ghillyer ethicsnow notes ch07 blowing whistle

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CHAPTER 7

Blowing the Whistle

Table of Contents

Table of Contents.............................................................................................................................1

Chapter Summary............................................................................................................................2

Learning Outcomes..........................................................................................................................2Frontline Focus................................................................................................................................3

Key Terms............................................................................................................. 16

Internet Exercises...........................................................................................................................19

1.Visit the Government Accountability Project (GAP) at www.whistleblower.org......................19

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Chapter Summary

This chapter examines how employees who find evidence of unethical conduct in their

companies go about bringing that information to the attention of the companies’ senior

management or the appropriate regulatory authorities. This chapter explores ethical and

unethical means of whistle-blowing. Whistle blowing came to its height in 2002 with the

Sarbanes-Oxley Act and there are internal policies to address the needs of whistle-blowers.

Further, it explores an individual’s duty to respond as well as the risks they face by making the

choice to act.

Learning Outcomes

After studying this chapter, the student should be able to:

1. Explain the term whistle-blower and distinguish between internal and external whistle-

blowing.

2. Understand the different motivations of a whistle-blower.

3. Evaluate the possible consequences of ignoring the concerns of a whistle-blower.

4. Recommend how to build internal policies to address the needs of whistle-blowers.

5. Analyze the possible risks involved in becoming a whistle-blower.

Extended Chapter Outline

Note: Key terms are in boldface.

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Frontline Focus

Good Money Questions

1. If Ben decides to raise concerns about the product quality of the Benfield Voyagers, he will

become a whistle-blower. The difference between internal and external whistle-blowing isexplained on page 134. Which approach should Ben follow if he does decide to raise his

concerns?

Student answers may vary. The right thing for Ben to do if he decides to raise his concerns is

to take the issue to his immediate supervisors. After speaking through the chain of command

within his organization if Ben feels his concerns are not being addressed and that they are

true concerns for himself and for the community, Ben should consider switching to a form of

external whistle-blowing. By involving the media the issue of the quality of tires will bemade public and thus the community will have all of the information they need to make an

informed decision about what type of tire they wish to purchase.

2. The five conditions that must exist for whistle-blowing to be ethical are outlined on page

134. Has Rick given Ben enough information to be concerned about the Benfield Voyagers?

Rick, a knowledgeable experienced professional in the field, has given Ben information to

suggest an extreme cut in the quality of the tires which could lead to harming a member of

the public if the tires do not perform as they should, thus meeting the first condition of ethical

whistle-blowing. Ben needs to make sure when he decides to address the issue that he clearly

expresses why he feels this brand of tires could in fact be a dangerous choice for consumers.

If Ben’s boss John does not take immediate action, Ben should not run right to the press. Ben

should make sure he exhausts all efforts internally of trying to solve the issue. Ben may want

to get documented statements from other tire professionals who agree with Rick to ensure

that when he addresses the situation he has substantial evidence that the tires may not be of

decent quality. Finally, Ben must weigh the chances of succeeding and failing. He must

determine if exposing these tires as dangerous will benefit both the public and the company

or if he is misunderstanding the severity of the issue.

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3. What should Ben do now?

Student responses may vary. Ben needs to do some research to see if the Voyager tire is of

low enough quality to cause concern. If Ben does find that the tire could cause harm, he

should address his concerns with his immediate supervisor. Based on evidence, we canassume his supervisor will not agree, in which case Ben should continue up the corporate

ladder to address his concerns. If evidence shows that these tires are of a quality that could

become dangerous and the company refuses to act, Ben should then consider taking the next

step and alert the media.

Learning Outcome 1: Explain the Term Whistle-Blower and Distinguish Between Internal

and External Whistle-Blowing.

• The opening Frontline Focus case shows how a tire sales agent faces an ethical decision with

a new product his company is pushing to sell.

o The term whistle-blower refers to an employee who discovers corporate misconduct and

chooses to bring it to the attention of others.

o After an employee decides to become a whistle-blower, s/he must then assess what

channel of exposure s/he feels is most beneficial to solving the dilemma.

o Internal whistle-blowing is when an employee discovers corporate misconduct and

brings it to the attention of his or her supervisor, who then follows established procedures

to address the misconduct within the organization.

o External whistle-blowing is when an employee discovers corporate misconduct and

chooses to bring it to the attention of law-enforcement agencies and/or the media.

