Business Ethics

Title of Assignment: Term Paper

Whistle Blowing

This assignment was done in partial fulfillment of the requirements of the Finance Major course

(BBA 4)
Term paper (GROUP ASSIGNMENT)

THE PAPER WILL REQUIRE SOME RESEARCH AND CRITICAL REFLECTION ON

WHAT HAS BEEN COVERED IN THE LECTURES AND TUTORIALS.

The term paper will be on a topic of interest to the student, but requires the approval of the tutor.
You may choose a topic from current issues in the news, or select one from the chapters in the
text or from the course outline. The term paper will provide a critical analysis of issues in
business ethics. This will require further readings with an examination of the views of other
writers on the selected topic.

The following guideline should assist:

1. Describe the content area; reference should be made to the views of other writers
(agreeing or disagreeing with their views)

2. Identify, analyse and discuss the ethical concerns related to the area of interest

3. Discuss the issue using the ethical perspective; utilitarian, moral rights justice etc.

4. Describe the relevance and impact of the issue on the business firm, society and
employees. Particular reference should be made to the Jamaican organisations

5. Make recommendations as to how the issue can be managed

6. Conclusion

Format: the paper is in the form of an essay and should be 12-15 pages, double space, with: table
of content, references and bibliography

Headings can be used but the essay should flow with good transitional sentences to guide the
reader.

Group size: 5-7 persons per group.

 Literature Review on Whistle Blowing

Whistle blowing can be defined as “an attempt by an employee or former employee of an

organization to disclose what he or she believes to be wrongdoings in or by the organization”

(James, 1995). Another definition of whistle blowing is “the disclosure of illegal, unethical or

harmful practices in the workplace to parties who might take action” (Uys, 2000).

In general, the activity is seen as whistle blowing if the disclosure of information is

considered to be in the public interest which would entail information about criminal activity, a

contravention of any statute, improper or unauthorized use of public and other funds, miscarriage

of justice, abuse of power, misadministration, danger to health and safety of any individual and

any other misbehavior or malpractice (Kloppers, 1997). The act of whistle blowing may have a

detrimental effect on interpersonal relations between the whistleblower and their co-workers

(Davis, 1989). Some might become enemies; other might avoid the whistleblower in order not to

become tainted while others might start looking at the whistleblower differently.

Whistle blowing can be external, internal, personal and impersonal. It is internal where

the whistle blower talks to people higher up in the organization or external where it is reported to

the media, enforcement agencies or public interest groups (Weiss, 2006). It is personal if harm is

reportedly done only to the whistle blower and impersonal if harm observed is done to another.

The act of blowing the whistle by an individual is sometimes considered as being disloyal to the

organization or company that he or she is attached with. The generally prevailing view of the

whistle blower within business, on the part of the management and colleagues, is that this person

is a traitor to the organization (DeGeorge, 1985). Business corporations anticipate the possibility
of disloyalty by requiring employees to sign confidentiality agreements, assenting to the

principle that the business of the corporation is the business of the corporation (Grant, 2002).

Whistle-blower violated their role as loyal agents of the corporations and betrays their employees

and coworkers. Bok (1981) identified three central elements of whistle blowing – dissent, breach

of loyalty and accusation. It can represent a cover for incompetence on the part of the whistle-

blower or some kind of vendetta or personal crusade that is imposed on the realities of regular

business practices (Grant, 2002).

The term whistle-blowing actually originated over a century ago from the federal

government’s False Claims Act. The FCA was established to offer incentives to individuals who

reported companies or individuals defrauding the government. The Whistle-blowers Protection

Act provided for the protection of the persons who reveal the harmful information to the public.

It helps to ensure that the whistle-blower is treated fairly after the “whistle has been blown.” This

Act is also endorsed by Sarbanes-Oxley (SOX) Act of 2002.

The case that had spearheaded the decision to ensure whistle-blowers’ protection was

settled in the Supreme Court in May 2006. The Supreme Court ruled in Garcetti v. Ceballos that

whistleblowers that make statements while performing their jobs may not be constitutionally

protected. Richard Ceballos, a supervising deputy attorney wrote a memo to his supervisors,

petitioners and the trial court about significant misrepresentations that turned up in an affidavit

which was used to obtain a search warrant. The petitioners retaliated against him thus reversing

the ruling of the Ninth Circuit Court of Appeals. The memo was unprotected because Ceballos

wrote it while performing his job duties.

