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Chapter 7: Blowing the Whistle

True/False Questions:
1. When an employee discovers evidence of malpractice or misconduct in an
organization, he or she faces an ethical dilemma.
(True) False

2. A whistleblower is an individual who discovers corporate misconduct.

True (False)

3. Internal whistle-blowing is when an employee discovers corporate misconduct and

brings it to the attention of his or her supervisor and then brings it to the attention of
law-enforcement agencies and/or the media.
(True) False

4. If an employee brings the misconduct of an organization to the attention of law-

enforcement officials, he or she is external whistle-blowing.
(True) False

5. One could argue that whistleblowers provide an invaluable service to their

organizations and to the general public.
(True) False

6. The discovery of illegal activities before the situation is revealed in the media could
potentially save organizations millions of dollars in fines and lost revenue from the
inevitable damage to their corporate reputations.
(True) False

7. Whistle-blowers are often severely criticized as informers, "sneaks," spies, or

"squealers," who have in some way breached the trust and loyalty they owe to their
employers.
(True) False

8. Everyone views whistleblowers as brave men and women who put their careers and
personal lives at risk in the name of "doing the right thing."
True (False)

9. When a whistleblower's immediate supervisor does not act, the whistleblower should
exhaust the company's internal procedures and chain of command up to the board of
directors.
(True) False
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10. Whistle-blowing is ethical when the company, through a product or decision,

causes serious and considerable harm to the public or breaks existing laws, the
employee should report the organization.
(True) False

11. Whistle-blowing is ethical if the employee has valid reasons to believe that
revealing the wrongdoing to the public would result in changes necessary to remedy the
situation.
(True) False

12. Whistle-blowing is unethical if the employee is motivated by the opportunity for

financial gain, media attention or that the employee is carrying out an individual
vendetta against the company.
(True) False

13. Under the Federal Civil False Claims Act, whistle-blowers who expose fraudulent
behavior against the government are only entitled to less than 10 percent of the amount
recovered.
True (False)

14. A Qui Tam Lawsuit is a lawsuit brought on behalf of the federal government by
corporations against whistle-blowers.
True (False)

15. Since internal whistle-blowing usually receives media attention, it is possible to

track the history of such actions.
True (False)

16. An employee does not need irrefutable evidence before becoming a whistleblower;
just an inclination is sufficient.
True (False)

17. The threat of losing your job and being alienated by your colleagues should
outweigh the possible financial gains a whistleblower might receive.
True (False)

18. External whistle-blowing is a 20th century phenomenon.

(True) False

19. Sherron Watkins was the individual who blew the whistle on WorldCom's illegal
activities.
True (False)
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20. One of the first uses of the term whistleblower occurred in 1943, when Otto
Otopeka was dismissed from the U.S. State Department after giving classified
documents on security risks to the chief counsel of the Senate Subcommittee on
Internal Security.
True (False)

21. Public awareness of whistleblowers reached its peak in 2002.

(True) False

22. Employees are becoming less willing to respond to any questionable behavior they
observe in the workplace.
True (False)

23. The choice for employers is to ignore whistle blowers and face public
embarrassment and potentially ruinous financial penalties, or to create an internal
system that allows whistle-blowers to be heard and responded to before the issue
escalates to an external whistle blowing case.
(True) False

24. The Whistleblower Protection Act of 1989 finally addressed the issue of company
retaliation against corporate employees who bring accusations of unethical behavior.
True (False)

25. Prior to 2002, legal protection for whistleblowers did not exist.
True (False)

26. Since the Sarbanes-Oxley Act of 2002, Congress has taken an integrated approach
to the matter of whistle-blowing by prohibiting retaliation against whistleblowers and
by encouraging the act of whistle-blowing itself.
(True) False

27. The Sarbanes-Oxley Act of 2002 requires public companies not only to adopt a
code of business ethics, but also to set up an internal apparatus to receive, review, and
solicit employee reports concerning fraud and/or ethical violations.
(True) False

28. Employees who prevail in whistle-blower cases are entitled to damages, which
include double their back pay.
True (False)

29. A whistleblower hotline can only be successful if trust exists between employees
and their employer.
(True) False
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30. Companies should be prompt and provide a thorough investigation of all

complaints in today's legal environment.
(True) False

31. If the investigation is perceived to be half-hearted or there is even the remotest

suggestion of a cover-up, then the hotline will definitely never ring again.
(True) False

32. In today's environment, experts highly recommended that becoming a

whistleblower and taking your story public should be a first resort.
True (False)

33. After blowing the whistle on fraud, 90 percent of the whistle-blowers were fired or
demoted.
(True) False

34. After blowing the whistle on fraud, most of the whistle-blowers said they wouldn't
blow the whistle again.
True (False)

Multiple Choice Questions:

35. A (n) _______ is an employee who discovers corporate misconduct and chooses to
bring it to the attention of others.
A. tattle-tail
B. internal spy
(C). whistle-blower
D. chief ethics officer

36. A(n) ______ whistleblower is an employee who discovers corporate misconduct

and brings it to the attention of his supervisor, who then follows established procedures
to address the misconduct within the organization.
A. external
(B). internal
C. organizational
D. governmental

37. ______ whistle-blowing rarely gains media attention.

