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US cases
This page highlights some US whistleblowing cases.
It
supplements the discussion
of whistle-blowing and secrecy.
The following cases are of interest because they suggest
some of the social benefits, personal costs and institutional
resistance to whistleblowing.
 The
Pentagon Papers Case
US intelligence analyst Daniel Ellsberg
provided the New York Times and other newspapers with
access to a comprehensive study documenting the 'secret
history' of US military and political activity in South
East Asia.
The case is discussed in David Rudenstine's The Day
the Presses Stopped: A History of The Pentagon Papers
Case (Berkeley: Uni of California Press 1996), Inside
the Pentagon Papers (Lawrence: Uni Press of Kansas
2004) edited by John Prados and Margaret Porter, Speaking
Freely: Trials of the First Amendment (New York:
Viking 2005) by Floyd Abrams and Ellsberg's Secrets:
A Memoir of Vietnam & the Pentagon Papers (New
York: Viking 2000).
Deep
Throat
Mark Felt, former second-in-command at the US Federal
Bureau of Investigation, admitted in 2005 that he had
been the 'Deep Throat' who supplied crucial information
to reporters Woodward and Bernstein about the misdeeds
of President Richard Nixon.
The Economist commented that
His
information kept the break-in alive as a news story.
He pushed the reporters, then lowly hacks from the Metro
section, to look higher into the administration by imploring
them to "follow the money" - which would become
an enduring aphorism for the American press. He revealed
the White House cover-up, which forced Nixon to leave
office before he was impeached. Without Mr Felt's actions
and the courage of the Washington Post's publisher,
Katharine Graham, Nixon would have served out his term.
Felt was convicted, post-Nixon, for authorising illegal
FBI break-ins against anti-Vietnam War protesters.
For views of Felt's whistleblowing see All the President's
Men (New York: Simon & Schuster 1974) by Bob
Woodward & Carl Bernstein, Woodward's The Secret
Man: The Story of Watergate's Deep Throat (New York:
Simon & Schuster 2005), David Halberstam's classic
The Powers That Be (New York: Knopf 1979), editor
Ben Bradlee's A Good Life: Newspapering & Other
Adventures (New York: Touchstone 1996) and David
Greenberg's superb Nixon's Shadow: The History of
an Image (New York: Norton 2003).
The
Insider and Tobacco
Dr Jeffrey Wigand
disclosed questionable practice by US cigarette group
Brown & Williamson and its peers.
After Wigand, a former B&W head of research and development,
told the US media in 1996 that cigarettes were the "delivery
device for nicotine" he faced lawsuits and death
threats but was persuaded by journalist Lowell Bergman
to reveal in a television interview that tobacco companies
knew nicotine was addictive, that carcinogenic material
was knowingly added to cigarettes, that research exploring
the dangers of cigarettes was suppressed and that attempts
to develop a "safer" cigarette were axed.
Wigand noted that executives "eliminated all reference
to anything that could be discovered during any kind of
liability action in reference to a safer cigarette".
His subsequent testimony was instrumental in a US$206
billion settlement in 1998 between the tobacco industry
and 46 US states for the costs of treating sick smokers.
The case is explored in Smokescreen: The Truth behind
the Tobacco Industry Cover-Up (Upper Saddle River:
Addison-Wesley 1996) by Philip Hilts and The Cigarette
Papers (Berkeley: Uni of California Press 1996) by
Stanton Glantz, online here.
It formed the basis of the Russel Crowe film The Insider.
A perspective is offered in The Cigarette Century
(New York: Basic 2007) by Allan Brandt.
Self-censorship by the US media in reporting Wigand's
whistleblowing is considered here.
Silkwood
and Kerr-McGee
Karen Silkwood gained attention for claims of malpractice
by nuclear fuels group Kerr-McGee before coming to what
was portrayed in the 1983 Hollywood feature Silkwood
as an untimely end.
There is an account of the case in Richard Raschke's The
Killing of Karen Silkwood: The Story Behind The Kerr-McGee
Plutonium Case (Boston: Houghton Mifflin 1981).
National
Fuel Gas and Lee
New York utility National Fuel Gas sacked corporate lawyer
Curtis Lee after he alleged NFG's chief executive and
president had ordered him to increase their remuneration
by backdating stock options on forms submitted to the
SEC. NFG then successfully sued Lee for the return of
documents that might have provided proof and in 2002 persuaded
a local court that he was in contempt of court, prohibiting
him from repeating the allegations. The court notoriously
ruled that he undergo psychiatric treatment (subsequently
reversed on appeal after Lee had been 'treated'). The
SEC investigation was frustrated by the death of the chair
of NFG's compensation committee.
Enron,
Watkins, Ceconi and others
Enron executive Sherron Watkins alerted CEO Kenneth Lay
to large-scale accounting irregularities in August 2001.
She resigned in November 2002 after inaction by Lay and
other officers and after "she had been demoted 33
floors from her mahogany executive suite to a 'skanky
office' with a rickety metal desk and a pile of make-work
projects". Enron subsequently collapsed amid claims
of regulatory indifference and complicity by auditors.
She disarmingly commented that
I
don't think Enron is that unusual. After all, we have
a chief executive class which act like dictators of
small Latin American countries.
The Economist commented in 2006 that
Ms
Watkins, at first sight a rare exception, is arguably
not even a whistleblower. She made no systematic attempt
to reveal wrongdoing to internal or external authorities,
the defining action of a whistleblower. Her qualms were
instead laid out in an internal memo that she wrote
to her boss, Mr Lay, expressing a fear that the company
might "implode in a wave of accounting scandals".
The memo was uncovered by an investigative committee
after the company had collapsed.
