and takes contributions from individuals and organizations to provide social services.  With the money it raises, it pays the salaries of its employees and other expenses.  It is a business with tax advantages that stem from its presumed social benefit.

Nonprofits generally do a poor job of reporting the results of their activities, which are the source of their social benefits.  Nearly all nonprofits, including HomeFirst, tell stories about their activities and some success stories, but they avoid systematic accounting for their results or how money is spent on services.  Those who criticize nonprofit deficiencies in reporting operational results[1] are not quite whistleblowers because the deficiencies, which count as marketing techniques more than ethical violations, are evident to all who choose to look. 

On the other hand, financial misreporting is less easily detected.  Nonprofits have been found guilty of widespread misreporting of expenses – chiefly by understating their fundraising costs and overstating the program costs – to improve the appearance of their performance[2].  These misstatements occur despite the internal and external controls intended to stop them and the watchdog agencies who hope to catch them[3].

In justifying my termination, HomeFirst’s CEO warned the Board that I might include unpleasant information in the company’s audit report if I were not fired.  After my successors failed to disclose some of that unwelcome information, I complained to the AICPA in June 2015 that the company’s auditors had failed to ensure that HomeFirst’s 2014 financial report was complete and accurate.  The AICPA replied promptly, assuring me that I would be informed if no investigation was warranted or, if one was warranted, when the investigation was complete.  I did not hear back from them again.

HomeFirst’s 2015 audit report showed a 54% reduction in administrative expenses (without any change in staffing) and an 18% reduction in fundraising expenses.  I asked the company’s new CEO and its auditor whether a mistake had been made, but received no reply.  I wrote again to the AICPA that the auditors had failed in their duties; this time they did not reply.

My complaints about misleading reports might not meet most people’s definition of whistleblowing: they were not about illegal actions; they posed a threat only to the small portion of the public who consider donating to HomeFirst; and I presented them as violations by the auditors, not by my former employer HomeFirst.  They also had no perceptible effect.  In contrast to most whistleblowing, they were undertaken without any likely cost to me unless you give credence to HomeFirst’s threatening letter from a year earlier.

Why anyone should blow the whistle on perceived wrongdoing is a question whose answer can seem obvious at the start of the project and more dubious after the penalties have been received.  At each end, moral concerns appear to be obvious justifications.  But if absolute morality is dismissed as mostly a rationalization after the fact, as I suggest, what can be the point of whistleblowing that is likely to be ineffective and, if it accomplishes anything, is likely to cause harm to the whistleblower?

That is the problem with most things, isn’t it?  They are likely to come up short of what you had initially hoped.  Early dreams you had of sports success, career superstardom, great wealth, idyllic families, long and healthy lives.  In the end you manage with what you have, and so we must with our whistleblowing. 

Whistleblowing is a banal activity, in itself no more significant than any other act intended to make the world a somewhat better place – like holding a door open for someone whose arms are loaded with packages or helping someone who has tripped to stand up.  Luck may present the unusual opportunity of becoming a big-time whistleblower, but the rest of us simply disclose small wrongs.

While I worked at HomeFirst, I felt that my revelations might change the company’s direction.  Perhaps I would benefit from that change somehow; perhaps not.  After I was fired, it came to seem that my continued complaints would not benefit me or anyone else.  But the persistent wrongs were irritating reminders that organizations too often do what they want without meaningful checks.

That HomeFirst could continue not to repay the $1.2 million it had tricked out of HUD more than ten years earlier was stupid beyond belief.  That it could continue to avoid repaying the $140,000 it grabbed from the County years ago was another insult.  Evading its responsibility to fairly pay its client-employees for years was a continuing reminder of the cuts companies take out of all employees.  Likewise the questionable reporting reminds that companies say what they want, true or not.

It can be painful when whistleblowing fails to achieve its objectives.  Reality forces the admission that many of our objectives are not achieved.  But the whistleblower’s failure may be less than that of the observer who ignores his opportunity and remains silent.

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[1] For example, Stern, Ken. With Charity for All. New York: Doubleday. 2013 and Singer, Peter.  The Most Good You Can Do: How Effective Altruism Is Changing Ideas about Living Ethically. New Haven: Yale University Press. 2015

[2] Krishnan, R., M. Yetman and R. Yetman. “Expense misreporting in nonprofit organizations.” The Accounting Review 81.2 (2006): 399-420.  Also see Yetman , Michelle H. and Robert J. Yetman.  “Do Donors Discount Low Quality Accounting Information?”  Accounting Review. 88.3 (May 2013): 1041-1068 and Ling, Qianhua and Daniel G. Neely. “Charitable Ratings and Financial Reporting Quality: Evidence from the Human Service Sector.” Journal of Public Budgeting, Accounting & Financial Management. 25.1 (Spring 2013): 69-90

[3] Cnaan, Ram A., Kathleen Jones, Allison Dickin and Michele Solomon. “Nonprofit Watchdogs: Do They Serve the Average Donor?” Nonprofit Management and Leadership (21 June 2010): 381–397

A New Whistleblower Ethic (Part 2)

A New Whistleblower Ethic (Part 2)

The old ethics of whistleblowing, as expressed by de George[1] and others, was formulated in the 1980s as whistleblowing grew to become a phenomenon.  The realities that whistleblowers have experienced over the past three decades call for a new whistleblower ethic.

