Berkeley College Applied Business Ethics no plagiarize, spell check, and check your grammar. Please only use the reference below. Use references below Dis

Berkeley College Applied Business Ethics no plagiarize, spell check, and check your grammar. Please only use the reference below. Use references below

Discussion 300 words

A whistleblower, by definition, is someone who brings an unethical, immoral, or illegal business practice to the public’s attention. Whistleblowers have a difficult time in doing this, and they often find their lives changed because of their actions. Sometimes they are shunned and receive death threats. It is common for the family members to feel the effects of a whistleblower’s behavior.

Dr. Jeffrey Wigand became one of the best-known whistleblowers after his experience was turned into a movie, The Insider. He proved that tobacco companies were deliberately boosting the nicotine content of cigarettes, making them more addictive and cancer causing. However, like other whistleblowers, he suffered from tremendous stress and received death threats and other forms of intimidation for doing the right thing.

How did Dr. Wigand show moral intelligence in this situation? Jeffrey Wigand put his economic future as well as coworkers and his family at risk to expose the tobacco companies. Would you have done the same thing?

References

Associated Press. (2006, October 20) Mark Hodler; Exposed Scandal in Selection of Olympics’ Host Cities [Web page]. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2006/10/19/AR2006101901725.html (Links to an external site.)Links to an external site.

BBC News. (2014, January 17). Edward Snowden: Leaks that exposed US spy programme [Web page]. Retrieved from http://www.bbc.com/news/world-us-canada-23123964 (Links to an external site.)Links to an external site.

Ellsberg, D. (n.d.). Daniel Ellsberg’s Website [Web page]. Retrieved from http://www.ellsberg.net/bi

Goodof, D. A., Bandyopadhyay, J., & McGee, P. F. (2013). Whistleblower Protection: Fact or Fiction? Competition Forum, 11(2), 85–91. Retrieved from http://search.ebscohost.com.proxy-library.ashford….

