29 July 2011
The Protected Disclosures Act has been in force for well over ten years in New Zealand. Why then are there remarkably few occasions when informants seek the security promised by this statutory process? Are we discouraged because of the way the media reports whistleblowing elsewhere in the world? Do people becoming aware of problems in their workplace share their concerns with someone they know and trust rather than putting faith in formal arrangements?
The 2010 State Services Integrity Survey found that only 40% of respondents were satisfied with the action taken by their agency in response to reported misconduct. Where misconduct relates to senior officials many lack confidence that appropriate action will be taken. A consequence is the encouragement given to agencies to promote their Protected Disclosures policies.
In the United States whistleblowing is surrounded with much drama. The outcome is often a public profile for the whistleblower, followed by career disintegration. A case this week has seen the vindication of whistleblowing, even if the process has been somewhat protracted and the US Army does not come out with any glory.
Bunny Greenhouse may well become an icon, the whistleblower of the decade.
This week after six years of litigation the US Army has settled her claim, compensating her with almost $1m for her losses. As a senior procurement executive, she strongly objected to massive, secret, non competitive, cost-plus contracts being given to Kellogg Brown and Root, a Halliburton subsidiary, in the run up to the Iraq war. Her agency closed ranks. She was demoted and notice of her dismissal withdrawn only because of media attention.
She testified at a Congressional committee about corrupt practices, in the face of advice from her agency that it would not be in her interests to do so. Subsequent legislation remedied the arrangements she disclosed and the Army ended its relationship with Kellogg Brown and Root. But she was removed from the senior executive service and lost her top secret security clearance. She sued for this retaliation. The case settled this week and she has been assured of a full career and benefits.
The National Whistleblowers Center has described Greenhouse as an American hero. “Whistleblowers like her save the taxpayers hundreds of billions of dollars and are on the front line fighting fraud and corruption. They need to be rewarded and supported.” Many would be dispirited after this sort of experience. Greenhouse however has commented that she was simply doing her job and protecting the public interest … ” I firmly believe, regardless of the many injustices to me as a professional, that integrity in government is not an option, but an obligation.”
Your question as to why there have been few occasions of whistle-blowing under the umbrella of the Protected Disclosures Act 2000 (PDA) raises some interesting points that I would like to respond to as I am in the middle of a completing a business ethics paper.
Firstly we need to be clear about what whistle-blowing is. My reading on the subject leads me to propose this working definition: Whistle-blowing is the revelation of information with which one is legitimately entrusted that would not otherwise be revealed, with the intention of exposing serious wrongdoing.
As you suggest, media reporting of whistle-blowing in the US could be a discouraging factor for New Zealanders, although the patchwork of whistle-blowing legislation in the US is quite different to our Act. American law varies from state to state and includes the ability for whistle-blowers to receive a part of any payment or fine that a company is required to make, thus placing another layer of suspicion over the whistle-blower (Fisher, Gillespie, Harshman & Yeager, 1999).
Closer to home, Australian legislation is broader and considered to have more bite, covering private as well as public organisations. A recent NZ Herald article suggests the lack of protection for whistle-blowers in the private sector in New Zealand is one reason for the lack of voluntary exposure of serious wrongdoing in recent finance company failures. Under the PDA all public sector organisations are required to have internal procedures for reporting misconduct; private sector companies have no such requirements. In order for a corporate whistle-blower to be protected under the PDA, the serious misconduct must involve a criminal offence as well as a breach of the directors’ statutory duties (Watson & Hirsch, 2011). How ethical is it to have an Act that aims to provide reasonable protection to public sector whistle-blowers, but sets the bar much higher for whistle-blowers outside the public sector?
Other than internal processes, the media and legislation, what else might impact on the decision to disclose serious wrongdoing? Potential whistle-blowers are faced with ethical deliberations and consideration of the likely personal cost of their action or inaction. How could whistle-blowing be ethically wrong? An Australian parliamentary report suggests that employees “have a sense of loyalty to their employer, colleagues and clients” (House of Representatives Standing Committee on Legal and Constitutional Affairs, 2009, p. vii). Blowing the whistle means you are going against the team spirit.
Ronald Duska, on the other hand, argues that there is no obligation of loyalty to their employer as the employment relationship is a contractual one, rather than a reciprocal emotional relationship i.e friendship (Duska, 1990). While this seems quite logical, it doesn’t deal with the reality that employees, employers, clients and colleagues are people and people form emotional relationships with each other especially when they interact with each other daily. So the issue of loyalty for most people is a very real. Perhaps one way employees deal with this is, as you suggest, to discuss the issue with a trusted colleague, thereby sharing or even passing on the dilemma so that is no longer such a burden.
