Study on Whistle blowing

For Ethics & Corporate Governance Assignment Submission

Submitted By:
Section A

2010008 Colin Menezes 

2010025 Nikhil Pachauri
2010039 Raju kumar
2010040 Ravi Agarwal
2010055 Vibhor Ronge
 Whistleblowing

A Whistleblower is a person who raises a concern about alleged wrongdoing

occurring in a government or governmental entity or a private or public corporation or
an organization or agency that is expected, by the public at large, to be operating
within the bounds of the law. The alleged misconduct may be classified in many
ways; for example, a violation of a law, rule, regulation and/or a direct threat to public
interest, such as fraud, health/safety violations, and corruption. Whistleblowers may
make their allegations internally (for example, to other people within the accused
organization) or externally (to regulators, law enforcement agencies, to the media or
to groups concerned with the issues).

The term “whistle-blowing” originates from the practice of British policemen who blew
their whistles whenever they observed commission of a crime. The disclosure of
information outside of one’s organization was the original meaning of the term
‘whistleblowing’, which compared the act to the shrill sounding of a whistle piercing
the background noise and disrupting the false harmony or imposed silence of the
status quo.

Whistle-blowing refers to “disclosure by organization members (former or current) of

illegal, immoral, or illegitimate practices under the control of their employers, to
persons or organizations that may be able to effect action”.

Corporate World:

Working in the corporate or government environment, employees are sometimes

subject to see things they should not see. Such things those are unethical to society
or to the corporation. An employee is then placed in a situation where the employee
must decide what action should be taken. At times employees are reluctant to report
or disclose information of unethical behavior because of loyalty to the company or
fear of having to deal with the matter and end up losing their job. A lot of people love
where they work and do not want to be labeled “snitches”.

The purpose of whistle blowing and reporting the wrongful action is to improve
society and not let employers get away with doing the wrong thing.

There are two kinds of whistleblowers.

 Internal whistleblowers who believe their superior might be engaged in
wrongful conduct bring their concerns up through the chain of command in the
organization all the way to the board of directors, if necessary. 
 The more serious act is that of external whistleblowers who go outside the
company with their concerns. For example, a whistleblower who is concerned
that the organization is dumping toxic water in lakes or streams might contact
 the Environmental Protection Agency if nothing is done internally to correct the
matter.

Types of misconduct whistle blowers can report: 

• Illegal or unlawful conduct
• Unprocedural conduct
• Unethical conduct
• Wasteful conduct

Benefits:
• Increases safety and well-being of organization
• Reinforces organization’s code of ethics
• Reduces organizational waste and mismanagement

The decision to blow the whistle on a colleague, an associate or an employer is never

an easy one; unless there is a legal obligation to report, it should be considered a
step one takes when all else has failed. A genuine case of external whistleblowing
requires that the whistleblower have utilized, unsuccessfully, all appropriate channels
within the organization.

Whistleblowing and Ethics

Whistle blowing has to do with ethics because it represents a person’s

understanding, at a deep level, that an action his or her organization is taking is
harmful—that it interferes with people’s rights or is unfair or detracts from the
common good. Whistle blowing also calls upon the virtues, especially courage, as
standing up for principles can be a punishing experience. Even though laws are
supposed to protect whistle blowers from retaliation, people who feel threatened by
the revelations can ostracize the whistle blower, marginalizing or even forcing him or
her out of office. On the other hand, there have been occasions when the role of
whistle blower has actually catapulted people into higher office and has earned the
respect of constituents.

The main ethical dilemma of whistleblowing is the clash of values, for example,
loyalty to clients or to one’s own integrity versus loyalty to the organization, the
general public, professional standards, family and friends. The tension between the
need to prevent abuses and preserve trust is an important tension point in
whistleblowing and a major source of ambiguity. However, at times loyalty to peers
and the organization can be blind or misplaced, and thus ceases to be a virtue
because harm, rather than good, can come from it.
A whistleblower must blow the whistle for the right moral reason and reasoning.

The ethics of whistleblowing tend to focus on the following:

 whether it is morally permissible.

 whether it is ever obligatory.
 whether whistleblowers ought be protected.

The question of whether or not it is ethically permissible for an employee to blow the
whistle, particularly in the public domain, raises questions of confidentiality and
loyalty. This a question of making an ethical judgment about which principle ought to
be given priority, confidentiality or the right to know. Does the senior management or
the general public have a right to know about the particular unethical behaviour that is
of concern? The answer would seem to be a qualified yes, depending on the
seriousness of the matter and the harm likely to result from continued silence or
revelation. There is no black and white answer to cover all cases.

