Three whistleblowers have recently dominated the headlines.
The first was an intelligence specialist who anonymously raised concerns about potentially inappropriate interactions between President Trump and President Zelensky of Ukraine that ultimately led to President Trump’s impeachment. Advocates for impeachment lauded the unnamed government employee for having the courage to call out an abuse of power at the highest levels; opponents (including, most notably, President Trump) derided the whistleblower as a disloyal and partisan tool of the “deep state” and sought to unmask his/her identity.
The second was Mike Fiers, a former pitcher for the Houston Astros who revealed to reporters for The Athletic that his team had used video cameras to steal signs of opposing pitchers in 2017 (when the Astros won the World Series) and 2018. Many praised Fiers for stepping up to confirm what many teams had suspected; but some, including a prominent ESPN analyst, criticized Fiers for having betrayed his former teammates by “going public.”
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The third was Li Wenliang, a thirty-something ophthalmologist who posted a WeChat note last New Year’s Eve about a cluster of patients at Wuhan Central Hospital who had contracted pneumonia after frequenting a local seafood market and warned about what he suspected was a new and dangerously transmittable coronavirus. Li’s post immediately went viral. Within hours, he was rebuked by senior hospital officials; two days later, Li was taken into custody at a police station, accused of “subverting the social order” and released only after he promised to stop his “illegal activities.” Li returned to work and resumed treating patients but, under the protection of international media scrutiny, also continued to advocate for more transparency. Li soon became one of the first to die from Covid-19 on February 7. The persisting outcry about the circumstances of his demise suggests that, by sanctioning Li instead of heeding his warnings, the Communist Party unwittingly created a compelling martyr for more openness in China.
These high-profile cases serve as powerful reminders of the value and importance of whistleblowers to organizations committed to operating with integrity. The decidedly mixed reactions also illustrate some of the complicated and emotional challenges that less-renowned whistleblowers both routinely face and sometimes pose for their organizations, whose responses speak volumes about their cultures.
Open Reporting
Fostering a culture of “open reporting” in which employees are confident they can raise integrity concerns without fear of retaliation is a centerpiece of strong compliance programs. Insofar as “early warning systems,” nothing can beat employees who step up to help companies detect and address potential issues. Indeed, most of the postmortems of major scandals place significant blame on weak organizational cultures in which employees believed it was neither safe nor valued for them to raise their hands.
Yet motivating employees to raise concerns is much harder than it sounds. Many people fear reprisals by their superiors or being shunned by their colleagues; in particular, despite the progress represented by the #MeToo movement, many victims of sexual harassment remain apprehensive about calling out misconduct by people in positions of power. Some simply prefer to avoid the attention, distraction, and controversy. Others are reluctant to “inform” on colleagues out of respect for chains of command or codes of silence that take hold in many institutions. Still others believe that what they see as an erosion of the social contract between companies and their employees (e.g., outsourcing, plant closures, layoffs, pension plan terminations and benefit reductions) excuses them from any obligation to raise concerns.
Overcoming such reservations requires steady, persuasive and credible communications from senior leaders (e.g., Chief Executive Officers, General Counsel, Chief Financial Officers) and direct supervisors coupled with training and education about the importance of open reporting. As always, actions speak louder than words. When I was at GE, we posted the number of concerns raised on our website and the number of disciplinary actions imposed following investigations of those concerns. We published case studies to circulate lessons learned, reinforce the company’s commitment to open reporting, and address the doubts of skeptical employees about whether raising concerns was worth the time, effort, and perceived risks. We also made concerted efforts to educate managers why it was in their best interests as well as the company’s for them to make it safe for members of their teams to raise their hands.
Somewhat counterintuitively, honest companies want to see more employees raising more concerns. So do enforcement agencies. Since the Civil War, whistleblowers who have reported fraud against the United States have been eligible to share in the government’s financial recoveries. For almost as long, the IRS has doled out rewards to incentivize citizens to turn in tax cheats. In 2010, the Dodd-Frank Act established a new bounty program to encourage whistleblowers to report securities law violations to the Securities and Exchange Commission (SEC).
Past SEC Chair Mary Jo White came to refer to the SEC’s new whistleblower program as “a game changer,” and rightly so. Since 2011, the SEC has awarded roughly $387 million to 67 whistleblowers whose information is credited for over $2 billion in monetary sanctions. As one might expect in the wake of steady publicity about awards to whistleblowers of tens of millions of dollars, the number of tips being provided to the SEC is growing, from 3,001 in FY 2012 to 5,212 in FY 2019.