Learning Outcome 2: Understand the Different Motivations of a Whistle-Blower.

• Whistle-blowers have been said to give an invaluable service to their organization as well as

the general public.

o Discovering illegal activity before the media finds out could save a company millions of

dollars in fines and lost revenues.

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o Discovering potential harm to consumers is an immeasurable benefit and thus one of the

reasons why the media holds whistle-blowers to a standard of honor and integrity. Many

believe whistle-blowing can be motivated by both appropriate and illegitimate reasons.

o

Whistle-blowing is considered ethical under five conditions:(1) When the company will cause serious harm to the public.

(2) When the employee identifies a serious threat of harm he or she should report it

and state his or her moral concern.

(3) When the employee’s immediate supervisor does not act the employee should

exhaust the internal procedures and chain of command.

(4) The employee must have documented evidence that is convincing that the

practice, product or policy seriously puts the public in danger.

(5) The employee must have valid reasons to believe that revealing the wrongdoing to

the public will result in changed necessary to remedy the situation.

o Whistle-blowing can be considered unethical if the employee is motivated by financial

gain or media attention, or if they carry a vendetta against the company. In this case the

legitimacy of their whistle-blowing must be questioned.

o A qui tam lawsuit is a lawsuit brought on behalf of the federal government by a

whistleblower under the Federal Civil False Claims Act, also known as Lincoln’s Law. Qui tam is an abbreviation for a longer Latin phrase that establishes the whistle-

blower as a deputized petitioner for the government in the case.

The Federal Civil False Claims Act was enacted during the Civil War in 1863 to

protect the government against fraudulent defense contractors.

The act was strengthened in 1986 to make it easier and safer for whistle-blowers

to come forward.

o While internal-whistle blowing is hard to track, external whistle-blowing has become a

20th century phenomenon. The term started in 1963 and reached a peak in 2002.

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Learning Outcome 3: Evaluate the Possible Consequences of Ignoring the Concerns of a

Whistle-Blower.

• Whatever the motive of the whistle-blower, the fact remains employees are increasingly

more willing to respond to any questionable behavior they observe.

o Employers face two choices in these situations:

(1) They can ignore the warnings and risk public embarrassment or extreme financial

penalties.

(2) They can create an internal system allowing whistle-blowers to be heard before

the case is taken public. This option means hearing out the whistle-blower instead

of firing them.

o Prior to 2002, safeguards against retaliation were not part of the legal protection for

whistle-blowers.

o The Whistleblower Protection Act of 1989 addressed the issue of federal employees who

brought accusations of unethical behavior and imposed deadlines in filing complaints and

for settlement payments to the whistle blower (only in effect for federal employees).

o The Sarbanes-Oxley Act of 2002 (SOX) not only prohibited retaliation against whistle-

blowers, but also encouraged the act of whistle-blowing.

The Act requires that public companies adopt a code of ethics, set up an internal

system to receive, review, and solicit employee reports of fraud and or ethical

violations.

SOX does not protect employee complaints to the news media because under

SOX these do not constitute whistle-blowing.

o Employees who prevail in whistle-blower cases are entitled to damages which may

include:

Reinstatement to the same seniority status that the employee would have had but

for the adverse employment action.

Back pay.

Interest.

All compensatory damages to make the employee whole.

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“Special Damages,” including litigation costs, reasonable attorney fees and costs,

expert witness fees, and “all relief necessary to make the employee whole.”

Learning Outcome 4: Recommend How to Build Internal Policies to Address the Need of

Whistle-Blowers.

• Employers are becoming increasingly willing to respond to any questionable behavior they

observe in the workplace.

o Prior to 2002, the only protection for a whistle-blower was legislation that encouraged the

moral behavior of employees to speak out, without offering any safeguards to the

employees.

o The False Claims Act of 1863 was designed to prevent profiteering from the Civil War.

