Blowing the Whistle Reporting Wrongdoing in the Workplace

Transcription

1 1 Blowing the Whistle Reporting Wrongdoing in the Workplace In March 2009, seventy-one year old Bernie Madoff, businessman, stockbroker, investment advisor and financier, pleaded guilty to what is considered the largest financial fraud in the history of the United States. Madoff confessed that his prestigious investment fund was basically, a giant Ponzi scheme and just one big lie. The amount outstanding from client accounts was close to $65 billion, with a staggering $18 billion of actual losses to investors. At his trial, Madoff pleaded guilty to eleven federal felonies and was sentenced to one hundred and fifty years in prison. Madoff s enterprise had been swindling investors for years. The story finally blew up when two senior employees began to suspect irregularities, and confronted Madoff at his home. He immediately admitted the truth. The two reported Madoff to the federal authorities, Madoff was arrested, and the scandal broke worldwide. The two employees who reported Madoff were his own sons. Several years earlier, Enron, one of the world's leading electricity, natural gas, communications, and pulp and paper companies, was a high-powered success story. Rated America s Most Innovative Company, 1 with some twenty thousand employees, Enron reported nearly $101 billion of revenues in Early in 2001, questions about Enron s earnings and accounting practices began drawing outside attention. In April of that year, the company s newly promoted CEO suddenly quit after only six months on the job. In August, the company s vice president for corporate development sent an anonymous letter to the chairman and new CEO expressing very grave concerns about Enron s accounting practices, followed by another lengthy letter delivered in person. Unfortunately, by the end of the year it was apparent that a major innovation at Enron was their sophisticated, systematic accounting fraud. Within a few years, the award-winning company was worthless and its leading executives faced trial. The Enron scandal, as it came to be known, toppled a leading accounting firm, and led to increased government scrutiny of other major corporations, and eventually, to new federal legislation for accounting reform and investor protection. The vice president who initially attempted to alert the chairman of Enron was named a Person of the Year by Time Magazine in 2001, along with two others who reported irregularities in their respective places of employment. 2001, said Time, was The Year of the Whistleblowers. When the Whistle Blows Who are whistleblowers? 1 Ranking by Fortune Magazine for six consecutive years.

2 2 Whistleblowers call public attention to suspicion of misconduct: law-breaking, corruption, fraud, and health or safety violations. They may address their concerns within the company or organization for example, to the boss or board of directors or to government agencies, safety commissions, the media, or others. Legal protection of whistleblowers in the United States dates back to 1863, when the United States False Claims Act was enacted during the Civil War. The term whistleblower itself, derived from the concept of a referee s whistle, originated in the 1970 s as a less demeaning term for informer. Despite the euphemistic title, whistleblowers can hardly expect to win points for popularity in the workplace. While they are technically protected by law, they often suffer retaliation and hostility from employers and fellow employees. In some cases, they have undergone criminal prosecution for their efforts. Time reports that Whistle-blowers don t have an easy time. Almost all say they would not do it again. If they aren t fired, they re cornered: isolated and made irrelevant. Eventually many suffer from alcoholism or depression... Some of their colleagues hate them, especially the ones who believe that their outfits would have quietly righted all wrongs if only they had been given time. One of the three People of the Year (all women) said, There is a price to be paid. There have been times that I could not stop crying. Whistleblowing most commonly addresses personal or financial harm to customers or shareholders, including latent or potential harm that could emerge at a later date. Main categories include: 1. Life-threatening harm: Obvious examples are manufacture or marketing of products which are defective or otherwise unsafe, or of medications with serious undisclosed side-effects. 2. Serious, but not life-threatening harm: For example, production or sale of merchandise which can hurt or maim the consumer. 3. Financial harm: Fraud, misrepresentation and dishonesty of all kinds, whether directed at investors or the general public. Whistleblowing can also expose theft by an employee, whether directly from the company or of customers credit cards and personal information, or violations of company policy, ranging from wasting work time to smoking in the office. In 2005 I was employed by a Los Angeles-based company selling a food processor known as The Ultimate Chopper. The company sold one and a half million units, but reports began trickling in about malfunctioning choppers in seventeen machines the lid was defective, allowing the chopper s powerful blades to operate with the lid off. As a result, five consumers sustained injuries requiring stiches or surgery, and another twelve suffered cuts or scratches. In this case, the company voluntarily informed the U.S. Consumer Product Safety Commission 2 and called on purchasers to examine their units; any with defective lids or worn or damaged blades were replaced for free. Thankfully my employers, the owners of the company, were ethical, responsible and law-abiding, and took the actions necessary to protect their 2 The CPSC is charged with protecting the public from unreasonable risks of death or injury, including fire, electrical, chemical or mechanical hazards, caused by the use of a large range of consumer products.

