Whistleblower Duty: Refuting Arguments Against Moral Obligations - Research Paper Example

Whistleblower Duty Whistleblower Duty: Refuting Arguments Against Moral Obligations BY YOU YOUR ACADEMIC ORGANIZATION Word Count 578 Whistleblower Duty 2 Abstract The argument has been offered that whistle-blowing is "at most a right, and never a duty". The suggestion of this statement is that the process of publicly exposing organizational corruption, corporate deceit, or broad unethical business behaviours is not a societal obligation, rather that whistle-blowing is merely a right established by certain legalities. Those who make this argument imply that such exposure infringes on corporate expectations of employee loyalty and that blowing the whistle on unethical practices should never be considered a responsibility. This paper will refute this argument in the pursuit of justifying whistle-blowing as a social and moral duty to secure the interests of society. Whistleblower Duty 3 Whistleblower Duty: Refuting Arguments Against Moral Obligations Renowned American economist Milton Friedman offered a landmark statement when he suggested that corporate social responsibility means, primarily, making money for stockholders and implying that ethical behaviour is therefore good for shareholder wealth (Nickels et al, 2005). Friedmans suggestion indicates that business maintains a duty to those who invest in the success of an organization and must work to ensure that it bases its activities chiefly to secure the financial well-being of shareholders. Enron Corporation, a now infamous American company which was bankrupted virtually overnight for eliciting false accounting practices, offered global business a learning lesson on truth in financial disclosure, insider trading, and the ethical fiduciary responsibilities of corporate managers and directors (Berenbeim, 2002). Enron Corp. failed in its duty to sustain its responsibility to its employees and shareholders, thus offering a blow to all of society, and was publicly exposed for its corruption by internal employees who blew the whistle on Enrons false activities. In the situation with Enron, the whistleblowers infringed on the precept of employee loyalty and, most likely, felt it was their social duty to expose corruption within the organization. However, loyalty is a feature of special, mutually-enriching relationships in which self-interest may be forfeited without anticipation for reward (Powerpoint, 2006). The key words are mutually-enriching and in the case of Enron, the whistle-blowers witnessed the firms failure to fulfil its duty and thus viewed exposure as more than merely a right, but a duty to act in a morally responsible manner to reclaim a sense of business ethics and protect investors from fraud. Thus, the whistle-blowers enacted their perceptions of justice against Enron. Whistleblower Duty 4 The term justice has been argued as being a moral obligation to respect a specific entitlement plus that of an assignable person to whom this entitlement is owed (Powerpoint, 2006). Milton Friedmans statement of securing the investment interests of business shareholders clearly indicates that all parties who stand to gain or lose financially from the activities of a firm are those to whom this right is entitled. Thus, from this researchers point of view, Enron whistle-blowers acted on their proper obligation to establish justice for those investors who were being misled by fraudulent accounting information. In this specific situation, exposing Enron for its misdoings was more than a right granted by legalities, it was a moral and social duty to enact justice against the corrupt. Had the firms employees not viewed whistle-blowing as a duty, likely Enron would still be misleading its investors, driving their future profitability into further economic losses. John Rawls, American philosopher and author of the 1971 book A Theory of Justice, offered that individuals maintain a pre-existing moral sense which he called an "intuitive conviction" which he assumed everyone in society shares. Rawls suggests that every individual possesses a purity founded on justice which cannot be overridden by any external factor (Anderson, 2003). A 2006 survey targeting 367 CPA Australia members conducted by the Corporate Governance & Financial Reporting Centre indicated that 95% of survey respondents believed that a code of conduct and whistle-blowing policy should be made mandatory for all listed companies (Teen & Vasanthi, 2006). The results of this survey point toward justifying Rawls position on inherent social beliefs in morality and thus identify social perceptions of whistle-blowing as more than a right, but a duty to protect those affected by corruption. Whistleblower Duty 5 WorldCom, a former telecommunications giant which experienced the largest bankruptcy in U.S. history due to fraudulent accounting, was another business entity obliterated by whistle-blower exposure. In 2002, Cynthia Cooper, an internal auditor for WorldCom, identified accounting irregularities in the companys books. Supporting the process of whistle-blowing as a duty of justice, Cooper offered, "Each of us has an opportunity to ensure that the moral fabric of our country is strong…(regarding) professionals who (must) set the right tone at the top of the company" (Amer, 2005). Further, Brian Martin, a professor at the University of Woolongong in Australia and author of The Whistleblowers Handbook: How to Be an Effective Resister, suggests that whistle-blowing is an open disclosure about substantial wrongdoing predominantly motivated by