Whistle

Blowing:
The Ethical
Aspects

Introduction
Individual's association to morality and WB
WB=Function of degree of association that individual
creates between (act of) wrongdoing and (his/her
understanding of) morality)
Worldcom Case and Cynthia Cooper: Didnt accede to
her superiors instructions not to waste time and dug
into deeper moral recesses (Sherron Watkins and Enron
Case)
Coopers association with professional accounting
standards influenced her to WB and she later revealed
about the influence of Bible on her( treat other people
the way you want to be treated)
Is WB compatible with Employee Loyalty?

Few Points to Ponder

Emergence of corporation as a legal entity/person and
growing attention in the recent times as one of the
most popular topics in recent times in BE
Shareholders Theory: Managers confining decisionmaking to economic criteria for assets use and
emergence of whistleblowers-Studies on WB show how
decision-making affects moral dilemmas and how one
responds to moral questions and dilemmas
Corporate Misbehavior=f(individual misbehavior
channeled through organizational actions)
Moral Competence: Responding to wrongdoings(by
reflection)

Definitions of Whistle blowing

Disclosure by organization members (former or
current) of illegal, immoral, or illegitimate
practices under control of employers to persons
or organizations that may be able to effect
action
Dissenting act of public accusation against an
organization which necessitates being disloyal
to that organization

Elements of Whistle blowing

Act of Disclosure of damaging news
Whistleblower
Subject of Disclosure
Target Organization held responsible
Disclosure Recipient

Outcome: Disclosure enters public domain

Salient Features of Whistle

blowing (henceforth WB)

Difference between Information and Whistle blowing

Hirschmans 3 responses to degenerative behavior in
organizations
1) Exit( distancing from a problem) 2) Loyalty (customers
and employees loyalty and choosing voicing over exit)
3) Voice(dissent voicing of extreme type is WB)
WB caused by purposive dissent: May be driven by Moral
Obligation or by high-minded motives/emotions
WB and Role conflict leads to ethical dilemmas
2-fold dilemma: a) Personal versus Organizational
Conflicts b) Loyalty to Organization versus Loyalty to
Society

WB and Organizations
Highly negative impact
Weakening chain of command

Threat to effectiveness
Unsettle employees confidence and ability to use
discretion
Need for right of public to know needs to be weighed
against right of organization to maintain secrecy in
some areas

Case for Internal WB

Internal WB can serve societys interests better.
How?
Code of ethics and training on how to deal with
ethical dilemmas
Information on steps required in communicating
ethical concerns internally
Policy must be credible
Whistleblower not to suffer for using internal
channels to report perceived wrongdoing
Ethics safety net: Chain of command can be
circumvented and dealt with by an impartial
organizational body

WB in India

Clause 49: Listed Companies of the Listing agreement,

where whistle blowers policy is non-mandatory in
nature
Listed companies may establish a mechanism to enable
disclosure of unethical behaviour, actual or suspected
fraud or violation of companys code of conduct or
ethics policy
Even the RBI now has a whistle blower policy to
strengthen financial stability and enhance public
confidence in financial sector
The Limited Liability Partnership Act, 2008:
Incorporated provisions to protect the interests of
whistle-blower and ensure that they are not subjected
to harassment termination of employment or any such
treat, to enhance transparency and promote an anticorruption tendency within the company

WB in India...cont
The Narayana Murthy Report also suggested the
incorporation of whistle blowers policy within the
companies to enable the employees to approach the
audit committee when they observe unethical or
improper practice with informing their superiors and
also protect them from unfair termination and other
prejudicial practices
According to a study by ASSOCHAM and E&Y WB is used
in a limited manner by India Inc for fraud prevention
Drawbacks: Hierarchical set-ups with single nucleus of
power-Threats (monetary and non-monetary)
Making a Case: Benefits to stakeholders-attracting right
talent-Proper handling needed for sustained value
creation

The Insider
Should Jeffrey Wigand disclose his information?
Is it unethical to encourage another person to
break his promise for grater social good
Should 60 minutes have succumbed to
corporate interests and aired edited version

Case Analysis
Is nicotine boosting an ethical practice of tobacco
companies?
Is blowing the whistle justified in this case?

