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He then faced retaliation from the company and was ultimately fired from his job. Even
2. Was the alleged behavior at GE Energy more or less unethical than the behavior at the
Countrywide Financial? Explain your answer.
3. Do you think Assadi and Lagow regret their decisions to go public with their information?
Why or why not?
Students’ responses will vary. In light of the following information given in the case, many
students may say that Assadi may be regretting his decision, whereas Lagow may be
4. Do you think their behavior changed anything at either company?
Students’ responses will vary. In the light of the following information given in the case,
many students may say that nothing will have changed in Assadi’s company but there must
have been a few changes in Lagow’s company:
Chapter 07 – Blowing the Whistle
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
• In Lagow’s situation, his complaint was brought under the qui tam provision and he
did receive a $14.5 million dollar worth settlement from the lawsuit that he had filed
against Countrywide Financial.
Frontline Focus
“Good Money—Ben Makes a Decision” Questions
1. What do you think will happen now?
2. What will the consequences for Ben, Rick, their tire store, and Benfield?
3. Should Ben have spoken out against the Voyager tires?
Key Terms
External Whistle-Blowing: An employee discovering corporate misconduct and choosing to
bring it to the attention of law-enforcement agencies and/or the media.
Internal Whistle-Blowing: An employee discovering corporate misconduct and bringing it to
the attention of his or her supervisor, who then follows established procedures to address the
misconduct within the organization.
Qui Tam Lawsuit: A lawsuit brought on behalf of the federal government by a whistleblower
under the Federal Civil False Claims Act of 1863.
Whistle-Blower: An employee who discovers corporate misconduct and chooses to bring it to
the attention of others.
Whistle-Blower Hotline: A telephone line by which employees can leave messages to alert a
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company of suspected misconduct without revealing their identity.
Review Questions
NOTE: Some questions allow for a number of different answers. Below are some suggestions.
1. Why are whistle-blowers regarded as models of honor and integrity?
2. Which whistle-blowing option is better for an organization: internal or external? Why?
3. Why would an organization decide to ignore evidence presented by a whistle-blower?
4. Is it reasonable for a whistle-blower to expect a guarantee of anonymity?
5. Why would a whistle-blower be concerned about retaliation?
6. Why is trust such an important issue in whistle-blowing?
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and without fear of retaliation.
Review Exercises
1. You work for a meatpacking company. You have discovered credible evidence that your
company’s delivery drivers have been stealing cuts of meat and replacing them with ice to
ensure that the delivery meets the stated weight on the delivery invoice. The company has 12
drivers and, as far as you can tell, they are all in on this scheme. Your company has a well-
advertised whistle-blower hotline. What do you do?
2. What would you do if your company did not have a whistle-blowing policy?
3. You later discover that one of the drivers was not a part of the scheme but was fired anyway
when the information was made public. What do you do?
4. Should the driver get his job back? Why or why not?
Internet Exercises
1. Visit the Government Accountability Project (GAP) at www.whistleblower.org.
a. What is the mission of GAP?
Chapter 07 – Blowing the Whistle
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
The Government Accountability Project’s mission is to promote government and
corporate accountability by protecting whistleblowers, advancing occupational free
speech, and empowering citizen activists.
b. How is GAP funded?
c. What kind of assistance is available through GAP for someone thinking about
becoming a whistle-blower?
2. Visit the National Whistleblowers Center at www.whistleblowers.org.
a. Select the biography of one whistle-blower (not already mentioned in this book) and
briefly summarize the details of the case.
Students’ responses will vary based on the biography they select.
b. Which publication is recommended for information pertaining to your rights as a
whistle-blower?.
3. There are now two whistle-blowing websites separated by only one letter. Summarize their
differences and propose which one offers the greatest assistance to a potential whistle–
blower.