Lynn Brewer's Confessions of an Enron Executive
(New York: Authorhouse 2004) claims that many of her colleagues
tried to alert authorities, notably Margaret Ceconi in
anonymous messages to the SEC in July 2001 and publicly
to Enron directors in August 2001. In 2006 lawyer's for
defendant Ken Lay characterised Ceconi as "a nutcake".
Watkins
co-authored Power Failure: The Inside Story of How
Enron's Culture of Greed Led to the Biggest Bankruptcy
in American History (New York: Doubleday 2003) with
Mimi Swartz. Studies of Enron - such as Corporate
aftershock: the public policy lessons from the collapse
of Enron and other major corporations (New York:
Wiley 2003) edited by Christopher Culp & William Niskanen
and Innovation Corrupted: The Origins and Legacy of
Enron's Collapse (Cambridge: Harvard Uni Press 2008)
by Malcolm Salter - are highlighted in this site's discussion
of the dotcom and telco bubbles.
Cynthia
Cooper and WorldCom
WorldCom VicePresident Cynthia Cooper, responsible for
performance evaluations and setting budget standards,
informed the Board's audit committee that WorldCom had
used deceptive bookkeeping to hide US$3.8 billion in losses
(subsequently assessed as over US$9 billion).
Her account is Extraordinary Circumstances: The Journey
of a Corporate Whistleblower (New York: Wiley 2008).
Pointers to studies of WorldCom - such as Disconnected:
Deceit and Betrayal at WorldCom (New York: Wiley)
by Lynne Jeter - feature in our discussion of the telco
bubble.
Xerox and Duke
US executive Barron Stone alleged that Duke Energy group
fudged its accounting from 1998 to 2001 to receive substantial
benefits from US state governments. Stone alerted his
superiors in 1999 that the practice did not meet "generally
accepted accounting principles" but was told that
their decisions were final. In 2001 he anonymously alerted
state regulators and Duke senior executives. His identity
was apparently disclosed and he was transferred to the
Duke equivalent of Siberia.
Xerox Assistant Treasurer James Bingham was less lucky,
being who fired in 2000 after publicising creative accounting
that had boosted the group's reported earnings.
San
Diego
UBS Financial Services investment adviser Diann Shipione,
a trustee of the San Diego city employee retirement system,
blew the whistle on a proposed San Diego sewer bond issue
in 2003 after identifying that the city had not disclosed
underfunding its public pension fund (with an unfunded
liability of over US$1.15 billion). The city owed around
US$1 billion in health care benefits to retirees. The
proposed issue implied that the fund's actuary had approved
the underfunding.
Shipione commented that
I
had completely lost confidence in the city's financial
decision making. I just couldn't let this go forward.
Going
public resulted in postponement of the bond sale and significant
downgrading of the city's credit rating, raising future
borrowing costs. The city admitted that it had misstated
its financial condition. Several senior officials resigned.
Retired employees sued the city demanding action to fix
the shortfall and the Securities & Exchange Commission
initiated an investigations, accompanied by an FBI inquiry.
Rost
and Pfizer
Pfizer vice president for corporate marketing Peter Rost
claimed in 2003 that Pharmacia, acquired by Pfizer earlier
that year, illegally promoted the sale of human growth
hormone for unauthorised uses such as anti-aging therapy.
The claim was followed by an often public disagreement,
including criticism on 60 Minutes that Pfizer
had sought to block US consumers from saving money by
importing prescription drugs, and culminated in Pfizer
firing Rost in December 2005.
A Pfizer spokesman commented in 2005 that
Peter
Rost filed his whistle-blower lawsuit after Pfizer brought
the matter to the government. His actions in this regard
were clearly opportunistic
and went on to suggest that Rost was essentially blowing
the whistle on his own conduct. The spokesperson claimed
that Rost had asked Pfizer for a severance package of
US$12.5 million in 2004, and that his public criticism
began only after the company rejected the severance package.
Rost said he believed he had filed his suit before Pfizer
disclosed any information to the government, bringing
the suit because Pfizer and Pharmacia repeatedly rejected
his efforts to tell the FDA about the marketing.
I had spent from October 2002 trying to get Pfizer and
Pharmacia to take action and finally took my own action.
Fishbein
and the NIH
In 2005 the US National Institutes of Health (NIH) reinstated
medical safety expert Dr Jonathan Fishbein, who had been
fired after raising allegations of scientific misconduct
and sexual harassment in federal AIDS research.
Fishbein alleged he was fired for raising safety concerns;
the NIH said he was fired for poor performance, although
he had been recommended for a cash performance bonus just
weeks before he was notified of termination. He was hired
by NIH in 2003 to improve the safety of its AIDS research.
He raised concerns about several studies and filed a formal
complaint against a senior manager alleging sexual harassment
of subordinates and a hostile workplace.
An internal review substantiated many allegations, characterising
the NIH AIDS research division as ''a troubled organization''
whose managers engaged in unnecessary feuding, sexually
explicit language and other inappropriate conduct. It
concluded NIH's efforts to fire Fishbein gave the ''appearance
of reprisal" and represented a denial of justice.
An administrative law judge initially ruled that, unlike
ordinary federal workers, Fishbein and similar experts
had no whistleblower protection because they were hired
outside the civil service system as special employees
at a higher salary. Amid criticism the government reversed
course, arguing such people should have some protection.
The NIH proceeded to fire Fishbein and then, after strong
criticism, to rehire him in what is seen as an admission
that his whistleblowing was justified.
Eric Poehlman, a tenured faculty member at the University
of Vermont, admitted during federal court action to fabricating
over a decade's scientific data on obesity and aging.
That data had been helpful in obtaining millions of dollars
in grants from the US National Institutes of Health. Poehlman's
admission followed denial of charges against him, perjury
and attempts to discredit critics such as whistleblower
Walter DeNino.
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