Whistle-Blowing

“Whistle-blowing” in the context of business ethics refers to a practice of informing either a superior, a compliance or regulatory agency, or the general public of some action done or about to be done by an organization or some individual in that organization that would be harmful, unjust, in violation of human rights, illegal, run counter to the defined purpose of the [Page 2225]organization, or otherwise immoral. An alternative definition of whistle-blowing stipulates that it is a purposeful revelation made by a person who somehow has special access to information concerning the organization. This person is aware of either an actual or suspected noninconsequential wrongful action that either concerns or implicates the organization and proceeds to inform an individual in the organization or outside of the organization with the ability to rectify the situation.

An employee of a company or a member of a profession, who knowing that someone in the company or in the profession is engaged in some sort of wrongdoing reports that behavior to an appropriate person, is a whistle-blower. The appropriate party being informed may be either someone in the corporation, the professional body, some public regulatory agency, some governmental agency, or finally, the general public. For example, Sharon Watkins informed her CEO Ken Lay of perceived irregularities in the accounting practices of Enron with respect to Special Purpose entities. Members of professional organizations are often required by their code of ethics to report unethical behavior on the part of fellow professionals in order to regulate their professions.

There are two ethical questions about the activity of whistle-blowing: (a) Is it an acceptable behavior? (b) If it is acceptable, under what circumstances is it obligatory?

There are several arguments against the acceptability of whistle-blowing: First, it involves disloyalty; second, it violates obligations of confidentiality; and third, it creates a distrustful atmosphere and undermines group and corporate morale. These arguments all rest on the fact that most groups have an unspoken expectation that members of the group should be loyal to the group or at least have some obligation of fidelity to the group and hence should not blow the whistle on the group. Analyzing the word “whistle-blowing” supports this presumption. The paradigmatic instance of whistleblowing is in the context of sports where a neutral official such as a referee blows the whistle to stop play because a foul has been committed by the player of one team against a player of the other team.

Those opposed to whistle-blowing point out the disanalogy between sports and business. In sports, the whistle-blowing is done by a neutral observer, the referee, while in business and other corporate situations, the whistle-blowing is done against one's own team or teammate. Since management technique often emphasizes the importance of “team playing,” and whistle-blowing is against the team and hurts the company, whistle-blowing is undesirable. From the perspective of those who expect group loyalty, the one who blows the whistle on a fellow group member is a “stool pigeon,” “rat,” “fink,” or some other ethically reprehensible type of character and whistle-blowing as a dissenting act of disclosure is disloyal. More formally, it is argued that whistle-blowing violates an obligation of loyalty the individual has to either the company or professional group. Defenders of whistleblowing need to show that either it is not disloyal and is ethically permissible or even if it is disloyal, the obligation to loyalty is overridden by some stronger obligation to the general public.

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