 All organizations are expected to implement a whistle-blowing policy in these modern

days. The policy should indicate who is covered under the policy, provide non retaliation

provisions, and point out confidentiality and process. The whistle-blower if they follow the

appropriate channels could save the company a lot of losses and reduction in revenue and public

humiliation. This is due to the fact that management and stakeholders are better able to address

situations before they are made public. For instance; boarders at the Westwood High School in

2003 had a problem with the scarcity of water on one of the boarding facilities. How can a

school for young ladies teach students proper hygiene without water? Students had written a

letter to the principal stating their concern. The principal was not aware of the problem before

the letter. This example shows us that management sometimes is unaware of the problem and

employees make situations worse if they go outside the company to fix it without using the

internal channels first.

 Ethical Issues Related To Whistle Blowing

Whistle-blowing is a conflicting subject in terms of employee loyalty. On one side

whistle-blowing can be seen as disloyal and on another, loyal. It is often assumed that employees

have a vow to protect the dealings of the organization. Ravishankar (2010) stated that an

arbitrator in a 1972 case told an employee that it is wrong to bite the hand that feeds you. There

are some employees that are labelled as an “informer” which is unacceptable in some cultures.

They may also be called untrustworthy and a trouble maker. Disloyalty arises when the person

has ulterior motives. He may not be seeking to help the organization; but to manipulate the

system in order to gain benefits like incentives, recognition or promotion.

Some researchers argue that it is impossible to associate loyalty with an abstract entity.

The organization does not have a mind of its own; instead, it is made of individuals working

towards the same goal. Loyalty depends on ties that demand self-sacrifice with no expectation of

reward, e.g., the ties of loyalty that bind a family together the second is that the relation between

a company and an employee does not involve any surrender of self-interest on the part of the

company, since its primary goal is to maximize profit. Indeed, although it is convenient, it is

misleading to talk of a company having interests. Since, then, the relation between a company

and an employee does not fulfill the minimal requirement of being a relation between two

individuals, much less two reciprocally self-sacrificing individuals, it is felt that it is a mistake to

suggest the employee has any duties of loyalty to the company. Loyalty does not imply that we

have a duty- to refrain from reporting the immoral actions of those to whom we are loyal. An
employer who is acting immorally is not acting in their own best interests and an employee is not

acting disloyally in blowing the whistle, in reality, the argument can be made that the employee

who blows the whistle may be demonstrating greater loyalty than the employee who simply

ignores the immoral conduct, as he is attempting to prevent his employer form engaging in self-

destructive behaviour.

Second, loyalty requires that, whenever possible, in trying to resolve a problem we deal

directly with the person to whom we are loyal. Thus, for example, a father might be loyal to a

child even though the child is guilty of stealing from him, but this would not mean that the father

should let the child continue to steal. Similarly, an employee may be loyal to an employer even

though she takes steps to protect herself against unfair retaliation by the employer, e.g., by

blowing the whistle externally. Loyalty, however, goes beyond considerations of justice in that,

while it is possible to be disinterested and just, it is not possible to be disinterested and loyal.

Loyalty implies a desire that the person to whom one is loyal take no moral stumbles, but that if

moral stumbles have occurred that the person be restored and not simply punished.

Is there a right to blow the whistle?

Utilitarian right rests on the contribution whistle-blowers make to society. There is a

direct benefit in having instances of illegal corporate conduct, gross waste and mismanagement,

and dangers to the public brought to light. These benefits must be balanced against the

undeniable harm that a greater incidence of whistle-blowing would have on business firms.

Nobody can answer whether whistle blowing is good or bad. The problem is that the

good and bad effects are in equal measures. A whistle blower draws the attention of people to
any wrong doing in the society or office environment or just about anywhere. Sometimes this

aspect causes more problem than good.

In an office environment whistle blowing is often considered wrong. If there is an issue

that has to be addressed, then it has to be channelled through the right authorities like an

ombudsperson. 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. 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.

Employees do have an ethical obligation to report wrongdoing. Companies are very large

places and oftentimes, one hand doesn't know what the other is doing. As a result of unethical

practices they are often involved in several lawsuits. These lawsuits, impact everyone in the

company negatively, whether or not they were involved in the illegal actions. It is therefore

beneficial to all employees to act ethically and demonstrate their loyalty to the company by not

only complying with rules and regulations but by identifying and reporting unethical practices

that may affect the company’s survival as well as the public at large.
 Ethical Perspectives on Whistle Blowing

There are quite a few views of whistle blowing identified in our present business

environment. Whistle blowing is said to be personal if the wrongdoing affects the whistle blower

alone (like sexual harassment), and said to be impersonal if the wrongdoing affects other people.

Many people whistle blow for two main reasons: morality and revenge. Morality is the biggest

and best reason because people generally want to do the good moral thing. If a person should

have to blow the whistle on a company they should know that for every action there is a reaction,

and the reaction of whistle blowing might lead to getting fired.