Enforcement agencies are also enthusiastic about protecting whistleblowers. In 2015, White declared, “We at the SEC increasingly see ourselves as the whistleblower’s advocate.” This zeal remains palpable and has spread to the media, where, as we have seen in recent months, stories about brave whistleblowers make for great press. Hollywood has also become enamored with movies that romanticize whistleblowers who stand up to powerful wrongdoers in corporations and government.
These pro-whistleblower sentiments are justified. I know from personal experience that brave employees committed to doing business with integrity admirably kept GE out of harm’s way dozens of times each year by speaking up when they sensed that something was amiss. Leaders at other companies with strong open reporting cultures would say the same. As for other types of companies, the success of programs like the SEC’s suggests that the government’s cultivation of whistleblowers is uncovering misconduct that otherwise would have gone undetected.
But there are exceptions, and even the most ardent proponents of open reporting come to appreciate that whistleblowers do not always cover themselves in glory. Some employees raise credible concerns for reasons that are self-serving. Others abuse channels for raising concerns by making unfounded claims for reasons that are anything but admirable. The details always matter and careful attention to them is essential for an organization to maintain the credibility and vitality of its open reporting culture.
In my experience, most claims by whistleblowers can be grouped into three basic scenarios:
Scenario One – Raising Legitimate Concerns for Noble Reasons
The most straightforward whistleblower scenario is presented by employees who internally raise credible concerns because they are committed to doing business the right way and are trying to ensure that their company also does things in the right ways. Companies benefit in numerous ways (e.g., avoiding legal and ethical violations, reinforcing their commitment to integrity, and sparing themselves enforcement actions and damage to their reputations) when they investigate such concerns promptly and take whatever remedial actions are warranted. If a company fails to respond when an employee raises a credible concern in good faith or, worse yet, retaliates against the employee, then the company deserves whatever punishment comes its way and the whistleblower has undoubtedly earned a financial reward (and the privilege of appearing on the cover of TIME or the front pages of newspapers).
These maxims hold true even (or, for the sake of promoting a robust open reporting culture, especially) when a concern raised in good faith is ultimately not validated. Companies should err decidedly on the side of being solicitous of credible whistleblowers and have zero tolerance for retaliation or intimidation by superiors and/or peers. This is especially important in the context of sexual harassment if the #MeToo movement is to maintain its momentum. At GE, we issued awards to employees for speaking up in especially challenging situations. We also terminated managers for retaliation even when the underlying concerns raised by employees proved unfounded.
Scenario Two – Raising Legitimate Concerns for Questionable Reasons
A more challenging whistleblower scenario arises when employees raise credible and investigation-worthy issues for reasons that are not altruistic – less out of a genuine concern for a potential integrity lapse and more, say, to make things difficult for a disliked colleague, retaliate for a perceived slight, advance a political agenda, derail a rival’s promotion, divert attention from performance issues, improve leverage in exit package negotiations, deflect attention from their own misconduct, garner fifteen minutes of fame, or earn a bounty. Emotions typically run high when this happens.
Yet whistleblowers with ulterior motives often raise valid concerns. To the exasperation of implicated employees (and oftentimes their managers), neither the law nor common sense requires whistleblowers to have a pure heart for the concerns they have raised to merit an investigation and, if warranted, corrective actions. When this happens, a company should try do the right thing on the merits in a way that continues to encourage employees to raise credible concerns without allowing the open reporting process to degenerate into a perceived hotbed of office politics and career machinations.
This is every bit as challenging as it sounds. As human beings, whistleblowers are not above exaggerating and/or lying when it suits their purposes. Soliciting and giving full, fair and balanced consideration to evidence bearing on their motives or biases is sound investigative practice. But the purpose of this exercise must be to give proper weight to the credibility of whistleblowers as witnesses to the violations they allege. When substantiated, misconduct cannot be excused on the grounds that it was brought to light with ignoble, political or other ulterior motives.
Indeed, it is in distinguishing (or not) between the message and the messenger in such circumstances that the true character of leaders often emerges. Vale offers a recent, extreme, and tragic example. In January 2019, the then-CEO of the Brazilian mining giant received an anonymous e-mail warning about Vale “dams at their limit.” Instead of investigating the merits of the concerns raised by this e-mail, the CEO reportedly focused on unmasking the identity of its author, whom he derided (presumptively, it appears) as a “cancer” within Vale. Weeks later, the collapse of a tailings dam in Brazil killed more than 250 people. Questions or suspicions about underlying motives do not give companies license to look the other way when employees raise serious concerns.
