In 2002 Time magazine named two employees, Cynthia Cooper of WorldCom and Sherron Watkins of Enron, among their People of the Year. Time was acknowledging the importance of internal whistle-blowers—employees who bring wrongdoing in their own organisations to the attention of management.

By the time Cooper and Watkins had blown the whistle, however, irreparable damage had already been done. The ultimate losers were still employees and shareholders.

The really important question raised by the corporate scandals is thus: how can organisations create an environment where questions are not only asked but asked early enough, so that unethical or illegal practices may be confronted, and timely forms of action taken? How, in other words, can organisations encourage pre-emptive whistle-blowing?

Not everyone sees merit in whistle-blowing, however conceived. Traditionally, whistle-blowers have encountered as much hostility as they have praise. They have been alienated and shunned by their co-workers, and regarded as traitors. Peter Drucker, the celebrated management guru, considers them “informers.”

On the flip side, one remembers individuals like Karen Silkwood, of the Three Mile Island nuclear exposure, and Frank Serpico, with his exposure of corruption in the New York Police Department. Both have become symbols of public accountability.

Given the division of opinion, however, there will hardly be unanimity any time soon on the merits or demerits of whistle-blowing.

“If Cooper had been a good team player,” one executive at WorldCom stated, “the whole mess would have remained private.”

This affords a revealing glimpse of one understanding of “team-player,” and why some executives or principals regard keeping organisational secrets as a sacred trust, no matter how harmful it may be to the company or the public good.

Egregious corporate misconduct in recent times has gone some way towards creating a more favourable climate for whistle-blowing. Public outrage has also helped. Public awareness after belated exposure of wrongdoing always means that companies end up spending more than they would have in liability damages, had earlier steps been taken to address the issues in question.

In 1996, for instance, Jeffrey Wigand, the tobacco researcher whose life became the inspiration for the movie The Insider, revealed that Brown and Williamson Tobacco Corporation, where he was vice president of research and development, disclosed to 60 Minutes how the company misled consumers about the highly addictive nature of nicotine, ignored research indicating that some of the additives used to improve flavour caused cancer, and encoded and hid documents that could be used in lawsuits brought by sick or dying smokers.

Wigand’s disclosure had a dramatic impact on public policy and public perception of the tobacco industry. Victims of tobacco- related illnesses began to be successful in litigation against the tobacco companies.

But Wigand’s activity was unprotected by law at the time, and he suffered severe reprisals from this lack of protection.

There is as yet no legislation in T&T regarding whistle-blower protection, either in the public service or in private industry. Without the protection of law, chances are that wrongdoing gravely affecting the public welfare and the public purse will remain undisclosed. Employees or public servants with knowledge of such wrongdoing will understandably put the well-being of their families and their own futures first.

For his efforts, Wigand was fired for what Brown & Williamson called “difficulties in communication.” In the end, he lost not only his job but his family.

Legal protection means that subordinates will no longer have only Hobson’s choice—be brave at your own risk, or “swallow the whistle,” that is, remain silent or obey directives against your principles or your conscience.

In the US, the Sarbanes-Oxley Corporate Reform Act of 2002 extended internal and external whistle-blower protection to all publicly traded companies for the first time. State and federal legislation had already enacted provisions against different forms of reprisal.

To give some idea of such legislation, Sarbanes-Oxley makes it illegal to “discharge, demote, suspend, threaten, harass, or in any manner discriminate against” whistle-blowers; it establishes criminal penalties of up to ten years for executives who retaliate against whistle-blowers; it requires board audit committees to establish procedures for hearing whistle-blower complaints; it allows (the Secretary of Labour) to order a company to rehire a terminated employee with no court hearing; and it gives a whistle-blower the right to a jury trial, bypassing months of administrative hearings.

The new law has made organisations realise the importance of putting in place ethical policies and codes of conduct relating to unethical or illegal conduct.

An ethical code, however, is not an ethical culture. The ethical code at Enron was 80 pages long. A code exists on paper. An ethical culture is an environment born of the firm commitment at management and employee levels to ethical excellence in all aspects of corporate or organisational activity.

In this environment, differing views are freely expressed, irregularities speedily addressed, and an employee’s status as junior or subordinate does not mean instant irrelevance.

The most significant barrier to a vibrant ethical culture is lack of trust on the part of employees that managers take ethics seriously, and hold themselves to the same high standards they promulgate as company or organisational policy. Double standards are the surest way to breed cynicism and indifference to talk about ethics.

An ethical culture also means the deliberate creation of special policies to deal with illegal or unethical practices. This includes formal mechanisms, such as clear lines of communication to specially designated people, prompt investigation of allegations, and regular publicising of the company’s overall ethical commitment.

Whistle-blowing is said to be on the rise everywhere since Enron and WorldCom. Legal protection has no doubt played a significant part in this development. But companies are best off not only when their personnel have protection but where the company climate itself functions pre-emptively to deal with issues before they become endemic.