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Freedom: A Novel

Freedom: A Novel

By Jonathan Franzen

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Why No One Would Listen

Posted on Mar 7, 2012
nataliej (CC-BY)

By Eyal Press, TomDispatch

(Page 2)

One provision of Dodd-Frank, for example, allows employees to bypass corporate internal compliance programs and report violations directly to the SEC.  Another provides rewards for Wall Street whistleblowers who step forward and offer the government tips that lead to successful prosecutions of fraud.

But even these modest steps may soon be reversed.  Last year, Congressman Michael Grimm (R-NY) unveiled the antidote to Dodd-Frank’s gestures toward the urge to leak.  His “Whistleblower Improvement Act”—a name that Orwell might have appreciated—would do away with the Dodd-Frank protections, such as they are, which the U.S. Chamber of Commerce and other industry groups lobbied against and continue to vigorously oppose.

Grimm’s proposal would indeed mark an “improvement”—for companies hoping to deprive whistleblowers of their voices.  If passed, it would strip the financial rewards from Dodd-Frank and require most whistleblowers to first report problems to their employer before even thinking about going to the government.  “This would be like requiring police officers to tip off suspects before they begin an investigation,” the Project on Government Oversight has wryly observed.

Harry Markopolos, a financial analyst who repeatedly tried to warn the SEC about Bernard Madoff’s Ponzi scheme—and who, like Leyla Wydler, was persistently ignored—has said the law “reads as if it were a wish list from those who once designed the Enron, Madoff, Global Crossing, Stanford, and WorldCom frauds.” Evidently, that only proved an incentive for the House Subcommittee on Capital Markets to approve Grimm’s measure in December 2011, on a party-line vote, which means it could now be tacked onto some must-pass piece of legislation and enacted.


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The Silent Treatment

Should the Grimm Act eventually become law, it would not mark the first time corporate whistleblowers had been encouraged to step forward in the wake of rampant abuse and misconduct, only to discover that public officials had no intention of emboldening them to speak out.  Back in 2002, after the accounting scandals broke at Enron and WorldCom, President George W. Bush signed the Sarbanes-Oxley Act, which made it a crime for companies to retaliate against employees who reported suspected fraud and illegal activities.

“The era of low standards and false profits is over,” Bush declared at the time. “No boardroom in America is above or beyond the law.”  It didn’t quite turn out this way.  In fact, his administration promptly set about staffing the federal agency in charge of whistleblower complaints with judges determined to deprive employees who reported suspected fraud of the protections they thought they’d just been guaranteed.

According to the Wall Street Journal, of 1,273 complaints filed by employees who claimed they had been subjected to company retaliation for speaking out between 2002 and 2008, the government ruled in favor of whistleblowers 17 times.  Another 841 complaints were dismissed unheard, sometimes thanks to minor technicalities.  Other times they were tossed out because the potential whistleblowers worked at the private subsidiaries of publicly traded companies, which the Department of Labor bizarrely decided were not covered by the statute.

Some might assume that, if the government ignores corporate whistleblowers again, a citizenry incensed by the greed and recklessness of Wall Street is not likely to allow history to repeat itself.  But this might be wishful thinking.  Despite the lore of the whistleblower that pervades popular culture, Americans turn out to be less sympathetic to such dissenters than Europeans.  Drawing on data from the World Value Surveys and other sources over multiple years, the sociologist Claude Fischer has found that U.S. citizens are “much more likely than Europeans to say that employees should follow a boss’s orders even if the boss is wrong.” They are also more likely “to defer to church leaders and to insist on abiding by the law,” and more prone “to believe that individuals should go along and get along.”

Whistleblowers may often be praised in the abstract and from a distance, but Americans have a tendency to ignore or even vilify them when they dare to stir up trouble in their own workplaces or communities.  In the case of Leyla Wydler, it wasn’t just the SEC that disregarded her warnings about Stanford.  It was also her fellow brokers, none of whom came forward to defend her, and her clients, who for the most part brushed aside the concerns she voiced about Stanford’s certificates of deposit (and so their own investments).

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By gerard, March 7, 2012 at 2:39 pm Link to this comment

... and when whistle-blowers can’t be ignored or squelched, they are arrested, tried using trumped-up accusations of offense against “sacred” values like patriotism, and punished with everything from a slap on the wrist to the death penalty—whatever public ignorance will support.
  One problem with whistle-blowing is that it tends to trigger the negative emotions associated with “snitching”—an association which degrades whistle-blowing by burying the conscious awareness of its real purpose.
  In cases like Manning and Assange, the true purpose of the cable releases was very specifically patriotic—that is, to let Americans others know that contemporary secret diplomacy and war are dishonest and disastrous, and that this fact had to be outed by massive and incontrovertible evidence so citizens could demand more honesty in international relations.
  People who are naive, or prefer not to know ugly truths, plus people who don’t see that exposure brings with it the opportunity for self-correction and reform—such people interpret such acts as “snitching” and turn away from truth, to side with government as victim rather than with the populace as victimized by government secrecy.
  Sad proof of this is citizens’ general tendency to permit unnecessary secret surveillance of their own everyday activities in the name of “national security” even though such surveillance destroys national security by breeding suspicion, disunity, and contention.

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