Blowing the Whistle: Determinants of

Responses to Sexual Harassment

Authors: Elissa L. Perry; Carol T. Kulik; James M. Schmidtke

Abstract
This research used a scenario study and survey data to examine the effects of 3 factors
(position power, personal power, and organizational efficacy) on responses to sexual
harassment. Results of the scenario study revealed that the position power and personal
power of the victim and the efficacy with which the organization dealt with previous
incidents of sexual harassment were positively associated with the likelihood that participants
actively responded to a hypothetical incident of sexual harassment. Similarly, analyses of the
survey data revealed that position power, personal power, and organizational efficacy
significantly predicted actual victims' responses to experienced sexual harassment. However,
contrary to prediction, personal power was negatively associated with the number of active
responses taken by actual victims. Results also suggested that the effects of position power,
personal power, and organizational efficacy were not significantly moderated by individuals'
previous experience with sexual harassment or their level of education.

<a href="http://w w w .thefreelibrary.com/WHISTLEBL

Just imagining the destructive power of a publicly revealed whistleblowing complaint can
strike fear in the hearts and minds of managers. Proactive strategies can help redirect
re·di·rect
tr.v. re·di·rect·ed, re·di·rect·ing, re·di·rects
To change the direction or course of.

n.
A redirect examination.

re employee complaints in positive directions and defuse de·fuse

tr.v. de·fused, de·fus·ing, de·fus·es
1. To remove the fuse from (an explosive device).

2. To make less dangerous, tense, or hostile: potential fires.

A RECENT SURVEY OF MORE THAN 125 CHIEF INTERNAL auditors Internal auditor

An employee of a company who analyzes the company's accounting records to that the
company is following and complying with all regulations. by professors at the University of
Massachusetts The system includes UMass Amherst, UMass Boston, UMass Dartmouth
(affiliated with Cape Cod Community College), UMass Lowell, and the UMass Medical
School. It also has an online school called UMassOnline.
..... Click the link for more information. and Bentley College Bentley College is located at
175 Forest Street in Waltham, Massachusetts, 10 miles west of Boston. Founded as a school
of accounting and finance in Boston's Back Bay neighborhood, Bentley moved to Waltham in
1968 and today is ranked 31 on Business Week's top 100 undergrad concluded that 76
percent of employee whistleblowing complaints were found to be true. The high potential for
a whistleblowing case worries top managers across the world--and for good reason. Once a
whistleblower whis·tle·blow·er or whis·tle-blow·er or whistle blower
n.
One who reveals wrongdoing within an organization to the public or to those in positions of
authority: "The Pentagon's most famous whistleblower is . . has gone public, the media
circus media circus n → excesivo despliegue informativo

media circus n (= event) → battage m médiatique (= group of journalists); cortège m

..... Click the link for more information. and multimillion-dollar lawsuits can leave a stain of
embarrassment on a company that might never be washed clean.

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Not all whistleblowing incidents are horror stories horror story

Story intended to elicit a strong feeling of fear. Such tales are of ancient origin and form a
substantial part of folk literature. They may feature supernatural elements such as ghosts,
witches, or vampires or address more realistic psychological fears. , however. Internal
auditors can help their organizations find the silver lining silver lining
n.
A hopeful or comforting prospect in the midst of difficulty.

[From the proverb "Every cloud has a silver lining".

..... Click the link for more information. in whistleblowing by encouraging practices and an
ideology that allow complaints to be addressed in a manner that can benefit--as opposed to
damage--the company.

WHISTLEBLOWING DEFINED

In its broadest terms, whistleblowing can be defined as a disclosure of information by an

employee or contractor who alleges willful Intentional; not accidental; voluntary; designed.

There is no precise definition of the term willful because its meaning largely depends on the
context in which it appears. misconduct carried out by an individual or group of individuals
within an organization. However, a major distinction needs to be drawn between internal and
external whistleblowing. The first occurs when an employee airs his or her complaint
internally, through designated channels in the organization. The latter occurs when an
employee blows the whistle outside the organization to the media, law enforcement officials,
or some other public entity.