One of the most controversial types of whistle blowing is that of impersonal whistle

blowing. Take for instance a company is making products that are unsafe because they are trying

to save a few dollars. An employee sees this as immoral and tells the media about it. The whistle

blower would do this based on Kant's theory. It would be following the moral law to do so. If a

company is cutting corners and hurting others it would be morally unacceptable not to blow the

whistle on this company. To knowing let innocent people get hurt because of something that you

could have stopped. It would be wrong not to inform the public for their safety, it is morally

required of someone. A lot of people would blow the whistle on a company that is making unsafe

products, but not all. A number of people would not inform the public of the company's

wrongdoings. They would not do it out of fear that they might loose there job or even be

blacklisted from the industry altogether. If they are not fired they will most likely be outcasts at
their work and looked over at promotion time. Whistle blowing is not morally required because

of the rights theory. One has a welfare right, to make a living and support themselves and a

family. They could not do this without a job. If they would blow the whistle on this company

they would more than likely be fired. A Kantian view would say blow the whistle if it is morally

right to do, because moral obligation has nothing to do with consequences. Usually whistle-

blowing is someone who exposes some wrongdoing, often at a great risk. Whether or not to blow

the whistle can be one of the hardest questions in a person's life.

From a Utilitarian perspective if there is a high probability that the whistle-blower is in a

position to know what he or she is talking about, and in a position to evaluate whether making

the disclosure would likely result in a significant increase in overall happiness and success of the

organization, then whistle-blowing should be encouraged. But if the converse of either of these

conditions is true, then whistle-blowing should be discouraged. A strong utilitarian argument for

encouragement of whistle-blowing is that, without protection, the potential whistle-blower is

likely to overvalue the harmful consequences to himself or herself (loss of job, etc.), and

undervalue the beneficial consequences to the rest of society, of speaking out. If a potential

whistle-blower knows that he or she would be protected, he or she will able to make a calculation

based on the overall good and harm to society.

Although Utilitarianism is most clearly illustrated by way of cost-benefit analysis, the

effects of this theory can also be seen when it comes to corporate whistle blowing. Whistle

blowing contains many moral venues. On one side, the well being of the company’s employees,

stakeholders, and image must be taken into account. On the other hand, the welfare of the

general consumer must be accounted for. Utilitarians once again simplify whistle blowing into a
pleasure versus pain issue. If the act of whistle blowing will generate less pain than pleasure to a

greater number of people, then it is a good act. If not, then it is wrong.

Take for example the Ford Pinto case, in which it is a well-known fact that prior to

production, Ford’s engineers were aware of the Pinto’s potential for catastrophe. No one blew

the whistle, however, and the defective car flooded the market for eight years. In this situation, a

fictional Utilitarian employee could have performed a calculation that indicated not to blow the

whistle. By using cost-benefit analysis, the Utilitarian weighed the pain inflicted upon the

general public versus the pain bestowed upon Ford and its associates. If a controversy such as

this were to leak into the public eye, many Ford employees would loose their jobs and

subsequently their lives would be devastated. This was to be weighed against the loss of life that

the Pinto would cause.

A whistle blowing policy from a utilitarian point of view would encourage those who

reasonably believe, and especially those who reasonably and firmly believe, that the unchecked

conduct of their organization will do more harm than good. In essence, the utilitarian argument

for a policy encouraging whistle-blowing would be that such a policy would alleviate certain

pressures that a person might feel to make the incorrect cost benefit analysis for society, while

still leaving in place social restraints on those who might want to blow the whistle when costs

outweigh benefits.

Additionally, if we look at ethical dilemmas in terms of environmental ethics,

depending on the consequences of a company’s actions whistle blowing would again be justified.

Based on environmental ethics we should conserve our environment and hand over to our

successors a world that is in no worse of a condition than the one we received from others.

Taking this into consideration an ethical employee would be in a position to blow the whistle on
activities that could cause serious damage to not only fellow citizens but also the very

surrounding which we depend on for our survival.

Finally, when blowing the whistle one must consider the conditions in which whistle-

blowing is morally justified. It is deemed to be morally justified if; the situation is of sufficient

moral importance, the whistle-blower has all facts and properly understand their significance, all

internal channels and steps short of whistle-blowing have be exhausted, the whistle-blower

knows the best way to blow the whistle, their responsibility in view of their role within the

organization, and know what are their chances for success.

