GM's Tax Break
The National Commission on Fiscal Responsibility and Reform


Whistleblowing has been in the news quite a bit lately so that I decided to write two blogs on the topic. This is the first of the two. There are two kinds of whistleblowers. Internal whistleblowers who believe their superior might be engaged in wrongful conduct bring their concerns up through the chain of command in the organization all the way to the board of directors, if necessary.  Whistleblowing The more serious act is that of external whistleblowers who go outside the company with their concerns. For example, a whistleblower who is concerned that the organization is dumping toxic water in lakes or streams might contact the Environmental Protection Agency if nothing is done internally to correct the matter. Someone concerned about the safety of a product sold in the marketplace might go to the U.S. Food and Drug Administration.

Perhaps you recall the case of  Jeffrey Wiegand who became nationally known as a whistleblower regarding the decisions of tobacco company Brown & Williamson with respect to the selection of ingredients in their cigarettes when on February 4, 1996 on the CBS news program 60 Minutes, he stated Brown & Williamson intentionally manipulates the tobacco blend to increase the amount of nicotine in cigarette smoke, thereby increasing the 'impact' to the smoker. Wiegand paid the ultimate price of a whistleblower. He was “forced” to resign from the company that refused to disclose the information. He lost his house, his family, and his livelihood in the process. It turned out well for Wiegand in the end and he stuck by his ethical values. Wiegand has been honored for his courage and labeled a hero. Now, he lectures around the world as an expert witness and consultant for various tobacco issues, and devotes time to his non-profit organization Smoke-Free Kids Inc, an organization that attempts to help children of all ages make better decisions and healthy choices regarding tobacco us.

Let’s fast forward to current times. In October 2010 it was reported that Cheryl Eckard, a quality-assurance manager at the pharmaceutical company Glaxo-SmithKline who had blown the whistle on the safety of products made in its Puerto Rico plant, had been fired as a result of what the company called a “redundancy” related to the merger of Glaxo Wellcome and SmithKline Beecham a couple of years before. Of course, the suspicion was that Eckard was fired because she refused to go along in a cover-up of the quality assurance and compliance problems at the plant. She had made recommendations to her superiors that were ignored reportedly because the company was too busy preparing for an FDA inspection they hoped would clear the way for approval to market two new products, including the diabetes drug Avandamet, which was eventually approved. Eckard had found that the manufacturing facility had a contaminated water system, an air system that allowed products to be cross-contaminated and pills of different strengths mixed in the same bottles, among other problems.

Eckard filed a federal lawsuit against Glaxo under the U.S. False Claims Act. The law, which dates back to the Civil War, prohibits people or businesses from defrauding the government, and provides incentives for people who suspect wrongdoing to come forward. Lawsuits are typically filed confidentially and the Justice Department determines whether the case has enough merit for it to take over. If the Justice Department is successful in recovering money – usually through a settlement – the whistleblower is generally entitled to receive from 15% to 25% of the award. Cheryl Eckard won $96 million as part of a $750 million penalty against Glaxo. Glaxo agreed to pay millions in fines, penalties and settlements to resolve claims that it knowingly made and sold adulterated drugs, including Paxil, a popular antidepressant, with the intent to defraud and mislead.

How do you view whistleblowers that approach the government under the False Claims Act and win large awards from the settlement? Are they just out for the money? Should they profit from the wrongdoing of their employer? Or, are they performing an important public service? Write me and share your thoughts on this important issue.