Whistleblowing Ethics and Policies

Whistleblowing occurs when an employee discloses information. However, according to Armstrong, 90 of whistleblowers suffer from dismissal or demotions, 27 faced legal actions, 26 were referred to medical treatment, 17 went homeless, and 8% bankrupted. Whistleblowers may suffer some kind of harassment, lower performance evaluations, punitive transfer or violence by their fellow colleagues and/or superiors if they remain working in the organisation (Dellaportas & al., 2005). Therefore, whistleblower protection is important to encourage employees in uncovering any fraud, and ensure that channels are open for whistleblowing. Supporting effective protection for whistleblowers can have advantages such as promoting an open organisational culture where employees have confidence in the reporting procedures, preventing and disclosing bribery in commercial transactions, safeguarding integrity, enhancing accountability, and supporting a clean business environment (Organization for Economic Cooperation and Development, 2012).

One can adopt a normative strategy when facing tough ethical choices as it can help people to evaluate and think carefully so as to prevent them from making irrational decisions. Normative ethics provides several philosophical approaches for making sound ethical decisions and it can be categorized into three parts: (a) consequentialist, (b) deontological and (c) virtue theory (Trevino & Nelson, 2004).

The consequentialist theory “focuses attention on the results or consequences of the decision or action” (Trevino & Nelson, 2004). It includes philosophical approaches like egoism and utilitarianism. Egoism promotes an individual’s long-term interests while utilitarianism holds ethical actions as those done for the greatest good or to maximize total utility (Ferrell, Fraedrich, & Ferrell, 2000). On the contrary, the deontological theory focuses on the rights of individuals and on the intentions associated with a particular behavior rather than on its consequences (Ferrell, Fraedrich, & Ferrell, 2000) and it embraces philosophical approaches like Kantianism and justice. Kantianism revolve around duty, not end goals or emotions, and their actions are performed according to some underlying principle or maxim that are entirely different from one another (e.g. honesty, fairness and justice), while the philosophical view of justice is rooted in one’s belief in moral equity and equitable treatment for everyone concerned with a questionable action. Lastly, the virtue ethics approach focuses more on the integrity of the moral actor than on the moral act itself (Trevino & Nelson, 2004).

The above-mentioned normative ethical theories can be applied to decide if employees should have a duty to blow the whistle on unethical/illegal acts or not.

From the egoist’s point of view, it is rare that employees will face the dilemma of deciding whether to blow the whistle. Be it due to fear of being investigated by the authorities or fear of being reported to the authorities as a scapegoat for following the policies, employees will seldom face these problems if they adhere to the egoism approach (Clairmont, 2011). According to Clairmont (2011), well-known whistleblowers (e.g. Ellsberg, Manning and Deep Throat) will never even consider whistleblowing if they follow the egoism method of making ethical decisions. This is because the upcoming hassle/trouble that they will face after they blow the whistle will deter them from doing so. As such, egoist employees will feel that it is not a duty but rather a choice to blow the whistle on unethical or illegal acts. They will only blow the whistle if it is within their self-interest and if they are not negatively affected in any way. However, some argue that if one is to take the negative consequences of whistleblowing into consideration, some degree of egoist traits appears to be acceptable (Clairmont, 2011).

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From a utilitarian perspective, the act of whistleblowing is seen as the calculation results of different foreseen consequences, and the impact of possible consequences on the conflicting loyalties (Padgett, 2009). The availability of alternatives and whether the benefits of whistleblowing outweigh the cost determine the choice of whether or not to blow the whistle. According to Bentham (1996), acts that create the most amount of happiness for the majority should be treated as morally obligatory acts. Moreover, unlike the egoism approach, the utilitarianism approach encourages one to treat others’ wellbeing as a heavily weighted factor when making an ethical decision. Hence, whistleblowing should be considered as a duty when it is known that the consequences of non-disclosure will result in extremely negative impacts on the public.

John Stuart Mill’s utilitarian perspective can also be used to discuss whether whistleblowing should be a duty. His utilitarian principle of “do no harm” supports the idea that whistleblowing is a duty if a non-disclosure act should cause “harm” since this principle holds that one’s actions should prevent “harm” to others. “Harm” in this case can take a variety of forms and it is not just limited to instances of physical injuries. The intensity and amount of harm that the problem can bring also determines whether whistleblowing should be an obligation. Mill also emphasizes that one should be accountable for others if his inaction happen to cause harm to them. If one sees a responsibility to prevent others from being harmed, then blowing the whistle on acts that may cause harm to others will appear to be at least partially justified based on Mill’s principle of “do no harm” (Padgett, 2009).

From the Kantian perspective, employees should have a duty to blow the whistle on unethical or illegal acts because it is the right thing to do. They are morally responsible to inform the public and/or stakeholders about the wrongdoings because the motive of moral action is more important than the potential consequences of not whistleblowing. Such courage to go against all odds and the possibility of punishment from the employer is necessary if those who are privy to immoral business practices are to make a positive contribution to the respect of consumer rights the world over (Masaka, 2007). Kant did not clearly state that whistleblowing should be a duty in all circumstances. However, what is clear from him is that he expects truth telling and the “good will” of the moral agent. Hence, based on these principles, one can will that an employee should blow the whistle if he/she has information of others’ or the organization’s intentional wrongdoings (Padgett, 2009).