While numerous high-level whistle-blowing whistle-blowing, exposure of fraud and abuse by

an employee. The federal law that legitimated the concept of the whistle-blower, the False
Claims Act (1863, revised 1986), was created to combat fraud by suppliers to the federal
government during the Civil War. cases reach the public eye each year, many experts
suggest that the bulk of allegations begin and remain inside the organization. "The most
common whistleblowing incidences relate to internal identification of issues and problems
versus external, media-driven complaints," maintains John Garvey, who heads up the
Business Frauds Investigation Unit for Arthur Andersen For the U.S. Supreme Court case
commonly known as Arthur Andersen, see .
Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms
(the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and
KPMG), performing
..... Click the link for more information. in the Midwest. "Most cases never go public."

Richard Girgenti, Partner in the Forensic and Litigation An action brought in court to enforce
a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest;
any dispute.

When a person begins a civil lawsuit, the person enters into a process called litigation.
Services Practice for KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm)
KPMG Kaiser Permanente Medical Group
KPMG Keiner Prüft Mehr Genau (German)
KPMG Kommen Prüfen Meckern Gehen , says misconduct charges most frequently involve
fraud. He cites a 1998 KPMG study showing that "fraud, which encompasses any kind of
illegal conduct involving the theft of assets from an organization, is identified in 58 percent
of U.S. companies by internal whistleblowers." Other common whistleblowing charges
include failure to comply with legal obligations, miscarriages of justice, endangerment to
health and safety, pollution of the environment, and unfair or unetbical treatment of
individuals within the company.

QUESTIONABLE MOTIVES

Most whistleblowers air their complaints internally because they have faith in the
mechanisms for reporting misconduct, such as an anonymous tip line or drop box. When an
employee decides to take his or her issue into the public arena, foregoing internal channels, it
may be due to fear of retribution RETRIBUTION. 1. That which is given to another to
recompense him for what has been received from him; as a rent for the hire of a house. 2. A
salary paid to a person for his services. 3. The distribution of rewards and punishments. from
the employer, the potential for a cover-up if the organization is alerted to the problem, or the
failure of the employer to act upon previous complaints.

However, external complaints may also be motivated by personal and financial gain. "Some
whistleblowers believe that they can sell a book or profit in some way from the publicity,"
notes Girgenti. "A typical scenario is one in which an employee, who is laid off from a
company, files a wrongful dismissal Wrongful dismissal, also called wrongful termination
or wrongful discharge, is an idiom and legal phrase, describing a situation in which an
employee's contract of employment has been terminated by the employer in circumstances
where the termination breaches one or suit. At the same time, he divulges to the media that
the unfair termination was due to knowledge of misconduct within the organization, such as
environmental pollution, earnings mismanagement mis·man·age
tr.v. mis·man·aged, mis·man·ag·ing, mis·man·ag·es
To manage badly or carelessly.

mis·man age·ment n. , or some other sexy issue. The whistleblower now has a lawsuit

that is generating a great deal of negative publicity for the company. The company may
decide to offer the whistleblower a generous settlement to get the matter out of court and the
papers and put this negative exposure behind them."

Should an organization find itself under attack by a whistleblower, Girgenti suggests that the
company's first priority should be to investigate the allegation itself Armed with the truth, the
organization is far better equipped to defend against the allegations. If an internal
investigation reveals that the whistleblower's allegations hold merit, the organization is in a
better position to dose the case and come to an appropriate out-of-court settlement An
agreement reached between the parties in a pending lawsuit that resolves the dispute to their
mutual satisfaction and occurs without judicial intervention, supervision, or approval. . The
business can acknowledge that it made a mistake and quickly put the situation in the past.

On the other hand, says Girgenti, if the internal investigation finds that the allegations are not
true, the organization is armed both publicly and in the courtroom with the evidence to
combat and rebut To defeat, dispute, or remove the effect of the other side's facts or
arguments in a particular case or controversy.

When a defendant in a lawsuit proves that the plaintiff's allegations are not true, the
defendant has thereby rebutted them.

TO REBUT. the allegations. The organization might still face some possible public
embarrassment, but presenting the truth may give the whistleblower ample reason to retreat
from the situation.

