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Whistleblowers. The Process and Risks - Assignment Example

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Forgeries, scams and scandals are ever increasing in the corporate and non-corporate world. Whistleblowers have been instrumental in exposing these scams to the media and regulatory bodies…
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Whistleblowers. The Process and Risks
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Download file to see previous pages Some of the recent examples of whistleblowers are Sherron Watkins of Enron, and Cyntha Cooper of WorldCom. They exposed or provided firsthand information on financial scandals. The case of Coleen Rowley of the FBI as a whistleblower was unique in the sense that the reporting incident was regarding lapses in the intelligence field a few weeks before September 11, 2001 terrorists attack. The Process of Whistle Blowing An employee who has some information about illegal activities of any nature pertaining to his or her organization and he or she chooses to bring that in public is known as a whistle blower. Whistle blowing is encouraged to bring honesty, equality, justice, and freedom of speech in society at large. It has many advantages such as it can protect health of consumers and employees. During 1920s, the harmful effects of asbestos in the manufacturing units were suppressed by company managment thus jeopardizing the health of employees. Employees feel more comfortable if they find it easy to raise their concerns within the organization. Risks Associated with the Whistleblower Whistleblowers carry certain risks such as alienation, face reprisals, or victimization at their workplace and likely to be more intensely supervised for their acts. They may be considered less loyal to their organization or employer for their act of blowing the whistle against the organization. Luque (2007) reports about one of the study of whistle-blowers in which 90% reported about emotional stress, anxiety and depression after their acts of whistle blowing. Around 54% of them reported harassment at their workplace and 10% were the cases of attempted suicide. Case Studies Sherron Watkins – Whistleblower of Enron The case of Sherron Watkins, the former corporate vice-president of Enron, is worth enumerating for the psychological trauma that she faced after her act of whistle blowing. In the month of August 2001, Sherron Watkins wrote a memo to the CEO of Enron that explained how the accounts of Enron present a distorted accounting numbers. On this, the CEO directed for an investigation through Enron's own law firm that did not do an honest job. Soon, the New York Times published a story about Enron's accounting jugglery. Thereafter, a congressional committee delved into the issue and started investigating the matter. Overnight, Watkins came into limelight and became a celebrated whistleblower that exposed Enron's accounting misreporting. This had a catastrophic effect on the company. Not only Enron was compelled to sack 4000 employees from its payroll but the very next day they filed Bankruptcy Code protection under chapter 11. Enron shares plummeted like a big log from the high of $90.75/share in August 2000 to the dismal $0.067/share recorded on Jan 13, 2002 (Luque, 2007). Watkins suffered more of a psychological pressure when she first acted as a whistle blower. She was isolated and made unnecessary for the company. Most of her partners began hating her as because of her 4000 employees lost their jobs (Luque, 2007). Cynthia Cooper – Whistleblower of WorldCom Cynthia Cooper was working as vice president of internal audit at WorldCom. On her routine investigations, she found that certain expenses were being capitalized thus inflating the yearly earnings by several billions of dollars. More she investigated, the stranger the reactions she confronted with from some of her colleagues. She sought an explanation from the Chief Financial Officer of the company. On this, she was asked to stop the audit until the next quarter -- a date to begin her normal audit as per routine. However, she did not stop on this and organized a meeting with the company's auditor KPMG. Finally, it was found that earnings ...Download file to see next pagesRead More
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