One’s response to implementing a justice perspective would be identical to using a deontological moral philosophy. From the viewpoint of justice, employees would feel obligated to blow the whistle internally about any unethical or illegal action within the organization as the employers have the rights to know the truth about the misconduct. Hence, it will be unfair to the employers if the involved employees do not disclose the wrongdoings to them. Based on justice approach, whistleblowing externally should also be a duty because it will be unfair to all the stakeholders if the involved employees choose not to blow the whistle. This is because these parties have the rights to know the truth about any misconduct that affects them.

As mentioned above, consequentialism focuses on the consequences (outcomes) of the actions while deontology emphasizes on adhering to ethical duties. Virtue ethics differs in that the emphasis is based on being rather than doing.

According to virtue theory, whistleblowing is the right thing to do because it requires one to tell the truth, to speak up/sound out and to emphasize with others, thus promoting positive virtues like honesty, courage and empathy. An employee who upholds any of these virtues will feel obliged to blow the whistle because it can improve one’s integrity. However, some argue that whistleblowing disregards virtues in different ways. For instance, whistleblowing can be seen as “putting people’s lives at risk, publishing stolen data and degrading loyalty, privacy and integrity of data” (Backhaus & Dodig Crnkovic, 2011). Hence, if we look from this point of view, whistleblowing should not be a duty. A common conflict with regards to whistleblowing is between the virtue of loyalty and honesty (Bowden, 2005). Many whistleblowers following this ethical approach will often face the dilemma of being truthful or remaining loyal to their organisation. Therefore, employees should weigh their priorities between these two virtues and choose a side; loyalty or honesty.

All in all, most of the ethical theories provide substantial grounds for discussing whistleblowing as a moral duty. From the utilitarian perspective, the duty to blow the whistle would follow from the principle of doing no harm and recognition of the extent to which our actions or inactions have significant consequences for the lives of others. From the deontological perspective (includes Kantianism and justice), it would consist of a duty to disclose the wrongdoing of another person (or organization) in recognition of the obligation to be truthful (Padgett, 2009). The virtue theory however provides two sides of the story; whistleblowing should be a duty based on certain virtues (e.g. honesty) whereas whistleblowing should not be a duty based on other virtues (e.g. loyalty). When comparing honesty and loyalty which are the most crucial virtues with regards to whistleblowing, one can note that honesty will supplant loyalty if there is a conflict between the two, as honesty is considered as the most important part of any honor code (Fraschini, 2007). Hence, based on this, one can deduce that whistleblowing should be a duty from the virtue perspective. Egoism is the only ethical theory that does not support whistleblowing as a moral duty. If we critically analyse the traits of this theory, one can observe that ethical egoism provides no moral basis for the resolution of conflicts of interest that form the only vindication for a moral code (Baier, 1990). Moreover, according to Rachels (2008), the ethical egoist may object that he cannot admit a construct of morality whose aim is merely to forestall conflicts of interest. As such, the egoism theory cannot be a good measure to determine whether whistleblowing should be a duty. Hence, based on all the above considerations, one can conclude that employees should have a duty to blow the whistle on misconduct.

Since whistleblowing should be a duty, it is crucial that whistleblowers are under legal protection and have clear guidance on reporting procedures in Singapore. The provision of whistleblower protection encourages an open organisational culture where employees are not only aware of how to report but also have the confidence in the reporting procedures. The protection of whistleblowers from retaliation for reporting in good faith suspected acts of corruption and other wrongdoing is therefore integral to efforts to combat corruption, promote public sector integrity and accountability, and support a clean business environment. Whistleblowing protection systems are widely implemented in the western countries. For instance, in Italy, proposed amendments to the Anti-Corruption Bill state that whistleblowers cannot be ―penalized, fired or submitted to any direct or indirect discrimination, which would have an impact on the working conditions directly or indirectly linked to the report. Protection is also provided under the U.S. law, against less severe disciplinary actions, such as admonishments or reprimands (Organization for Economic Cooperation and Development, 2012).

On the contrary, whistleblowing legislation in Asia is not as sophisticated or as robust as it is in the US (Lord & Cole, 2012). The workplace cultures in Asian differ from those in the West. Family businesses promote a distinct sense of patronage within themselves that are incredibly collective. Foreign companies operating in Asia reveal that the staff is not only loyal to the company, but also to their bosses and line managers (Lord & Cole, 2012). These cultural norms hinder whistleblowing to prosper. However in recent years, Asian countries take whistleblowing seriously and are aware of Dodd-Frank, for example.

Singapore code of CG expanded the role of the Audit Committee (AC) in Guideline 12.4 of the 2012. There are some changes made to the whistle-blowing provisions in the 2012; companies should disclose in its annual report the existence of a whistle-blowing policy, and the procedures for raising whistle-blower should be publicly disclosed as appropriate (Ernst & Young, 2012). These changes align Singapore’s corporate governance practice in this area closely with that of the UK and US. According to a Singapore Institute of Directors survey, 70% of the listed companies have a whistleblower policy compared to 20% five years ago. Another 8% said they did not have a policy but intended to introduce one, while 3% reported that they had no plans to introduce whistleblowing (Deloitte, 2011). Korea’s ACRC Act also provides protection against financial or administrative disadvantages, such as the cancellation of a permit or license, or the revocation of a contract (Park , 2008).

In conclusion, based on the philosophical approaches, employees should have a duty to blow the whistle. Therefore, whistleblowers need to under legal protection and have clear guidance on reporting procedures. Protecting whistleblowers from retaliation can (a) promote public sector accountability, (b) combat corruption, and (c) support a clean business environment. Whistleblowing protection policy has been widely implement in the Western countries. Recently, Asian countries also take whistleblowing seriously and reinforce their whistleblower policy.