A new ethic must first relate to all whistleblowers – the big-time players like Snowden, Ellsberg, and others not quite as famous as well as the ordinary employees who report organizational wrongdoing.  It does not limit itself to serious and considerable wrongs, as de George insists, but considers the million or more organizational issues and wrongs reported in the U.S. each year.

Some states, like New York, continue to limit whistleblower protection to those who disclose substantial threats to the public; some, like Louisiana, require that the wrongs disclosed be actual, not suspected, violations of law.  Some organizations, like the Government Accountability Project, focus on violations that interest media and the public on a grand scale[2].  But whistleblower complaints range from the very serious to the far less so.  

HomeFirst’s violation of the food handler card requirement, for example, was not major, but I reported it.  Others have reported a failure to report traffic violations, preferences in job hiring decisions, having to sandbag a supervisor’s house before a storm, and many other wrongs that win little public attention.  I contend that the human impact of these million or more small-time disclosures (plus the many wrongs not disclosed) each year is as significant that of the few high dollar qui tam suits that catch the public eye.

Second, the new ethic accepts that whistleblowers are not always nice or even honorable people.  It is possible that their former employers’ complaints[3] about them are correct in many cases – they can be disgruntled, impolite, disrespectful people who committed wrongs themselves and claim to be whistleblowers only because they hope to be paid off.  They may be misfits of various sorts, and some have mental health issues.  They may make mistakes in their jobs, and they may hope to harm the organization (or someone in the organization).  Much of this may be true, but it cannot distract us from honestly evaluating their allegations.

The public likes its whistleblowers to be saints and heroes[4], but most are ordinary humans who face a difficult decision.  This new ethic places more, not less, pressure on observers of wrongdoing by making the action available to everyone.  We cannot excuse ourselves from decision-making simply because the wrong is small and we are not great.

Another consequence is that every organizational wrong – take the VW emissions fraud, the killing of innocent blacks by police, sex and age discrimination in tech companies, FIFA, or any that you like – is witnessed by numerous insiders who have the opportunity to become whistleblowers in one fashion or another.  That most do not reveal the wrongs neither excuses them nor elevates those who do.

A third element of the new ethic follows from the history of retaliations by organizations: whistleblowers need not play fair and are not limited in their tactics. 

-          Those who disclose wrongs cannot count on being treated fairly by their employers, by enforcement agencies, or by the media.  As a result, they have no obligation to comply with rules of engagement promoted by those who will attack them.

-          Unrestricted by established rules for making their disclosures, whistleblowers may reveal wrongs without warning.  They may preemptively disclose them to enforcement agencies, possibly making them eligible for limited protection against retaliation, or to media, possibly exposing them to punishment by the wrongdoer if discovered.

-          They may gather whatever information they seek to prove their claim, taking care to avoid punishment that could come with discovery by the wrongdoer.

-          They may start their disclosures and end them whenever they choose and for whatever reasons they choose.  It is the whistleblowers who are in charge of their disclosures, and not the wrongdoers or those who claim to be ethicists. 

-          They may choose to conceal a wrong – or to discontinue their disclosure – because they judge the circumstances too dangerous for them and their families, because they are fearful.  If they do not disclose a wrong as they could have done, they will fail themselves, but they can recover on another occasion.  Whistleblowers do not need to be perfect all the time; they do not need to be saints or victims.

A fourth element admits opposition to power as a justification for whistleblowing that is no less valid than high ethics and morality.  When the whistleblower makes her disclosure, she stands up for herself; she states that her existence is as valuable as that of the organization that opposes her.  Whistleblowing is, first of all, an existential act. 

In the view of this ethic, whistleblowing is not primarily a moral act although morality may be used in justification.  It is not the result of a cost-benefit analysis by the whistleblower although the costs may be summed up after the fact and the personal and social benefits may be identified in time.  It is not fundamentally a prosocial act although it may benefit segments of society.  Instead, whistleblowing is the act of an individual against power that is situated in an organization, its managers, and its allies.

Morality should be removed from whistleblowing because corporate life involves transactions, not moral relationships.  One may follow her passion into a profession, but passion for an employer will be reciprocated only as long as she sustains the organization’s profit objectives.  She may be fired for any reason or no reason at all.  The witness to a wrong may choose to ask a superior about it, she may report it to someone outside the organization, or she may sit on it for a while.  The decision is hers to make.

The decision to blow the whistle wells primarily from a frustration at having witnessed too much for too long – in one organization or many, at the hands of one manager or many.  It is like a kettle heated until it blows.  The decision puts into action an emotion that cries out “I’ve had enough.”

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[1] First in de George, Richard T.  “Ethical Responsibilities of Engineers in Large Organizations: The Pinto Case.”  Business and Professional Ethics 1.1 (1981): 1-14 and later in De George, Richard T.  Business Ethics.  6^th edition.  Upper Saddle River, NJ: Pearson Education.  2006

[2] Hertsgaard, Mark.  Bravehearts: Whistle-Blowing in the Age of Snowden.  New York: Hot Books. 2016

[3] A selection of recent employer complaints about whistleblowers is found here.

[4] Heumann, Milton, Al Friedes, David Redlawsk, Lance Cassak, and Aniket Kesari.  “Public Perceptions of Whistleblowing.” Public integrity 18 (2015): 6-24

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