Bill to Weaken Whistleblower Protections Introduced

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Jun 7, 2012; Source: Project on Government Oversight

The Project on Government Oversight (POGO), absolutely one of the standout watchdog organizations in Washington, D.C., has been watching the trajectory of a bill introduced by Rep. Michael Grimm (R-N.Y.) which it says “incinerates the whistleblower protections” in the Dodd-Frank financial reform legislation. Grimm’s bill would require that whistleblowers report wrongdoing to authorities inside the companies they work for before turning to external sources.  But the Ethics Resource Center says that only two percent of potential whistleblowers say they would choose to report externally first rather than starting with internal channels. Grimm thinks that monetary rewards for financial sector whistleblowers under Dodd-Frank would spur whistleblowers to go external, but again the Ethics Resource Center indicates that a tiny proportion of whistleblowers do so because of the possibility of a reward. So why is Grimm, probably no more friendly to government regulation than most of his party brethren, interested in regulating behavior that doesn’t seem to be a problem?

{loadposition banner} Grimm may be arguing that “Dodd-Frank undermines [internal compliance programs] by incentivizing whistleblowers to go directly to the SEC,” but the evidence isn’t there and Grimm’s Whistleblower Improvement Act (HR 2483) is no improvement at all. In fact, in Dodd-Frank, whistleblowers are eligible for financial rewards only if they start their reporting internally first.

Some whistleblowers that choose an external reporting route first may be doing so because of a hostile corporate environment where they work. Maybe they know that in a few companies, the protections for whistleblowers are weak to nonexistent, or that whistleblowers face punitive behavior that would punish them for legitimate whistleblowing. According to the Ethics Resource Center, among whistleblowers who do make their complaints to external bodies, 84 percent of them tried going the internal route first.

The Nonprofit Quarterly has covered whistleblower protections—and their weaknesses as applied to nonprofits—several times, including the guidelines for nonprofit whistleblowers offered by former Massachusetts Attorney General Scott Harshbarger, and more recently the whistleblower work of Bill Harper related to SEEDCCO in New York City. Besides the fact that there is much less protection in the law for nonprofit whistleblowers than there is for government or corporate whistleblowers, it is often exceptionally difficult for the public, for attorneys general, and for the IRS to spot, much less take action to correct, wrongdoing in our sector. All too often, the evidence of wrongdoing is after the fact and too late to make a material difference to the stakeholders and constituents of nonprofits. How are whistleblowers in the nonprofit sector treated? How strong are the internal policies of nonprofits to protect whistleblowers from intimidation from executive directors and board members?

Tell us whether you think your organization’s ethical policies and standards would work if you found yourself pondering whether to blow the whistle on wrongdoing. Would you follow an internal route or go external? If you have to, due to a less than supportive environment in your shop, send us your answer anonymously.—Rick Cohen