Is it ever justified? Were there alternative courses of

action?
Unjust dismissal: Does being fired for poor
communication skills constitute unjust termination
without cause?

Utilitarian Considerations for

Wigand
Choices

Pleasure

Pain

Utility

Disclose Great Benefits to

public
Satisfies desire to
hurt Brown &
Williamson

Impact on family
benefits and
confidentiality
agreement
Face lawsuit
Damage to
tobacco industry
and employees

High Utility

Not
Family Benefits
Disclose
Tobacco Industry
and people
protected

Wigand will feel

guilty

Low Utility
Exposure to
harm public

Public hurt as
tobacco cos will
continue to act

Possible
benefits to
public greater
than costs

Motivations for Wigand

Kantian Perspective
Moral Duty: Must act from a duty to protect public health
What was his intentions?
a) Anger at company for acting with impunity or
b) Good of humanity
Would he have disclosed if he would not have been fired?
Principle of Universality and Hyper norm of Keeping promises
1. I shouldnt breach contract even if I knew it forces me to
uphold false statements
2. I should breach if I knew it forces me to upheld false
statements
Does this contradict with universal law to keep promise?
Upholding integrity of contract= Keeping promises

Utilitarian Considerations for

Lowell Bergman
Choices

Pleasure

Pain

Utility

To Encourage

Possible
benefits to
people
Uphold
integrity of
60 mnts

Impact on
Wigands
family
Lawsuit
against CBS
Damage to
tobacco
industry

Low to
medium
Benefits to
public
uncertain
Costs more
evident

60 mnts
and CBS to
lose credibility
Public will
never find out
truth

Medium to
high utility
Knows
pleasure but
not pain

Not encourage Wigand and

family keep
benefits
Tobacco
industry
protected

Motivations for Lowell Bergman

Moral Duty
One must act from moral duty. Motives ?
Principle of humanity: Treating people not as
means but as end
One ought not to encourage another person
to break promise even if there is a greater
social good
For greater social good one ought to
encourage other person to break promise

Rawls Theory of Justice as

Fairness

1st Rule: Equal right to all with similar system of

liberty for all
Companys right to privacy versus Right of
society to know truth
2nd Rule a)Difference principle b) Attached to
all offices and positions to all under conditions
of fair equality and opportunity
Will it make life better off for people who are
now worst off?

Recap
Should Wigand Disclose
Information?

Should Bergman
encourage Brigand to
disclose information?

Utilitarian

Disclose: Benefits> Costs

to public

Not Encourage: Knows

pleasure but not pain

Kantian

Dont Disclose: Violates

Universal Law to Keep
Promises

Not Encourage:
Encourage others to
break promises
unethical

Rawlsian
The Class
Stand?

Encourage: Right to
know truth

Should 60 mnts have succumbed to

Corporate Interests?
Choices

Pleasure

Pain

Utility

Dont
agree

Public welfare
Maintain professional
integrity

Lose jobs
Lose $5.3
million
Potential
lawsuit to
Westinghouse

Medium to high:
Lots of pain by
them but public
to benefit greatly

Agree

Keep jobs
Gain $5.3 million
Avoid lawsuit
Sale to Westinghouse

Guilt
Low Utility: Lots
Damage CBS
of pain to public
NEWS reputation as a whole
Lose credibility
Public oblivious of
information

Negotiate

Maintain Integrity and

Professionalism
Increase options
available

Lose jobs
Lose $5.3
million

High Utility
Integrity and
professionalism
maintained and
more options

Few Issues to Ponder Upon

If you were General Counsel or President of CBS
News would you be swayed by $3.9 million or
$1.4 million
What's the value or worth of ethics?

Is there price that can match that value?

Is it moral for companies to produce and sell
that which is harmful ?