The government would split up to fifty percent of the recovered amount with the

individual that filed the petition, but it did not offer specific prohibitions against

retaliatory behavior.

o The Whistle-Blower Protection Act of 1989 addressed the issues associated with

retaliation against federal employees who bring accusations of unethical behavior:

It imposed specific performance deadlines in processing whistle-blower

complaints.

It guaranteed the anonymity of the whistle-blower unless revealing the name

would prevent criminal activity or protect the safety of the public.

It required prompt payment of any portion of the settlement to which the whistle-

blower would be entitled, even if the case were still working its way through the

appeals process.

It applied only to federal employees until the Sarbanes-Oxley Act of 2002.

o The Sarbanes-Oxley Act of 2002 (SOX) is also known as the Corporate and Criminal

Fraud Accountability Act

By putting the following mechanisms in place employers can safeguard

themselves from breaking SOX.

SOX does not provide for punitive damages.

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o Employees who prevail in whistle-blower cases are entitled to damages; and the damages

can include:

Reinstatement to the same seniority status that the employee would have had but

for the adverse employment action.

Back pay

Interest.

All compensatory damages to make the employee whole.

“Special damages,” including litigation costs, reasonable attorney fees and costs,

expert witness fees, and “all relief necessary to make the employee whole.”

o It is wise for employers to address the needs of whistle-blowers and implement the

following policies: A well-defined process to document how such complaints are handled—a

nominated contact person, clearly identified authority to respond to the

complaints, firm assurances of confidentiality, and no retaliation against the

employee.

An employee hotline to file complaints with assurance of confidentiality and no

retaliation.

A prompt and thorough investigation of all complaints.

A detailed report of all investigations, documenting all corporate officers involved

and all action taken.

o A whistle-blower hotline is a telephone line where employees can leave messages to

alert a company of suspected misconduct without revealing their identity.

Employers must be committed to follow through with all reports.

Trust must be established for the mechanisms to work.

Learning Outcome 5: Analyze the Possible Risks Involved in Becoming a Whistle-Blower

• The act of whistle-blowing often gets such positive attention that it masks the risks to one’s

own career and financial stability.

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o If an employee is left with no other option than to go public than the organization has

failed to address the situation internally for the long-term improvement of the cooperation

and all of its stakeholders.

o

Going public should be the last resort.

o The fallout of media attention and the often irreversible damage done to the company

should be enough to pressure the executives to look deeper and fix what is broken.

o Regrettably, many still choose to bury the truth, hire a legal gunslinger, or put the

employee in a position of such severe financial risk that s/he decides not to speak out.

o A study of 233 whistle-blowers by Donald Soeken of St. Elizabeth’s Hospital in

Washington, DC, found that the average whistle-blower was a man in his forties with a

strong conscience and high moral values.

o The following statistics were also revealed about whistle-blowers:

About 90 percent of whistle-blowers are fired or demoted.

About 27 percent are faced lawsuits.

About 26 percent had to seek psychiatric or physical care.

About 25 percent suffered alcohol abuse.

About 17 percent lost their homes.

About 15 percent got divorced.

About 10 percent attempted suicide.

About 8 percent were bankrupted.

Despite these repercussions, only 16 percent said they wouldn’t blow the whistle

again.

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Life Skills

Making Difficult Decisions

Many individuals, such as those discussed in this chapter, have been faced with situations where

there is a conflict in ethical standards and they cannot simply look the other way. What would

you do in this situation? Could you life with your decision? What if there were negative impacts

on the company as a result of your decision? Then there are the consequences for you, your

family, coworkers, etc. Now you can see why whistle-blowers face such emotional turmoil. If

you find yourself in such a situation,

Progress Check Questions

1. What is a whistle-blower?

A whistle-blower is an employee who discovers corporate misconduct and chooses to bring it

to the attention of others.

2. What is internal whistle-blowing?

Internal whistle-blowing is when an employee discovers corporate misconduct and brings it

to the attention of his or her supervisor, who then follows established procedures to address

the misconduct within the organization.