Another issue is employee loyalty. If employees owe strict loyalty to the company,
whistleblowing seems to be an act of extreme disloyalty. It puts at risk the reputation
of the firm. But this seems to be based on a narrow view of loyalty as if it demands
that we do whatever the company or another individual believes to be in their best
interest. Genuine loyalty requires the exercise of judgment to discover what is truly in
another’s best interests. Individuals often want things that are not really in their best
interests. It is not an act of disloyalty to refuse them. Loyalty cannot imply that we
should not report the unethical behavior of others.

In fact sometimes there can be a duty to do so. It would be obligatory for an

employee to blow the whistle when the level of harm to others is serious, and the
employee has clear evidence of the unethical practice that has led to this. This could,
for example, be in terms of product safety or severe financial hardship for others. In
such a case, before an obligation to go public could be imposed, it would require the
judgement that there was no simpler solution.
Some practical suggestions before blowing the whistle are:

 make sure the situation is serious enough to warrant going to superiors or

going public;
 examine your motives: is it in the public interest, or for revenge?
 be sure of the exact nature of the problem and to whom it should be reported;
 stick to facts: avoid personalising the issue;
 check to see the amount of protection provided for whistleblowers;
 consult a lawyer.

The fact of whistleblowing, despite the likely ostracism or resulting penalties,

indicates that there are people within the community who take harm to the community
and their sense of ethical obligation very seriously. But to get involved often requires
courage as well as deep convictions. Those who perform such a service for the
community deserve to be protected.

Moral Justification for Whistleblowing

Whistleblowing should not be a capricious matter; a person's or an organization's life

or death may result from it. Thus, strong moral justification must exist for blowing the
whistle and, ideally, the whistleblower should have an established reputation for high
integrity lest his or her personal characteristics detract from the issues. The following
are considered some necessary conditions that should be established before one
undertakes blowing the whistle:

1. The reason the whistleblower is blowing the whistle is because he/she sees a
grave injustice or wrongdoing occurring in his/her organization that has not
been resolved despite using all appropriate channels within the organization;
2. The whistleblower morally justifies his/her course of action by appeals to
ethical theories, principles, or other components of ethics, as well as relevant
facts;
3. The whistleblower thoroughly investigates the situation and is confident that
the facts are as she/he understands them;
4. The whistleblower understands that her/his primary loyalty is to client(s) unless
other compelling moral reasons override this loyalty;
5. The whistleblower ascertains that blowing the whistle most likely will cause
more good than harm to client(s); that is, clients will not be retaliated against
because of the whistleblowing; and
 6. The whistleblower understands the seriousness of his/her actions and is ready
to assume responsibility for them.

To Prevent Whistleblowing, organizations should start an internal whistleblowing

program. An organization that does not support those that whistle blow because of
the violation of
professional standards is indicative of a failure of organizational ethics.
The OBJECTIVES of an internal whistleblowing program should be:
• To encourage employees to bring ethical and legal violations they are aware of
• To minimize organization's exposure to the damage that can occur when
employees circumvent internal mechanisms
• To let employees know the organization is serious about adherence to codes
of conduct
BARRIERS to a successful internal whistleblowing program could be:
• Lack of trust in the internal system
• Unwillingness of employees
• Misguided union solidarity
• Belief that management is not held to the same standard
• Fear of retaliation or alienation from peers
Steps for Creating a Whistle-blowing Culture
I. Create a Policy
II. Get Endorsement From Top Management
III. Publicize the Organization's Commitment
IV. Investigate and Follow Up
V. Assess the Organization's Internal Whistleblowing System
Organizations will have to institute rigorous policies to allow employees to bring
unethical and illegal practices to the forefront. Companies will have to train managers
and executives on how to encourage openness. Putting processes in place will not be
quick, but it is certainly necessary given the increased public scrutiny of corporate
behavior.
Safeguards of whistleblowers
Potential whistle-blowers will not report internally if they fear reprisals within
organization or suspect that the management condoned or approved the illegal
activity. To encourage whistle-blowing, whistle-blowers must be protected:
• Genuine whistle-blowers must be adequately protected to encourage them to
report wrongdoing in the organization
• Whistleblowers who make false allegations should be punished
• As whistle-blowers face retaliation, ostracism, dismissal or death threats, their
organizations must make it safe for them to blow the whistle
The internal accountability of an organization can be enhanced by adopting three-
pronged strategy:
• Provision of ethics training for all its staff
• Punishing staff who violate its code of ethics
• Establishing an internal whistle-blowing mechanism with safeguards to protect
whistle-blowers

In conclusion, whistleblowers provide society with justice and hope for protecting the
need for ethical behavior. Without these people stepping up and doing the right
things, our society will continue to be in danger.