INTERNAL AUDITING'S ROLE

In most large organizations, the internal audit function enters the whistleblowing equation
once an allegation has been made and an investigation is required. "From my experience,
internal auditors are ideally equipped to investigate allegations discreetly within the
company," maintains Guy Dehn, Director of the nonprofit A corporation or an association
that conducts business for the benefit of the general public without shareholders and without
a profit motive.

Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created
according to state law. U.K. whistleblower organization, Public Concern at Work. "They can
determine the most effective way to check whether the complaint is correct without causing
undue damage or disruption to other people in the company."
Many experts consider it a best practice to funnel internal whistleblower complaints directly
to a chief compliance officer, as opposed to internal auditing. The chief compliance officer
"can be likened to a traffic cop," notes Richard Girgenti, "determining where exactly in the
organization a whistleblower complaint should be addressed. For example, if an employee
blows the whistle on sexual harassment sexual harassment, in law, verbal or physical
behavior of a sexual nature, aimed at a particular person or group of people, especially in the
workplace or in academic or other institutional settings, that is actionable, as in tort or under
equal-opportunity statutes.
..... Click the link for more information., the chief compliance officer would immediately
forward the issue to the general counsel's office."

Girgenti recommends that organizations lacking a chief compliance officer should consider
creating this position to assume responsibility for maintaining effective corporate
compliance--part of which involves tackling internal whistleblower complaints. He also notes
that for a chief compliance officer to effectively carry out his post, the position needs to
report to the highest levels of management, such as the CEO (1) (Chief Executive Officer)
The highest individual in command of an organization. Typically the president of the
company, the CEO reports to the Chairman of the Board. and audit committee.

In small to medium-sized organizations, however, the burden of responsibility might rest

completely on the shoulders of internal auditing. "In smaller organizations without a chief
compliance officer or similar group, internal auditing would be the next best function for
tackling whistleblower complaints," maintains Sharon Stanford, Chair of The IIA's Ethics
Committee ethics committee A multidisciplinary hospital body composed of a broad
spectrum of personnel–eg, physicians, nurses, social workers, priests, and others, which
addresses the moral and ethical issues within the hospital. See DNR, Institutional review
board. . "If internal auditing has developed a good working relationship with staff, then a
whistleblower would feel confident about calling someone in that department."

KEEPING IT INSIDE

If an employee is troubled by misconduct he witnesses or experiences at work, there is a good

chance that he will blow the whistle, regardless of whether or not the organization likes it.
The challenge for internal auditors, and for the organization itself, is not to prevent
whistleblowing, but to foster a cooperative culture that encourages its staff to report
misconduct internally and allow those reports to be thoroughly investigated. The alternative,
external whistleblowing, could be crippling crip·ple
n.
1. A person or animal that is partially disabled or unable to use a limb or limbs: cannot race a
horse that is a cripple.

2. A damaged or defective object or device.

tr.v. to the reputation of the company.

According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3. Girgenti, the key to containing whistleblowing complaints internally is establishing staff

confidence that their issues will be taken seriously by management. Best practices aimed at
inspiring such confidence include a clear and well-communicated anti-retribution policy; staff
involvement in the development of policies relating to relating to relate prep → concernant

relating to relate prep → bezüglich +gen, mit Bezug auf +acc whistleblowing; and offering
prompt and continuous responses to internal complaints--in other words, keeping the
whistleblower in the loop.

Stanford emphasizes the role of senior management in promoting the organization's code of
conduct. "If the people at the top behave in a manner consistent with the company's code of
conduct, then staff will not be so hesitant to report an issue internally," maintains Stanford.
"If an employee is unclear about the tone at the top, then he might be swayed to blow the
whistle outside the organization." As another best practice, Stanford suggests a "bottom-up,
top-down" approach to developing the code of conduct, in which staff are asked for input into
the writing and rewriting re·write
v. re·wrote , re·writ·ten , re·writ·ing, re·writes

v.tr.
1. To write again, especially in a different or improved form; revise.

2. of the materials. "Having staff contribute to the development of a code builds stronger
consensus and buy-in and raises the level of awareness of the code," says Stanford.

