Whistle-blowing

Definition of Whistle-Blowing
 The act of revealing wrong-doing within an
organization to the public or to those in positions of
authority.
 Disclosure of information about misconduct in the
workplace that violates the law or endangers the
welfare of others.
 One who speaks out, typically to expose corruption
or dangers to the public or environment – is a
whistleblower.
 ORGANIZATIONAL ETHICS

Whistleblowers
• Whistleblowers
– Persons who expose organizational misdeeds in
order to preserve ethical standards and protect
against wasteful, harmful, or illegal acts.
– Many whistleblowers were / are fired for their
actions.
– State and federal laws now offer some protection
 Types of Whistle-Blowing
External
Internal Whistle-Blowing

 When an individual advocates beliefs or

revelations outside
within the
theorganization.
organization.
Characteristics of a
Whistleblower
 Altruistically Motivated
 Utilitarian
 Uninterested in Altering Their
Behavior
 Allows Own Attitudes and Beliefs
to Guide Them
 Often are Well Educated and
Holds Professional Positions
 Effects of Whistle-Blowing
•• Physical
Forced or psychological isolation
to leave
• Organization experiences loss of money,
organization/demotion
• restitution,
Credibility productivity, and positive
ruined
• reputations.
Family, health, and/or
• life in jeopardy (imprisonment or confinement)
Incarceration
• Outrage and divisiveness
of people directly or
indirectly involved
• Transferred to
undesirable locations
 Failure to Reveal Wrongdoing
• Severe problems for society or organization

• Can be implicated as an accessory before or

after the fact
 Protection Laws
• The Whistleblower
Protection Law ~
1989

• The Whistleblower
Act ~ 1994
 Whistleblowing Example
• In charge of Quality Control
• Company makes parts for automobile brakes
• Find defect in brake part
• Could cause failure in brakes
• Failure not certain
• May take many years to develop
 Whistleblowing Example (cont.)
• Go to VP of Production, your boss
• He tells you to overlook defect - company may
loose too much money

• What would you do?

 Challenger Disaster
• Morton-Thiokol
• “O” rings
• Cold in Florida
• Engineers warned “O” Rings could fail
• NASA management made decision to launch
Space Shuttle anyway
 Famous whistleblowers
• Jeffrey Wigand – Brown & Williamson Tobacco
Company
• Sherron Watkins – Enron
• Cynthia Cooper – Worldcom
• Colleen Rowley - FBI
 Cautious Approach to Whistleblowing

1. Make sure situation involves an imminent

threat to society or to the business
2. Document all allegations
3. Examine internal whistleblowing first
4. Should you remain anonymous?
5. Get another job first!!!
 Bribery
• A payment, usually to a public official, to
induce that person to either do something
improper or to influence decisions or actions

• Extortion - same as bribery - recipient of

payment initiates transaction
 Case
• International consulting firm - designs and
supervises construction of hydroelectric
power generating systems
• Your proposal is far superior to any other
technically lowest bid
• To get job, must deposit $250,000 in official’s
personal Swiss bank account
 Should you pay the money?
• Foreign Corrupt Practices Act of 1997
• Grease payment allowed
• Standard Practice in most foreign countries
• Results in lost business opportunities for US
companies
• American tax dollars may be used to pay bribe
 Bluffing and Deception
• Negotiating a labor contract
• Plant has experienced losses over past several
years - not clear why
• Want concessions from labor
• Tell labor that plant will be closed if no
concessions are made. In reality , no such
plans contemplated
• Is This Ethical?
 Managerial Implications
• Top Management Leadership
Organizational Culture
• Realistic Goal Setting
• Ethics Audit
• Code of Ethics
• Ethics Committee
 What is fraud?

'fraud' means taking or obtaining by

deception, money or another benefit
from the government when not entitled
to the money or benefit, or attempting
to do so - this includes evading a
liability to government

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 Elements of fraud

• Unlawful
• Deliberate/intentional
• Deceptive
• Objective of obtaining a personal benefit from the
Government to which the person is not entitled
• Committed by members of the public service, the
community or external providers
• Includes attempts and evasion of liability

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 Examples of fraud
• Theft of money or assets owned by the
Government
• Using Government owned equipment for
personal benefit
• Misusing/leaking information for personal
benefit
• Manipulation of, or unauthorised access to, IT
databases for personal gain

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 More examples of fraud
• False claims for petty cash
• Payment of travel and other allowances without
entitlement or in excess of entitlement
• Selection of suppliers /consultants other than by
merit
• Contract management
• Misuse of credit card/Cab Charge

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 Even more examples of fraud
• False claims for payments/payroll
transactions.
• False claims for promotion or recruitment.
• Misuse of leave/flex-time.
• Theft of revenue.
• Theft/misuse of grant funding/scholarships.

