1 :

MGT 222

TERM PAPER

ON

WHISTLE BLOWING

-AN ETHICAL DILEMMA IN HRM

 2 :
Acknowledgement
 3 :

TABLE OF CONTENTS

S.no. Topic Page no.

1. Introduction 4
2. Whistleblowers 4
3. Whistleblowing as an ethical issue 5
4. Examples of whistleblowing 6
5. Role of HRM in whistleblowing 7
6. Advantaged of whistleblowing 9
7. Disadvantages of whistleblowing 9
8. Protection initiatives 10
9. Protecting whistleblowers in India 11
10.Zero tolerance 12
11. Conclusion 13
12. References 14
 4 :

Introduction

The term whistleblower derives from the practice of English police officers, who would
blow their whistles when they noticed the commission of a crime. The whistle would alert other
law enforcement officers and the general public of danger.

Whistleblowing can be defined as the attempt by an employee or former employee of an

organization to disclose what he or she believes to be wrongdoing in or by the organization.

Whistleblowers

A whistleblower is a person who raises a concern about wrongdoing occurring

in an organization or body of people. Usually this person would be from that same
organization.

Whistleblower can be:

• Internal whistleblowers, who report misconduct on a fellow employee or superior within

their company. One of the most interesting questions with respect to internal
whistleblowers is why and under what circumstances people will either act on the spot to
stop illegal and otherwise unacceptable behavior or report it. There is some reason to
believe that people are more likely to take action with respect to unacceptable behavior,
within an organization, if there are complaint systems that offer not just options dictated
by the planning and control organization, but a choice of options for individuals,
including an option that offers near absolute confidentiality.
• External whistleblowers, however, report misconduct on outside persons or entities. In
these cases, depending on the information's severity and nature, whistleblowers may
report the misconduct to lawyers, the media, law enforcement or watchdog agencies, or
 5 :
other local, state, or federal agencies. In some cases, external whistleblowing is
encouraged by offering monetary reward.

Whistleblowing as an ethical issue

Whistleblowing entails an ethical dilemma as the individual considering becoming a

whistleblower is torn between two competing loyalties:

• loyalty to the corporation and

• Loyalty to society or the law or some higher morality.
 6 :
One problem is that whistleblowers nearly always experience retaliation, ranging from being
fired to being vilified. Society recognizes that there is a need for whistleblowing, the need
to expose corruption and wrongdoing, and legal structures have been developed to encourage and
protect the whistleblower, showing that society recognizes this as a socially valuable act.
Inherent in any discussion of the matter is a comparison and conflict of responsibilities--both the
employer and the employee have responsibilities to themselves, the organization, and society, as
well as to each other. The whistleblower in a sense challenges this relationship by accusing the
employer of having abrogated his or her responsibility, and the employer in turn claims that the
employee is doing precisely that by revealing confidential matters, true or not. The law says that
revealing the truth is socially valuable and that both parties have a responsibility to do so, while
revealing false information on either side is to be punished. Freedom and responsibility here go
hand in hand.

Examples of whisteblowing:
• The Telgi scam in Maharashtra is the latest instance of whistleblowing in the state. The
whistleblower, in all probability a high-ranking police officer, remains anonymous, but
his act leaking out the crucial Subodh Jaiswal report to the media triggered a series events
that culminated in the arrest of former Mumbai police chief R.S.Sharma.
• Frank Serpico is the legendary ex-cop of the New York Police Department (NYPD)
whose story was the subject of a best-selling book, and a film starring Al Pacino — both
titled `Serpico.' When he became a cop in 1960, payoffs, kickbacks and protection
rackets were rampant in NYPD. Refusing to look the other way, Serpico complained to
the Police Commissioner and the Mayor, but they ignored him. Frustrated, Serpico
revealed NYPD's dirty laundry to theNew York Times in 1971, after which the cops as
well as the criminals started gunning for him! Matters came to a head when he was shot
in the face during a raid; his colleagues did not come to his help. Serpico quit NYPD in
1972 but NYPD has become a more honest force since his time.
• Jeffrey Wigand is the one-time head of R&D of America's third largest tobacco company,
Brown & Williamson. In a 1995 interview to "60 minutes," he spoke about the
company's knowledge of nicotine's addictive properties, its reckless use of harmful
additives, it’s quashing of research on safe cigarettes, and a variety of other abuses. He
 7 :
was the central witness in the U.S. government's lawsuit against the tobacco, which
eventually led to the $246 billion federal tobacco settlement. The story of his
whistleblowing and subsequent harassment was made into a critically acclaimed movie,
`The Insider,' starring Russell Crowe.

