Whistle-Blowing - a Management Control Tool

By Russell, Grant | CMA - the Management Accounting Magazine, September 1993 | Go to article overview

Whistle-Blowing - a Management Control Tool


Russell, Grant, CMA - the Management Accounting Magazine


Recently in his column as chairman of the Society, my good friend, Fred Grant, stated, "Developing structures that foster ethical conduct and institutionalize ethical practice can go a long way toward reducing temptation. Structures that encourage open relationships are important, and should keep honest information flowing without die need for the distasteful practice of |whistle-blowing.'"(1) After reading his comments, I was challenged to determine how others viewed the process of whistle-blowing: whether the old, intuitive rejection of "tattlers, finks, rats, and stoolies," was part of the culture for managers (particularly financial managers) of organizations.

Fortunately, I had the opportunity to discuss the question in corporate seminars dealing with personal and professional integrity and was able to gather some anecdotal evidence as to how persons who whistle-blow are treated in our professional culture.

As I prepared for these seminars, I discovered that whistle-blowers are treated quite differently in different cultures. For example, Chester Walsh, a former General Electric manager, was awarded $13.4 million dollars for his role in providing evidence leading to GE's $60 million settlement of allegations that GE had defrauded the United States on military sales to Israel (die General Dotar situation). This vigilante bonus was given to Mr. Walsh, despite company policy that individuals who uncover unethical or illegal behavior should report internally, and the company has an anonymous means of reporting to a corporate ombudsman. This award was made under the U.S. False Claims Act, that allows whistle-blowers to receive a percentage of the damage claim. In the United States, being a whistle-blower may not be socially acceptable, but can be financially rewarding.!

Many whistle-blowers have been able to profit from the situation in other ways as well. Thomas Talcott blew the whistle on Dow Corning's silicon breast implant problems and now manages to obtain $400 an hour as an expert witness testifying against the company. Whistle-blowing of another sort provides Anita Hill with the opportunity to carry on a lucrative, high-profile lecture series .

To balance out these few, however, most whistle-blowers receive no media attention. They are not made wealthy by their actions, and are subject to major dislocations in both their personal and professional lives. Clearly, their personal lives are subject to very close scrutiny as a means of testing the veracity of their statements, and many come forward only after a long period of agonizing self-examination, self-doubt, and internal conflict. …

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