3. What is external whistle-blowing?

External whistle-blowing is when an employee discovers corporate misconduct and chooses

to bring it to the attention of law-enforcement agencies and/or the media.

4. Is whistle-blowing a good thing?

• Many individuals, especially the media believe that whistle-blowing is a good thing, not

only because it can save an organization millions of dollars, but because it can often

prevent substantial harm to consumers.

• However, some individuals may argue that whistle-blowers are motivated by money or

have egos and a “troublemaker” personality. Also, some feel that whistle-blowers are

“sneaks” or “squealer” who has broken the trust and loyalty of their employer.

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5. List five conditions for whistle-blowing to be considered ethical.

(1) When the company will cause serious harm to the public.

(2) When the employee identifies a serious threat of harm he or she should report it and

state his or her moral concern.

(3) When the employee’s immediate supervisor does not act the employee should exhaust

the internal procedures and chain of command.

(4) The employee must have documented evidence that is convincing that the practice,

product or policy seriously puts the public in danger.

(5) The employee must have valid reasons to believe that revealing the wrongdoing to the

public will result in changed necessary to remedy the situation

6. Under what condition could whistle-blowing be considered unethical?

Whistle-blowing can be considered unethical if the employee is motivated by financial gain

or media attention, or if they carry a vendetta against the company. In this case the legitimacy

of their whistle-blowing must be questioned.

7. If you blow the whistle on a company for a personal vendetta against another employee but

receive no financial reward, is that more or less ethical that doing it just for the money?

Student answers will vary. Personal vendettas and/or financial rewards are unethical reasons

for blowing the whistle on corporations. Whistle-blowing should be about wanting to prevent

unethical behavior that will affect numerous stakeholders by “shedding light” on behavior

unknown to others.

8. Would the lack of any financial reward make you more or less willing to consider being a

whistle-blower? Why?

Student answers will vary. Blowing the whistle on someone or on an organization should not

be about the reward. It is important for the health of the company and its stakeholders to

report unethical behavior.

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9. If an employee blows the whistle on an organization on the basis of a rumor, is that ethical?

No, one of the conditions for ethical whistle-blowing states that there must be documented

evidence that is convincing to a reasonable, impartial observer.

10. If that information turns out to be false, should the employee be liable for damages? Explain

your answer.

Student’s answers may vary. If an employee blows the whistle on an organization based on a

rumor and the information is false, then the employee should be held liable for damages. The

employee will have cost the organization its reputation and have to spend time mending and

rebuilding trust. Whistle-blowing should only take place if there is documented evidence that

is convincing to a reasonable, impartial observer.

11. Compensation to “make the employee whole” under SOX isn’t as clear as a percentage of the

funds recovered for a government whistle-blower. Does that make it less likely that we’ll see

more whistle-blowing under SOX?

Student’s answers will vary. It may or may not promote more whistle-blowing, but the

financial reward aspect should not be the primary motivation. The primary motivation should

be to do the right thing and prevent an organization from going through a corporate scandal

when it can be prevented.

12. Under SOX, complaining to the media isn’t recognized as whistle-blowing. Is that ethical?

Student’s answers will vary. Complaining to the media is different from whistle-blowing.

Complaints should be addressed and taken care of by the organization, whereas, the

information displayed by the whistle-blower will be taken into consideration and dealt with

by legislation.

13. How should managers or supervisors respond to an employee who brings evidence of

questionable behavior to their attention?

Managers should tell the employee about the company’s defined process and ensure the

employee’s confidentiality. They should then take the employee through the next steps of the

company’s outlined process for reporting questionable behavior.

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14. Should that employee be given any reassurances of protection for making the tough decision

to come forward?

Yes, as it is stated in SOX, retaliation against whistle-blowers is prohibited and thecompany’s policies should stress this along with extreme confidentiality.

15. Do you think a hotline that guarantees the anonymity of the caller will encourage more

employees to come forward?

Student answers may vary. An anonymous hotline would allow for those who are

uncomfortable coming forward to do so. However, this may also encourage those who have

personal vendettas to cause unnecessary investigations as well.