John Garvey suggests additional strategies for encouraging internal whistleblowing, such as
switching from an internally operated anonymous tip hotline to one that is managed by an
outside party. To help prevent the misconduct that leads to whistleblowing complaints,
Garvey advises companies to establish an employee assistance program: "I know of one
organization that has a private foundation to assist employees experiencing personal,
financial, health, or drug-related problems," adds Garvey. "If someone needs a loan, they'll
give them a loan with a low rate of interest and a long payment schedule. If someone has a
gambling problem, they'll guide them to a counseling program. People often commit fraud
because of these types of problems. It starts with pressure."

CORPORATE COMPLIANCE

Whistleblowing experts also stress the importance of implementing and maintaining a rock-
solid corporate compliance program--a mechanism that helps employees to recognize that
their organization is committed to high ethical standards. "An effective corporate compliance
program is the best means for discouraging whistleblowers from seeking outside remedies,"
claims Girgenti. He recommends going above and beyond simply satisfying the requirements
of the Federal Sentencing Guidelines The Federal Sentencing Guidelines are rules that set
out a uniform sentencing policy for convicted defendants in the United States federal court
system. The Guidelines are the product of the United States Sentencing Commission and are
part of an overall federal sentencing reform for compliance programs. He encourages
internal auditors to conduct reviews of their organizations' code of conduct, relevant
employee training and orientation, and processes for reporting misconduct.

Garvey ranks "core values that echo from the chairman all the way down the organization" as
one of the first lines of defense against the types of fraud and abuse that might manifest
themselves as whistleblowing complaints. He regards the internal audit function as the
second most important component. According to Garvey, one of internal auditing's
responsibilities should be to perform examinations to confirm that staff are following both the
code of conduct and internal control processes. "Ethically focused core values are quite
common," observes Garvey, "although they're sometimes not reinforced to the extent that
they should be."

Girgenti maintains that internal auditing's responsibility should center on the need for these
programs to be reviewed and measured on an ongoing basis. "Internal auditing needs to know
if people are reporting misconduct to the hotline and how the complaints are being handled.
Internal auditing needs to know how many issues are being reported and the disposition of
these cases. Internal auditing needs to know if there is a training program, how many people
attend it, what sort of written materials are distributed, and if follow-ups and evaluations of
the training program are conducted. A proactive internal audit program should play an
integral role in ensuring that the organization has an ethical corporate culture."

Girgenti says that simply auditing the organization's compliance program "just won't cut it."
He argues that the program must be reviewed and measured on an ongoing basis, and he
maintains that knowing there were 100 calls to the hotline in 1997, 105 in 1998, and 90 calls
in 1999 "tells you nothing." He recommends going one step further and using focus groups,
workshops, and interviews with employees to find out what the volume of calls means. A
report card should also be established to help internal auditing measure, year by year, whether
or not the compliance program is getting better or worse.

TURNING THE TABLES

According to The IIA's Position Paper on Whistleblowing, "for organizations with internal
audit functions that adhere to adhere to
verb 1. FOLLOW, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by,
be loyal, mind, be constant, be faithful

2. the standards and ethics of The IIA (1) (Information Industry Association, Washington,
DC) In 1999, IIA merged with SPA (Software Publishers Association) to become the
Software & Information Industry Association. See SIIA. and that are headed by an audit
director with full access to an active audit committee, there should be no need to report in an
unauthorized manner to anyone outside the organization." Occasionally, however, some
internal auditors are faced with unique dilemmas that force them to consider the possibility of
externally blowing the whistle on their own organizations.

In 1995, for example, an internal auditor at Millard Refrigerated re·frig·er·ate

tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates
1. To cool or chill (a substance).

2. To preserve (food) by chilling. was fired after warning top management that tainted taint
v. taint·ed, taint·ing, taints

v.tr.
1. To affect with or as if with a disease.

2. To affect with decay or putrefaction; spoil. See Synonyms at contaminate.

3.
..... Click the link for more information. food had left the company warehouse to be shipped
to consumers. After making a private matter public in a wrongful termination wrongful
termination n. a right of an employee to sue his/her employer for damages (loss of wage and
"fringe" benefits, and, if against "public policy," for punitive damages). action, the auditor
was awarded $26,000 in lost wages. A similar verdict was awarded to an internal auditor in
New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont,
Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S),
Lakes Erie and Ontario and the Canadian province of who was fired after blowing the
whistle on a pervasive money-laundering scheme within his firm.

