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Whistleblowers: Incentives, Disincentives, and Protection Strategies by Frederick D. Lipman

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Chapter Four

Disincentives to Internal Whistleblowers

It is said that nobody likes a snitch.1

THERE ARE SERIOUS DISINCENTIVES to internal whistleblowing. The phrase “internal whistleblowing” refers to employees of an organization providing information about its illegal or unethical conduct. External whistleblowers, such as Harry Markopolos, the Madoff whistleblower, do not suffer these same disincentives.

According to the former general counsel of the Securities and Exchange Commission (SEC):

[Whistleblower advocates] would tell you that it takes extraordinary courage to be a whistleblower, because blowing the whistle on corporate misconduct invariably means, at a minimum, ostracism in the workplace. Often it means the loss of one's job, or at the very least the loss of one's ability to do one's job, and it may also mean the loss of one's friends. There is only a small prospect of vindication; or if it comes, it comes only after many years.2

Organizations that wish to have an effective whistleblower policy, such as the one described in this book, must devise a system that either eliminates or at least ameliorates these disincentives. Other chapters of this book discuss the huge potential statutory bounties available to whistleblowers, but it should be remembered that these people have to endure many years of litigation to obtain these awards and that the median whistleblower award is only approximately $150,000 after legal fees.3

Disincentives to internal whistleblowing can be ...

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