Case1: For Whistle Blowers, Virtue May Be the Only Reward (LA Times)

Q1: What do you think about Mr. Bagely’s colleagues’ attitudes when he became a whistle blower?

Q2: If you were Mr. Bagely, what shall you do based on professional and/or your ethical standard?

Court decision, how Bagley’s life turned out because of his decision to blow the whistle:

Richard Bagley,

From 1987 through 1992, as a Chief Financial Manager for TRW’s space and technology group,
Bagley was responsible for contract proposal pricing, indirect expense budgeting and control, and
accounting. As per the code of conduct for Management accountants, an ethical standard set by the
Institute of Management Accountants (IMA) of the United States, Bagley has to ensure the
integrity of the accounting records and that the bills were sent to the government.

Soon after he began raising questions about the internal accounting practices, everyone in the
office treated him as a tattletale, rat, snitch and a trouble-maker. He was laid off in August 1993 as
a result of the reorganization. Since then he had no other employment, ruined his reputation, and
was being blackballed.

For nine grueling years, Bagley, on behalf of the United States of America ("government"),
prosecuted TRW Inc. ("TRW") for false claims under the False Claims Act ("FCA"). He lived
frugally for nearly a decade on a modest pension. He had undergone greater psychological toll,
and financial strain. Currently, he is living an isolated life in Henderson, a suburb of Las Vegas.

Finally, Los-Angeles based Northrop Grumman has agreed to pay $111 million to the federal
government to settle a claim against its subsidiary TRW Inc., for improperly billing the
government on several projects between the years 1990 and 1997.

The ethical standards provide sound, practical advice for management accountants and managers. Most of the
rules in the ethical standards are motivated by a very practical consideration—if these rules were not generally
followed in business, then the economy and all of us would suffer.

The ethical standards provide sound, practical advice for management accountants and managers. Most of the
rules in the ethical standards are motivated by a very practical consideration—if these rules were not generally
followed in business, then the economy and all of us would suffer.

False Claims Act

Principle: Greatest good for the greatest number: Utilitarianism

People need to stand up and willing to speak up

We should maximize happiness

Unreliable, untrustworthy

Media attention

Different conflicts of interests

Snitches and tattle-tales . (plural)

Snitch. Rat. Tattletale. Trouble-maker. These are words that are most
commonly used to describe a whistle-blower.

it takes an extreme amount of courage to stand up to a system

when a person speaks out against an injustice

Undoubtedly, whistle-blowers are a key source in fraud discovery. People need to

stand up and willing to speak up

that often brings a fraud to the forefront.

40% of all frauds are discovered by a whistle-blower who is often an employee

of the organization they are whistle-blowing about. But when an employee
decides to take this step, they are taking a huge risk. Instead of being praised
and rewarded, they are often ostracized and ridiculed for speaking up and if
we want to fight fraud, this treatment must stop.

1986 Space Shuttle Challenger lift off.

Challenger rose into the sky until the unthinkable happened. The Challenger
exploded within 73 seconds of lift-off.

Space Shuttle Challenger could have been prevented if only the whistle-blower
was heard.

Whistle-blower Roger Boisjoly tried to warn NASA the night before the
launch that the O rings would fail if the shuttle was launched in cold weather.
No one listened

Wells Fargo banking debacle. On September 8, 2016, we learned that 2

million bank accounts or credit cards were opened or applied for without
customers' knowledge or permission over a 4 year period.

The Wells Fargo employees felt internal pressure to meet sales goals so they
developed an unethical strategy.

As shocking as this fraudulent behavior was, what was even more shocking
was the whistle-blowing employees that attempted to report widespread
unethical and illegal activity were either fired or demoted which led to a
resignation.

But given all of this,

Just ask yourself;

situation that could protect us all from harm