16. Does your company have a whistle-blower hotline? How did you find out that there is (or

isn’t) one?

Student answers may vary. Most likely, students will not be working in a company that has a

whistle-blower hotline, but many will upon graduation. If a hotline exists, the company will

want to share it with their employees.

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Ethical Dilemma

Case 7.1 – The Insider

1. Dr. Wigand was initially unwilling to go public with his information. What caused him to

change his mind?

After being fired due to “poor communication skills,” the company modified their

confidentiality agreement. While still employed, Wigland did not want to break his integrity

of honoring the contract. Once he realized they did not believe he would honor their

agreement he chose to go public.

2. Did CBS pursue Wigand’s story because it was the right thing to do or because it was a good

story?

Student responses will vary. Arguments for CBS covering the story could be considered for

both the right thing to do and because it was a good story. Both of these were probably

motivators for CBS. They were able to turn a true story into a movie with a Hollywood cast.

3. Since CBS played such a large part in bringing Dr. Wigand’s story to the public, do you

think the network also had an obligation to support him once the story broke? Explain why or

why not.

Student responses will vary. CBS was not obligated to support Wigand, but should have run

the interview as an unbiased display of coverage. CBS does have an obligation to display the

facts of the stories they are covering.

4. Was CBS’s decision not to run the interview driven by any ethical concerns?

Student responses will vary. The main decision not to run the interview, however, came from

fears of lawsuits from B&W. Students answer may vary as to whether this was because of

financial reasons or the ethical issue of interfering in to other parties’ contractual

relationship.

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Case 7.2 – The Cold, Hard Reality

1. Who took the greater risk here: Christine Casey or David Welch?

Student responses will vary. While Casey stated her concerns and later resigned, Welch filed

for whistle-blower protection under SOX. Casey was ruled against by the judge because she

made constructive proposals to senior management rather than filing explicit complaints.

Welch was fired for raising his concerns within the organization, and therefore, could be

awarded whistle-blower protection.

2. Was the alleged behavior at Mattel more or less unethical than the behavior at the Bank of

Floyd?

Student responses will vary. Both included falsifying financial information.

3. Do you think Casey and Welch regret their decisions to go public with their information?

Why or why not?

Student responses will vary. While Welch commented that his worst fears were realized and

he would never again work in the industry, if his beliefs outweigh the influence of money he

probably does not regret his decision. While Casey probably regrets that the company settled

without having to admit any wrongdoing, if she stands by her beliefs she also probably does

not regret her decision.

4. Do you think their behavior changed anything at either company?

Student responses will vary. It seems as though the outcome of these two scenarios would

discourage people from whistle-blowing because neither had a positive outcome from “doing

the right thing.”

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Frontline Focus

Good Money—Ben Makes a Decision Questions

1. What do you think will happen now?

Student answers will vary. The family will probably sue the tire company for damages. The

more direct effect with be how Ben handles the pressure of knowing he could have stopped

this.

2. What will the consequences for Ben, Rick, their tire store, and Benfield?

Student answers will vary. Benfield and potentially the store could have lawsuits on their

hands. Ben and Rick will have to live with knowing they should have stepped up and

reported what they thought.

3. Should Ben have spoken out against the Voyager tires?

Student answers will vary. Ben should have called the company hotline so that the company

could follow procedure and investigate the situation.

Key Terms

External Whistle-Blowing: When an employee discovers corporate misconduct and chooses to

bring it to the attention of law-enforcement agencies and/or the media.

Internal Whistle-Blowing: When an employee discovers corporate misconduct and brings it to

the attention of his or her supervisor, who then follows established procedures to address the

misconduct within the organization.

Qui-Tam Lawsuit: A lawsuit brought on behalf of the federal government by a whistleblower

under the Federal Civil False Claims Act, also known as “Lincoln’s Law.” Whistle-blowers who

expose fraudulent behavior against the government are entitled to between 10 and 30 percent of the amount recovered.

Whistle-Blower: An employee who discovers corporate misconduct and chooses to bring it to

the attention of others.