3 3 customers. However, this does not always happen. What if the company had ignored the complaints, and I knew about them? Would I have been obligated to inform the public, or the CPSC? There are a number of considerations a whistleblower may need to weigh. What is the likelihood of harm occurring is it one case out of one million, or one out of ten? What is the total number of people who could potentially be hurt one, ten, or one thousand? How serious is the harm? A loose knob on the glove compartment is hardly the same as defective, malfunctioning brakes. On the other side of the scale, how will the whistleblowing employee be affected? Will he be fired, ostracized, or otherwise penalized at his workplace, or even beyond? Whistleblowing in Halachah Whistleblowing touches on four main halachic issues. 1. Tochachah: the obligation to rebuke wrongdoers 2. Lashon hara: the prohibition against speaking badly of fellow Jews 3. Lo sa amod al dam re echa: the responsibility to intervene in life-threatening or financially damaging situations 4. Moser: the prohibition against handing a Jew over to the secular authorities Before going public with our revelation, we need to weigh these four halachic issues with great care. Are we obligated to intervene ( You shall surely rebuke your fellowman and Do not stand on your fellow man s blood )? Are we permitted to disclose the information to the injured party or the authorities (lashon hara and mesirah)? 1. Tochachah: the obligation to rebuke the wrongdoer It becomes obvious to us that the boss or the management is doing something wrong. Must we confront them? The Torah commands us to rebuke wrongdoers: You shall surely rebuke your fellow man (Vayikra 19:17). 3 Are we required to become whistleblowers in the workplace regardless of repercussions in order to fulfill this commandment? The writings of the poskim provide important practical guidelines. Mahari Weil 4 responded to the following question concerning the commandment to rebuke wrongdoers. Chazal teach that one who is able to rebuke a transgressor and fails to do so, is punished as if he personally had committed the transgression. How is it, then, that practically speaking, we do not rebuke transgressors? He writes that it is because sinners abound who mock and degrade the Torah and its students, and if we protest, we would put ourselves at risk for physical and financial 3 According to the Sefer HaChinuch, the mitzvah to administer rebuke relates only to fellow Jews (239). However, when we are able compel a non-jew to keep the sheva mitzvos bnei Noach (Seven Noahide Laws), which include the prohibition against theft, we are obligated to do so (192). 4 Rav Yaakov Weil, author of Responsa Mahari Weil and one of the great halachic authorities of the fifteenth century, was rav and rosh yeshivah in Augsburg, Germany until the expulsion of the Jews in 1438, and later in Erfurt. He died in Germany ca. 1460, and his halachic writings were published posthumously.

4 4 harm. The obligation to rebuke only extends to cases where there is no danger involved. Mahari Weil next addresses a question which is especially relevant to whistleblowing in the workplace. Are we obligated to incur expense in order to administer rebuke? He rules that we are obligated to spend money out of pocket to save a fellow Jew from life-threatening danger, but not in order to rebuke him (Responsa Mahari Weil 157). This is an important consideration for an employee who stands to endanger his job if he calls public attention to dubious activities. The Rema, citing Mahari Weil, rules that we are lenient concerning this obligation because of the danger of reprisals, whether bodily or monetary (Yoreh Deah 334:48). 2. Lashon hara: speaking badly of the wrongdoer We know for a fact there is ongoing physical or financial harm to customers or shareholders, and we also know that this harm has not yet been rectified. The injured party may not be aware of the damage, but we are. Are we permitted to inform either the victim or the relevant authorities? One who speaks lashon hara, forbidden gossip about another Jew, stands to transgress as many as seventeen negative commandments and fourteen positive commandments, detailed in the beginning of the Chafetz Chaim s 5 classic work on the topic. If we report a fellow Jew, is our whistleblowing forbidden lashon hara, or is it permitted in order to prevent damage? The Chafetz Chaim addresses this question, listing seven conditions which must be met to permit alerting the injured party (Sefer Chafetz Chaim, Klal 10). If these seven conditions are met, it is permitted to speak lashon hara about the wrongdoer, in order to assist the injured party. However, it does not necessarily mean that we are obligated to relay the lashon hara. 1. We personally were witness to the wrongdoing; hearsay is not enough. 2. We must be absolutely certain that the action we witnessed is indeed theft or damage. 3. If it seems that rebuke is likely to be effective, we should first attempt to approach the wrongdoer himself, rather than immediately publicizing the wrongdoing. 4. Our report should be strictly factual we may not exaggerate the extent of the wrongdoing. 5. Our motives should be kosher and clearly defined: we aim only to assist the injured party, and not to derive personal benefit from informing, or to harm the wrongdoer because we dislike him or would like to see him punished. 6. If we can assist the injured party without resorting to lashon hara about the wrongdoer, we should take the route that does not require lashon hara. 5 Rav Yisrael Meir HaKohen of Radin ( ) is known by the title of his work on the laws of forbidden speech as the Chafetz Chaim. A saintly tzaddik and rosh yeshivah whose influence is felt to this day, he wrote many works of halachah and Jewish thought, most prominently the six-volume Mishnah Berurah on Shulchan Aruch Orach Chaim.