The question over whether it is an internal auditor's ethical responsibility to blow the whistle
on his organization yields no clear-cut answers. Stanford sheds some light on the subject: "If
the law in your country states that you are obligated ob·li·gate
tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates
1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force.

2. To cause to be grateful or indebted; oblige. to blow the whistle, then as an internal auditor,
you need to obey the law. An internal auditor's ethical responsibility is to report problems to
the highest level of authority in the company--in most cases, the board of directors.

"If the problem is reported, yet not adequately addressed, then it becomes a personal, ethical
decision Real life ethical decisions are studied in sociology and political science and
psychology using very different methods than descriptive ethics in ethics (philosophy). Not
ethics proper for the internal auditor. The IIA's Code of Ethics Code of Ethics can refer to:
• Ethical code, a code of professional responsibility, noting what behaviors are
"ethical".
• Code of Ethics (band), a 90's Christian New Wave/Pop band
does not require internal auditors to resign or report their issues externally when faced with a
whistieblowing dilemma. If the organization or law does not demand that you blow the
whistle, it must be a personal decision for the internal auditor.

"Many members of the profession have to come to members of The IIA's Ethics Committee
with stories about whistleblowing that left them no alternative but to leave their jobs. They
found a problem, reported it as far as they could go, and no one in their companies acted on
the issue. And so, they simply left. Many internal auditors tend to resign."

And resign they do. Today's tight labor market labor market A place where labor is
exchanged for wages; an LM is defined by geography, education and technical expertise,
occupation, licensure or certification requirements, and job experience places talented
internal audit professionals in high demand, making the decision to leave an unethical
unethical

said of conduct not conforming with professional ethics. organization easier than ever.
However, in organizations that recognize the value and importance of maintaining unmovable
ethical standards, resignation should not even have to cross the internal auditor's mind.

JONATHAN FIGG FIGG Federazione Italiana Giuoco Go is a Staff Editor for Internal
Auditor.

When Internal Auditing Blows the Whistle

WHILE CONDUCTING A ROUTINE AUDIT OF HIS COMPANY'S books, an internal

audit director, who wishes to remain anonymous, discovered a serious problem -- something
he would later describe as a "deliberate deferral deferral - Waiting for quiet on the Ethernet.
of reporting income." Further digging revealed that management was "cooking the books"
and manipulating earnings to meet Wall Street's quarterly estimates.

The internal audit director immediately raised the matter with the public accountants and his
superiors in management. Both groups failed to address the issue, so the director took the
bold step of calling a meeting with his audit committee. The committee members reviewed
the facts and decided to support management, possibly because the director's
recommendation would have required restating the reported results of the company. Shortly
thereafter, he was dismissed for "poor performance."

The internal audit director filed a lawsuit against his employer for wrongful termination,
claiming he was dismissed for blowing the whistle on the company's questionable accounting
practices. The whistleblower suit helped blow the lid off one of the most high-profile
earnings mismanagement cases in recent history. After an extensive legal battle, the internal
audit director reached a settlement under undisclosed terms. Internal Auditor recently
conducted an exclusive interview with the internal audit director, in which he discussed his
efforts to right the wrongs of his organization's management, public accountants, and audit
committee.

Is your discovery of fraudulent bookkeeping bookkeeping, maintenance of systematic and

convenient records of money transactions in order to show the condition of a business
enterprise. The essential purpose of bookkeeping is to reveal the amounts and sources of the
losses and profits for any given period. practices likely to become a more common
occurrence?

The Securities and Exchange Commission (SEC) reportedly suspects considerable earnings
mismanagement, but it's difficult to nail down. You may only be talking about a swing of 3 or
4 cents per share Cents per share

The amount of a mutual fund's dividend or capital gains distributions that a shareholder will
receive for each share owned. in profit reporting. Companies can establish excessive reserves
and manipulate the figures by adjusting these reserves periodically.

With today's tremendous pressure on management to produce results, there is no question that
they can be tempted to manipulate the figures to meet stock market expectations. For
example, if the market expects a 24 cents per share earning, and your company comes in at
22 cents, the stock price can easily drop 10 to 20 percent.

