Life after Whistle-Blowing Enron FBI WorldCom

Enron, WorldCom, FBI, HIH FBI  Colleen Rowley WorldCom  Cynthia Cooper Enron  Sherron Watkins

Are Whistle Blowers Inevitable? Yes since:  Corporate fraud will continue to happen  Competing personal ethics exist  Rewards for whistle blowing are being introduced But numbers are likely to be on the decline as:  Knowledge and experience of corporations and employees is growing  Laws, regulations and audits are becoming more stringent

Should Whistle Blowers be protected? Protecting Whistle Blowers is important since they:  Demonstrate high moral and ethical standards  Are pillars of the corporate world, and act positively to ensure ethical standards are upheld  Face personal risk from the corporations they work for

Employing Whistle Blowers Would you employ Sherron Watkins, Cynthia Cooper, Colleen Rowley?  For: Desirable Characteristics – work ethic, loyalty(?), trust Builds ‘clean’ business reputation  Against: Alternative Actions were available for exploration Negative publicity Poor employee and colleague sentiment Questionable Corporate loyalty

Whistle Blowing Incentives What outcomes might paying Whistle Blowers lead to?  Costs Counter Productivity More elaborate schemes developed Greater secrecy Greater Monitoring Costs Prevents internal remedies  Benefits Stakeholder Protection Early intervention, leading to more incentive for firms to be clean Corporate Reputation