Another take on the employee/employer relationship is offered by Arendt and subsequently May who suggest that the grind of the bureaucratic workplace results in employees feeling powerless and irrelevant which distorts their sense of responsibility. As May points out “in this bleak institutional context, whistle-blowing would seem to be an act of remarkable moral courage….such acts will remain relatively rare.” (as cited in Fisher, Gillespie, Harshman & Yeager, 1999, para.9)
How can there be personal cost when New Zealand has the PDA? The Act instructs persons to whom disclosures are made to use their “best endeavours” not to disclose information that might identify the whistle-blower. The wording of the Act is not very reassuring and given the frequency of unauthorised ‘naming’ on the internet, beyond the scope of the Act there exists the likelihood of damage to workplace and other relationships. In addition career prospects may be adversely affected as New Zealand and indeed the world is a very small place in the 21st century. The likelihood of retaliation from individuals affected by whistle-blowing must be considered as a possible personal cost.
One further aspect of whistle-blowing which is worthy of consideration is when the whistle-blower is deemed to be incorrect. The scenarios for this are many and varied including honest mistake, employees being set-up, validity of information being successfully refuted and even disclosures made for reasons other than the belief of serious wrongdoing. Who decides that the belief that the information was true was not reasonable? On what grounds? What happens to the whistle-blower in these scenarios? Scott-Howmann from Bell Gully suggests that the Act would be “arguably inapplicable, and the employee would be prevented from relying on the protections offered by the Act.” (Scott-Howmann, 2001, para. 11) This would mean that anyone thinking of disclosing information regarding serious wrongdoing would have to be 100% certain of the situation and to assume that they knew the full picture. How easy would it be to let doubt creep in when the cost of being not fully informed is to have your identity revealed?
Perhaps the PDA has led us away from the true ethos of whistle-blowing. How can a person stand up and ethically blow the whistle whilst demanding anonymity? Does the whistle-blower need identity protecting or public acclaim? I invite your response.
Fisher, J., Gillespie, W. B., Harshman, E. F., Yeager, F. C. ( 1999). Whistleblowing on the Web. Retrieved January 5 2011 from
House of Representatives Standing Committee on Legal and Constitutional Affairs. Whistleblower Protection: A comprehensive scheme for the Commonwealth public sector. H.R. Rep. (2009). Retrieved January 5 2011 from
Scott-Howman, A. (2001). The Protected Disclosures Act. Retrieved on January 5 2011 from
Watson, S. & Hirsch, H. (2011, January 4). Whistleblower protection could have helped investors. Retrieved January 5 2011 from
I sincerely applaud Bunnatine “Bunny” Greenhouse for what she did, and can only imagine what she faced every day during a trial that lasted almost 6 years. After years of litigation, attorney Michael Kohn, president of the National Whistleblowers Centre, brought the case to a settlement. He said: “Bunny Greenhouse risked her job and career when she objected to the gross waste of federal taxpayer dollars and illegal contracting practices. She had the courage to stand alone and challenge powerful special interests. She exposed a corrupt contracting environment where casual and clubby contracting practices were the norm. Her courage led to sweeping legal reforms that will forever halt the gross abuse she had the courage to expose.”
When we point to whistle-blowing and Employee loyalty, this issue has been hotly contested. Why is whistle-blowing viewed by the company as an act of disloyalty on the part of an employee? Personally I totally agree with Ronald Duska when he said “…one does not have an obligation of loyalty to a company, even a prima facie one, because companies are not the kind of things which are proper objects of loyalty.” It is impossible for an employee to be as loyal to their employer as to a partner or family member. The latter relationship clearly indicates that loyalty is contradictory to self-interest. How many managers today still look on whistle-blowers as disgruntled employees who are not good team players? Is it possible that managers can be trained to view whistle-blowing as a benefit to the company rather than a threat? Can whistle-blowing not be seen as a positive way to end corruption and expose companies that are harming society, albeit in a big or small way?
The Utilitarian will ask: Which option for action will produce the greatest amount of happiness and the least harm? Bunny had two options – speak out or keep quiet! Utilitarianism is a consequence-based theory – priority must be given not to the actual intent of an individual moral choice, but rather to the result of that choice. Bunny told her superiors that the contract was unethical, but was overridden and seen as an annoyance and threat to the company. Bunny chose the morally good action of exposing the fraud and thereby bring about the greatest amount of good for the country and the public taxpayer and the least bad consequences was to the company and herself, which in the bigger scheme of things, the result did turn out very well.
