Whistleblowers - Truthsayers - TruthTellers

The press reported that Coca-Cola settled a suit with a whistleblower. A former finance director claimed he was fired because he blew the whistle on accounting fraud at the company. His accusations led to the U.S. attorney’s office and the Securities and Exchange Commission launching investigations. It is reported that Coca-Cola is paying a half million to their former finance director to settle.

It is unfortunate that corporate leaders are intent on covering up wrongdoing and fire those who stand up for what is right.

The regulatory system is simply unable to police the securities industry if it is intent on breaching the rules and doing wrong. If our society has a sense of right and wrong then individuals have a responsibility of reporting the wrongs to management. If management acts responsibly they should take immediate corrective action. Unfortunately top management often condones the activities when these same activities lead to increased perks.

John Reynold’s book Free Rider exposed another case where the “Whistleblower” was fired. He writes about the compliance officer who reported to management about the broker’s activities and suggested that management take appropriate action. Unfortunately management decided to fire the compliance officer because the broker was generating huge amounts of commission. Eventually the broker was jailed for fraud.

A current case in Canada involves a lady who was a director of a publicly owned company. She believed it was her responsibility as a director to bring to management’s attention activities which she believes are wrong. She was promptly excluded from board meetings and management took no appropriate action. She believed the allegations were sufficiently serious that she should report to the regulators to fulfill her responsibility as director. The regulators declined to investigate and suggested she take civil action.

There appears to be a distinct lack of support for those who will go out on a limb to report wrongdoing. We continue to see reports of corporate culture that supports activities that are contrary to law, and which cause irreparable harm to small investors.

Joe Killoran talks about “Truthsayers” as opposed to “Whistleblowers” which often is used with negative connotations. Joe was a mutual fund salesman who felt compelled to “blow the whistle” and ended up being without a job in the industry.

It is time that our society recognizes those people who have the courage to say something is wrong. We need to demand that corrective action be taken, and that those who expose the wrongs be protected from punitive action.