Case_8.14_Mohamed_Salem_El-Hadad,_Internal_Auditor

Case 8.14 Mohamed Salem El-Hadad, Internal Auditor 1. By definition a whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company. One of the first laws to protect whistle blowers was the False Claim Act of 1863 which tried to combat fraud by suppliers of the United States government during the Civil War. The act encourages whistleblowers by promising them a percentage of the money recovered or damages won by the government and protects them from wrongful dismissal. 1 In the US there is a private group that provides funds to help whistle blowers they are National Whistleblowers Center. 2 The NWC was established in 1988, the NWC and attorneys associated with it have supported whistleblowers in the courts and before Congress and achieved victories for environmental protection, government contract fraud, nuclear safety and government and corporate accountability. 3 The following are protections for whistle blowers: a. Civil Service Reform Act of 1978. This act protects government workers that experience retaliation as a result of whistle blowing. b. Ethics in Government Act. This act provides three protections to whistle blowers: i. Mandatory, public disclosure of financial and employment history of public officials and their immediate family. ii. Restrictions on lobbying efforts by public officials for a set period of time after leaving public office iii. Creates the U.S. Office of Independent Counsel (OIC) to investigate government officials. c. Lloyd–La Follette Act. This legislation prohibits payroll compensation for managers that retaliate against employees. The intent is to provide direct feedback to Congress from federal employees, most of whom work within the executive branch. d. Whistle Blower Act. Only protects government employees from management retaliation, but the Supreme Court has ruled this protection only applies to government workers when the disclosure is not directly related to the job. e. No FEAR Act. This Act discourages federal managers and supervisors from engaging in unlawful discrimination and retaliation. f. Sarbanes-Oxley Act. The provisions of this Act states: * “Make it illegal to "discharge, demote, suspend, threaten, harass or in any manner discriminate against" whistleblowers. * Establish criminal penalties of up to 10 years for executives who retaliate against whistleblowers. * Require board audit committees to establish procedures for hearing whistleblower complaints. * Allow the secretary of labor to order a company to rehire a terminated employee with no court hearing. * Give a whistleblower the right to a jury trial, bypassing months or years of administrative hearings. g. Freedom of Information Act. This Act provides access to information required to pursue a whistle-blower action. Right to know is necessary for workplace safety involving things like chemical injury, radiation injury and other occupational illnesses where the cause may not be discovered by physicians without disclosures that are required by law. 2. I feel that U.S. companies should integrate legal protections for internal whistle blowers into their internal control systems. The famous and much quoted management guru Peter Drucker did not believe in whistle blowing stating that it was “informing”. Whistle blowing can bring about important positive changes for an organization. Whistle blowers have been touted as guardians of the public. I feel that an organization that does their best to keep true and correct in all of their business dealings would want and encourage whistle blowing within their organization. Organizations should create a policy for reporting illegal or unethical practices. The top management, including the CEO should demonstrate a strong commitment to whistle blowing. 3. I hope to goodness that I will never have to face a situation like the one that El-Hadad faced. I believe that I would have made photocopies of all the documents supporting the fraud that was committed. I would have secured an American attorney that specialized in helping whistle blowers first and spoke with him concerning the possible negative ramifications and what we should do first to try to mitigate them. I would have then (while being accompanied by my attorney) presented what I knew to the administration. I feel that El-Hadad might have been able to prove that he was innocent if he had legal counsel sooner in the proceedings. I really don’t know if any of this would have helped, it seems to me that they were out for their pound of flesh and El-Hadad was their scapegoat. 4. An ethical dilemma is a complex situation that will often involve an apparent mental conflict between moral imperatives, in which to obey one would result in transgressing another. This is also called an ethical paradox since in moral philosophy, paradox often plays a central role in ethics debates. 4 One of the most quoted moral dilemmas would be: “In Book I of Plato's Republic, Cephalus defines‘justice’ as speaking the truth and paying one's debts. Socrates quickly refutes this account by suggesting that it would be wrong to repay certain debts—for example, to return a borrowed weapon to a friend who is not in his right mind. Socrates' point is not that repaying debts is without moral import; rather, he wants to show that it is not always right to repay one's debts, at least not exactly when the one to whom the debt is owed demands repayment. What we have here is a conflict between two moral norms: repaying one's debts and protecting others from harm. And in this case, Socrates maintains that protecting others from harm is the norm that takes priority.” 5 In my opinion, an ethical dilemma and a moral dilemma are too similar to make a distinction. As for if El-Hadad faced an ethical or moral dilemma when reporting his friend and co-worker…I do not think so. El-Hadad sounds like he knew what was right and what was (in this case) very wrong and he did the right thing by reporting the fraud. Some moral dilemmas are the result of uncertainty about the kind of actions someone should take to achieve the best outcome. El-Hadad knew the best action to take was to report the fraud. It is unfortunate that it was his friend that he had to report. Referenced: 1. Wikipedia. Whistle Blower. (ND). Retrieved from http://en.wikipedia.org/wiki/Whistleblowers on April 13, 2012. 2. Wikipedia. Whistle Blower. (ND). Retrieved from http://en.wikipedia.org/wiki/Whistleblowers on April 13, 2012. 3. National Whistleblowers Center. NWC History. (ND). Retrieved from http://whistleblowers.nonprofitsoapbox.com/index.php'option=com_content&task=view&id=14&Itemid=43 on April 13, 2012. Wikipedia. Whistle Blower Protection in the United States. (ND). Retrieved from http://en.wikipedia.org/wiki/Whistleblower_protection_in_the_United_States on April 13, 2012. Ravishankar, Lilanthi. Santa Clara University. Encouraging Internal Whistleblowing in Organizations. (2003). Retrieved from http://www.scu.edu/ethics/publications/submitted/whistleblowing.html on April 13, 2012. Flamand, Lee. EHow. What is an Ethical Dilemma'. (ND). Retrieved from http://www.ehow.com/about_5481837_ethical-dilemma_.html on April 13, 2012.