Does it constitute a valid system of correcting wrongs in Corporations and

society?

Corporations:

What a whistleblowing policy should contain

Employers should make clear to employees what to do if they come across

malpractice in the workplace. This should encourage employees to inform someone
with the ability to do something about the problem. Guidance will need to reflect the
circumstances of individual employers, but should make the following clear:
  The kinds of action targeted by the legislation are unacceptable and the
employer attaches importance to identifying and remedying malpractice
(specific examples of unacceptable behaviour should usually be included).

 Employees should inform their line manager immediately if they become

aware that any of the specified actions is happening (or has happened, or is
likely to happen).

 In more serious cases (for example, if the allegation is about the actions of
their line manager), the employee should feel able to raise the issue with a
more senior manager, bypassing lower levels of management.

 Whistleblowers can ask for their concerns to be treated in confidence and such
wishes will be respected.

 Employees will not be penalised for informing management about any of the
specified actions.

It is preferable to deal with whistleblowing separately rather than as an extension to

or part of an existing grievance procedure, while cross-referencing procedures on
discipline and grievances. This is partly because the scale of risk to the organisation
and to the employee will generally be significantly greater in whistleblowing cases
than in other matters. In addition, the whistleblower may have no grievance in relation
to their terms and conditions or indeed in relation to the employer.

Whistleblowing as opposed to personnel or workplace grievances

The second threshold distinction is the subject matter of the wrongdoing—in

particular, whether it constitutes a matter of potential public interest or involves only
matters of personal or private interest to the reporter. As discussed in Chapter 1, if a
report is only in the latter category, it is more accurately categorised as a personal
grievance than a whistleblowing matter. The distinction can, however, again be
difficult to draw in practice. As outlined in Chapter 1, many reports of wrongdoing
involve a personal grievance and matters of broader organisational or public integrity.
An employee’s personal grievance could be indicative of a larger breakdown in
organisational procedures (whether or not this is known to them); an employee could
be aware of a matter of serious public interest but reveals it only after a personal
grievance arises (whether or not related to the public interest matter); or an employee
could raise a public interest matter but receive an initial response that immediately
gives rise to a personal grievance (causing the two issues thereafter to travel in
tandem).

The frequency with which public interest concerns are mixed with personal conflicts is
confirmed by responses to the case study and integrity agency surveys. Table 2.7
sets out how often a variety of conflicts appears to precede or accompany the making
of reports, even when the wrongdoing observed does not include matters classified in
Appendix 2 and the earlier tables as ‘personnel or workplace grievances’. The table
indicates the frequency with which the specified conflicts were present in the
experience or opinion of: a) all those who volunteered for the internal witness survey;
b) internal witnesses whose observed wrongdoing did not include ‘personnel or
workplace grievances’; c) case-handlers and d) managers from the same group of
case study agencies; and e) case-handlers from integrity agencies. It shows that in
any view of the situation, a range of interpersonal conflicts is sometimes or often
likely to be present, in addition to whatever public interest issues might be involved.

What we learn about organizations from whistleblowers

The organization creates the whistleblower by its responses. By retaliating, the

organization declares that there is a certain type of person it cannot stand in its midst.
This person is not so much one who goes outside the organization. Rather, the
whistleblower is one who appears to remember that there is an outside. To be a
whistleblower, then, is to assert the social conscience in the midst of the organization.
To be a whistleblower is to set one way of thinking about the sacred, the conscience
collective, against another sacred element, power. Only when we understand this
inherent conflict will we truly understand what is going on with the whistleblower. Only
when we understand this inherent conflict will we truly understand what is going on in
our organizations.

The organization, Alford concludes, is constitutionally unable to deal with insiders

who challenge its sense of self-sufficiency (autarky). Taking misconduct public, or
even bringing concerns of the public inside the organization, challenges this sense.
When the ideal self confronts the organization's desire to be self-sufficient, the
whistleblower must make the "choiceless choice" and risk sacrificing career, home,
and family to stay true to self. In sum, whistleblowers blow the whistle because they
dread living with a corrupted self more than they dread the isolation
Whistle Blower Doctrine

            Some thinkers are suggesting and exploring the desirability of a legislation to
protect persons disclosing illegal, dangerous and improper conduct and or activities,
which they believe to be contrary to the public interest. They advocate that public
disclosures made to proper authorities should have public interest in mind and
consists of

Conduct constituting an offence under any legislation;

A substantial and specific serious health danger to the life and safety of the public or
to the environment.

Conduct that constitutes official misconduct within the meaning of the criminal justice;

Conduct of a public official, which constitutes misconduct or criminal act punishable

as a disciplinary breach;

Conduct of a public official, which constitutes negligent, incompetent or inefficient

management of or within a public sector unit resulting or likely to result directly or
indirectly in a substantial waste of public funds.