At the same time, ulterior motivations are plainly relevant in determining how much praise and credit a particular whistleblower deserves. For example, although a company ultimately benefits however integrity lapses are brought to light, a departing executive who discloses wrongdoing to try to improve his leverage in severance negotiations should not expect to be named “departing employee of the month.” Likewise, a whistleblower who disregards internal reporting channels in favor of raising a concern directly with a bounty-paying enforcement agency should expect to receive less praise (and a smaller reward) than employees who takes greater career risks by first raising an issue within a company and then involving an agency only after internally raising the concern proved futile.
Nor does blowing the whistle on misconduct entitle an employee to stop being a constructive and productive colleague. To be sure, a company must go out of its way to ensure that any personnel actions taken vis-à-vis a whistleblower do not constitute retaliation and, for the sake of the open reporting process, cannot reasonably be viewed by other employees as retaliation. But I’ve encountered more than a few whistleblowers who indignantly claimed to have been blackballed when, in reality, they had behaved as though protection from retaliation should somehow equate to dispensation from standards, rules, and proper expectations that continued to apply to them as well as all other employees at a company. It also goes without saying that excessive self-righteousness can quickly wear thin.
Scenario Three – Raising Illegitimate Concerns for Illegitimate Reasons
Some whistleblowers abuse open reporting channels by making allegations they know are untrue. This is aggravating, especially for targets of false accusations, but it’s a price worth paying for a robust open reporting culture. Plus, at some point, chronic abusers themselves become subject to discipline.
My experience in such circumstances raises a more fundamental concern that pro-whistleblower sentiments may have tilted too far at some enforcement agencies. It sometimes seems that, because many whistleblowers bravely and commendably raise valid concerns, all whistleblowers are given the benefit of every doubt and presumed to be telling the truth and nothing but. Yet not all whistleblowers are the same or entitled to the same presumptions of truthfulness.
My concerns are not abstract or theoretical. They stem from interactions with enforcement staff who, from what I could tell, approach investigations as if all whistleblowers are above reproach. I mean no disrespect, but I sense a growing belief among an increasing proportion of enforcement staff that companies have no business presenting evidence that casts doubt on a whistleblower’s credibility.
Two cases stand out in my memory. In the first, the agency found the employee’s allegations to be without merit, as did our own internal investigation. But, as the agency closed its file, the lead attorney expressed dismay at how we “went after” the employee by citing a slew of evidence (including serious performance issues) that left no doubt that the employee had resorted to making false accusations to try to extract a more lucrative separation package. We were reproached even though ours was the only plausible explanation for why this whistleblower had been motivated to go to the trouble of making a false claim, consistent with the agency’s own findings.
In the second case, a former employee whom we had terminated for misconduct sued GE for allegedly violating the anti-retaliation provisions of Dodd Frank. An important threshold issue, as we asserted in our successful motion to dismiss, was that the aggrieved employee had never raised the issues that supposedly gave rise to the retaliation with the SEC (or, for that matter, with GE). Although our position was subsequently validated in another case by the Supreme Court, the SEC’s Whistleblower Chief publicly took GE to task for asserting defenses that he said were “ironic” and “bothersome.” These adjectives presumptively credited the would-be whistleblower’s contention that he raised integrity concerns and was thereafter retaliated against for having raised those concerns.
The truth was that the former employee never raised the issues that he claimed gave rise to retaliation, was never retaliated against, and never claimed to be a whistleblower until after he was terminated for cause. Against this backdrop, it arguably would have been malpractice for GE’s lawyers not to have sought dismissal on the grounds that, under the framework for the SEC’s whistleblower program at that time, a claimant could not bring a private cause of action for retaliation under Dodd Frank if he had never raised a concern with the SEC. I still marvel at the suggestion that a company that responsibly embraces open reporting should pull its punches when an employee with a history of performance problems concocts a retaliation claim as leverage in severance negotiations and then as a false basis for a bounty under Dodd Frank’s anti-retaliation provisions.
Such an abjectly pro-whistleblower mindset, however well-intentioned it may be, goes too far. Enforcement officials who do not leave enough room in the open reporting process for principled credibility determinations – an age-old practice that is deeply rooted in our legal process for discovering truth – impede the legitimate efforts of honest companies to defend themselves. Agencies are right to see themselves as an advocate for principled whistleblowers who raise credible claims. But they must never lose sight of their responsibility to investigate all evidence in a balanced and principled way.