To apply the Kantian moral theory, the question to ask is: Do the options for action demonstrate respect to rational humanity? Thus being a moral agent, means following “universal laws” – moral rules that hold, without exception, whatever the circumstances. This goes for any agent, albeit the company or the employee. It implies that the company and the employee must follow the same moral compass or standards and cannot be permitted to act in ways that are forbidden to others. Certainly the CEO knew that it was morally wrong to only allow one stakeholder to bid on the contract. Kant said that consistency requires rules that have no exceptions. Bunny acted on her responsibility to reveal this discrepancy, and is seems reasonable to hold that she was doing her job. If she kept silent, it would have been disrespectful and ignorant of rational humanity and therefore immoral.
Taking it a step further – what can be said of the code of conduct or code of ethics of the US Army. Instead of applauding Bunny for her actions, she was demoted and stripped of her security clearance. According to the virtue ethicist, this injustice is totally out of the question. Maybe it is time for managers to realise that paying attention to ethics is as important a business issue as paying attention to costs, profits and growth. It is a social responsibility.
Last but not least, I need to mention and highlight Bunny’s professional integrity. Here I wish to quote Brig. Gen. M.M. Wakin when he said: “Integrity is the modern name we use to describe the actions of those persons who consistently act from a firmly established character pattern of doing the right thing.” Bunny accepted it part of her responsibility to bring the unethical actions of her employer to light, with a clear and confident conscience. Her professional practices were constrained by basic moral principles. By doing that, she saved the mere taxpayer a lot of money, but also showed that when the US Army went beyond their essential service function to society and distorted their purpose toward profits, power and greed, they lost the trust and respect of the US community and I suspect the global community as well.
I am very delighted that Bunny’s actions were worth it and that she got awarded and rewarded for it, but I cannot help but think of how many other whistle-blowers would be able to tell of a success story with a happy ending! In a perfect world there cannot be just honesty, integrity, justice and compassion – but also fraud, greed, dishonesty and many more. The issue is to find the golden pathway between right and wrong, and in my opinion that path is called “ethics”.
The main issue identified here is that although Whistle Blowers have had some protection under the Protected Disclosures Act (referred to as PDA from here on in) for over 10 years in New Zealand, there have been very few instances of Whistle Blowers seeking this statutory protection.
One question you raise which I would like to address is “Do people becoming aware of problems in their workplace share their concerns with someone they know and trust rather than putting faith in formal arrangements?”.
In a situation where the whistle blower may need to seek protection under the PDA it is more than likely because the whistle blower is going to disclose information externally. If they were only acting internally and were receiving the support of their management team, they would not need to seek PDA support. This action is defined in my current Business Ethics course documentation as; “External whistle-blowing relates to the disclosure about company activities to the media or external authorities.” (The Open Polytechnic, 2011 p 16).
Before taking this step, the employee has ethical and moral obligations to consider, as well as issues of loyalty to their employer. Duska (1990) argues that loyalty is only owed to “persons with whom I have special relationships” (Duska, R.F. ,1990, p144). He goes on to say that “in any relationship which demands loyalty the relationship works both ways and involves mutual enrichment” (Duska, R.F., 1990, p144). He argues that loyalty is not therefore something that needs to be applied to an employee’s relationship with the company that employs them, as that is not a special relationship or mutually enriching.
In the context of business in New Zealand, I do not believe that this is always the case. In “The Elements of Moral Philosophy”, the concept of cultural relativism describes how “the moral code of a society determines what is right within that society” (Rachels, J. & Rachels, S., 2010, p16). I understand this to mean that your personal moral code is formed from that of the society in which you live. I would argue that the everyday culture prevalent in many New Zealand businesses, particularly small businesses, or small regional offices of larger businesses is very different from that in the USA which you use as an example. A lot of businesses here operate with quite small management teams. The culture encourages socialising, for example Friday afternoon get togethers, active social clubs and frequent social events. Due to a national shortage of skilled staff, employer’s value their skilled staff and actively seek to retain them. The employer/employee relationship becomes more personal and the lines between professional and personal relationships blur. In many ways then, the New Zealand business environment does encourage loyalty, as it feels “mutually enriching” (Duska, R.F., 1990, p144). The feeling of disloyalty is consequentially more likely to be a larger deterrent to a whistle blower in NZ, and it is this that would lead people to “raise their concerns with someone they know and trust”, before considering any external action which would require the statutory protection offered by the PDA. NZ business culture promotes networking, and these contacts would provide a trusted second opinion.
