On Whistleblowing and Corporate Ethics
The act of disclosing information about misconduct in the workplace which they feel,
violates the law of the land or endangers the welfare of the public or is tantamount to fraud and deception of the stakeholders etc. by either an employee of the organization having access to the information held back is called whistleblowing; the perpetrator being the whistleblower.(Wines, n.d.). The recent controversial revelations made against the federal government controlled NSA’s surveillance on friendly countries and even on the American Public by Edward Snowden is an example of whistleblowing, Snowden being the whistleblower here. A whistleblower need not necessarily be an employee. Any person who knows about the incident can blow the whistle. For example, Dryden was not an employee of the NSA but worked for a contractor of the National Security Agency.
Characteristics of the Whistleblower
Whistleblowers are generally
- Morally and ethically motivated
- Idealistic and Utilitarian
- Free of financial responsibilities
- Astute Planners
- Has clear ideas of right and wrong.
- Highly educated, well read and knowledgeable.
The Trinity Scandal
Trinity Industries Inc. is a market listed mammoth engineering company specializing in heavy machinery.Tritinity has five business groups which are Rail Group; Railcar Management Services Group; Construction Products Group; Barge Group, and Energy Equipment Group. It makes a lot of products for the rail industry. Trinity’s guardrail enjoys a huge market share and is the Number 1 guard rail in the US. Besides domestic use, guardrails are also exported to developed countries as well as developing countries.
On October 5th 2014, Joshua Harman who is a guardrail Engineer from Virginia and Trinity’s competitor, replied to a patent infringement law suit filed by Trinity by counter-filing a lawsuit under the whistleblower’s act. Trinity had carried out five tests of its guard rail EX plus after modifying the design, and they failed every time. It appears that this was because of a rib reinforcement which was 250mm thick earlier but was now reduced to 200 mm, as a cost cutting measure. Trinity was supposed to inform the state authorities about the failed tests, but it did nothing of that sort. States went on installing defective guard rails.
Guard rails are supposed to protect vehicles which strike them by gradually increasing the damping effect and de-accelerating the vehicle. At the same time, the rail is turned away from the car as otherwise the rail will pierce the car. Once a piece of equipment is approved for use in transport, the manufacturer has to inform the authorities of all product development news but Harman, who is a competitor of Trinity, says that Trinity just pushed the facts under the carpet. We quote from the brief “.Nor did Trinity properly test units that contained these changes. Instead of undertaking proper testing and seeking approval, Trinity has falsely certified that the modified ET Plus is approved for federal reimbursement when approval has never been sought or granted for the modified unit.” ‘(http://localtvwiti.files.wordpress.com/2014/02/1_falseclaimslawsuit.pdf)’
In court, Trinity engineers said that the failed model is still in the R&D stage and its ET plus is a different model. This was disputed by Harman (the plaintiff) and the jury decided against Trinity, awarding the plaintiff $175 million taking into account that actual accidents had taken place and people had been killed, on 10/21/2014. Till now ten states have asked Trinity to replace the guard rails immediately while Virginia has decided to go in for forcible removal, at Trinity’s cost presumably.
Trinity Industries Inc. is now the latest fraud to be captured through the whistle blowing act. Trinity’s stocks have remained more or less at par as on Friday but pundits say that the fall will start from Monday.
The Sarbanes –Oxley Act & Whistle blower Protection.
Sarbanes-Oxley Act of 2002 [SOx for short] prohibits any sort of retaliation against the whistleblower and if anyone does so, then the bosses of the organization can face trial on criminal charges. Secondly as the Department of Labor takes over the law suits on behalf of the employee, Sox ensures that the employee is not hassled by bureaucratic delays. It says that after 180 days have passed without a solution, the employee is free to re-file his case with a federal court, though not mandatory. (Kohn, Kohn and Colapinto, p.p. 5- 9). The Trinity Industries Inc. Case is the latest in cases of intentional Corporate Fraud perpetrated by a leading US Heavy Engineering Firm.
REFERENCES
Kohn, S.M. Kohn, M.D Colapinto, D.M.( 2004). ‘Whistleblower Law, A guide to legal protection for corporate employees’ Praeger Publishers, Westport, CT. pp. 5-9
Paints, L.A.(n.d.) ‘ Whistleblowing’ (PowerPoint Slides) . Accessed on the Sam Houston State University (Texas) Internet portal < URL: www.shsu.edu/~piic/fall2005/presentations/Whistleblowing.ppt/ >
Kessler, A.M. & Ivory, D ( 2014, October 15). “Guardrail Tests Went Unreported, Court Hears” The New York Times. Accessed on the Internet at <URL http://www.nytimes.com/2014/10/16/business/guardrail-tests-went-unreported-court-hears.html>