5 5 7. The harm to the wrongdoer as a result of our report should not exceed what a beis din would have ruled on the case, for example, if he is likely to go to jail rather than paying reasonable damages Lo sa amod al dam re echa: the responsibility to intervene in life-threatening or financially damaging situations There is no question that something is going on at work; one way or another, people are getting hurt. Are we obligated to inform the authorities of the wrongdoing in order to protect them? This question is directly related to the Torah s commandment, Do not stand on your fellow man s blood (Vayikra 19:16). If we can help a fellow Jew who is in danger for example, from drowning or attack by wild animals or bandits the Torah requires that we step in and save him (Rashi, citing Toras Kohanim). 7 The Rambam elaborates further. He writes that this negative commandment warns us not to be negligent in saving a Jew s life when we see him in a life-threatening situation, or [at risk for] a loss, and we have the ability to save him; for example, if he is drowning and we know how to swim and can save him, or if a non-jew is trying to kill him, and we can stop him or fend off the damage. The Rambam writes that this prohibition includes withholding testimony which could save him from financial loss (Sefer HaMitzvos, Lo Saaseh 297). In light of the repercussions for whistleblowers, this raises an obvious question. Administering rebuke is a Torah-ordained commandment, and we are held responsible for a transgression if we could have protested and did not. And yet, the Rema rules that if our intervention will endanger us or cost us money, we are not obligated to get involved (Shulchan Aruch Yoreh Deah 157:1). What of the prohibition against letting another Jew be hurt when we can help? Must we undergo loss or harm in order to save a fellow Jew? Generally speaking, the poskim differentiate between positive commandments, negative commandments, and minhagim (customs). We are not required to suffer serious financial loss (up to one-third of our assets) in order to fulfill a positive commandment (Baba Kama 9a), even if it is explicitly Torah-ordained (Rema, Orach Chaim 656:1), like the mitzvah of rebuke. A negative commandment has a different status. We are obligated to give up all we own, including losing our jobs, to avoid transgressing one of the Torah s prohibitions (Rema, Orach Chaim 656:1 quoting Rashba and Raavad; Bach, Orach Chaim 656; Mishnah Berurah 656:9-10). According to the Vilna Gaon and other poskim, this is true even of rabbinic prohibitions (Orach Chaim 656, v davka ), although not of minhagim. Do not stand on your fellow man s blood is a negative commandment, but it is in a different category than most prohibitions. It is a lav she ain bo maaseh a passive transgression. In this case, we are not sinning by actively committing a forbidden act 6 See the Chafetz Chaim s Be er Mayim Chaim (ibid., note 39), explaining when this condition is applicable. 7 When there is damage to the public, it is likely that some of the people affected will be Jews.

6 6 (lav she yesh bo maaseh); we are sinning by not taking a required action, in this case, coming to the aid of a fellow Jew. The Klausenberger Rebbe 8 discusses the question of whether or not we are obligated to spend all of our money to avoid transgressing a lav she ain bo maaseh. He writes that there is a difference of opinion among the poskim on this question. Rabbi Akiva Eiger 9 cites the Chavos Yair, 10 who equates a lav she ain bo maaseh with a positive commandment in this sense we are not obligated to give up our money in order not to transgress. The Rivash, 11 on the other hand, rules that this type of negative commandment is no different than an active negative transgression, and our obligation remains the same (Responsa Divrei Yatziv, Likutim V Hashmatos 109:2). According to the stricter opinion of the Rivash, we would have to risk losing our job for the mitzvah of Do not stand on your fellow man s blood. Practically speaking, a number of poskim rule that we are not obligated to incur financial loss to avoid transgressing a lav she ain bo maaseh (see Pischei Teshuva Yoreh Deah 157:4), including Do not stand on your fellow man s blood. In keeping with this opinion, if whistleblowing will cost us our job, we are not obligated to get involved. 4. Moser: the prohibition against handing over a Jew to the secular authorities 12 As employees, we are torn by knowledge of an injustice on the one hand, and the gravity of informing on a fellow Jew on the other: Anyone who hands over a Jew to the non-jews, whether his person or his assets, has no share in the World to Come (Shulchan Aruch Choshen Mishpat 388:9). If the wrongdoer is Jewish, what takes precedence the obligation to halt the physical or financial harm he inflicts, or mesirah, the prohibition which forbids informing against a fellow Jew? Are we permitted to report him to the authorities? In certain cases, it is permitted to inform against a Jew who is a public menace or physically abusive. Circumstances relevant to the workplace include: Reporting a wrongdoer who harms, harasses or endangers the community (see Choshen Mishpat 388:12). Examples may include financial fraud, misrepresentation, or knowingly marketing defective or dangerous merchandise. Reporting a wrongdoer who physically endangers or abuses even an individual (Sema, Choshen Mishpat 388:30; see Rema ibid. 9). 8 Rav Yekusiel Yehudah Halberstam ( ) was the Rebbe of Klausenberg, Transylvania. His family and most of his community were murdered by the Nazis. He rebuilt Klausenberg chassidus in New York, founded Mifal HaShas, and established Kiryat Sanz in Netanya, Israel. He is the author of Shefa Chaim, a series on a variety of Torah topics, and many other works. His responsa were published after his death under the title Divrei Yatziv. 9 Rabbi Akiva Eiger ( ), born in Eisenstadt, Hungary, was a renowned rav and posek, and the father-in-law of the Chasam Sofer. He wrote commentaries on the Talmud and Shulchan Aruch, and responsa. 10 The responsa of Rav Yair Chaim Bachrach ( ), an important German rav and posek. 11 Rav Yitzchak bar Sheshes ( ), a great Spanish Rishon and author of Teshuvos HaRivash, was the premier disciple of the Ran and one of the major poskim of his time. 12 See Chapter 20, Working for the Government: The Prohibition against Mesirah.

