WHISTLEBLOWER :

SAINT OR SINNERS ?
GR
O
UP
PUTRI ROUDINA MASUD 041411331084
2
AMALIA KUSUMA DEWI 041411331246
PAMBUDI

PRATAMA PUTRA A

041411331211

Accounting English
Class 2014

CASE
SUMMARY

Whistle blowers are individuals

who report unethical practices
by their employer to outsiders
Whistle blowers are often lauded
for their courage and integrity
Many people do not report illegal
activity since they fear to face
unemployment and ridicule
from the company

 Whistle blower law adopted in 1986- pays

informants as much as 30% of legal finessettlements often exceed $ 100 million!!
Employees encouraged to quickly report
wrongdoings instead of trying to rectify
internally
In 1995, Douglas Durand, the Vice President
of TAP Pharmaceuticals- suspected that TAP
was engaged in illegal activities
Durand believed that:
a) TAP was working with doctors to bill
Medicare for the free drugs- a practice
against the federal law
b) TAP paid a 2% fee to individual doctors to
cover administrative costs- a kickback in
Durands opinion

 Durand decided to blow the whistlecontacted with attorney Elizabeth Ainsilestarted to keep noted and collect company
documents as evidence-while his lawyer
attempted to get the federal govt. involved
February 1996- Durand received $ 35,000
and left the company
3 months later, his lawyer filed suits against
TAP
More that 500 boxes of documents were
collected, containing evidences against TAP
TAP fought the lawsuit which was finally
settled in April 2001- Durands take was a
cool $126 million!
TAPs troubles were yet to come-prosecutors
filed further criminal charges against the
company- To send a very strong signal to
the pharmaceutical industry

 As the trial progressed- flaws in Durands

story began to appear :
a) The kickbacks that Durand claimed TAP
paid to doctors never occurred
b) The company never overcharged
Medicare
c) TAP never bribed the doctors
) Finally- in July 2002, TAP was cleared of
the charges- but not before incurring $
1 billion in legal fees
) Supporters of whistle blowing say
Having informants report on company
wrong doing is the best way to prevent
illegal activity
) Opponents say It is a means to extort
large financial gains from companies

QUESTION
S
???

QUESTION 1
Do you believe
that whistleblowing is good
for
organizations
and its
members, or is
it, as David
Stetler believes,
often a means

 Whistle blowing is definitely good

for the organization as in new
corporate world organizations are
not only liable to shareholders
but also to all other stakeholders
concerned with the companies
Whistle blower will not only
protect rights of all stakeholders
but would also protect rights of
minority shareholders so that
management can not involve in
activities not authorized by all
stakeholders.

 Moreover, Whistle-blowing is an ethical

dilemma, it may be good and it may be
bad for the organization and its
members.
If the organization is indeed practicing
unethical activities then it would not
benefit from whistle-blowing as it
exposes the unethical practices and
then it would affect their credibility and
the organizations competitiveness in
the market as well as being
incriminated in legal proceedings and
the like

 It may also be bad for the members of

the organization since it would likely
contribute to the loss of confidence in
the organization
it may also be good for the
organization especially if the unethical
practices had been committed by a
few of the members of the
organization . It gives the organization
the opportunity to right the
wrongdoing of its members and
salvage its reputation and its market
value .
Not all whistle-blowers are ethically
and morally upright, this is evident
especially if the whistle-blower stood
to gain much from spilling the beans.

 In this case of Douglas Duran, a former

VP of sales for TAP, it was the good
ethics and his intuition that had to make
him decide, act and correct the
wrongdoing of the organization while
using the precise process of decisionmaking and choose to go through the
court system to punish the organization
for what they have been doing to the
insurance company.

 One of the best ways to prevent illegal

activity in an organization is by having
informants within the organization that
would report on the companys wrongdoing.
Some whistle-blowers tend to look for
incriminating evidence, so that even if there
is nothing unethical or illegal about the
organizations activities, he/she may make
false assumptions in order to incriminate
the company/organization.

QUESTION 2
How might self-fulfilling prophecy
affect a whistle-blowers search
for incriminating evidence
against a company?

 The concept of self-fulfilling prophecy

says that when we believe in
something as being the truth, then
we generally perceive all other things
to fulfill what we believe.
If a whistle-blower believes that the
organization is engaging in unethical
practices, then his /her search for
evidences to support such claims
would be geared towards supporting
the belief of unethical behavior.

 This means, that even ordinary

business transactions could be
construed as being unethical even
if it is not.
Also , the whistle-blower might
force other people to support
his /her claims and interpret the
evens in the company in terms of
the unethical behavior he /she
believes to be occurring in the
company .

QUESTION 3
When frivolous lawsuits occur, how
might these cases affect future whistleblowers who have a valid legal claim
against their company?

Would they be more or less likely to

come forward?
How might their claims be evaluated?

What should companies and the

government do to prevent frivolous
lawsuits?

 Frivolous lawsuits are a waste of time

and money, it disrupts the operation of
the organization and it only breeds
contempt , insecurity and loss of faith in
thecompany .
As such, it would also show that the
whistle-blower actually was just digging
up dirt for the sake of digging and not
really having any concrete claims. This
would influence how whistle-blowers
could be perceived by the organization
and the members of the company even
if the whistle-blower has alegitimate
cause.

 When frivolous lawsuits occur, it prevents

possible whistle-blowers by havingtrying to
report anything by being discouraged in
investing the time and effort tofollow through
with their claims because they will feel that
they are wasting timeand that people will not
take them seriously.
In this case, if employees provided strong
evidence, acted ethically and have an open
case against an organization, the authorities
will evaluate their claim, but inthe case in
which a whistle-blower acts unethically and
does not providesufficient evidence, and has a
weak case, the authorities most likely will
notevaluate their claim.

QUESTION 4
Do you believe that employees
of a company have an ethical
obligation to first attempt to
report wrong-doing to members
of the company itself, or should
they go straight to the
authorities when they suspect
illegal activity?
What are some advantages
and disadvantages of both
actions?

Most companies and organizations

are set up upon an organizational
tree systemand ranks of
hierocracy, so it depends on where
in the organization the wrongwas
made, in order to figure out
whether the wrongdoing should be
reported tothe members of the
organization of to the authorities.

If it is the case of a larger

company and the wrong was
made in a lower level, Ibelieve
the reporting should be made
to a member in a higher level,
but in thecase that the
wrongdoing continues or it is
done by members in the higher
levels,the reporting should be
made to the authorities.