Ravishankar, L. (2003, February 4). Encouraging Internal Whistleblowing in Organizations [Web page]. Retrieved from https://www.scu.edu/ethics/focus-areas/business-ethics/resources/encouraging-internal-whistleblowing/ (Links to an external site.)Links to an external site. CF Vol.11 (2), 2013
Whistleblower Protection: Fact or Fiction?
David A. Goodof, Salem State University
Jayanti Bandyopadhyay, Salem State University
Paul F. McGee, Salem State University
EXECUTIVE SUMMARY
Utilizing actual cases, this paper reviews laws covering whistleblowers with an emphasis on the Sarbanes-Oxley Act (2002)
to determine if, in fact, whistleblowers are protected under that statute. A secondary purpose is to explore the changes made
in the whistleblower provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) and whether it
will have any impact on whistleblowers. A third purpose of this article is to offer an alternative method to teaching the
evolution of whistleblower protection laws to undergraduate business students in business law, accounting, and auditing
courses utilizing actual cases with a storytelling approach.
Keywords: Whistleblower protection, Corporate scandals, Sarbanes-Oxley Act, Dodd-Frank Act, Business law and auditing
pedagogy.
INTRODUCTION
This inquiry explores whistleblower protection or lack thereof from a historical viewpoint for the purpose of teaching this
material to business law students as well as accounting students, especially those in auditing. Moreover, as the impact of
whistleblower protection acts, especially Sarbanes-Oxley becomes greater and greater on the operating environment of
practicing accountants, auditors and employees, the need for coverage of the material in a pervasive manner throughout the
accounting and business curriculum becomes important. Bukics (2005) suggested that this type of material be accomplished
effectively via discussions, case studies and readings of current events. Through their research in legal studies pedagogy,
DiMatteo and Anenson (2007) showed innovative ways to teach graduate law students with the ‘active learning’ approach.
In the current paper, the authors offer another attractive alternative to teaching legal subject matter through storytelling of
actual cases to liven up what students normally perceive as ‘dry’ and uninteresting material.
Douglas Durant is a corporate whistleblower. Hired in 1995 as a vice president of sales at TAP Pharmaceuticals, he spent
his tenure with the company building a fraud case against his company and a number of conspirators within the company. In
addition, he filed a secret law suit against them. He helped the government build a case against TAP for the next eight years.
As a result, when TAP and later Zeneca, Inc. settled with the government, Durant shared in the settlement to the tune of $126
million (Weinberg, 2005). Durant was successful despite the fact that no one was ever found guilty of the conspiracy he
alleged even though he testified against eight defendants.
Nicholas Tides and Matthew Neumann were Audit IT SOX (Sarbanes-Oxley) auditors at The Boeing Company in 2007.
Upon noticing certain irregularities during the audit, they reported their findings to their supervisors. When no changes were
made and they believed that the auditing culture was unethical, they contacted the press and provided information and
documents to a reporter. As a result, the Boeing Company placed both men on suspension and required them to appear in
front of an employee corrective action review board. After a hearing, these two men were terminated. After filing
complaints with OSHA, they were issued letters authorizing them to sue in federal court. The United States District Court
made a ruling that they were terminated for going to the media and that this is not a protected activity under Sarbanes-Oxley
Act (Tides vs. The Boeing Company, 2010). The Supreme Court has recently denied Certiorari which means that there is no
further review of this case and Mr. Tides and Mr. Neumann now have no other recourse (Tides vs. The Boeing Company,
2011).
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In 2002, Time Magazine named three whistleblowers as persons of the year. Sherron Watkins was a whistleblower at Enron
Corp, Cynthia Cooper uncovered massive fraud at WorldCom and Coleen Rowley was a midlevel attorney for the FBI who
wrote a thirteen-page memo regarding flaws in the pre 9/11 domestic terrorism investigation (Lacay & Ripley, 2002). These
three were lauded as heroes for coming forward to report such wrongful and unethical behavior. Coleen Rowley later said
that “the credibility of the investigation I helped launch into pre-9/11 was undercut by suspicions that I was motivated by the
fame that came along with being on the cover of TIME. Still the publicity is what kept me from being fired from the FBI”
(Time, 2009).
The aforementioned cases had one thing in common: each involved a whistleblower. While employed at TAP, Durant who
did not even attempt to first rectify a questionable situation internally but still made millions in cash settlement, would be
defined as a whistleblower for statutory purposes (Weinberg, 2005). Sherron Watkins was also classified as a whistleblower
even though she never went outside the company with her concerns and was selling off her own stock at the time of the
demise of Enron (Businessweek, 2002). On the other hand, Nicholas Tides and Matthew C. Neumann went directly outside
Boeing, specifically, to the press, but they also would be whistleblowers in the eyes of the law (Tides vs. The Boeing
Company, 2010). All were considered whistleblowers whose cases had different outcomes for numerous reasons.
The authors offer an attractive option to business educators in teaching whistleblower protection statutes and their evolution
thereof utilizing actual cases as described above in business law and accounting and auditing courses. The article reviews
laws covering whistleblowers with an emphasis on the Sarbanes-Oxley Act (2002) to determine if, in fact, whistleblowers are
protected under that statute. A secondary purpose is to explore the changes made in the whistleblower provision of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) and whether it will have any impact on whistleblowers.
The first section examines the legal definition of a whistleblower and the second section gives a brief overview of
whistleblower statutes with an evaluation of the Sarbanes-Oxley (2002) and the Dodd-Frank (2010) Acts in the context of
whistleblower protection. The authors express the need for some uniformity in state laws for protecting whistleblowers for
situations where the federal statutes do not apply.
WHO ARE WHISTLEBLOWERS?
