What Is a Whistleblower?
A whistleblower is someone who possesses and reports insider knowledge of illegal, illicit, or fraudulent activities occurring within an organization. These individuals can be employees, suppliers, contractors, clients, or anyone aware of dubious business practices. Whistleblowers are safeguarded against retaliation through a series of laws and programs created by the Occupational Safety and Health Administration (OSHA), the Sarbanes-Oxley Act, and the Securities and Exchange Commission (SEC). Federal employees, in particular, benefit from protections under the Whistleblower Protection Act of 1989.
Key Takeaways
- Whistleblowers reveal illegal, unsafe, or fraudulent activities within public or private organizations.
- They are protected against retaliation by various laws enforced by OSHA and the SEC.
- The term “whistleblower” has 19th-century origins.
The Essence of Whistleblowing
Many organizations address whistleblowing, and some specialize in specific aspects of it. For example, OSHA concentrates on environmental and safety violations, while the SEC deals with securities law breaches. Organizations often offer rewards for actionable information, accommodate anonymous tips, and provide multiple channels for submitting information.
A whistleblower might choose to submit information to company leaders or larger regulatory bodies. When high-ranking officials are implicated in wrongdoing, the ideal route is to report to an official governing entity.
The Origin of the Term
The term “whistleblower” was initially used in the 19th century. However, its modern use is often attributed to Ralph Nader in the 1970s, who sought to eliminate the negative stigma associated with terms like “informer.” The term combines “whistle,” a signaling device, with “blower,” referring to the person who sounds the alarm.
Sports referees, practically, were also once referred to as whistleblowers, alerting onlookers and participants to infringements within games. The frequent media and activism usage in the 1960s, especially by journalists like Ralph Nader, shaped today’s understanding of the term.
Notable Whistleblowers
- W. Mark Felt (“Deep Throat”): Uncovered Richard Nixon’s illegal activities during the Watergate Scandal.
- Sherron Watkins: Exposed Enron’s fraudulent practices, leading to its collapse and the emergence of the Sarbanes-Oxley Act.
Protecting Whistleblowers
Confirmed reports of illicit activities ensure that whistleblowers are shielded from retaliation. This protection covers any adverse actions like demotions, terminations, and reprimands by the company involved. Additionally, whistleblower protection prevents the company from legal reprisals to recover losses incurred during investigations or imposed penalties.
In situations involving physical violence threats against the whistleblower, their associates, or family, more comprehensive protections may be in place.
Whistleblower Rewards
Whistleblowers may receive a reward compensating them for reporting illegal activities—typically a percentage of the sums recovered by the government or regulating agency thanks to the disclosed information. Qualification for a reward may require a minimum recovery amount, with the reported information being both unique and previously undisclosed.
Many organizations have internal reporting mechanisms concerning inefficient, albeit non-illegal practices. While such reportees might not incur whistleblower status, their efforts towards operational improvement might earn them acknowledgment and a nominal reward.
In cases of significant governmental or corporate waste discoveries, particularly involving considerable financial sums, reporters can sometimes be considered whistleblowers.
Related Terms: Occupational Safety and Health Administration, Securities and Exchange Commission, Whistleblower Protection Act, Sarbanes-Oxley Act
References
- Congress.gov. “S.20 - Whistleblower Protection Act of 1989.”
- Congress.gov. “H.R.3763 - Sarbanes-Oxley Act of 2002”.