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 What is corruption?
• 'corruption' in relation to an employee means
that the employee seeks, obtains or receives
any benefit, other than lawful salary and
allowances, on the understanding that the
employee will do or refrain from doing
anything in the course of their duties or will
attempt to influence any other employee on
behalf of any person

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 Elements of corruption
• An officer;
• Seeks, obtains or receives a benefit;
• Agreement to do or abstain from doing an act
that is part of officer’s duties; or
• Attempts to influence another officer in
relation to that officer’s duties.

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 Examples of corruption
• Lack of impartiality in performance of duties
• Using your position to harass the public
• Unlawful coercion
• Failing to declare conflicts of interest
• Taking improper advantage of your position
• Taking improper advantage of official information
• Unauthorised disclosure of official information
• Improper use of official comment
• Improper use of Territory property

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Management responsibilities for
integrity
• Promoting ethical behaviour and standards.
• Raising awareness of fraud and corruption
management.
• Preventing, detecting, investigating and
reporting suspected fraud and corruption

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 More management
responsibilities for integrity
• Recovering money or property lost through
fraudulent activity.
• Ensuring appropriate systems of control
• Conducting an integrity risk assessment and
developing a fraud and corruption
prevention plan every 2 years

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Employee responsibilities for integrity

• Section 9(q) of the PSM Act requires:

– "A public employee shall, in performing his or
her duties:
• report to an appropriate authority -
– any corrupt or fraudulent conduct in the public
sector that comes to his or her attention.
– any possible maladministration in the public
sector that he or she has reason to suspect."

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Reporting suspected fraud and/or corruption

• Suspected fraud should be reported to your

supervisor or manager
• Or, if this isn’t considered appropriate in the
circumstances then report to:
– the Senior Executive Responsible for Business
Integrity Risk (SERBIR); or
– the Chief Executive Officer; or
– the Auditor General

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 Initial steps to be taken when
fraud or corruption is suspected
• Do not confront suspect
• Be discrete
• Make notes of your reasons for suspicion
• Notes should include reference to all material
events, documents, conversations and things that
tend to raise your suspicion
• Note relevant actions that you may have taken

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 More initial steps
• Retain any documents that relate to the
incident taking care:
– Not to alter the documents in any way
– To retain any attachments as found
– To protect them from any damage
– To minimise handling and to avoid the addition of
further fingerprints
• Report the matter as soon as possible

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Management responsibilities for dealing with
suspected cases of fraud or corruption
• A decision will be taken:
– In the most serious cases, the matter is referred to
the Police
– For other complex cases a qualified investigator
(perhaps from the private sector) will be assigned
to the case
– For minor cases an experienced officer will
undertake an enquiry

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Ethical Discrimination
03 March 2006

A job advertisement for the University of Charleston in West Virginia that ran in The Chronicle of
Higher Education this week stipulates that applicants for the Herchiel and Elizabeth Sims "In God
We Trust" Chair in Ethics "must embrace a belief in God and present moral and ethical values
from a God-centered perspective." After legal experts told Chronicle-competitors,
Inside Higher Ed, that such a requirement violates Title VII of the Civil Rights Act of 1964, which
bars secular institutions from discriminating on the basis of religion, the University ended the
illegal job requirement. University President Edwin H. Welch explained that the "In God We
Trust" Chair had been endowed with "more patriotic than spiritual" intentions by the Sims
family, but that in any case, the phrase would no longer be used as employee test, and that
those who don't "trust in God," such as atheists and agnostics, will be equally eligible for the
position.
From the UK Daily Mail:
We only employ workers born under specific star signs, says in
surance company

'We are looking for people over 20 for

part-time jobs in sales and management
with the following star signs: Capricorn,
Taurus, Aquarius, Aries and Leo,' read the
ad that appeared over the weekend.
What Is Workplace Discrimination?
• Discrimination occurs when an employee
suffers unfavorable or unfair treatment due to
their race, religion, national origin, disabled or
veteran status, or other legally protected
characteristics.
 Types of discrimination in the workplace

