Worldcom: the Story of a Whistle-Blower
Question 1
At the time Cynthia Cooper discovered the accounting fraud, WorldCom did not have a whistle-blower hotline process in place. Instead, Cynthia took on significant risks when she stepped over Scott Sullivan’s head and notified the audit committee chairman of her findings. Discuss the key criteria for the operation of an effective corporate whistle-blower hotline. Be sure to highlight potential pitfalls that should be avoided and reference professional codes, legislation and academic literature as appropriate.
A whistle-blower is an organisation member (former or current) who discloses illegal, immoral or illegitimate practices under the control of their employers, to other persons or organisations that may be able to take and effect action (Miceli & Near, 1984). In the case which is given to us, Cynthia Cooper, who worked in WorldCom, was the whistle-blower when she revealed the truth regarding the malpractice in some accounting treatment taking place in WorldCom. But we can see from the case that she had to face a lot of pressure exposing this error because her reporting boss Scott Sullivan, the CFO of the company, himself was involved in doing the fraud. So, for Cynthia, going against the fraud was like going against her boss.
In her situation if there was a whistle-blower hotline system available in place then she would have been relieved from much of her pressure. Whistle-blowing hotline system is mainly having an independent reporting mechanism which uses employees to report any misconduct. This way any employee can expose any wrong practice going on in a company without being spotted as whistle-blower. An article of guardian.co.uk by John Carvel (May, 2009) says that “A survey of more than 5,000 nurses found 78% feared personal reprisals or a negative effect on their career if they reported concerns to their employers. It also found that 21% had been discouraged or told not to report concerns about what was going on in their workplace.”
At the time Cynthia Cooper discovered the accounting fraud, WorldCom did not have a whistle-blower hotline process in place. Instead, Cynthia took on significant risks when she stepped over Scott Sullivan’s head and notified the audit committee chairman of her findings. Discuss the key criteria for the operation of an effective corporate whistle-blower hotline. Be sure to highlight potential pitfalls that should be avoided and reference professional codes, legislation and academic literature as appropriate.
A whistle-blower is an organisation member (former or current) who discloses illegal, immoral or illegitimate practices under the control of their employers, to other persons or organisations that may be able to take and effect action (Miceli & Near, 1984). In the case which is given to us, Cynthia Cooper, who worked in WorldCom, was the whistle-blower when she revealed the truth regarding the malpractice in some accounting treatment taking place in WorldCom. But we can see from the case that she had to face a lot of pressure exposing this error because her reporting boss Scott Sullivan, the CFO of the company, himself was involved in doing the fraud. So, for Cynthia, going against the fraud was like going against her boss.
In her situation if there was a whistle-blower hotline system available in place then she would have been relieved from much of her pressure. Whistle-blowing hotline system is mainly having an independent reporting mechanism which uses employees to report any misconduct. This way any employee can expose any wrong practice going on in a company without being spotted as whistle-blower. An article of guardian.co.uk by John Carvel (May, 2009) says that “A survey of more than 5,000 nurses found 78% feared personal reprisals or a negative effect on their career if they reported concerns to their employers. It also found that 21% had been discouraged or told not to report concerns about what was going on in their workplace.”
References: * David A. Selden, 2004, FindLaw, Practical Solutions for Dealing with Whistle-Blowers. [Online] Available at: http://library.findlaw.com/2004 * Carvel