Nor is giving full, fair and balanced consideration to evidence bearing on the motives or biases of whistleblowers to take their concerns too lightly or to undervalue their sacrifice or service. It is simply good and sound investigative practice that honors a company’s right to defend itself when (and only when) serious accusations are unfounded. It is the duty of discerning investigators to give proper weight to credibility evidence and not to scold companies that have the “temerity” to responsibly offer such evidence during an investigation.
Anonymity
Similar considerations raise the related question of whether claims raised anonymously can properly serve as the foundation for disciplinary actions because the implicated employees are not afforded an opportunity to “confront” the motivations and biases of their “accusers.”
The short answer is “yes,” because the Sixth Amendment technically does not apply to disciplinary actions in the private sector. The more considered answer remains “yes,” because it’s important for companies to field, investigate and then act upon concerns raised by employees who would otherwise remain silent out of fear of retaliation. This is not an idle or tangential concern. In fact, 42 percent of employees in Ethisphere’s culture data set cited the ability to remain anonymous as a key factor in their willingness to report misconduct.
In the context of whistleblowers, there are three basic variations of anonymity: 1) limited anonymity, when an employee identifies herself to investigators but requests no further disclosure of her identity, especially not to the subject(s) of her allegations, 2) complete anonymity, when a whistleblower submits a concern through a hotline or other portal without ever revealing his identity, and 3) collateral anonymity, when a named whistleblower reports misconduct but does not identify the alleged victim (who is unwilling to come forward for one or more of the reasons identified above).
In the case of limited anonymity, companies can afford due process by deploying skilled investigators who can be trusted by targets of allegations (as well as concern raisers and the company) to elicit all the evidence pertaining to the credibility, motivations and biases of whistleblowers and other witnesses and then to make fair determinations based on all the evidence.
In the case of complete anonymity, a fair investigation must account for potential motivations of whistleblowers who have not revealed their identities. In cases where alternative findings on the facts are plausible, the inability of investigators to interview a whistleblower and assess his credibility may often preclude a finding of misconduct. In other cases, the evidence of misconduct may be so clear cut as to render a whistleblower’s biases and motivations irrelevant.
Cases of collateral anonymity are even more challenging. Not knowing who has allegedly been victimized by reported misconduct will handicap most (but not all) investigations and will often (but not always) preclude determinations of misconduct. Investigators must also try to respect the wishes of the alleged victims to remain anonymous. Still, in any of these scenarios, misconduct that is substantiated by a principled investigation should not be excused simply because it was brought to light anonymously.
It bears further emphasis that, in the context of corporate investigations, targets of allegations do not have a right to know who has accused them of misconduct. Efforts to identify employees who have submitted claims anonymously should be limited strictly to requests by investigators that an anonymous whistleblower submit to an interview or provide other information to advance an investigation (with assurances, when necessary, that the investigators will not further disclose the whistleblower’s identity). Attempts to ferret out anonymous whistleblowers should be discouraged and, in most cases, disallowed as retaliation; this type of misplaced focus on messengers rather than their messages signals in no uncertain terms that it is neither safe nor valued for employees to raise concerns.
A Labor of Integrity
The best and most ethical companies are those whose employees are confident at all levels that they can raise concerns without fear of retaliation and believe that raising such concerns is valued by their managers and the company’s senior leaders. But even the best-managed companies cannot separate open reporting from the realities of human behavior.
Nor, truth be told, should companies even try to. Organizations are better served by fielding concerns from all comers without regard to potentially untoward motivations and then deploying skilled investigators to sort out the facts. Many of the organizational issues posed by whistleblowers raising concerns for reasons that would be disqualifying in other contexts can be addressed in principled ways that will not discourage other employees from coming forward; to the extent that they cannot be addressed constructively, the resulting challenges are significantly outweighed by the overall benefits of a robust open reporting culture.
In the end, what really matters the most is the positive tone that leaders set throughout an organization when they unequivocally embrace open reporting despite its periodic unpleasantness. There is no more powerful way to say to every stakeholder of an organization that integrity always comes first.
About the Experts:
Alex Dimitrief is a Partner at Zeughauser Group and advises legal departments and law firms on a broad variety of strategic issues. He is also a Lecturer on Law at Harvard Law School, where he teaches a new class on “The Corporation as a Citizen.” Dimitrief was the President & CEO of General Electric’s Global Growth Organization in 2018 and previously served as GE’s General Counsel. The views in this piece are strictly his own.
