Originally published at Corporate Compliance Insights on June 3, 2014 by Guest Columnist Donna Boehme.
Recently I’ve had a few epiphanies about corporate whistleblowers (are we ever going to find a better term for this?), and the most striking is this:
Many are accidental.
My month of whistleblower observations includes (i) a striking column by a former JPMorgan executive, “5 Terrible Things I Learned as a Corporate Whistleblower”1, (ii) a visit in the North York Moors to the home of the former head of risk for the UK’s HBOS bank and (iii) a fascinating keynote session with the former CEO of Japan’s Olympus Corporation at the recent Society of Corporate Compliance and Ethics (SCCE) European conference in London.
Three corporate whistleblowers, three jurisdictions, three very different sets of circumstances, and yet, all with some strong commonalities worth calling out – if we are ever to make progress addressing this singularly challenging topic.
How the corporate world treats its whistleblowers is nothing short of alarming.
As Adam Turteltaub, SCCE VP of Membership Services, puts it: “Whistleblowers are courageous, principled heroes, unless they are on my team, in which case they are dirty rotten traitors.” Whistleblowers are like the foreign body in the organization being attacked by its white blood cells. Or the nail sticking out of the board, begging to be hammered.2
The modern compliance program has as its stated goal to find, fix and prevent problems. Whistleblowers are a key resource in achieving this goal. But still, the white blood cells remain vigilant.
But what happens when the whistleblower is a senior manager, head of a control function or even a CEO, who happens upon the problem – sometimes a very large problem – in the ordinary course of doing their job well? In companies with healthy ethical cultures, people who see problems are encouraged to fix them or consult with others who can do so. Managers are accountable for fixing and preventing problems.
But in companies with weak ethical cultures, particularly those with embedded power structures that govern through fear and retaliation, even executives or leaders in control functions (including chief compliance officers) who do not “go along” can be the object of vicious reprisals.
That’s when a corporate manager can become an “accidental” whistleblower, just for doing their job well. When that happens, the attack of the white blood cells can be swift, brutal and, in some cases, maybe even life endangering.
Take a look at the stories of these three corporate execs-turned-whistleblowers.
JPMorgan’s Linda Almonte: Daughter Followed Home By Black Van
In a post that has been retweeted around the world, Linda Almonte from JPMorgan, wrote: “5 Terrible Things I Learned as a Corporate Whistleblower.” And terrible things they are. Almonte found she had wandered into the half-light realm of the whistleblower when, as part of her job, she discovered a $250 million mortgage fraud and informed her management about it, again and again. She writes: “I thought I was protecting the bank.” Evidently, Linda didn’t get the memo about “going along.”
Almonte gives us insight into what really happens to corporate whistleblowers, and it is alarming. In addition to “you can be an accidental whistleblower” (#5), Almonte notes that “you will never get another job” (#3) and “they will hunt you to the ends of the earth” (#4). The image I found most disturbing was that of a black van following Almonte’s 11 year-old daughter home from school by hired investigators, a development that also terrified her teachers.
Paul Moore: Brought Down a British Knight of the Realm
Then there’s Paul Moore, ex-Head of Group Regulatory Risk and compliance for UK banking giant HBOS. I visited Paul a few weeks ago at his North York home. He lives in an English village of 300 so bucolic you might forget that Moore has been through the corporate wringer and back since 2004.
HBOS had to be bailed out by the UK government during the 2008 financial crisis, to the tune of some £20 billion, after undertaking the kinds of excessive risks Moore had previously warned the Board about.
You can Google the long, twisting saga of Moore’s story, which includes being summarily fired after delivering a report on the aggressive sales culture to the HBOS Board and, much later, testimony to a select committee of the UK Parliament, and the downfall and forfeited knighthood of his former boss, Sir James Crosby. Crosby had fired him personally and written to Paul stating “the decision was mine and mine alone.” The end of the story has not yet been written, pending the outcome of further Parliamentary inquiry into the way HBOS investigated Moore’s claims. KPMG is involved and the word “cover up” has been thrown around.
Moore is writing a book about his journey (which includes what he calls his “tribulation”) and everything that happened after he tried to do his job well at HBOS. He tells me it will include another common theme to these cases: the devastating personal impact on both Moore and his family, the details of which are actually hard to hear. The book will be called “Crash! Bank! Wallop! The Memoirs of the HBOS Whistleblower” and will be published toward the end of this year.
Michael Woodford: Japanese CEO-Turned-Whistleblower (and Sushi Aficionado)
In 2012, Michael Woodford was hand-picked by the Chairman of Olympus Corporation, the Japanese manufacturing giant, to succeed him as CEO. As those who have read his book “Exposure” will know, Woodford was barely weeks on the job before he was confronted with newspaper allegations of an enormous financial accounting fraud scheme, which he later learned his staff were instructed not to discuss with him. Woodford recently shared his experiences with several hundred compliance practitioners at the SCCE European conference in London. You could hear a pin drop.