A. Governmental
(B). Internal
C. Coercive
D. External
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38. A (n) ______ whistleblower is an employee discovering corporate misconduct and

chooses to bring it to the attention of law enforcement agencies and/or the media.
(A). external
B. internal
C. organizational
D. governmental

39. When an employee discovers evidence of malpractice or misconduct in an

organization, he or she faces
______.
(A). an ethical dilemma
B. a cut and dry situation
C. a legal decision
D. an everyday occurrence

40. One could argue that whistleblowers provide ______.

A. a positive image of their organization
(B). an invaluable service to their organization
C. investors an unrealistic outlook of a company
D. a disservice to the public

41. The media often portray whistle-blowers as _____.

A. devious
B. fraudulent
(C). models of honor and integrity
D. deceitful

42. Whistle-blowing is ethical under all of the following conditions, EXCEPT:

(A). when the motivation is financial gain.
B. when the employee identifies a serious threat of harm.
C. when the company will cause serious and considerable harm to the public.
D. when the employee's immediate supervisor does not act, and the internal procedures
and chain of command have been exhausted.

43. The potential for financial gain in some areas of corporate whistle-blowing can be
______.
A. small.
B. personally devastating.
(C). considerable.
D. minuscule.
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44. All of the following can cause a whistleblower to lose legitimacy, EXCEPT:
A. motivation by financial gains.
B. motivation by media attention.
C. the employee is carrying out a personal vendetta.
(D). the employee is trying to protect the public.

45. Under the Federal Civil False Claims Act, whistle-blowers who expose fraudulent
behavior against the government are entitled to _______ of the amount recovered.
A. between 20 and 30 percent.
B. under 10 percent.
C. 30 percent.
(D). between 10 and 30 percent.

46. Under _______, whistle-blowers who expose fraudulent behavior against the
government are entitled to between 10 and 30 percent of the amount recovered.
A. a Qui Tam Lawsuit.
(B). the Federal Civil False Claims Act.
C. Title VII of the Sarbanes Oxley Act.
D. the Federal False Claims Act.

47. A Qui Tam Lawsuit is a lawsuit brought on behalf of ________ by a whistle-

blower.
(A). the federal government.
B. corporate executives.
C. the industry.
D. the community.

48. A Qui Tam Lawsuit is a lawsuit brought on behalf of the federal government by
______.
A. all employees.
(B). a whistle-blower.
C. the community.
D. the state government.

49. Since internal whistle-blowing _____, it is ______ of such actions.

A. usually receives media attention; possible to track the history.
B. rarely receives media attention; possible to track the history.
(C). rarely receives media attention; impossible to track the history.
D. usually receives media attention; impossible to track the history.
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50. What year did public awareness of whistleblowers reach a peak?

A. 1998
B. 2000
(C). 2002
D. 2004

51. _____ was the CEO of Enron when Sherron Watkins blew the whistle?
A. Joseph Berardino
B. Jeffery Skilling
C. Bernard Ebbers
(D). Kenneth Lay

52. Employees are becoming ______ to respond to any questionable behavior they
observe in the workplace.
A. less willing
B. hesitant
C. uncooperative
(D). increasingly willing

53. The _____ finally addressed the issue of retaliation against federal employees who
bring accusations of unethical behavior.
A. Sarbanes-Oxley Act
(B). Whistleblower Protection Act of 1989
C. False Claims Act of 1963
D. Federal Sentencing Guidelines Act

54. Congress took an integrated approach to the matter of whistle-blowing by

prohibiting retaliation against whistleblowers and encouraging the act of whistle-
blowing under which act?
(A). The Sarbanes-Oxley Act
B. The Whistleblower Protection Act of 1989
C. False Claims Act of 1963
D. Federal Sentencing Guidelines Act