Even companies with excellent reputations seem more willing to take inappropriate
approaches to meet their earnings projections, and some of these approaches border on being
fraudulent. I don't know Don't know (DK, DKed)

"Don't know the trade." A Street expression used whenever one party lacks knowledge of a
trade or receives conflicting instructions from the other party. how other companies' audit
directors are reacting to this, but I'm sure in some cases they are being put under the gun.

What sort of conflicts might internal audit directors be facing in organizations, such as that of
your former employer? It's a very difficult situation for internal audit directors. I have Little
faith in some of the public accountants, because they do not function independently; in far too
many instances, they fail to do their jobs properly and allow themselves to be persuaded by
management pressure.
I also have strong reservations about the independence of audit committees. In some
companies, the audit committee may be sufficiently strong and independent, but in other
organizations the members have too close a connection with management. Keeping the audit
committee and management separate is difficult in many companies, because the board of
directors and the audit committee have a hand in appointing the CEO, and the CEO has a
hand in appointing the board and audit committee members. A further problem of
independence arises if there are interlocking interlocking /in·ter·lock·ing/ (-lok´ing) closely
joined, as by hooks or dovetails; locking into one another.

interlocking Obstetrics A rare complication of vaginal delivery of twins; the 1st directorships
in which the CEO and audit committee members serve as directors for each others'
companies.

Do you have any suggestions as to how internal audit directors can facilitate more effective
action from their audit committees?

In many organizations, internal audit directors have full access to their audit committees; but
I had never met with the audit committee without having at least one senior company
employee present. I am sure everything I said to the audit committee went right back to
management.

I believe internal audit directors should meet at least once or twice a year, on an informal
basis, with the chairman or individual members of the audit committee without members of
management or public accountants present. Such meetings are recommended in the literature,
but I wonder how closely it is being followed.

What was the external auditors' responsibility in your situation?

Public accountants have a clear responsibility to expose and address this sort of problem with
management. They can correct the problem, comment on the problem by offering a qualified
opinion, or determine that the problem is not material and give an unqualified opinion
Unqualified opinion

An independent auditor's opinion that a company's financial statements comply with accepted
accounting procedures. Antithesis of qualified opinion.

unqualified opinion

See clean opinion.

..... Click the link for more information.. It was my obligation and responsibility to get the
public accountants involved in addressing the issue, but they failed to act on it.

Was the ethical environment questionable at your organization?

I don't think the environment was questionable to the point of promoting this sort of unethical
behavior. The situation I faced was directed by and came from top corporate management.
Comments were made to me by several of the group financial personnel to the effect that
"This was not our idea" and "We were told to do this by corporate."

Overall, I would say that the company had an excellent reputation for financial reporting and
ethical behavior. The whole thing falls apart, though, when top-level management is the
cause of the problem.

Due to the confidential nature of the case, Internal Auditor agreed to protect the anonymity of
the interviewee and his former employer.

A Revolutionary Law on Whistleblowing

IN JULY 1999, ONE OF THE WORLD'S TOUGHEST AND BROADEST whistleblowing

laws was enacted in the U.K. The Public Interest Disclosure Act (PIDA PIDA Pet Industry
Distributors Association
PIDA Pennsylvania Industrial Development Authority
PIDA Photonics Industry Technology & Development Association
PIDA Public Interest Disclosure Act 1998 (UK) ) -- supported almost unanimously by
members of Parliament, business leaders, and the public-grants virtually blanket protection to
whistleblowers in private, public, and nonprofit organizations Nonprofit Organization

An association that is given tax-free status. Donations to a non-profit organization are often
tax deductible as well.

Notes:
Examples of non-profit organizations are charities, hospitals and schools. . One of the more
unique aspects of the legislation is that it encourages arid shields whistleblowers who, with
good reason, voice their concerns outside the organization.

The nonprofit organization Public Concern at Work (PCAW PCAW Prostate Cancer
Awareness Week
PCAW Public Concern At Work (UK)
PCAW Policy Creation Authority Workstation ) proved instrumental in bringing the law to
fruition by developing a consultation paper that became the basis for the act. Internal Auditor
recently spoke with Guy Dehn, Director of PCAW, to discuss this revolutionary new law and
how legislators and business leaders might apply the act's rationale in their own
whistleblowing policies.

