Bad corporate behavior has been taking the limelight lately. After all, the current raging economic crisis can very well be attributed to corporate excess gone wild and bad. Given the prevalence of corporate misconduct in the recent past, whistleblowing incidents are not exactly few and far between.
Nothing beats the year 2002, however. Business Week called 2002 the “Year of the Whistleblower.” Stephen Meagher, a former federal prosecutor who represents whistleblowers, said that “the business of whistleblowing is booming.” Whistleblowing has, indeed, become a trend partly because it is encouraged by the provisions of the Sarbanes-Oxley Act which accords legal protection to whistleblowers in publicly traded companies.
WorldCom’s Cynthia Cooper and Enron’s Sherron Watkins became two of Time magazine’s People of the Year for 2002. Through the company’s recognition, Time magazine was actually recognizing the important role of corporate and organizational whistleblowers. In the end, these people are considered heroes who advocate honesty without fear by revealing their organization’s wrongdoing.
Cynthia Cooper and her team of auditors worked secretly to investigate and disclose the $3.8 billion in fraud at WorldCom. This has been known as the biggest case of accounting fraud in U.S. history. Sherron Watkins revealed the company secret that Enron was lying to its investors and employees as the company was sinking into bankruptcy in 2001, in some sort of a Ponzi scheme.
Although whistleblowers are seen as heroes, the sordid secrets they unearth and reveal have already done much damage, as in the cases of Watkins and Cooper. By the time they came out and spoke, shareholders and employees had already lost.
Still, the act of whistleblowing remains to be the most effective tool to combat fraud. There are many more cases of fraud going around, seemingly impervious to disclosure. In fact, some of the biggest ones have been taken as truth in mythic proportions.
Via NWC