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Review Questions

1. Why are whistle-blowers regarded as models of honor and integrity?

Student responses will vary. Whistle-blowers can be regarded as models of honor and

integrity because they put their careers and personal lives at risk to do the right thing.

2. Which whistle-blowing option is better for an organization—internal or external? Why?

Student responses will vary. Internal whistle-blowers do not receive a tremendous amount of

attention and it is harder to track. They avoid public embarrassment. External whistle-

blowing exploits the company and it typically creates more public awareness of an issue or

incident at a particular organization.

3. Why would an organization decide to ignore evidence presented by a whistle-blower?

Student responses will vary. An organization could decide to ignore evidence if it thought the

individual was reacting in the interest of his/her own ethical perception.

4. Is it reasonable for a whistle-blower to expect a guarantee of anonymity?

Student responses will vary. Some organizations have whistle-blower hotlines that

individuals use to protect their identity. A well-defined process is needed to determine how

complaints are handled. It can assure confidentiality and ensure that there is no retaliation

against the employee.

5. Why should a whistle-blower be concerned about retaliation?

Student responses will vary. A whistle-blower should be concerned about retaliation because

s/he could lose their job or create an environment that could be dangerous or uncomfortable

in which to work.

6. Why is trust such an important issue in whistle-blowing?

Student responses will vary. Whistle-blowing has become popular over the years and it is

important that the employee is assured that his/her information can be given anonymously

and without fear of retaliation.

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Review Exercises

NOTE: some questions allow for a number of different answers. Below are some suggestions.

1. You work for a meatpacking company. You have discovered credible evidence that your

company’s delivery drivers have been stealing cuts of meat and replacing them with ice toensure that the delivery meets the stated weight on the delivery invoice. The company has 12

drivers and, as far as you can tell, they are all in on this scheme. Your company has a well-

advertised whistle-blower hotline. What do you do?

Student responses will vary. If you do not have substantial evidence you should report the

situation to the hotline so that they may do an investigation. If you do have evidence and feel

comfortable doing so you may want to take the evidence to your direct manager.

2. What would you do if your company did not have a whistle-blowing policy?

Student responses will vary. The right thing to do would be to take the information to your

direct supervisor. You must make sure you have evidence and are not just going on rumors or

suspicions.

3. You later discover that one of the drivers was not a part of the scheme but was fired anyway

when the information was made public. What do you do?

Student responses will vary. You may want to report what you know to a supervisor to try

and help the driver get their job back. This is why it is important to know all of the facts

before making accusations.

4. Should the driver get his job back? Why or why not?

Student responses will vary. It will be hard to prove the driver was not involved. It will also

be hard to prove if he was aware of the scheme and turned a blind eye or if he was unaware

of the situation.

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Internet Exercises

1. Visit the Government Accountability Project (GAP) at www.whistleblower.org.

a. What is the mission of GAP?

Mission: The Government Accountability Project (GAP) is a 30-year-old nonprofit public

interest group that promotes government and corporate accountability by advancing

occupational free speech, defending whistleblowers, and empowering citizen activists.

We pursue this mission through our Nuclear Safety, International Reform, Corporate

Accountability, Food & Drug Safety, and Federal Employee/National Security programs.

GAP is the nation's leading whistleblower protection organization.

b. How is GAP funded?

Founded in 1977, GAP is a non-profit, public interest organization that receives funding

from foundations, individuals, and legal fees.

c. What kind of assistance is available through GAP for someone thinking about becoming

a whistle-blower?

Student responses will vary. A few examples include:

• 12 Survival Strategies

• A GAP Intake Application for GAP to review your case

• Conferences

2. Visit the National Whistleblowers Center at www.whistleblowers.org.

a. Using the interactive map, select one country and summarize the whistle-blowing activity

in that country.

Students’ responses will vary based on the country they select. Students should include a

summary of the whistle-blowing activity in that company.

b. Identify the whistle-blower protections in effect in your home state.

Students’ responses will vary based on the student’s home state.

