Whistle Blowing

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MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE

AARON MAKAHAMADZE

Whistle blowing has been described as violating company and collegial loyalty while at the same time it helps to inform the public about business practices. This article is intended to: a. Discuss this statement in relation to whistle blowing as a technique of exposing unethical business practices in an organization b. Suggest other ways of exposing unethical business practices – highlighting the advantages and disadvantages of each technique

(a)INTRODUCTION Whistle blowing is an attempt by a member of former member of an organization to disclose wrong doing in or by the organization (Manuel, G. Velasquet – Business ethics: Concepts and cases, ). Whistle blowing may be divided in to two categories (a) internal whistle blowing and (b) external whistle blowing. A. Internal Whistle blowing

This happens when the wrong doing is reported to eh senior management (not immediate) of the organization. B. External whistle blowing happens when the wrong doing is reported to external publics such as the media or regulatory bodies or government. In all case an exposure of wrong doing in the organization is done to someone else. Whistle – blowing has been described as violating company and collegial loyalty in an organization.

COMPANY LOYALTY – VIOLATION ARGUMENT “Some critics are now busy eroding another support of free enterprise – the loyalty of the management team with its unifying values of cooperative work. Some of the enemies of business now encourage employee to be disloyal to the enterprise they want to create suspicion and disharmony and pry in to the proprietary interests of the business.” James M. – Roce (1971) – Chairman of the board of Gener Motors. His views are a real negative attitude example towards whistle blowing and external whistle blowing in particular. His views represent the views of many in business organizations and are founded on the principal of an employee as an agent of the employer and this is discussed below.

THE LOYAL AGENT An employee is an agent of the employer that is he acts in the best interests of the employer (Principal) and is authorized to act on that employer’s behalf. The employee as an agent has an obligation to work as directed to protect confidential information and to be loyal. All these are seemingly violated when the employee blows the whistle to external publics. Some argue that, he now acts as a lawyer who “sells out” the client. The loyal agent argument receives some

support from the law where the concept of agency and the obligations of agents are well developed. The main responsibility of an agent is to work in the best interests of the principal.

However the agency of the employee to the employer is not without limits. At law, agreements and contacts are void if they require an individual to do something immoral or unlawful or to conceal such. Thus if an employee has a moral obligation to prevent other people from being harmed and the only way to prevent the harm is by whistle blowing even externally, the principle of agency cannot require him to remain silent. As much as the employee is an agent of the employer, he is also a moral agent of the community.

THE EMPLOYMENT CONTRACT AND CONTRACTUAL DUTY Some argue that external whistle blowing is always wrong because employee has contractual duty to be loyal to their employer and to keep all aspects of the business confidential. However, this contractual agreement is not unqualified and does not impose on the employee unlimited obligations towards the employer. Contracts are void if they require an individual to do or to conceal something unlawful or immoral. In the same spirit of an agent, if an employee has a moral obligation to prevent other people from being harmed and the only way to do so is by whistle blowing, an employment contract can not require him to remain silent. It would be void in such circumstances because it would require...
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