notions of securing public interest (Verschoor, 2005). The statements offered by both of these professionals support the notion that exposing an organizations corrupt or fraudulent activities ensures that society, or those that are entitled to rights of protection, becomes much more than a right, rather it is a moral responsibility to promote justice against those who advance injustice by breaking faith where there is reasonable expectation to perform morally. Development economists argue that business and governmental corruption negatively impacts long-term, regional economic growth (Kelman, 2000). When a company utilizes fraudulent activities to gain an advantage at the expense of society, the first step is for potential whistle-blowers to determine whether the wider public interest may be harmed by the issue about to be exposed (Grant, 2002). In essence, if the whistle-blower feels that the well-being of the stakeholder is to be jeopardized by injustice, they must step up to promote an end to the activity. Reverting for a moment back to the case Whistleblower Duty 6 of Enron, internal employees which had invested the majority of their retirement investments in Enron stock lost virtually everything from a financial aspect. In such a situation, whistle-blowing is far from a moral entitlement, exposure becomes a necessity and an inherent duty to end the corruption to prevent long-term financial disaster for shareholders and prevent social economic losses. Corporations may argue against the idea that whistle-blowing is a moral and social duty by citing the Invisible Hand theory proposed by Adam Smith. Under this theory, utilizing contemporary business as the example, self-directed corporate gain creates social and economic benefits for all individuals as the company thrives with increased financial gain. Though the implications of the Invisible Hand proposition suggests a positive outcome of business activities to society, business leaders might be prone to argue that activities such as fraudulent accounting measures support the business long-term by promoting investors to increase stock value, thus securing regional economic growth. In essence, the argument that whistle-blowing is "at most a right" might seem to imply that employees must be loyal to the firms immoral business activities by citing the idea that the ends do, in fact, justify the means. However, it is the inherent human moral system as proposed by John Rawls which suggests that individuals who witness fraud and corruption in contemporary business cannot rationalize this behaviour regardless of the outcome and feel protected to act for the betterment of a misled society. When an industry expects that its employees will sustain loyalty to the firm in which they are employed, it is anticipated that employees will adopt the value system of the organization. With this in mind, it then becomes the full responsibility of business leaders to establish a mutually-rewarding relationship based on virtue to which Whistleblower Duty 7 employees should conform. In this case, it is the reasonable expectation of employees that leadership will also conform to the same guidelines of morality when performing its activities. To breach this relationship by promoting unethical behaviour is to encourage employees to sustain a sense of injustice against the relationship and will move to enact justice against the activity. Is this, at most, a right? No, rather, blowing the whistle is promoting an end to overall disloyalty on behalf of the organization and placing moral accountability on those who choose to defy social and legal expectations for fair dealings. It is often difficult to understand and quantify what is truly unethical or immoral and different situations often turn the clear waters of "rightness" downright muddy (Moorthy et al, 1999). Corporate whistle-blowers are put into this situation of determining whether the action actually harms society or whether there is merely a difference of moral opinion about specific practices. If one were to sustain the argument that whistle-blowing is "at most a right, but never a duty", this would suggest that an employee who moves to expose corruption is ill-equipped to make this decision properly and cannot be justified by claiming a duty to reveal injustice based on moral perceptions alone. However, it is the profound duty of the potential whistle-blower to adequately size up the action to which they perceive as immoral and expose the activity if they are reasonably secure that the stakeholder will be adversely affected. Failure to do so nullifies the entitlement of stakeholders and allows the potential whistle-blower to be victimized by ongoing corporate injustice. In as much as an employee should be loyal to the company in which they are employed, the business maintains this same responsibility of loyalty to its stakeholders, thus the supreme duty to render justice falls on those individuals who are aware of unethical activities in the firm and are otherwise powerless to prevent it without aiding in public or governmental intervention and awareness. Whistleblower Duty 8 Bibliography Amer, Suzie. (Mar 2005). Do the Right Thing. Successful Meetings. Vol. 54, Iss. 3, p.72. Anderson, Brian C. (Spring 2003). The antipolitical philosophy of John Rawls. Public Interest. Iss. 151, p.39-42. Berenbeim, Ronald. (Jun 2002). Improper behavior. Executive Excellence. Vol. 19, Iss. 6, p.14. Grant, Colin. (Sep 2002). Whistle blowers: Saints of secular culture. Journal of Business Ethics. Dordrecht. 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