WHISTLE-BLOWING
A common method for detection of occupational fraud is employee tips. While many employees choose to handle fraud accusations internally by reporting wrongdoings to executives, whistle-blowing is the employee’s disclosure to the media or government of a company’s unethical activities. Before employees step forward with information, there are several factors that they must consider.
. Can the ethical problems that a company is having be better handled internally?
. Is it worth staying with a company that does not value ethics?
. Does the unethical damage that has been done outweigh the risk of retaliation by the company?
. Can the whistle-blower risk the possibility of being harassed, disciplined, or fired, in spite of regulatory protection?
There are some state and federal regulations that have been put in place to protect whistle-blowers once they have decided to step forward. According to the Sarbanes-Oxley Act of 2002:
(e) Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both. (www.sarbanes-oxley.com)
ETHICS TODAY
Enron and WorldCom have caused many citizens to take a skeptical view of large corporations. The managerial negligence that has been brought to light in recent years has caused global distrust of the U.S. financial markets. The economic impact of these scandals, combined with distrust, has taken a financial toll on many U.S. investors.
As evident in the Sarbanes-Oxley Act, the U.S. government is doing more these days to protect citizens against unethical corporations. Attempts have been made by creating new regulations, requiring more stringent accounting practices, encouraging an increase in transparency, and protecting those who step forward with information regarding corporate wrongdoings.
The cynical view of business ethics in the United States has caused organizations to go above and beyond what was done in the past to ensure that ethics are being enforced. As seen with MCI, corporations are now creating positions for chief ethics officers. Tyco is another company whose past questionable ethics led it to create this position in the organization.
But will these moves toward stringent ethical policies be enough to convince the world that U.S. companies are ethical? A new term has been created: “Enron ethics,” meaning an ironic difference between a company’s outwardly ethical appearance and its internal ethical failure. From the outside, Enron appeared to be a model company, with its corporate social responsibility practices and thick book of ethical guidelines that was handed out to employees, while on the inside, the company was falling apart due to its faulty accounting practices. But Enron managed to pull the wool over the public’s eyes for years. It’s difficult for people to trust that other companies are not doing the same.
A common method for detection of occupational fraud is employee tips. While many employees choose to handle fraud accusations internally by reporting wrongdoings to executives, whistle-blowing is the employee’s disclosure to the media or government of a company’s unethical activities. Before employees step forward with information, there are several factors that they must consider.
. Can the ethical problems that a company is having be better handled internally?
. Is it worth staying with a company that does not value ethics?
. Does the unethical damage that has been done outweigh the risk of retaliation by the company?
. Can the whistle-blower risk the possibility of being harassed, disciplined, or fired, in spite of regulatory protection?
There are some state and federal regulations that have been put in place to protect whistle-blowers once they have decided to step forward. According to the Sarbanes-Oxley Act of 2002:
(e) Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense, shall be fined under this title or imprisoned not more than 10 years, or both. (www.sarbanes-oxley.com)
ETHICS TODAY
Enron and WorldCom have caused many citizens to take a skeptical view of large corporations. The managerial negligence that has been brought to light in recent years has caused global distrust of the U.S. financial markets. The economic impact of these scandals, combined with distrust, has taken a financial toll on many U.S. investors.
As evident in the Sarbanes-Oxley Act, the U.S. government is doing more these days to protect citizens against unethical corporations. Attempts have been made by creating new regulations, requiring more stringent accounting practices, encouraging an increase in transparency, and protecting those who step forward with information regarding corporate wrongdoings.
The cynical view of business ethics in the United States has caused organizations to go above and beyond what was done in the past to ensure that ethics are being enforced. As seen with MCI, corporations are now creating positions for chief ethics officers. Tyco is another company whose past questionable ethics led it to create this position in the organization.
But will these moves toward stringent ethical policies be enough to convince the world that U.S. companies are ethical? A new term has been created: “Enron ethics,” meaning an ironic difference between a company’s outwardly ethical appearance and its internal ethical failure. From the outside, Enron appeared to be a model company, with its corporate social responsibility practices and thick book of ethical guidelines that was handed out to employees, while on the inside, the company was falling apart due to its faulty accounting practices. But Enron managed to pull the wool over the public’s eyes for years. It’s difficult for people to trust that other companies are not doing the same.
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