7 7 Reporting a habitual thief. In the workplace, this could include Ponzi schemes, defrauding investors, shortchanging customers or suppliers on a regular basis and the like. Mesirah is a complicated question involving a number of factors, and a qualified rav and/or beis din should be consulted. For example, is the evidence of actual financial or physical harm sufficiently clear? Is the specific case one of the exceptions where it is permitted to inform? Are there any alternative options? Other issues include turning to the secular courts when the rabbinical courts do not have legal power to enforce their rulings; the possibility of punishment being imposed by the police or courts which exceeds the penalties established by the Torah for these offenses; and the obligation to comply with the laws in our country of residence (dina d malchusa dina; see Baba Kama 113b, Shulchan Aruch Choshen Mishpat 104:2). Another major consideration is whether the prohibition of mesirah applies in countries ruled by enlightened governments, or only to unjust or oppressive regimes. The Aruch HaShulchan rules that the prohibition applies only to oppressive governments, not to enlightened governments. Other authorities, among them Rav Moshe Feinstein and Rav Yaakov Breisch, disagree. Should We Speak Up? Rabbi Dr. Asher Meir 13 of the Business Ethics Center of Jerusalem mentions the conflicts involved in whistleblowing, along with some practical suggestions which could help solve the issue without a public confrontation by the employee. Among them are anonymous complaints backed up with solid evidence; approaching a reporter, and allowing events to take their course without further involvement on the part of employee; and especially in cases where the employee himself is the injured party, suggesting a solution less damaging to the employer than a formal, public complaint (Rabbi Dr. Asher Meir, Should I Blow the Whistle? Weighing the Risks and Damages ). Rabbi Meir raises five important points. Before blowing the proverbial whistle, we need to be certain that: 1. There is indeed an offense which needs to be stopped or rectified. 2. There will be concrete benefit to the injured party. 3. The damage or punishment to the wrongdoer will not exceed the offense. 4. Our intentions are legitimate, and not motivated by personal gain or dislike. 5. Our report is accurate, not exaggerated. In a follow-up article, Rabbi Meir elaborates on the whistleblower s conflict between his obligation to protect the injured party, and the repercussions he is likely to face. In conclusion, he writes, Sadly, experience shows that so-called whistle-blowers usually suffer great personal loss and anguish. They almost invariably lose their jobs, 13 Rabbi Dr. Asher Meir, Research Director at the Business Ethics Center of Jerusalem, is a graduate of Harvard and MIT who worked at the Council of Economic Advisers in the Reagan administration. He is a senior lecturer in Economics at the Jerusalem College of Technology and the author of the twovolume Meaning in Mitzvot, columns for Aish.com published in the Jewish Ethicist, and articles on business, economics and Jewish law.

8 8 and in many cases lose their careers. Therefore, while it is certainly praiseworthy to protect people from fraud as soon as possible, I generally advise people to think through the consequences very carefully before they take such a far-reaching step. The essential first step is to make sure that you yourself are not participating in any wrongdoing. Usually the next step is to try to disengage yourself from the morally toxic work environment, by finding a new job. For most people, only then will it be practical for them to contemplate righting the wrong by blowing the whistle (Rabbi Dr. Asher Meir, When to Blow the Whistle: Saving Others from Loss Doesn t Have to Come at Your Expense ).