What is a CEO to do, when he reads in the tabloids about fraud in his own company? Evidently in Japan, ignore and cover up. Woodford refused to do so.
Woodford told a particularly vivid story of a lunch meeting in the Olympus boardroom involving the Chairman, a $1,000 platter of sushi (for the Chairman) and a “mankey tuna sandwich” (for him) that would be a terrific example of the many hundreds of forms of subtle corporate retaliation, if it weren’t so chilling.
Ultimately, Woodford received some satisfaction when the entire Board was fired and sentenced to prison. He was awarded $10 million in a wrongful dismissal settlement, but not before being warned of his own death (disguised as suicide) at the hands of Japanese organized crime and watching his wife wake up screaming at night in fear.
So let’s call this “Three Terrible Things I’ve Observed About Accidental Corporate Whistleblowers”:
1) The more senior the whistleblower, even the “accidental” kind, the more brutal the force applied to retaliate and silence.
That’s because these folks are senior, knowledgeable and credible. That makes them much more dangerous to established sources of power in the organization. And so they must be destroyed. The retaliation is swift and visible, to send this clear message to other would-be whistleblowers: “this is what happens to those who rock the boat.” Companies will spare no expense to silence and punish these accidental whistleblowers, even to the point of renting houses across the street from the family home to eavesdrop or hiring cars to frighten their children on the way home from elementary school.
2) The personal toll on the whistleblower is devastating and extends to their family.
The toll on corporate whistleblowers is devastating, intrusive and sometimes never ends. As Almonte notes “you will never work again.” Moore told me that, despite an impressive CV that includes being a top-earning KPMG partner and other sterling credentials, he has never received a single call from a recruiter. All three of our accidental whistleblowers tell heart-wrenching tales of the mental, emotional and physical impact on themselves and their families. What that tells us is that the strategy of punishing whistleblowers to send a message to others is pretty darn successful.3
3) There are no happy endings.
Woodford says that speaking publicly is “part of the therapy” to deal with the experience of becoming an accidental whistleblower. Having heard first-hand both Moore and Woodford recount their stories, I am struck by the impact on executives who have spent their careers as respected and valued leaders, suddenly brought to fame in ways they never would have sought.
All three of these accidental whistleblowers thought they were acting to protect their companies. I was also struck by their need for closure, to tell the tale so others can know the terrible and unexpected things that can happen to even senior execs for nothing more than doing their jobs well. Writing a book seems to be part and parcel of this process.
The three company managers I’ve described will likely have different endings to their stories. Almonte is still out of work and in litigation after five years, and her family is accepting donations to support this process. Moore has landed as the chairman of a new peer-to-peer lending company. Woodford is consulting and writing. But as these stories vividly demonstrate, any manager can become an accidental corporate whistleblower, including (and sometimes especially) those in control functions.
The lucky ones – and this is rare – reinvent themselves beyond the reach of their former employers. But no matter where their journeys take them, their previous careers as they knew them are over.
Imagine if all three were still in their former day jobs, continuing to do them well. If their bosses had valued and embraced them instead of launching an attack of the white blood cells, JPMorgan, HBOS and Olympus would all have different endings to their stories, too.
The Road Ahead
Corporate whistleblowers must be protected. Until we embrace them as assets, rather than nails to be hammered down, little will change.
Whistleblowers have a vital role in our communities, which is why we have whistleblower protection laws. Whistleblowers uncover wrongdoing that harms society, such as frauds, government waste and abuse, bribery and safety concerns.
The recent revelations about the numerous Veterans Affairs branches that may have been keeping two sets of books, including fake waiting lists, while our veterans died came to light not through an audit or investigative reporter, but from a whistleblower.
How a company treats its internal whistleblowers is a bellwether of its corporate culture. But as these stories illustrate, we must also, as a larger society, come to terms with the corporate whistleblower. We all have a stake in encouraging corporate whistleblowers. The more we talk openly about the realities of managers fired for doing their jobs well, the better.
We need to change how we view, address and protect all whistleblowers, and that includes (especially) the accidental ones.
[1] https://www.cracked.com/article_21043_5-terrible-things-i-learned-as-corporate-whistleblower.html
[2] “The nail that sticks out gets hammered down” is Japanese saying detailed by Michael Woodford in his book “Exposure” amazon.com/Exposure-Inside-Olympus-Scandal-Whistleblower/dp/1591845750
[3] bloomberg.com/news/2014-05-21/gm-said-overhauling-legal-office-to-avoid-recall-delays.html