How come there aren't more whistleblowers?
It's a vexing question for anyone who'd like to see corporate crime reduced. Just this week, CNN noted that half of all misconduct at financial companies never gets reported, according to a study conducted by the Corporate Executive Board, a Virginia consulting firm.
But another recent story, this one in The New York Times, provides a painful illustration of why potential whistleblowers may not be that interested in speaking up. Not every whistleblower has an experience like Lynn Szymoniak, the mortgage-fraud tipster who got an $18 million settlement for her troubles. Often things can go a lot worse -- like they have for Jack Palmer.
Palmer, an employee at the outsourcing company Infosys, alerted authorities a couple of years ago to what seemed to be shady business practices at his firm, according to the NYT. Since then, he says, Infosys has all but frozen him out, giving him no work and little communication. Palmer says he has gone on medication for anger and depression, and once found a death-threat note on his office chair.
It sounds like the same kind of blowback that many financial workers say they fear, and that keeps them from speaking up when they witness wrongdoing. That's one of the main reasons more whistleblowers don't come forward, Thomas Monahan, the chairman and CEO of the Corporate Executive Board, told CNN. Even Szymoniak says her bank has been harassing her since her case received national attention.
Many would-be whistleblowers also keep quiet because they think their warnings will have no effect, says Monahan -- a concern that's hardly unjustified, given the federal government's track record on ignoring whistleblowers and dismissing their complaints.
The fact that half of all misconduct goes unreported may seem especially troubling at a time when the country is still trying to shake off the effects of a recession hastened by the deregulation of many banking practices.
A few regulators have tried to offer greater incentives to whistleblowers in the wake of the financial crisis, with the Securities and Exchange Commission sometimes paying out between 10 and 30 percent of recovered money to the tipster who makes it happen.But many Americans aren't even aware that these reward programs exist, and in any case the rules vary widely from agency to agency. The Federal Bureau of Investigation, for example, has a reputation for sending whistleblowers on their way with nothing but a word of thanks.