55. Prior to ______, legal protection for whistleblowers existed only in the form of
legislation that encouraged behavior by employees who felt compelled to speak out,
without offering any safeguards against retaliation aimed at them.
A. 2000
(B). 2002
C. 2004
D. 2006
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56. All of the following are possible damages entitled to employees who prevail in
whistleblower cases, EXCEPT:
A. interest
B. back pay
C. all compensatory damages to make the employee whole
(D). reinstatement at a higher seniority status

57. _______ requires public companies not only to adopt a code of business ethics but
also to set up an internal apparatus to receive, review, and solicit employee reports
concerning fraud and/or ethical violations.
(A). The Sarbanes-Oxley Act
B. The Whistleblower Protection Act of 1989
C. False Claims Act of 1963
D. Federal Sentencing Guidelines Act

58. If the investigation is perceived to be _______, or there is even the remotest

suggestion ________, then the hotline will definitely never ring again.
A. half-hearted; that it was forgotten
B. forgotten; seen as insignificant
(C). half-hearted; of a cover-up
D. seen as insignificant; of a cover-up

59. Given the new legal environment surrounding whistleblowers, employers would be
wise to put all of the following mechanisms in place, EXCEPT:
A. a detailed report of all investigations, documenting all corporate officers involved
and all actions taken
B. a well-defined process to document how such complaints are handled
C. an employee hotline to file such complaints
(D). a prompt and thorough investigation of serious complaints

60. ______ is a telephone line where employees can leave messages to alert a company
of suspected misconduct without revealing their identity.
(A). A whistleblower hotline
B. An employee crisis hotline
C. A company hotline
D. A legal hotline

61. After blowing the whistle on fraud, only 16 percent of the whistle-blowers said they
______.
A. would blow the whistle again
(B). wouldn't blow the whistle again
C. would resign rather than speak up
D. would confront those involved
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62. A study of 233 whistleblowers by Donald Soeken of St. Elizabeth's Hospital in

Washington, DC, found that the average whistleblower was __________.
A. a woman in her fifties with an extroverted personality
B. a man soon to retire
C. a woman in her thirties with strong moral values
(D). a man in his forties with a strong conscience and high moral values.

Fill-in-the-Blank Questions:
63. A whistle-blower is an employee who discovers corporate misconduct and chooses
to bring it to the attention of others.

64. An internal whistleblower is an employee who discovers corporate misconduct and

brings it to the attention of his supervisor, who then follows established procedures to
address the misconduct within the organization.

65. Internal whistle-blowing rarely gains media attention.

66. An external whistleblower is an employee discovering corporate misconduct and

chooses to bring it to the attention of law enforcement agencies and/or the media.

67. When an employee discovers evidence of malpractice or misconduct in an

organization, he or she faces an ethical dilemma.

68. The potential for financial gain in some areas of corporate whistle-blowing can be
considerable.

69. A Qui Tam Lawsuit is a lawsuit brought on behalf of the federal government by a
whistle-blower.

70. A Qui Tam Lawsuit is a lawsuit brought on behalf of the federal government by a
whistle-blower.

71. In the year 2002 public awareness of whistleblowers reached a peak.

72. Kenneth Lay was the CEO of Enron when Sherron Watkins blew the whistle.

73. Employees are becoming increasingly willing to respond to any questionable

behavior they observe in the workplace.

74. The increasingly finally addressed the issue of retaliation against federal employees
who bring accusations of unethical behavior.
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75. Under the Sarbanes-Oxley Act, congress took an integrated approach to the matter
of whistle-blowing by prohibiting retaliation against whistleblowers and encouraging
the act of whistle-blowing.

76. Prior to the year 2002, legal protection for whistleblowers existed only in the form
of legislation that encouraged behavior by employees who felt compelled to speak out,
without offering any safeguards against retaliation aimed at them.

77. The Sarbanes-Oxley Act requires public companies not only to adopt a code of
business ethics but also to set up an internal apparatus to receive, review, and solicit
employee reports concerning fraud and/or ethical violations.

78. A whistleblower hotline is a telephone line where employees can leave messages to
alert a company of suspected misconduct without revealing their identity.

Essay Questions:
79. Discuss the term whistle-blower. Give an example of a whistle-blower.
(p. 134) An employee who discovers corporate misconduct and chooses to bring it to
the attention of others. Student responses will vary on the second part of the question.

80. Summarize and discuss the differences between internal and external
whistleblowers.
(p. 134) Internal whistleblowers are employees who discover misconduct in the
workplace and communicate this to their supervisor, who then follows established
procedures to address the misconduct within the organization.
External whistleblowers are employees who discover corporate misconduct and choose
to bring it to the attention of external parties, such as law enforcement agencies or the
media.