Relevance to the Jamaican Society

Whistle blowing is relevant to all Jamaican organizations and all citizens, not just those

few who are corrupt or criminal. This is because every business and every public body faces the

risk of things going wrong or of unknowingly harbouring a corrupt individual. Where such a risk

arises, usually the first people to realize or suspect the wrongdoing will be those who work in or

with the organization. Yet these people, who are best placed to sound the alarm or blow the

whistle, often fear they have most to lose if they do. Unless culture, practice and the law indicate

that it is safe and accepted for them to raise a genuine concern about corruption or illegality,

workers will assume that they risk victimization, losing their job or damaging their career.

Public trust in business is difficult to repair, if possible any at all. If there is a continuous

decline in public trust this may strengthen pressures for greater governmental regulation of

business, reducing opportunities for Jamaican entrepreneurs and hindering the country’s

economic growth.
 Every organization desires honesty amongst their employees. Such an element allows for

complete dedication to the organization's mission, and success. By encouraging a whistle

blowing culture within Jamaican organization, the organizations promote, transparent structure

and effective, clear communication. More importantly, whistle blowing can protect the

organization's clients. The impact of unethical practices extends beyond the company,

organisation or the government. It reaches to and affects us all as entrepreneurs, as investors, as

consumers, as employees, and as citizens. Therefore implementing a successful whistle blowing

policy is extremely important to Jamaican companies on a whole that desires success in our very

competitive business environment.

Recommendations

A key aspect of system awareness is educating employees about the red flags, risks and

schemes related to unethical or illegal behaviour including topics such as conflicts of interest,

bribery, kickbacks, embezzlement, financial statement manipulation, and fraudulent regulatory

reporting. This type of awareness can be part of a fraud risk management or ethics and

compliance awareness program.

It is important to explain that every employee has a role in preventing and detecting

fraud. Although employees have this role, they should consider all available options before

blowing the whistle. They should make sure that they have followed the established procedures

for reporting wrong doing, also that the product or service may cause serious harm to society if a

report is not made and the employee doing the reporting must have documentary evidence that

can convince an impartial observer.

 It is also recommended that employers develop an internal grievance system in which

employees can report wrong doing. They may also reward employees for using the appropriate

channels and appoint executives to investigate all reported wrong doings.

Conclusion

In concluding, it is necessary to outline that whistle blowing can be both good as well as

it may be harmful to an organization. What is of outmost importance is the motive behind an

employee blowing the whistle. If it is done out of genuine concern for the public then it is good

for the organization. However if the employee does it to get back at a supervisor or a fellow

employee it may be detrimental to the companies wellbeing.

All things considered, whistle blowing is a necessary facet within an organization.it

protects organizations from fraud, misconduct, and to some degree, failure.

By promoting clear communication, keeping the organization's goals in focus for the

entire organization, one can certainly minimize their chances of reaching an organizational

disaster.
 References

Bok, S. (1981).“Blowing the Whistle”, in J. Fleishman (ed), Public Duties: The Moral

Obligations of Government Officials, Harvard University Press, Cambridge CN,

1981, pp.204-220.

Davis, M. (1989). “Avoiding the Tragedy of Whistle blowing”, Business and Professional

Ethics Journal, 8 (4), pp.3-20.

De George, R. (1985). “Whistle blowing: Permitted, Prohibited, Required”, in F.A. Elliston

(ed.), Conflicting Loyalties in the Workplace, University of Notre Dame Press,

Notre Dame.

Grant, C. (2002). “Whistle blowers: Saints of secular culture”. Journal of Business Ethics,

39(4), 391-399.

Heungsik Park (2004). “Whistle blowing as planned behavior: a survey of Korean police
 officers”, Presented at the Joint EGPA-ASPA Conference Ethics and Integrity of

Governance: A Transatlantic Dialogue, pp.1-24. Leuven, Belgium 2-5 June 2005.

James, G. (1984). “In Defense of Whistle Blowing", in W.M. Hoffman & J. Mills Moore

(eds.), Business Ethics: Readings and Cases in Corporate Morality, McGraw Hill,

New York, pp.249-260.

Kloppers, P. (1997) “Behoort die whistle-blower beskerm te word?” Stellenbosch Law

Review 8(2): 237-248.

Miceli, M.P. (2004) “Whistle blowing research and the insider: lessons learned and yet to

be learned”, Journal of Management Inquiry, pp.364 – 366.

Perrucci, R., Anderson, R., Schendel, D.E. & Trachtman, L.E. (1980) Divided Loyalties:

Whistle- Blowing at BART, Purdue University Press, West Lafayette IN.

Weiss, W. Joseph. (2006). Business Ethics: A Stakeholder and Issues Management

Approach, 4th Edition, Thomson South-Western.