Role of HRM in whistle blowing

HR is considered a neutral department in organizations and can play a critical role in hearing
the voice of employees.
• For HR, setting up channels and other mechanisms that not only allow but also promote
healthy, open communication will be important for setting up an employee friendly
culture.
• Training which explicitly states the ethics policy in organizations and the means that
employees can take to handle issues of corruption in organizations will be relevant.
 8 :
• Assigning accountability officers and providing special telephone numbers and e-mail
accounts encourage employees to bring out issues and will help in maintaining
anonymity.
Meindertsma, an expert in whistle blowing litigation suggests that it is important for
organizations:
• to formulate a zero tolerance policy
• should be ready to respond quickly
• encourage employees in bringing forth issues
• understand the legal implications and
• provide training to managers and supervisors regarding whistle blowing

Independent and neutral provision for reporting may be critical. Setting up a clear value system
in the organization which is implied in recruitment, training, performance appraisal etc would
help to develop and sustain an open, honest culture.

As employees or former employees, it is important to make sure that certain aspects are
taken into consideration before whistle blowing:
 9 :
• Whistle blowers should confirm whether the practice followed in the organization will
cause harm to an individual or the general public if uncorrected

• Make sure that the facts in hand are reliable and not mere rumors

• Be fairly certain that by bringing the matter before an outside group the problem can be
corrected and harm avoided.

• Weigh the personal risks that are to be encountered if the choice is made to be a whistle
blower (quite often this will be the critical factor which makes the process difficult.
However, this will help to deal with the future problems in a much easier way).

Law can become handy for the whistle blowers in some cases. Support from the law can help
prevent sufferings of whistle blowers

Advantages of whistle blowing

• There is exposure of wrongdoing and corruption in the organization.

• Genuine whistleblower can get some reward for complaining like bonuses, promotions,
incentives etc

• This leads to benefits of the company e.g. the wrong usage of resources by corrupted
person is minimized and now these resources can be used in a productive manner.

Disadvantages of whistleblowing

• If a whistle blower continues to talk to people about the wrong doing of someone, then
the whole office environment gets affected. Even in society this could lead to common
people taking some extreme measures to control the wrong doing.

• Also, the claims of whistle blowers are not always genuine and sometimes a person may
be doing it for their selfish reasons. However, a lot of people get dragged into it
unnecessarily. Especially in health care industry, whistle blowing causes severe problems
to the industry and the industry has to deal with false claims and law suits.
 10 :
• A whistle blower lawsuit can cost a company millions of dollars and sometimes it may
have been spent unnecessarily. By the time the company tries to prove its innocence or
justify the case, they would have already spent thousands of dollars dealing with the case.
Only the lawyers get to make the money in the bargain.

Protection initiatives

• The U.S. Whistleblowers Protect Act of 1989 (amended in 1994) protects public interest
disclosures by federal employees. An Office of Special Counsel (OSC) was created to aid
whistleblowers in the investigation of their disclosures and prevention of retaliatory
action against them. It has had only modest success due to a series of hostile judicial
rulings undercutting the protection afforded by the Act. More than 40 States have passed
similar or even stronger legislation in respect of State employees.
• After the spectacular collapse of Enron and WorldCom, U.S. Congress passed the
Sarbanes-Oxley Act of 2002 granting sweeping legal protection to whistleblowers in
publicly traded companies. Anyone retaliating against a corporate whistleblower can now
be imprisoned for up to 10 years. The Department of Labour (DoL) is required to
complete its adjudication of whistleblower cases within 180 days, failing which the
whistleblower may either elect to stay with DoL or seek a de novo trial in court.
Remedies include reinstatement, back pay with interest, compensatory damages, special
damages, attorney fees and costs.
• The U.K.'s Public Interest Disclosure Act of 1998 is a unique piece of legislation
providing protection to employees in the public, private and non-profit sectors, including
those working outside the U.K. Under the law, employment tribunals have power to
`freeze' a dismissal and make unlimited compensation awards.
• South Africa has followed the U.K. example in providing protection to employees of all
organisations through its Protected Disclosures Act of 2000.
 11 :
• A number of countries such as Australia, Canada, South Korea, Argentina, Russia,
Slovakia, Mexico and Nigeria have enacted or are in the process of enacting
whistleblowers protection legislation (but only to government employees).

