Whistleblowers and the Sarbanes-Oxley Act

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Table of Contents

Introduction
Key characteristics of a whistleblower
A recent whistleblowing case
The extent of the whistleblower’s protection under the Sarbanes-Oxley Act
Conclusion
References

Introduction

Organizations are expected to function ethically and legally for the benefit of all stakeholders and shareholders. However, few individuals in some organizations may decide to break the law and violate the set ethical standards by engaging in malpractices. Fortunately, in most cases, that information falls into the hands of a third party, who may decide to blow the whistle on the malpractices. This scenario underscores the aspect of whistleblowing in organizations.

Cases of organizational malpractices and whistleblowing peaked by the start of the 21^st Century, which necessitated the passage of the Sarbanes-Oxley Act into law to protect whistleblowers. This paper discusses the key characteristics of a whistleblower and gives a recent case of a whistleblowing incident. Finally, the paper highlights the extent to which the whistleblower in the said case is protected under the Sarbanes-Oxley Act.

Key characteristics of a whistleblower

In most cases, whistleblowers are employees or former workers of an organization, which is believed to be engaging in malpractices in violation of the generally accepted principles of operation. Halbert and Ingulli (2012) define whistleblowers as “people who decide to report unethical or illegal activities under the control of their employer” (p. 46). The disclosure may be done to other employees or the relevant authorities.

One of the most outstanding characteristics of a whistleblower is that s/he is committed to a certain cause. For a whistleblower to come out and disclose classified information, s/he believes that such exposure will benefit the majority of the stakeholders in the organization. Such individuals are selfless, and thus instead of keeping the information to themselves, they decide to share it with the public regardless of the involved risks like job loss or lawsuits from the involved organizations. Mostly, whistleblowers hold high-ranking positions in the exposed organizations, and this aspect allows them to access classified information. Therefore, in light of this understanding, it suffices to conclude that whistleblowers are professionals in a given field.

Another characteristic of whistleblowers is that they are risk-takers. The risks involved in whistleblowing are numerous, and thus for one to pursue such a cause, s/he must be a risk-taker. For instance, job loss is one of the automatic repercussions of whistleblowing (Kohn, 2011). Additionally, the involved organizational leaders may decide to file lawsuits as a way of fighting back the disclosure of the classified information. In worst cases, whistleblowers can be killed as a way of preventing them from giving collaborative evidence that might implicate the involved organizations. To some extent, whistleblowers can be characterized by disloyalty following the decision to betray the people who have trusted them with some confidential information.

A recent whistleblowing case

One for the recent whistleblowing incidents revolves around the Volkswagen scandal that emerged in September 2015 following the disclosure that the carmaker had used manipulative ways to violate emission tests. In March 2016, Daniel Donovan, a Volkswagen’s ex-employee, filed a lawsuit claiming that he lost his job after discovering suspicious deletion of data, which amounted to the obstruction of justice (Ewing, 2016). After the US authorities started an investigation into the Volkswagen’s 2015 emission scandal, the company’s IT employees embarked on the deletion of incriminating data. Daniel Donovan was allegedly fired after it emerged that he was about to blow the whistle on the unlawful data-deletion exercise.

The effect on this whistleblowing incident to the employee is that he lost his job. To the company, the whistleblowing would potentially highlight the malpractices surrounding the manipulation of emission tests on its cars. I think Daniel Donovan was justified in reporting Volkswagen’s data deletion exercise. After the scandal came out on September 18, 2015, the Environment Protection Agency (EPA) legally required the company’s data to be held intact until the investigations were over. However, Donovan claims that the company broke this legality and continued with the data deletion exercise until September 21, 2015. This exercise was illegal as it would affect the investigations and probably subvert justice, and thus Donovan was justified in his actions.

The extent of the whistleblower’s protection under the Sarbanes-Oxley Act

In this case, the whistleblower is protected under the Sarbanes-Oxley Act of 2002. Section 806 of the Act confers “legal protection upon employees of public companies who report suspected violations of a range of federal offenses – including those relating to fraud against shareholders” (Welytok, 2008, p. 18). Therefore, I believe that Daniel Donovan is protected under the Act until his case is heard and determined. However, if the courts determine that Donovan’s allegations are false, then he loses the protection, and the company can sue him for damages associated with the whistleblowing incident.

Conclusion

Whistleblowers are risk-takers, and they believe in a certain course. The decision to blow the whistle on given organizational malpractice hinges on the conviction that such disclosure will ensure justice and probably save stakeholders and shareholders from adverse effects. Daniel Donovan blew the whistle on the illegal data deletion at Volkswagen, which violated the EPA’s directive at the time. The whistleblower lost his job. He is protected under the Sarbanes-Oxley Act as long as the case is yet to be heard and determined.

References

Ewing, J. (2016). VW whistle-blower’s suit accuses carmakers of deleting data. The New York Times, p. 48. Web.

Halbert, T., & Ingulli, E. (2012). Law and Ethics in the Business Environment (7th ed.). Mason, OH: South-Western. Web.

Kohn, S. (2011). Whistleblower’s handbook: a step-by-step guide to doing what’s right and protecting yourself. Guilford, CT: Globe Pequot Press. Web.

Welytok, J. G. (2008). Sarbanes-Oxley for dummies. Hoboken, NJ: Wiley. Web.

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Whistleblowers and the Sarbanes-Oxley Act

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