If this failed to resolve the situation and someone reached the point of considering external action, I believe that the other issue you raised around the way in which the media treats whistle blowing elsewhere acting as a deterrent could indeed be the case. New Zealand is a relatively small country by International standards, and as a result, a news item which may not be a major issue in a larger country would probably be of national interest here.
In the smaller business community of New Zealand, both personal and professional integrity and reputation are important. This is especially the case where one is in a professional occupation which has its own code of ethics, such as Accountancy. One definition of professional integrity states that it is “about upholding the values and standards of a profession” (Open Polytechnic, 2011, p46). By the nature of their profession Accountants hold a position of trust, as they deal with confidential financial and commercial information. The revelation of this information in an act of whistle blowing would make it extremely difficult for an accountant to find another job if they were portrayed in the media here as having acted without professional integrity because they have divulged this confidential information.
If you consider Michael Davis’ discussion on De George’s Standard Theory, whistle blowing is morally required when “people have a moral obligation to prevent serious harm to others if they can do so with little cost to themselves” (Davis, M, 2001, p 7). Because of the parochial nature of New Zealand society, the reputational cost to the whistle blower is very likely to be high, and therefore an individual is much less likely to take this action.
In conclusion then, I feel that there are two main reasons why there have been very few instances of people seeking the protection of the PDA to act as a whistle blower. The first is that the nature of New Zealand business and social culture is more likely to lead an individual to seek informal ways of dealing with any situation they encounter internally, using their network of colleagues and trusted individuals. Secondly, this very culture would in itself act as a deterrent to someone acting as an external whistle blower, due to the likelihood of great personal and professional cost to the individual as a result of their actions and how they would be portrayed in the New Zealand media.
The Open Polytechnic of New Zealand (2011). Module 2 – Ethics and Employment Relations. In
71203 Business Ethics. Lower Hutt, New Zealand. Author.
Duska, R.F. (1990).Whistle Blowing and employee loyalty. In J. R. Desjardins and J. J. McCall (Eds.),
Contemporary issues in business ethics (2nd ed., pp 142-147). Belmont, CA: Wadsworth
Rachels, J. & Rachels,S (2010). The Elements of Moral Philosophy (6th Ed). New York, NY: McGraw Hill
Davis, M. (1996).Some paradoxes of whistleblowing. Businessand Professional
Ethics Journal, 15 (1), 3 -19.
…probably never any advantage in blowing the whistle! Interesting observation extracted from the link below.
“Reading that article, I also remembered that President Obama came into office promising more transparency. And yet this president’s team has now prosecuted six current or former government officials for leaking information to reporters, which the Times’ Charles Savage reported is more than all previous presidents combined.”
The Protective Disclosures Act (“the Act”) came into force on 1 January 2011 with the purpose of facilitating the disclosure and subsequent investigation of matters of “serious wrongdoing” in or by an organisation. It does so by protecting current employees, former employees, independent contractors and managers of the organisation who make such disclosures.
Your report suggests that it is the media that discourages whistleblowers from “blowing the whistle” and prevents them from seeking protection from the Act. I feel that there is a far more important aspect that puts employees off blowing the whistle on their organisation.
Evidence shows that whistleblowers suffer, often harshly, for doing what is arguably a social good. They are often victimized for making a report about a colleague’s or employer’s transgression and suffer consequences such as loss of employment, being ostracized from their colleagues and possibly their communities; this can often be before there is any media attention. Once the whistleblowers allegations are made public in their communities, there names are sometimes dragged through the mud, this can often push the whistleblower to leave their home, their district and the life that they have lived for so long.
New Zealand is a small country in comparison to the United States in which you make your comparison. Small businesses are more prevalent in our society. We have a close working environment/relationship with both management and contemporaries (both in and out of the organisation). Because of this closeness, employees often feel that they need to remain loyal to their colleagues, managers and the organisations in which they work. An employee’s duty of loyalty towards an employer, in earlier days, was used as a legitimate justification for dismissing an employee who reported a wrong doing on the part of their employer. An employee owes some duty of loyalty to their employer, Davis agrees with this by stating that whistleblowing is an “…unexcused misuse of one’s position in a generally law abiding, morally decent organization, an organization that prima facie deserves the whistleblower’s loyalty…”. However Ronald Duska argued that employees do not have prima facie duty of loyalty to their employees and that whistleblowing needs, therefore no moral justification. I agree with Duska’s position, loyalty is an important virtue and that it does not have the same context when discussing whistleblowing. In an employer/employee relationship each will fulfil their contractual agreement because that is what is required of them. It is not out of loyalty that they are doing their duties. An employee owes no loyalty to their employer and loyalty should not be used to justify silence when the public good is at stake.