• Sexual discrimination
• Racial discrimination
• Experience Discrimination
• Job Role Discrimination
• New forms of discriminations on the basis of
genetic disposition, illnesses and disabilities
 Legal Remedies

• Back pay
• Restoration of their old job (if they were fired
or reassigned)
• A court order to stop the discrimination
• Compensation for pain and suffering
 Copyright
• Copyrights are designed to protect expressions of
ideas. Ideas are free, however, when an artist
expresses those ideas in a work of art, that can be
copyrighted. Thus, a copyright applies to a creative
work such as a story, painting, or song. Copyright
gives the author the exclusive right to make copies of
the expression and sell them to the public. Copyright
laws exist so that artists can earn a living at their art.
 What Can Be Copyrighted
• U.S. copyright law of 1978 (India 1957) says that
copyright can be registered for “original works of
authorship fixed in any tangible medium of
expression … from which they can be perceived,
reproduced, or otherwise communicated either
directly or with the aid of a machine or device.”

• It must be expressed in a tangible medium.

• It must be original with an identifiable author
 Copyright: Fair Use

• All copyrighted material is subject to “fair

use”. This allows reproduction for
“purposes such as criticism, comment,
news reporting, teaching (including
multiple copies for classroom use)
scholarship or research.”
• Be careful when you leave the University!
 Registration: Mark
• Before 1978, each copy had to be marked with
the copyright symbol ©, the word copyright,
the year and the authors name. Either the
word copyright or the symbol © could be
omitted but not both.
• This was to make any potential user aware
that the work is copyrighted.
• Since 1978, no mark is necessary.
 Copyright Registration: Filing
• The copyright must be officially filed. That is, a form
is completed and submitted to the U.S. Copyright
Office along with a small fee and a copy of the work.
If the work is longer than 50 pages, only the first and
last 25 pages need to be submitted.
• No infringements can be prosecuted before the time
of filing. In practice, filing is often not done unless
prosecution is planned.
 Copyright Duration

• A copyright lasts for 50 (60)years beyond

the death of its author or last living co-
author or a total of 75 years in the case of
work done for hire (that is, work being
copyrighted by a business instead of one or
more individuals). Can be extended.
• Trend: length is increasing
 Copyright Infringement

• The holder of the copyright must go to

court to prove that someone has infringed
on the copyright. The infringement must
be substantial for the courts to allow a
prosecution.
Copyrights and Computer Works

• In 1980, the copyright law was amended to

include an explicit definition of computer
software. Still, copyright may not be the best
form of protection for computer software.
• Code not algorithms: Computer algorithms are
the ideas behind the code which is the
expression, so the code is copyrighted and cannot
be copied, but the algorithm cannot be protected.
 Copyrights and Computer Works
• Copyright protects the expression of ideas. Protects
the intangible “sequence of words, bits, or colors”,
not the copy itself.
• It is not clear what can and cannot be copyrighted.
Courts have ruled that a menu can be copyrighted
but “look and feel” as in Microsoft Windows, cannot
be copyrighted.
 Copyrights and Computers
• Copyright does not limit how a work is used,
only the distribution of copies. Suppose a
single host on a network legally acquires a
copy of a piece of software. That host can
allow any user on the network to access the
software as long as a new copy is not created.
Copyright controls copying; it is not clear that
distributed access is a form of distribution.
 Software Licenses

• A software license is permission to use

copyrighted material under certain
circumstances.
• Some click-through licenses are enforceable.
Some are not.
 Patents
• Patents protect inventions. The difference
between patents and copyrights is that
patents were intended to apply to the
results of science, technology and
engineering, whereas copyrights were
meant to cover works of art, literature and
written scholarship. A patent can protect a
“new and useful process, machine,
manufacture, or composition of matter.” A
patent is valid for 19 years.
 Patents
• Patents cannot cover “newly discovered laws
of nature … and mental processes”. “2+2=4” is
not patentable because it is a law of nature. It
is not copyrightable because it is in the public
domain. The patent protects the device or
process for carrying out an idea, but not the
idea itself.
 Patent: Novelty Requirement

• A patent is valid for something that is truly

novel or unique.
• The object or device must be novel and
non-obvious to a person considered skilled
in that area.
 Patent: Novelty Requirement

• If two composers happen to write the same song

independently, they can both be given a copyright
for it. If two inventors invent substantially the
same device, the patent goes to the one who
invented it first, regardless of who filed a patent
application first. (Of course, you have to prove you
invented it first).