81. Discuss when whistle-blowing is ethical and when it is unethical.

(p. 135) Whistle-blowing is ethical when:
1) The company, through a product or decision, will cause serious and considerable
harm to the public (as consumers or by standers) or break existing laws the employee
should report the organization.
2) When the employee identifies a serious threat of harm, he or she should report it and
state his or her moral concern.
3) When the employee's immediate supervisor does not act, the employee should
exhaust the internal procedures and chain of command to the board of directors.
4) The employee must have documented evidence that is convincing to a reasonable,
impartial observer that his or her view of the situation is accurate, and evidence that the
firm's practice, product, or policy seriously threatens and puts in danger the public or
product user.
5) The employee must have valid reasons to believe that revealing the wrongdoing to
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the public will result in the changes necessary to remedy the situation.
The chance of succeeding must be equal to the risk and danger the employee takes to
blow the whistle.
Whistle-blowing is unethical when: if there is evidence that the employee is motivated
by the opportunity for financial gain or media attention or that the employee is carrying
out an individual vendetta against the company, then the legitimacy of the act of
whistle-blowing must be questioned.

82. What factors can make a whistleblower lose legitimacy in the eyes of viewers?
(p. 134-135) If there is evidence that the employee is motivated by the opportunity for
financial gain or media attention, or that the employee is carrying out an individual
vendetta against the company, then the legitimacy of the employee's whistle-blowing
must be questioned.

83. Discuss Qui Tam Lawsuits.

(p. 135) A Qui Tam Lawsuit is a lawsuit brought on behalf of the federal government
by a whistle-blower under the False Claims Act of 1863.

84. Discuss both positive and the negative views of whistleblowers in the media.
(p. 136) One could argue that whistleblowers provide an invaluable service to their
organizations and to the general public. The discovery of illegal activities before the
situation is revealed to the media could potentially save organizations millions of
dollars in fines and lost revenue from the inevitable damage to their corporate
reputation. However, in contrast to the general perception that whistleblowers are brave
men and women putting their careers and personal lives at in order to "do the right
thing," some feel that whistleblowers are motivated by money or personal egos.
Student responses will vary on the second part of the question.

85. Explain the differences between the Whistleblower Protection Act of 1989 and
the Sarbanes-Oxley Act of 2002 in regards to whistleblowers.
(p. 138-140) The Whistleblower Protection Act of 1989 addresses the issue of
retaliation against federal employees who bring accusations of unethical behavior. The
act imposed specific performance deadlines in processing whistleblower complaints
and guaranteed the anonymity of the whistleblower unless revealing the name would
prevent criminal activity or protect public safety. The Sarbanes-Oxley Act of 2002
allowed Congress to take an integrated approach to the matter of whistle-blowing by
prohibiting retaliation against whistleblowers and encouraging the act of whistle-
blowing.

86. Discuss the consequences of ignoring a whistle-blower.

(p. 136-141) The possible the consequences are face public embarrassment and
potentially ruinous financial penalties, unceasing media attention, and the often
terminal damage to the reputation and long-term economic viability of the organization.
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87. How can a whistle-blower hotline be effective? Explain.

(p. 140-141) For a whistleblower hotline to be effective trust must exist between
employees and the employer. This trust means that the information can be given
anonymously and without fear of retaliation, even if the identity of the whistleblower is
revealed during the investigation.
The organization can make all the promises in the world, but until that first report is
completely and thoroughly investigated, the hotline may never ring again.

88. Discuss how a company should build internal policies to address the needs of
whistleblowers.
(p. 140) Given this new legal environment surrounding whistle-blowers, all employers
would be wise to put the following mechanisms in place:
1) A well-defined process to document how such complaints are handled, a nominated
contact person, clearly identified authority to respond to the complaints, firm
assurances of confidentiality, and non-retaliation against the employee.
2) An employee hotline to file such complaints, again with firm assurances of
confidentiality and non-retaliation to the employee. 3) A prompt and thorough
investigation of all complaints.
4) A detailed report of all investigations, documenting all corporate officers involved
and all action taken.

89. Discuss the possible risks involved in becoming a whistle-blower.

(p. 134-135) Whistle-blowers are often severely criticized as informers, sneaks, spies,
or squealers, who have in some way breached the trust and loyalty they owe to their
employers. The general perception is that whistle-blowers are brave men and women
putting their careers and personal lives at risk to do the right thing, Whether the
motivation to speak out and reveal the questionable behavior comes from a personal
ethical decision or the potential for a substantial financial windfall will probably never
be completely verified, but the threat of losing your job or becoming alienated from
colleagues by speaking out against your employer must be diminished by the
knowledge that some financial security will likely result.