Legal, Ethical, and Industry Implications of Whistleblowing Explored

This essay delves into the multifaceted nature of whistleblowing, examining the threats whistleblowers pose to organizations and the legal, ethical, and industry-related issues that arise from their actions. It highlights how whistleblowers can expose corporate misconduct, leading to financial losses, reputational damage, and internal mistrust. The essay discusses the ethical dilemmas faced by whistleblowers, balancing loyalty to employers with moral obligations, and explores legal protections such as the False Claims Act. It analyzes the Enron scandal as a case study, demonstrating the impact of whistleblowing on corporate accountability and the personal consequences for those who come forward. Ultimately, the essay argues that whistleblowing is essential for societal reform, promoting transparency and ethical conduct in the workplace, despite the challenges and potential repercussions faced by whistleblowers.

Running Head: Whistleblowing 1
Whistleblowing
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Whistleblowing
Introduction
Whistleblowing relates to decisions made by workers to disclose details to parties in
official positions. The crisis evident financially which occurred globally has resulted in a
situation where the greater focus is directed towards whistleblowing. For example, the Securities
Exchange Commission which operates in the US indicates an 8% increment of requests from
whistleblowers to provide individual reports (Watts & Buckley, 2017). On the other hand, the
Financial Conduct Authority which oversees operations in the UK indicated a 38% increase in
reports generated by whistleblowers. The paper’s objective is to underscore the factors that make
whistleblowers a threat and the legal, ethical and industry related issues which can be anticipated
from their activities.
The factors that make whistleblowers threatening
According to Zakaria (2015), whistleblowers can cost the careers of individuals in the
environments that corporations can establish. Moreover, the individuals implicated are forced to
endure litigation or even a prison sentence. Whistleblowers are a threat as they can result in
extensive losses of profits for enterprises as well as the value which can be attached to the shares
that the company offers to its public. Before Eron’s declaration of bankruptcy, its shares traded
at $90.75 which later declined to $0.26. Other companies which have lost revenue in the
settlement of various lawsuits emanating from whistleblowing include Worldcom and Tyco
(Lopez, LaVan & Katz, 2014). The banks affiliated with Worldcom such as J.P. Morgan and
Citigroup were required to make settlements that amounted to $6 billion. In addition, the
company lost assets which were valued at $107 billion.

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Moreover, a negative image is fostered when uncouth practices that employers engage in
are highlighted. The sales of an enterprise can be negatively impacted due to whistleblowing. For
enterprises whose scale of operation is extensive, the prospect of attaining success over the long
haul is curtailed (Near & Miceli, 2016). Furthermore, the rate at which an enterprise’s products
might be accessible is bound to be limited. The implication is that clients who might prefer to
purchase an organization’s products may be accorded opportunities which are extensively
restricted.
Whistleblowers pose a serious threat to operations owing to their propensity to disclose
details considered to be confidential (Bashshur & Oc, 2015). For example, Anti-slap laws offer
remedies that whistleblowers can rely on in various procedures which are court related. More
specifically, the regulations ensure that whistleblowers can exercise their constitution given
rights where they are exposed to lawsuits owing to their endeavors. Hence, they speak freely
while making the requirement for respective governments to ensure that their grievances are
addressed.
Currently, governments continue to encourage efforts geared toward exposing fraudulent
activities conducted by establishments. The responses by some operational entities involve
limitations to information access (Bartuli, Mir Djawadi & Fahr, 2016). Moreover, companies are
forced to incur additional expenses for the implementation of policies that facilitate governance
for the limitation of fraud. For example, the Sarbanes-Oxley Act mandates necessary procedures
whose expenses are covered from the dollars that accrue to administration. The systems
operational internally in an enterprise are bound to be characterized by mistrust. The outcome is
that an environment which is counterproductive is created. Workers may review workplace

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policies with suspicion, and the conduct of employers may also be subjected to extensive
scrutiny.
The discussion of ethical, legal and industry related business issues concerning whistleblowing
Whistleblowing is essential for the strategy that an enterprise may use for its corporate
governance endeavors (Lee & Fargher, 2017). Ethically, disclosure relating to improper
organization activities is widely supported by the parties who are bound to feel affected.
Democracy Corps which is located in the US conducted a survey to evaluate the public's
perception of whether whistleblowers should be protected in 2007. However, the practice has
some implications for the individual involved on a level that is personal.
The individual engaged in making disclosures are forced to choose between the loyalty
that is necessary for their interaction with the employer and the regulations that determine what
is acceptable morally (Liu, Liao & Wei, 2015). Moreover, their activities may serve to help the
communities in which they reside. The outcome of a whistleblower’s actions is that they do not
have to contend with an environment that is dehumanizing. Companies can adopt an ethical
approach towards whistleblowers. Hence, they should be receptive to the reports which are
generated. Moreover, appropriate actions are necessary for respect to the intelligence received.
Legally, regulations have been adopted by the Federal Government and various states to
ensure that whistleblowers are protected. For example, individuals can be able to report the
activities conducted by the government which is fraudulent owing to the protection offered by
the False Claims Act. Other regulations include the Conscientious Employee Protection Act.
However, the laws are not enough to cover the consequences that the individuals might
personally encounter (Cho & Song, 2015). For example, it should be anticipated that the parties