• There can be only one patent for a given invention.

 Patents: Registration

• Obtaining a patent is much more difficult than

getting a copyright. The inventor must convince
the Patent Office that he deserves a patent. A
patent attorney can research the patents already
issued for similar inventions to:
– determine that the invention has not been previously
patented.
– identify similar patents that can be useful in describing
the unique features of the invention to be patented.
 Patents: Registration
• The Patent Office compares the application to
similar patented inventions and decides if it is novel
and non-obvious. If so, the patent is granted.
• The patent applicant must disclose how his
invention works and what is novel in sufficient
detail to convince the Patent Office that it is worthy
of a patent. This detail, however, which becomes
public record, makes the possibility of infringement
more likely. Patented objects are usually marked
with the patent number to discourage potential
infringers.
 Patent Infringement
• With a copyright, the holder can choose which
cases to prosecute, ignoring small
infringements, and the copyright will remain
valid. The holder of a patent must prosecute
all infringements. Failing to sue for patent
infringement, even if it is small or unknown to
the patent holder, can result in loss of patent
rights.
 Patent Infringement
• An infringement has occurred if another
inventor independently invents the patented
device (unlike copyright - copyright
infringements occurs only if it was a copy and
not an independent invention).
 Drawbacks to Patents
• Infringement prosecution is expensive and time
consuming. Prosecution is dangerous in that it
could cause the patent holder to lose or limit the
patent if the person charged with infringement
successfully argues:
– This isn’t infringement because the 2 inventions are
sufficiently different.
– The patent is invalid because a prior infringement was
not opposed
– The invention is not sufficiently novel so that the
patent should not have been granted in the first place.
– The infringer invented the object first.
 The result is..

• Getting and maintaining a patent is very

expensive and usually done by large
companies with big research (and legal)
budgets.
 Patents and Computers
• Computer hardware can be patented.
• The Patent Office recently started granting patents
for computer software. The courts consider
algorithms not patentable if they are ideas instead of
processes. The underlying algorithm is what many
software writers would like to protect. Some
software has been patented, but there have not been
enough court challenges to clearly establish this form
of protection.
 Trade Secrets
• The key characteristic of a trade secret is that it must
be kept secret. The information has value only as a
secret and the infringer is one who divulges the
secret.
• Typically, it is some information that gives a company
a competitive edge over other companies - the
formula for a soft drink, a mailing list of customers,
or information about a product to be announced
soon.
 Trade Secret
• The owner must take precautions to protect the
secret - storing it in a safe, encrypting it in a
computer file or having non-disclosure agreements
with employees.

• If someone steals a trade secret, the owner can sue

and recover damages, lost revenues and legal costs.
If someone discovers or invents the secret
independently, there is no protection.
 Should not Be Easy to
Reverse Engineer

• A telephone can be taken apart and analyzed so it is

apparent how it works. This is not protected as a trade
secret. A better mechanism for a telephone is a patent.
• It is more difficult to determine the manufacturing process
of a soft drink from the final product - time, temperature
and ingredients all combine to produce the drink in a way
that is not obvious from an analysis of the final product.
Hence, the recipe of a soft drink is an example of a trade
secret.
• Trade secret protection works when the secret is not
apparent in the product.
 Trade Secrets and Software
• Trade secret protection can be used for computer
software. The design or underlying algorithm of the
program is novel and it’s value depends on it’s being
a secret.

• Trade secret protection allows distribution of the

result of the secret (soft drink, executable code)
while keeping the secret hidden.
 Trade Secrets and Software

• Trade secret protection does not cover

copying a product, so that it cannot protect
against a software pirate who sells or
distributes someone else’s program without
permission.
• Trade secret protection makes it illegal to
steal a secret algorithm and use it in
another product.
 Trade Secrets

• Trade secret protection does not help against

reverse engineering or code disassembly - both
cause the secret to be revealed and thus the
protection to disappear.

• No filing is necessary and the protection has no

time limit. In practice, once there is an
infringement, the secret is out and there is no
longer a secret to protect.
 Protecting Computer Hardware
• The legal system was not designed for computer
objects, so existing protection mechanisms must be
used as best as they can.

• Hardware such as chips, disk drives and storage

media can all be patented. The objects themselves
and also the manufacturing process are suitable for
patents.