Protecting whistleblowers in India

In India, till now there is no whistleblower protection act.

• Together with the Freedom of Information Act (which received Presidential assent on
January 19, 2003), it can be a potent tool for promoting good governance in the country.
What we lack at the moment are public interest groups like the Government
Accountability Project and the National Whistleblower Centre in the U.S., and the Public
Concern At Work in the U.K., to lobby for whistleblowers' rights and defend employees
against retaliation.
• With the consent of the required number of State governments, Parliament should try to
enact a single Act for all employees working in any tier of government, and also for
employees working in any form of organisation in the private and voluntary sectors.
Employees of contractors, sub-contractors and agents of an organisation; applicants for
employment, former employees and overseas employees; attorneys and auditors should
also be covered.
 12 :
• The Official Secrets Act should be overridden to provide for a public interest defence
and the `gagging clauses' in employment or severance contracts should be declared void
in respect of public interest disclosures.
• What constitute `public interest disclosures' need to be clearly defined. In my opinion,
the protection should apply to specific disclosures only involving an illegality,
criminality, breach of regulatory law, miscarriage of justice, danger to public health or
safety and damage to environment, including attempts to cover up such malpractices.
• The whistleblower must reasonably believe that his information about a malpractice is
substantially true, and must act in good faith. Those caught making anonymous or
pseudonymous leaks should not be protected. The period of limitation for filing a
complaint must be sufficiently long (say, 1 year).
• The Act must encourage employees to raise the matter internally in the first instance and
mandate organisations to establish suitable mechanisms for this purpose. Where it is not
reasonable to raise the matter internally, or where attempts to remedy the matter from the
inside have been unsuccessful, employees who make an external disclosure in a specified
way should also be protected. What should be the `specified way' is a matter of debate. In
my opinion, apart from certain `designated offices' (such as SEBI, Pollution Control
Boards, etc.), public interest disclosures to MPs and MLAs; employee unions and
associations; and reputed public interest groups must be protected.

Zero tolerance

As things stand today in India, the chances of enacting such legislation may seem remote.
But whistleblower protection measures are gathering a momentum of their own around the
world, aided partly by spectacular government and corporate scandals. It is just a question of
time before we shift from our present culture of zero tolerance of whistleblowing to a culture of
zero tolerance of whistleblower retaliation.
 13 :

Conclusion

The guts and high moral responsibility of whistle blowers shows that whistle blowers can
play a vital role in fighting loose ethics and slack corporate governance. Ironically, they have to
undergo insult and injury in form of job loss, ridiculing, retaliation and boycott. However an
important aspect here would be the tolerance of the society towards corruption and unfair
practices. In the Indian context it is of high importance that organizations takes a serious view of
instilling high sense of ethics and laws are formulated to protect the employees who play the role
of whistle blowers against corruption both in the private and public sector.
 14 :

References

• http://www.hroutsourcingconnection.com/2010/01/28/whistleblower-protection-rules/

• http://www.humanrightsinitiative.org/programs/ai/rti/news/whistleblowing_law.htm

• http://en.wikipedia.org/wiki/Whistleblower

• http://www.hindu.com/thehindu/op/2003/03/25/stories/2003032500110200.htm

• http://www.whistleblowing.org/

• http://www.besr.org/Article.aspx?ArticleID=441

• http://www. mightystudents. com/ essay/ Whistle. Blowing. impact. 21236

• http://timesofindia.indiatimes.com/city/mumbai/Blowing-the-whistle-blowing-their-
cover/articleshow/357294.cms