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involved might be forced to lose their positions owing to retaliation efforts. In some situations,
they might be forced to face different forms of litigation as a result of disclosing some details
which must have been kept confidential.
Most individuals who expose company or enterprise operations which do not conform to
set regulations to suffer various repercussions in their respective industries. For example, they
might be regarded with mistrust despite their continued involvement in the activities that their
enterprises may engage in (Vandekerckhove, 2016). The outcome is that the relationships which
might have been forged in places where work is to be performed might be negatively challenged.
In addition, the messages communicated by whistleblowers may fall to attract necessary action in
the organizations where their services are mandated.
Application of research, course terminology and themes to analyze the case study
The application of course terminology ensures that the fall of Enron can be understood.
The unethical practices at Enron were highlighted by Sherron Watkins who had to assume the
position of the company’s whistleblower owing to an appointment by congress. The themes that
culminate in whistleblowing include frauds occurring internally in an enterprise which may be
accounting related. Situations which endanger the welfare of the public generally can attract
attention from whistleblowers. Moreover, the rewards inherent in exposing organizations might
drive the intentions of respective whistleblowers.
Discussion of how the case and issues at hand were resolved
Enron Corp. was rocked by a massive scandal in 2001. The company was involved in
fraudulent activities which led to the manipulation of its accounts. Through the actions of a
whistleblower affiliated with the enterprise, the company’s actions were brought to light. The

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outcome is that the corporation collapsed rendering many workers jobless who were estimated to
be 20000 in total (Vandekerckhove, 2016). Most of the workers at Enron Corp. lost their savings
some of which was held as part of the stock that accrued to the enterprise. Jeffrey Skilling who
was Enron’s C.E.O was forced to contend with a prison sentence owing to his involvement in
company earnings manipulation as well as the prices which were offered for available stock. In
addition, his incarceration stemmed from offering fabricating information for workers as well as
investors in relation to the health attributed to the company financially.
Personal opinion concerning whistleblowing
According to my understanding, whistleblowing is among the practices which can be
undertaken to ensure that societies are effectively reformed. However, the parties involved must
expect some difficulties in the endeavors that they might elect to undertake. They may not be
trusted by their employers, and fellow workers might consider their intentions as being
malicious. However, such individuals are an essential component of the societies in which they
reside. Where the intelligence they provide is acted on, the places in which they work are bound
to feature more transparency. Moreover, workers are required to ensure that their duties are
ethically performed.
In my opinion, reported frauds ensure that communities do not incur losses which are
often in the form of the taxes paid. The money can be directed into initiatives which would serve
to benefit the communities involved. Furthermore, company shareholders are assured that their
investments are utilized using methods that would pave the way for returns that are effectively

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optimized. Some of the reports made ensure that a region's residents do not have to suffer the
repercussions portended by erratic actions.
Conclusion
Whistleblowers provide the foundation on which reputable democracies are formed. The
encouragement offered for such parties can be informed of the rewards offered. Besides, they are
allowed to enjoy a conscience clear of any nagging thoughts of corporate practices which are
unethical.

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References
Bartuli, J., Mir Djawadi, B., & Fahr, R. (2016). Business ethics in organizations: an experimental
examination of whistleblowing and personality.
Bashshur, M. R., & Oc, B. (2015). When voice matters: A multilevel review of the impact of
voice in organizations. Journal of Management, 41(5), 1530-1554.
Cho, Y. J., & Song, H. J. (2015). Determinants of whistleblowing within government agencies.
Public Personnel Management, 44(4), 450-472.
Lee, G., & Fargher, N. L. (2017). The role of the audit committee in their oversight of whistle-
blowing. Auditing: A Journal of Practice & Theory, 37(1), 167-189.
Liu, S. M., Liao, J. Q., & Wei, H. (2015). Authentic leadership and whistleblowing: Mediating
roles of psychological safety and personal identification. Journal of Business Ethics,
131(1), 107-119.
Lopez, Y., LaVan, H., & Katz, M. (2014). Whistleblowing in organizations: A logit analysis of
litigated cases.
Near, J. P., & Miceli, M. P. (2016). After the wrongdoing: What managers should know about
whistleblowing. Business Horizons, 59(1), 105-114.
Vandekerckhove, W. (2016). Whistleblowing and organizational social responsibility: A global
assessment. Routledge.
Watts, L. L., & Buckley, M. R. (2017). A dual-processing model of moral whistleblowing in
organizations. Journal of Business Ethics, 146(3), 669-683.

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Zakaria, M. (2015). Antecedent factors of whistleblowing in organizations. Procedia Economics
and Finance, 28, 230-234.