What sparked the introduction of this legislation?

Several years ago the Committee of Standards in Public Life--an independent group--
determined that if the public is to have confidence in the accountability and probity
PROBITY. Justice, honesty. A man of probity is one who loves justice and honesty, and who
dislikes the contrary. Wolff, Dr. de la Nat. Sec. 772. of organizations, it needs assurance that
organizations can adequately regulate themselves. Therefore, organizations need to have a
culture that encourages staff to raise issues about suspicious activities in the company.

The committee found that staff also need to know that it is safe and acceptable to raise issues
externally. The point of having the external route is to reassure employees that the
organization genuinely wants them to blow the whistle. If an employee does not believe
management will address the issue, he has the right to go to the authorities. That gives the
whistleblower more confidence in using the internal procedure; because if management fails
to address the problems, the issue will be raised externally.

What was the national climate for whistleblowing before PIDA was passed?
When we started pushing for the new legislation, "whistleblowing" was a pejorative
pejorative Medtalk Bad…real bad word. Whistleblowers were stigmatized as disloyal
employees making trouble for their employers, leaking information anonymously to the
media.

Whistleblowing is now seen and promoted in the U.K. as an accountability and risk-
management tool. The protections under the new act encourage self-governance, and the right
to blow the whistle is primarily viewed as something that's in the best interest of the
organization and the public.

What sort of protection does the act offer whistleblowers? The U.K. legislation is declaratory
DECLARATORY. Something which explains, or ascertains what before was uncertain or
doubtful; as a declaratory statute, which is one passed to put an end to a doubt as to what the
law is, and which declares what it is, and what it has been. 1 Bl. Com. 86. , offering absolute
protection to anyone who raises a genuine suspicion inside the organization. If someone
blows the whistle to a regulatory authority Noun 1. regulatory authority - a governmental
agency that regulates businesses in the public interest
regulatory agency

administrative body, administrative unit - a unit with administrative responsibilities and can
provide evidence to back it up, absolute protection is also provided.

Should a whistleblower make a wider, public issue out of his complaint by taking it to the
media or a member of Parliament, that individual might not be protected. During litigation, a
tribunal will determine whether the public disclosure was reasonable, based on several factors
such as the urgency of the problem, fear of retribution, or lack of management action.

Are any whistleblower incentives built into the legislation? The PIDA does not offer any sort
of financial incentive for blowing the whistle, other than compensation for lost wages. For
example, if an employee is fired for blowing the whistle on his organization and hired at
another company one week later, he is entitled only to that one week's worth of salary. In the
U.S., employees who are unfairly terminated for blowing the whistle often receive
compensation for their losses; but they also have an opportunity gain large sums of punitive
damages Monetary compensation awarded to an injured party that goes beyond that which is
necessary to compensate the individual for losses and that is intended to punish the
wrongdoer. over and above lost wages.

Is there anything lawmakers and businesses in other countries might learn from the act?

I think so. The act accounts for a number of areas that laws in other countries, including the
U.S., do not address. First, the act covers all sectors-private, public, and nonprofit
organizations. It also applies to concerns of malpractice malpractice, failure to provide
professional services with the skill usually exhibited by responsible and careful members of
the profession, resulting in injury, loss, or damage to the party contracting those services.
overseas. If an employee is concerned that another staff member at a branch of his bank in
Singapore is defrauding the company, that employee is still protected even though the
concern relates to something outside British jurisdiction.

In addition, the act overrules gag orders A court order to gag or bind an unruly defendant or
remove her or him from the courtroom in order to prevent further interruptions in a trial. In
a trial with a great deal of notoriety, a court order directed to attorneys and witnesses not to
discuss the case with the media—such or confidentiality clauses. Employers can no longer
fire whistleblowers and pay them off to keep their complaints secret. In those three areas, the
U.K. law is stronger than current U.S. laws as an accountability mechanism.