Black’s Law Dictionary defines a whistleblower as “an employee who reports employer wrongdoing to a governmental or
law-enforcement agency” (Garner ed., 2004). Under this definition, Sherron Watkins would not have been a whistleblower
as she never reported to a government or law-enforcement agency. There is no provision in this definition for the
innumerable employees who submit reports to their immediate supervisors. Nor would Harry Markopolos qualify as a
whistleblower under this definition as he was not an employee of Bernard Madoff when he informed the SEC of what he then
believed to be a Ponzi scheme being run by Madoff. The definition of whistleblowers should go far beyond that offered by
Black’s Law Dictionary (Garner ed., 2004). In fact, a number of statutes, including the Sarbanes-Oxley Act of 2002 now
protects persons from retaliation who report internally to “a person with supervisory authority over the employee (or such
other person working for the employer who has the authority to investigate, discover, or terminate misconduct) (SarbanesOxley Act of 2002).
Social Scientists give a much more generous definition of a whistleblower. Their definition encompasses both internal and
external recipients of information (Dworkin & Baucus, 1998). This school of thought assumes that internal whistle blowing
is much more beneficial to the organization (Desai, 2012) because such action provides an organization an opportunity to
correct the situation(s) in question prior to legal actions or adverse publicity. Dworkin and Baucus (1998) discuss the factors
that go into each type of whistleblower. Their study did not find any gender differences as to whom the subjects reported the
wrongdoing. There was an indication that employees with longer tenure were less likely to go to external recipients. They
also found that external whistleblowers had more evidence of wrongdoing and more witnesses than internal whistleblowers.
The study did find that internal whistleblowing was on the whole ineffective while external whistleblowing often led to an
investigation and organizational changes.
Near and Dworkin (1998) studied companies’ responses to increased whistleblower protection statutes in the late 1990’s.
The results were that not a significant percentage of companies who responded to the survey had more than an open door
policy for complaints. The discussion seemed to indicate that it was business as usual even after a wrongdoing was reported.
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Employees didn’t see an open door policy as accomplishing anything or in any way protective of their jobs. The findings
also indicated that employees would rather choose to sue companies for wrongful discharge in tort as they were dissatisfied
with the limitation of most state statutes to equitable remedies. In conclusion, the authors suggested that state statutes needed
to be less restrictive if employees were to be encouraged to disclose illegal and unethical acts, (Near & Dworkin, 1998).
Is Douglas Durant a villain for his actions leading to his multimillion dollar payoff? Often whistleblowers are characterized
as villains or as heroes (Dworkin & Baucus, 1998). Many whistleblowers are in fact vilified in their companies for their
actions in speaking out about illegal or immoral behavior. Dworkin and Baucus (1998) showed that external whistleblowers
(those report to external organizations) suffered delayed firing and more extensive retaliation than internal whistleblowers.
Internal whistleblowers were simply terminated while external whistleblowers were nullified, suffered verbal abuse, pressure
and were documented with poor performance records.
Is someone a villain simply because he or she decides to stand up for what he or she believes is right? Often a whistleblower
is characterized as disloyal, disgruntled or incompetent by the employer and other employees who are affected by his or her
actions (Cherry, 2004). A plethora of studies show that whistleblowers are subjected to tremendous harassment after blowing
the whistle. A case in point is one where both plaintiffs testified as to the harassment they experienced (Bowen vs. Parking
Authority of the City of Boston, 2003). Plaintiff, Joseph Bowen, testified that one commissioner intimidated him with a lifethreatening comment (such as ‘dig a hole for yourself’). Bowen’s barn was burned and was subject to an arson investigation.
He also testified that he feared for his own safety as well as that of other employees. Plaintiff Thomas Del Rosario testified
that he was threatened which led to visits to his doctors with complaints of anxiety, stress and depression. The likelihood that
most whistleblowers are doing so for personal gain is low; Douglas Durant is more of an anomaly.
WHISTLEBLOWER STATUTES
More than ninety federal statutes contain whistleblower protection (National Whistleblowers Center, 2010). A detailed
discussion of all of these is not within the scope of this paper. The intent here is to examine a few of the more well-known
statutes such as the Federal False Claim Act (1863), the Internal Revenue Code, Sarbanes-Oxley Act of 2002, and DoddFrank Wall Street Reform and Consumer Protection Act (2010).
The Federal Civil False Claim Act was originally enacted in 1863. Abuses of the statute and lack of control led to its
amendment in 1943. The amendment was designed to limit qui tam lawsuits (Brockmeier, 2009). Qui Tam is short for qui
tam pro domino rege quam pro se ipso in hac parte sequitur translated as “who as well for the king as for himself sues in this
matter” (Garner ed., 2004). A qui tam action is one “brought under a statute that allows a private person to sue for a penalty,
part of which the government or some specified public institution will receive” (Garner ed., 2004). Under the Federal False
Claim Act, the relator shares in the award. The relator is the person who files suit on behalf of the government. If the
government takes over the action, the statute calls for the relator to receive at least fifteen percent of the recovery but not
more than twenty-five percent. If the government decides not to take over the prosecution of the action, the relator may
continue and he will then be entitled to not less than twenty-five percent but no more than thirty percent of the award.
Federal False Claim Act cases are brought in a number of areas but the one that seems to garner the greatest publicity and the
largest awards is in health care. In 2009, Federal False Claim Act cases brought in approximately 2.4 billion dollars in
awards of which approximately 70% can be attributed to health care fraud (Becker & Sullivan, 2010). The pharmaceutical
industry and medical device companies seemed to be a focus at this time. The largest settlement was from Pfizer and its
