By Del Jones, USA TODAY
Ethics experts praise the decision by an Enron financial vice president to send a letter of warning to CEO Kenneth Lay. They say Sherron Watkins was courageous, heroic and a model for workers. Watkins walked the fine line, staying loyal to the company when she sent the seven-page letter in August warning that the energy company's finances could be in shambles. Enron declared bankruptcy on Dec. 2, and many employees with 401(k) retirement plans lost their savings.
Under most cases, there is no legal obligation for employees to go to the Securities and Exchange Commission or other law enforcement. But there may be a moral obligation and one that isn't easy to fulfill because the lives of whistle-blowers are disrupted and often ruined.
"It's a real sticky situation," says Barbara Ley Toffler, an adjunct professor at the Columbia Business School. Most who don't get fired are at least excluded from sensitive meetings as "blabbermouths." From grade school on, Americans don't treat tattletales kindly, she says.
Toffler was hired away from the Harvard Business School in 1995 to launch an Arthur Andersen arm to help companies with ethics. Andersen is Enron's independent auditor that has admitted to shredding documents.
Does Toffler, who left Andersen in 1999, find the accounting firm's involvement in the scandal ironic? "What do you think? Yes, I find it ironic," she says.
One celebrated case of whistle-blowing is of Jeffrey Wigand, the former head of Brown & Williamson's research and development. He became the star witness in the $246 billion tobacco-industry settlement, a story that was made into a movie, but not before he lost his $300,000-a-year job, went to work as a school teacher for one-tenth the salary, had no insurance for his sick daughter and saw his marriage fall apart.
There has been much corporate interest in ethics since the 1989 Exxon Valdez oil spill. That led to laws requiring mandatory fines for corporate wrongdoing, fines that judges can reduce if companies take pre-emptive steps.
Most large companies reacted to the Exxon case by hiring ethics officers and installing hotlines where employees can anonymously report illegal and unethical behavior. But there is wide variation in how companies respond.
Texas Instruments has a phone hotline, an e-mail address where the sender can't be traced and a mailbox with a key belonging only to David Reid, ethics and compliance director. When facing a situation that borders on unethical, workers are urged to ask themselves: "How would this look in the newspaper?" Reid said.
David Gebler, president of Working Values Group, says he tries not to preach the moralistic side, but he is finding that companies that merely maintain legal compliance get into trouble. Employees who take shortcuts on safety do so because they believe it's what the company expects, he says.
Should Watkins have gone further than the CEO? Bill Redgate, founder of the Center for Values Based Leadership, believes she had that obligation. "If somebody doesn't get a fair response internally, they have the right to go anonymously to the SEC."
But Margaret Blair, of the Georgetown University Law Center, says Watkins did the right thing, and action beyond that becomes "tricky."
For one thing, where it comes to finances, most employees can't be certain that the company is doing anything wrong. "It's not like you're witnessing a murder," Gebler says. "Organizations can thwart you by saying, 'It's not a big deal,' or 'You don't know what you're talking about.' "
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