Right now, the Organization for Economic Cooperation and Development Organization for
Economic Cooperation and Development (OECD), international organization that came into
being in 1961. It superseded the Organization for European Economic Cooperation, which
had been founded in 1948 to coordinate the Marshall Plan for European (OECD OECD: see
Organization for Economic Cooperation and Development. ) is discussing the development of
a whistleblowing provision. Business and labor representatives have expressed a great deal of
interest in the U.K. legislation, and initial whistleblowing provisions have been released in
the OECD's new guidance on multinational enterprises. The OECD published a review draft
of the guidance in January, recommending that companies provide protection to individuals
who raise issues internally or to the appropriate regulator.

Some American employers might want to have a look at the U.K. legislation. If the OECD
decides to base any whistleblowing provisions on the U.K. model, then that legislation will
become something that companies in OECD-member governments, such as the U.S., might
be encouraged to meet or match.

What do the detractors of the whistleblowing law have to say about it?

If an organization conducts business in an ethical and responsible manner, then it has nothing
to fear from this type of legislation. The organizations that are worried by the act are the fly-
by-night, reckless, and unethical businesses that stand to be exposed because of their
questionable practices. And those are the companies that the act targeted in the first place.

Whistleblowing in the Public Sector

THE WHISTLEBLOWING RULES ARE DIFFERENT IN PUBLIC agencies and businesses

that rely on government reimbursement Reimbursement

Payment made to someone for out-of-pocket expenses has incurred.

..... Click the link for more information. and contracting. While laws and policies might mute
mute (my t), in music, device designed to diminish uniformly the loudness of a musical

instrument. a vocal whistleblower in publicly traded companies publicly traded company

A company whose shares of common stock are held by the public and are available for
purchase by investors. The shares of publicly traded firms are bought and sold on the
organized exchanges or in the over-the-counter market. , employees in the public sector face
more lucrative incentives to bypass internal channels, such as the internal audit function, and
file whistleblower actions in court. Internal Auditor discussed the issue with Richard
Girgenti, National Director for Investigative and Integrity Management Services for KPMG,
in a recent interview.

How is whistleblowing different in the public sector? In the U.S., whistleblowers in the
public sector might be more motivated to expose their complaints externally, rather than
internally, because employees of government agencies or contractors can benefit financially
under the qui tam QUI TAM, remedies. Who as well. When a statute imposes a penalty, for
the doing or not doing an act, and gives that penalty in part to whosoever will sue for the
same, and the other part to the commonwealth, or some charitable, literary, or other
institution, and makes it recoverable by laws of the Federal False Claims Act. The laws were
enacted during the Civil War as a means for dealing with defense procurement fraud. If an
individual has knowledge that someone has filed a false claim involving payment by the
government, such as defense contracting or Medicare reimbursements, an individual can
report that information through a qui tam action qui tam action (kwee tam) n. Latin for who
as well, a lawsuit brought by a private citizen (popularly called a "whistle blower") against a
person or company who is believed to have violated the law in the performance of a contract
with the government or in violation ; and the government will take the responsibility of
investigating that allegation.

What can a whistleblower gain form such an action? There are some fairly rich rewards that
await a successful prosecution of a qui tam action. Somewhere in the neighborhood of 10 or
15 percent of the final recovery will be paid to the whistleblower. If you have a $100 million
fraud, the whistleblower could walk away with $10 of $15 million for having brought the
false claim to the government's attention--and the burden of proving the falsity of the claim
falls upon the government. The whistleblower has to do nothing other than file the qui tam
action.

How can organizations in the public sector better prepare themselves against whistleblower
complaints?

If an organization has a system in place to properly handle misconduct, it would probably

uncover abuses early on, when their exposure would be far more limited. An effective
corporate compliance program can usually locate or prevent misconduct before it escalates to
the point where an individual might file a qui tam action.

In companies that demonstrate they have a solid internal corporate compliance program, the
potential fines and Sentencing Guidelines, an organization with a demonstrated poor
compliance program might pay a $100 million penalty; but if a false claim or similar fraud
slipped through the cracks of a good compliance program, that same penalty might be
reduced to $5 million. An effective compliance program would serve as a disincentive
dis·in·cen·tive
n.
Something that prevents or discourages action; a deterrent.

disincentive
Noun

something that discourages someone from behaving or acting in a particular way

Noun 1. for whistleblowers to bring those actions public, knowing that their overall reward
might be substantially diluted