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http://www.whistleblower.org/

http://www.whistleblowers.org/

http://www.whistleblower.org/

http://www.whistleblowers.org/



c. There are now two whistle-blowing Web sites separated by only one letter. Summarize

their differences and propose which one offers the greatest assistance to a potential

whistle-blower.

Students’ responses will vary.

Team Exercises

1. Guilt by Omission.

Divide into two groups and prepare arguments for and against the following behavior:

You work for a large retail clothing company that spends a large amount of its advertising

budget emphasizing that its clothes are “Made in America.” You discover that only 15 percent of its garments are actually “made” in America. The other 85 percent are actually

either cut from patterns overseas and assembled here in the United States, or cut and

assembled overseas and imported as completed garments. Your hometown depends on this

clothing company as the largest local employer. Several of your friends and family work at

the local garment assembly factory. Should you go public with this information?

Student responses will vary. It is not okay to use false advertisement. This goes deeper into

deciding whether the statement “made in America” insinuates that 100% of their products aremade in America. However, this also addresses the question of who is affected by this

decision. If this hometown depends on this company and several friends and family members

work there, these people may be out of a job if the whistle is blown.

2. “Tortious Interference.”


In the case of Dr. Jeffrey Wigand and the Brown & Williamson Tobacco Company, the CBS

Broadcasting Company chose not to air Dr. Wigand’s 60 Minutes interview with Mike

Wallace under threat of legal action for “tortious interference” between B&W and Dr.

Wigand. There were suspicions that CBS was more concerned about avoiding any potential

legal action that could derail its pending sale to the Westinghouse Corporation. Was CBS

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behaving ethically in putting the welfare of its stakeholders in the Westinghouse deal ahead

of its obligation to support Dr. Wigand?

Student responses will vary. A corporation should never act in a way that would negativelyaffect their shareholders. However, some may feel that CBS should not have agreed to

support Dr. Wigand and then backed off the case.

3. A New Approach to Freshness.


You work in the meat department of store #2795 of a large retail grocery chain. The

company recently announced a change in the meat-handling protocols from the primary

supplier. Starting in January 2009, the meat will be gassed with carbon monoxide before

packaging. This retains a brighter color for the meat and delays the discoloration that

usually occurs as the meat begins to spoil. You understand from the memo that there will be

no information on the product label to indicate this protocol change and that the company

has no plans to notify customers of this new process. Should you speak out about the

procedure?

Student responses will vary. This would depend on the health effects of the carbon

monoxide. If doing so might cause people to buy meat that will go bad earlier, or if the gas

itself will harm consumers, you should speak out about the procedure.

4. California Organic.


You work in the accounting department of a family-owned mushroom grower based in

California that sells premium organic mushrooms to local restaurants and high-end retail

grocery stores. The company’s product range includes both fresh and dried mushrooms.

Your organic certification allows you to charge top-dollar for your product, but you notice

from invoices that operating costs are increasing significantly without any increase in

revenues. The market won’t absorb a price increase, so the company has to absorb the

higher costs and accept lower profits. One day you notice invoices for the purchase of dried

mushrooms from a Japanese supplier. The dried mushrooms are not listed as being organic,

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but they are apparently being added to your company’s dried mushrooms, which are labeled

organic and California-grown. Should you speak out about this?

Student responses will vary. This is a prime case of false advertising. The company cannot

claim their mushrooms are organic and California-raised if they are imported from Japan.

Thinking Critically – Exercise 7.1

Questionable Motives

1. Birkenfeld is adamant that his prison sentence is unfair when compared to the fact that no

one else (Olenicoff, UBS bankers) went to jail. Does he have a point?

Students’ responses will vary. Birkenfeld withheld pertinent data related to Olenicoff’s

business dealings. He did not disclose the nature of his relationship with Olenicoff to the

United States Justice Department.

2. Why did UBS elect to settle with the U.S. Government?

Students’ responses will vary. UBS did not want to lose its access to a large market and it

wanted to remain a global banking entity. UBS also sought the intervention of the Swiss

Government to help its case.

3. Given that there was an immunity agreement in place, what did the Justice Department gain

from prosecuting Birkenfeld?