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Team Exercises
1. Guilt by Omission.
Divide into two groups and prepare arguments for and against the following behavior:
You work for a large retail clothing company that spends a large amount of its
advertising budget emphasizing that its clothes are “Made in America.” You discover
that only 15 percent of its garments are actually “made” in America. The other 85
percent are actually either cut from patterns overseas and assembled here in the United
States or cut and assembled overseas and imported as completed garments. Your
hometown depends on this clothing company as the largest local employer. Several of
your friends and family work at the local garment assembly factory. Should you go public
with this information?
Students’ responses will vary. It is not okay to use false advertisement. This goes deeper into
2. “Tortious Interference.”
Divide into two groups and prepare arguments for and against the following behavior:
In the case of Dr. Jeffrey Wigand and the Brown & Williamson Tobacco Company, the
CBS Broadcasting Company chose not to air Dr. Wigand’s 60 Minutes interview with
Mike Wallace under threat of legal action for “tortious interference” between B&W and
Dr. Wigand. There were suspicions that CBS was more concerned about avoiding any
potential legal action that could derail its pending sale to the Westinghouse Corporation.
Was CBS behaving ethically in putting the welfare of its stakeholders in the Westinghouse
deal ahead of its obligation to support Dr. Wigand?
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3. A New Approach to Freshness.
Divide into two groups and prepare arguments for and against the following behavior:
You work in the meat department of store 2795 of a large retail grocery chain. The
company recently announced a change in the meat-handling protocols from the primary
supplier. Starting in January 2013, the meat will be gassed with carbon monoxide before
packaging. This retains a brighter color for the meat and delays the discoloration that
usually occurs as the meat begins to spoil. You understand from the memo that there will
be no information on the product label to indicate this protocol change and that the
company has no plans to notify customers of this new process. Should you speak out
about the procedure?
4. California Organic.
Divide into two groups and prepare arguments for and against the following behavior:
You work in the accounting department of a family-owned mushroom grower based in
California that sells premium organic mushrooms to local restaurants and high-end
retail grocery stores. The company’s product range includes both fresh and dried
mushrooms. Your organic certification allows you to charge top dollar for your product,
but you notice from invoices that operating costs are increasing significantly without any
increase in revenues. The market won’t absorb a price increase, so the company has to
absorb the higher costs and accept lower profits. One day you notice invoices for the
purchase of dried mushrooms from a Japanese supplier. The dried mushrooms are not
listed as being organic, but they are apparently being added to your company’s dried
mushrooms, which are labeled organic and California-grown. Should you speak out
about this?
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Thinking Critically
7.1 – Questionable Motives
1. Birkenfeld was adamant that his prison sentence is unfair when compared to the fact that no
one else (e.g., Olenicoff or UBS bankers) went to jail. Did he have a point?
2. Why did UBS elect to settle with the U.S. government?
3. Given that there was an immunity agreement in place, what did the Department of Justice
gain from prosecuting Birkenfeld?
4. Critics are concerned that even with the large qui tam award, Birkenfeld’s prison sentence
will discourage other tax whistle-blowers from coming forward. Is that a valid concern?
Why or why not?
Chapter 07 – Blowing the Whistle
7.2 – Olympus: Paying a Price for Doing What’s Right?
1. What accounting irregularities did Michael Woodford uncover at Olympus?
As part of a regular review of Tokyo operations, Woodford had begun analyzing four
separate acquisitions that Olympus had made between 2006 and 2009. Three of the four had
authorized in October 2009.
2. How did the executive leadership respond to Woodford’s revelations?
3. Critics argue that Woodford could have been more effective if he had taken a longer-term
approach to addressing the accounting scandal, rather than the “showdown” approach he
took with Kikukawa. Is that a fair assessment? Why or why not?
4. After the 2012 accounting scandal, Olympus Corp. committed to a major overhaul of its
accounting practices. What do the 2016 settlements convey about that overhaul??
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6. How could this situation have been handled differently to avoid such a lengthy and bitter
battle?