The Act was put into place to remove the fear by protecting the employee from civil or criminal liability or disciplinary action by the employer. But because the Act does not encourage people to come forward, it is rarely used. There needs to be confidence that the Act will protect employees from the repercussions of “blowing the whistle” on their employers. Is it the employee’s lack of confidence in the Act that is discouraging them from seeking its protection? Prior to a review of the Act in 2009, whistleblowers would meet a brick wall if they made a procedural mistake regarding the organisation they wanted to complain about, who they complained to, or how they complained; and if mistakes were made, including not mentioning the Act in the disclosure, their complaint could potentially have been ruled out. However since this review, any technical mistakes made by the whistleblower will no longer rule out their complaints. This gives the whistle-blower more certainty in the Act when making their disclosure.
Your article also states that where misconduct relates to senior officials, may lack confidence that appropriate action will be taken. However, the public sector is required by law to put in place procedures for internal whistleblowing. Why is this not extended to the private sector? You state that only 40% surveyed by the State Service were satisfied with the actions taken by their agency in response to serious misconduct. However, what you failed to mention was that only 51% of those surveyed said that their organisation had a point of contact for advice on integrity issues including serious misconduct. This figure has risen from 43% when the survey was taken in 2007. So if the public sector is so unsure of who to contact in their own organisations, what must it be like in the private sector?
I feel it is important to mention this one major concern. The current legislation focuses mainly on whistleblowing in the public sector, leaving the private sector employees outside the purview. In order for a corporate whistleblower to be protected under the Act, serious misconduct must involve a criminal offence as well as a breach of the director’s statutory duties. Is it the private sector informants who fail to seek the security of the Act because the managers will not take the appropriate action? Perhaps it is time that these organisations are educated on the benefits of taking any allegations made seriously. By having procedures in place for internal whistleblowing will more often that not be good and there will be few occasions for matters having to be exposed ‘out of house’. Internal exposure allows organisations/managers a chance to fix problems before they develop in to full-blown scandals. It will also allow the organisation to check whether or not the whistleblower is genuine or is merely a disgruntled or malevolent employee attempting to disclose for personal gain.
Bather, A. (2012), Closing the Door on Whistleblowing, from:
Webber, R.A. (1989). Whistleblowing. Executive Excellence, 6(7), 9-10
Davis, M. (1996).Some paradoxes of whistleblowing. Business and Professional Ethics Journal, 15 (1), 3 -19.
Duska, R.F. (1990). Whistleblowing and Employee Loyalty. In J. R. Desjardins and J. J McCalls (Eds.), Contemporary Issues, in: Business Ethics (2nd ed., pp 142 – 174). Belmont, CA: Wadsworth.
The Open Polytechnic of New Zealand. (2009). Module Two. 71203 Business Ethics. Lower Hutt, NZ: Vanessa Scholes.
Protected Disclosures Amendment Bill, Second Reading, 31 March 2009, from:
Research New Zealand, State Services Commission Integrity and Conduct Survey 2010, pg 20, from:
Click to access Integrity-and-Conduct-Survey-2010-full-report.pdf
True that there is dubious traction in the public sector and very little elsewhere. In the public sector many disclosures also seem closely connected to an employment dispute. The comment on Open and Shut blog last week about the suggestion the Australian Act will exclude employment disputes seems to reflect the NZ experience http://www.foi-privacy.blogspot.co.nz/2012/05/commitments-to-whistleblower-protection.html
Your finger slipped on the commencement date ( 2001 – not 2011 )
The SSC encouragement to give effect to the section 11 duty to publish and republish PDA policy is a simple requirement which seems to tax most agencies.
An agency where there is trusted management probably doesn’t need a formal process…. but where is the exemplar of such a regime?
It will be interesting to see the effect of “bounty hunting” which the SEC seems to be encouraging in the US – providing an incentive to say nothing internally when misconduct first is detected, but await for an escalation, then refer to the regulator, and seek a percentage of any enforcement penalties.