Students’ responses will vary. Students should recall that Birkenfeld was charged with

helping Olenicoff by referring him to a UBS specialist in the creation of offshore ‘shell’

corporations designed to hide the true ownership of UBS accounts. The Justice Department

charged Birkenfeld with conspiracy to commit tax fraud.

4. Critics are concerned that Birkenfeld’s prison sentence will discourage other tax whistle- blowers from coming forward. Is that a valid concern? Why or why not?

Students’ responses will vary. It is a valid concern; however, Birkenfeld was not honest with

the Justice Department because he withheld pertinent information about the case.

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Wikileaks: Principled Leaking?

1. Critics have argued that WikiLeaks is now attacking secrecy on all fronts, with no concern

for the consequences of the information posted on its site. Do those actions align with the

ethical principles of whistle-blowing?

Students’ responses will vary based on their perception of the case. In some responses, the

students should agree that the actions align with the ethical principles of whistle blowing. On

the other hand, some students will argue that its’ actions does not align with the ethical

principles of whistle-blowing.

2. Does WikiLeaks have an obligation to censor postings to protect innocent individuals who

may be harmed by making the information public? Should the site take steps to verify the

accuracy of the posted documents?

Students’ responses will vary. Some students may argue that it does have an obligation to

censor postings to protect individuals, and other students may argue that it would ruin the

purpose of the Web site. If anyone can post anything on the Web site, there is no telling what

could end up on it. How would anyone know if the data is really accurate?

3. Would fulfilling the vision of a “wiki” community (with editors and fact checkers) reduce the

criticism directed at the site? Why or why not?

Students’ responses will vary. Some students may feel that editors and fact checkers would

reduce the criticism directed at the site. Other students may feel that the editors and fact

checkers would reduce the effectiveness and the apparent “hands-off editorial policy” at the

site.

4. Does the decision to withhold 15,000 documents in a “harm minimization process” indicatethat WikiLeaks is developing some sense of the potential consequences of its actions? Why

or why not?

Students’ responses will vary based on their perceptions of the case.

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The Olivieri Case

1. Was it ethical for Apotex to include a three-year gag clause in the agreement with Dr.

Olivieri?

Students’ responses will vary. It is not ethical to keep hidden information that could prove to

be harmful for society yet that is what this clause did.

2. Even though Dr. Olivieri later admitted that she should never have signed the agreement with

Apotex that included a confidentiality clause, does the fact that she did sign it have any

bearing on her actions here? Why or why not?

Students’ responses will vary. While it is unethical to break a signed agreement, some may

feel it is more unethical to keep hidden information that could cause harm to a number of

children.

3. Was Olivieri’s decision to publish her findings about the trial an example of universalism or

utilitarianism? Explain your answer.

Students’ responses will vary. Oliveiri’s decision to publish her findings about the trial is an

example of utilitarianism. Utilitarianism is the philosophy that ethical choices are made

based on the greatest good for the greatest number of people. Olivieri could have allowed

Apotex to terminate the findings, but this would have allowed the drug to be used on people

who cause a toxic build-up of iron in the liver—known as hepatic fibrosis.

4. If we identify the key players in this case as Dr. Olivieri, Apotex, the Hospital for Sick

Children, and the University of Toronto, what are the conflicts of interest between them all?

Students’ responses will vary. The conflict of interest for Apotex is the large amount of time

and money they have invested in their drug and the well being of their company. The conflict

of interest of the University is the donation they were expecting to receive from the CEO of

Apotex.

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5. What do you think would have happened if Dr. Olivieri’s fellow academics had not

supported her in her fight?

Students’ responses will vary. Olivieri would have never been reinstated nor had the

complaints withdrawn or legal fees covered if her fellow academics had not supported her inher fight.

6. How could this situation have been handled differently to avoid such a lengthy and bitter

battle?

Students’ res ponses will vary. Dr. Olivieri should not have signed the agreement with Apotex

that did not allow the unauthorized release of any findings. Also, she needed to go public

with her findings after approaching Apotex and raising her ethical concerns she had with

terminating the results.

ghillyer ethicsnow notes ch07 blowing whistle

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