subsidiary Pharmacia which is the second largest in history. Qui tam cases have resulted in a major portion of the
government recoveries since 1986. In 2005, qui tam lawsuits resulted in the recovery of $1.1 billion and the relators gained
over $150 million (Whistleblower-Awards, 2009). These recoveries serve as an incentive for people to report wrongdoing as
Douglas Durant did.
The Federal False Claim Act contains a relief from retaliation provision. It calls for making the employee whole if
discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against because of lawful acts of
the employee. Remedies are reinstatement, double back pay, and reimbursement of reasonable attorney fees among other
relief provisions. The Act also allows the employee to bring an action in the appropriate federal district court to enforce this
provision.
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The Internal Revenue Service has a whistleblower scheme in place to incentivize reporting of those who are cheating on
their taxes (I.R.C. §7623). The Secretary of the Treasury is authorized to pay such sums as he or she deems necessary.
These situations may relate to either criminal proceedings or civil actions. The rewards are to come from collections
resulting from the information received and may come from interest on the sum payable as well. Currently, there is no
information pertaining to who qualifies for the rewards and how much they are entitled to (Morse, 2009). A separate section
of the code deals with high value cases. The taxpayer in question must owe at least two million dollars and must have gross
income in excess of two hundred thousand dollars for a whistleblower to even qualify for a reward (I.R.C. §7623(b)). These
are very difficult thresholds to reach. If they are reached, however, the award program entitles the claimant to a reward as a
percentage of the recovery. The IRS still has discretion in deciding whether to proceed at all. The IRS has not been
aggressive in this context. Despite the fact that there are billions of dollars of unpaid taxes every year, the IRS has only
recently paid out its first Big Whistleblower Award (Dale, 2010).
Sarbanes-Oxley Act
Sarbanes-Oxley Act of 2002 originated from the corporate and accounting scandals of 2000 through 2002, most particularly
Enron and World Com. The major goal of the statute was to reduce fraud and, as a result, require more accurate financial
statements (Desai, 2012). The statute contains a whistleblower provision that is designed to protect those who come forward
to report and prevent accounting fraud (18 U.S.C. §1514A). Under the provisions of the act, workers are protected from
retaliation whether they report fraud internally or to a government agency if they work at a publically traded company
(Cherry, 2004). The company is forbidden from “discharging, demoting, suspending, threatening, harassing or otherwise
discriminating against an employee who engages in certain forms of protected whistle blowing activity” (18 U.S.C. §1514A,
2002). Protected employee activity would include reporting accounting fraud or other fraud against shareholders to a
supervisor internally or to the appropriate government agencies externally. Neither the act of reporting to the media nor
discussing it with a peer or a subordinate internally is a covered activity (Cherry, 2004). It appears that retaliation against a
whistleblower would also violate the criminal offense of retaliation against informants which was included within the Act (18
U.S.C. § 1107).
Sections 301 and 806 are important provisions in Sarbanes-Oxley. Section 301 provides that the audit committee of
publically traded companies install a mechanism for the receipt of complaints regarding accounting, internal accounting
controls or auditing matters as well as maintaining the anonymity of those complaints made by company employees (15
U.S.C. § 78j-1(m)(4)(B) (2002). Section 806 provides protections for those employees who dare to be whistleblowers (18
U.S.C. §1514A, 2002). The section also calls for both civil and criminal penalties for those companies that violate it. The
act provides for remedies for those who suffer retaliation as a result of whistle blowing. Claims generally require proof of
disclosure, retaliation and causation, and both internal and external disclosures are protected (Tippett, 2007). The protections
included within the act include reinstatement of the employee with proper seniority, payment of back wages and attorney
fees.
Although touted as the solution for prevention of corporate frauds as those of the early 2000’s, Sarbanes-Oxley failed to
improve reporting and certainly didn’t give adequate protections for employees. There are a number of reasons for this
failure. The Act only protected whistleblowers for reporting six types of fraud (18 U.S.C. §1514A, 2002). The procedure
under the Act called for filing with the Occupational Safety and Health Administration (OSHA) which is charged with
investigating alleged whistleblower retaliation cases. If OSHA finds a violation, the agency then could order the remedies
mentioned in the above paragraph. Either party can appeal to an administrative law judge for a hearing de novo. The
administrative law judge’s finding can be appealed to the Administrative Review Board and then to the Federal Circuit of
Appeals. The whistleblower could withdraw his complaint prior to a decision by the Administrative Review Board and file a
case for de novo review in the Federal District Court (Moberly, 2012). Additionally, the Act allows for complaints to be sent
to arbitration, thereby prolonging the recovery process. Most employees would rather have the right to use the federal district
court to enforce their claim of retaliation. These factors help weaken the effect of the act (Cherry, 2004).
Whistleblower cases can last for years. In a case where the Supreme Court recently denied a writ of certiorari, David E.
Welch was fired in 2002 from his job as chief financial officer of a bank in Virginia (Welch v. Solis, 2009). Mr. Welch
complained about certain insider trading going on at the bank and financial irregularities and refused to sign financial
statements as provided in Sarbanes-Oxley. He was fired for “incompetence.” Welch filed a complaint under Sarbanes-Oxley
with the Occupational Safety and Health Administration alleging a violation of the whistleblower protections in section 806
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of the act. The Secretary of Labor dismissed his case saying that he was fired for other legitimate reasons. Welch appealed
and got a hearing with an administ…
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