Standards of ethics in public service statutes exist in the USA, Irish Republic and
New Zealand. Lord Nolan, Chairman of the Committee of Standards in Public Life
(1995), made very important recommendations prescribing a set of standards to be
followed in public life. He wrote to the Prime Minister of UK in May 1995 requesting
that statutory recognition may be given to those recommendations. Laws in the USA
seek to protect such whistle blowers from the disciplinary and administrative
consequences of their public interest revelations –though not from criminal
consequences. A new trait of administrative culture in many developing countries is
discernable; the existence of a parallel “black administration” where influence, favors,
money, privileges, misuse of public funds, falsifying records and bending of
rules/regulations plays a crucial role. Whistle blowers are needed to expose such
practices in developing countries. There is an urgent need in India to establish
internal procedures for public interest disclosures and to protect employees making
such disclosures against reprisals. Even today in UK, in civil service, public interest
whistle blowers are in a weak position and may find themselves punished under the
reformed official Secrecy Laws. Several studies have shown that most whistle
blowers come to total grief; they are sacked, demoted and socially ostracized “as
men who let down their comrades. In India and United States, the whistle blowers
among the public servants attract much greater public sympathy and support while
whistle blowers in the private sector have a tragic fate. Various case studies carried
out in the past indicate that by and large whistle blowers are unhappy and miserable
lot who usually end their lives tragically. Research in the USA on whistle blowing is in
turmoil, unsure of the consequences of newer laws protecting whistle blowers.

Strategies for successful whistle blowing

Whistle blowing can be successful only when the whistle blower has adequate
knowledge about the irregularities, violation of laws or corrupt practices, which are
being committed, and how the public interest is affected. Whistle blowing may result
in violating employee’s employment contract or may be violating any ethical rules
affecting external parties and its likely response from inside and outside the
organization. Whistle blowers must understand what can be achieved by whistle
blowing. The five practical tips for a whistle blower are:

1. Identify precisely not only the objectionable activity but also the public interest
or interests that is or are threatened and the magnitude of harm that will result
from non-disclosure.
2. Verify accuracy of your knowledge of the situation or entire episode before
blowing the whistle.
3. Identify ethical standards as well as laws and regulations that support your
decision to blow the whistle.
4. Develop a plan of action; consider the personal costs and the likely response
of allies and antagonists within and outside the organization.
5. Select an appropriate outside contact.

Whistle blowers help in exposing corporate frauds. In the Enron case one of the
middle level managers was able to point out that things were not all right. If the top
management itself is corrupt, then it may not encourage whistle blowers.

Changes that may take place in the highly internet media driven society in light
of Wiki leaks type of exposures

In light of the wiki leaks types of exposures, the society may start perceiving the value
of a person or firms on the basis of the information and opinions formed on the
internet and blogging sites. This may have following positive effects:-

1. Wikileaks or similar sites may actually help in creating awareness among the
people about the kind of diplomacy taking place in the back offices and loop
holes in the political , business or judicial system.
2. It can be an excellent medium of influencing the public opinion towards the
wrong doings taking place across the globe.
3. Internet being accessible from almost everywhere may bring together people
having interest in exposing the wrongdoings together and may provide them a
 platform to form their own groups and spread their message across the
geographies with in few minutes or seconds.
4. This will also alert the government officials or office bearers that they are not
above the law and their actions can be questioned if leaked on internet. This
will create a kind of self-governance and help in implementing moral ethics .
5. The leaks may bring out the details of the facts and thereby help in influencing
opinions of the internet users.

Though there are several positive sides of the wikileaks, we can’t neglect the
negative effects of such a system in exploiting public opinion.

1. It will give rise to several “me too” sites trying to bask in the glory of the wiki
leaks by providing similar contents and in doing so may compromise the
quality of information.
2. The increased competition among these sites may force them to plant false
stories of whistle blowing thereby indicting innocent persons.
3. These sites can also be used by the rivals in businesses to malign the
competitors by spreading false rumors about them and hence gaining an
upper hand in the competition by unethical means.
4. Also due to rise of several similar sites , it will lead to over exposure of the
information thereby leading to loss of public interest in such leaks.
5. These leaks may actually lead to exposure of sensitive data like the one
related with country’s defense establishments and may be used by
terrorists to plot their nasty schemes.
6. These sites may be used by hostile countries and governments to create
malicious counter political campaigns against the persons or entities trying
to expose the loop holes or the short comings of the government.
7. Based on the gravity of the situation, government may try to curb flow of
information by putting on restrictions on these sites.