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Top 10 reasons why whistle-blowers are heroes

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By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times
published February 15, 2002


If there's one thing this country likes, it is a whistle-blower. That's why Enron whistle-blower Sherron Watkins Thursday was treated like royalty by members of Congress when she testified about how she tried to convince top Enron executives that the company's accounting was rotten.

Blow the whistle on that government waste! Expose that corporate fraud!

We even make campy movies such as Erin Brockovich and The Insider about whistle-blower heros out to save the little guys from big, bad corporations.

So it comes as little surprise that Hollywood already is planning a TV movie based on the Enron collapse.

In truth, most whistle-blowers go through hell. They often are ostracized by their co-workers for rocking the boat. They often lose their jobs and can't find work in the same industry. Sometimes, they lose their families when the stress gets to be too much.

Some whistle-blowers get lucky. Under the federal False Claims law, which was passed in 1863 to protect the government from unscrupulous merchants during the Civil War, a whistle-blower is entitled to a percentage -- typically between 15 and 30 percent -- of amounts recovered in lawsuits.

That's made a few whistle-blowers wealthy, if not happy.

Whistle-blowers are not always right. But many are. They must make a very tough and lonely decision to go public and take the heat.

"Today, whistle-blowers tend to be walking out on an island. They are castigated within the business community," says Robert McMurrian, director of the Center for Business Ethics at the University of Tampa. "They pay a great price personally for telling the truth."

No whistle-blower's story is the same. But we should thank them for making a moral decision to try and expose a wrong. The corporate world could use more of them. One person can change things.

Here are 10 whistle-blowers who tried to make a difference:

1. Sherron Watkins, vice president, Enron Corp.: Watkins, an accountant, tried to warn Enron chairman Ken Lay in a six-page memo last August that the financial partnerships set up by the huge Houston energy company would prove disastrous and potentially destroy Enron. After meeting with Lay on Aug. 22, Watkins says Lay assured her "that he would look into my concerns." But Lay only asked Vinson & Elkins, Enron's outside law firm, to investigate. Nothing happened.

So why didn't Watkins go outside Enron and, in a true sense of the word, "blow the whistle" to the Securities and Exchange Commission or other federal agencies? Self-interest. "I didn't want to hasten our demise," she says. Lay, she maintains, was "duped" by other executives who enriched themselves in Enron's cozy deals. Enron declared bankruptcy in early December. Watkins, 42, still works for the bankrupt Houston energy trader.

2. Roy Olofson, former finance vice president at Global Crossing: Olofson accused the telecommunications giant of using faulty accounting and contrived "swaps" of fiber-optic capacity with other carriers to inflate revenue and mislead investors about the company's true financial condition. Bermuda-based Global Crossing, which operates from executive offices in Beverly Hills, Calif., on Jan. 28 became the largest telecom company in U.S. history to file for bankruptcy-law protection. Now Olofson's allegations, outlined in five-page letter dated Aug. 6 to Global Crossing's top attorney, are at the heart of investigations by the SEC and FBI.

Global Crossing did not bring Olofson's letter to the attention of its auditors. The company says Olofson left his position in November as part of a layoff. But, Olofson's attorney counters, Olofson was fired "because he told the truth."

3. Jeffrey Wigand, vice president for tobacco research and development at Brown & Williamson: Wigand became the whistle-blower on Big Tobacco, telling how the industry minimized tobacco's health and safety issues. His story was told in the movie The Insider. The tale gets nasty. Wigand was fired in 1993. His former employer publicized unsubstantiated allegations of shoplifting and domestic abuse from his past. He went on to assist the U.S. Food and Drug Administration in its investigation of the tobacco industry.

Wigand now runs a nonprofit foundation in South Carolina devoted to educating children about health issues, including tobacco use and alcohol consumption.

4. Jim Alderson, accountant, Quorum Health Services, Montana: In 1992, the CPA questioned some fishy bookkeeping practices at the hospital in Whitefish where he was chief financial officer. The problem? The hospital routinely sought reimbursement after filing fraudulent cost reports with Medicare.

When Alderson would not keep quiet, he lost his job. No other hospitals would hire him. But his effort led to a major whistle-blower case against his former employer, Quorum Health Services, and the giant Hospital Corp. of America, its former owner.

Five years after Alderson filed a fraud suit, the federal government joined the case and moved it to Tampa. In October 2000, Quorum agreed to settle the case. Under the False Claims law, Alderson received about 15 percent of Quorum's fine of $77.5-million. That's $11.6-million.

5. Michael Lissack, former banker at the Smith Barney brokerage: In 1995, Lissack exposed a scheme known as "yield burning" -- a form of fraud in municipal financing. Lissack and another banker filed suit against more than a dozen Wall Street firms under the False Claims act. In April 2000, 17 investment banks -- ranging from the giant Merrill Lynch to St. Petersburg's own Raymond James Financial and William R. Hough & Co. -- agreed to pay about $140-million to settle charges that they defrauded the federal government by overpricing securities sold in connection with certain municipal bond transactions.

For Lissack, the outcome is bittersweet. His lawsuit made him wealthy. But former friends shun him. He finds himself arguing with former co-workers that he happens to see in public. "This is a lonely profession. For most people, it ruins their lives," Lissack said in a recent Reuters interview. "My wife said "Thank you for ruining both our lives' and walked out the door."

Lissack is founder and now director of the Institute for the Study of Coherence and Emergence, lectures on economics and business, and has endowed a chair in business ethics at Williams College. He says the typical whistle-blower, like Enron's Sherron Watkins, is someone who "can't stand it anymore."

6. Roger Boisjoly, former engineer for Morton Thiokol: In January 1987, Boisjoly came forward and claimed he had warned his employer -- the maker of the solid rocket booster used to launch the space shuttle -- about the structural problems that caused the Challenger shuttle to explode a year earlier.

Eventually, Morton Thiokol (which no longer exists) fired Boisjoly. And he was blacklisted by the aerospace industry from finding other work as an engineer. He now lives in Nevada and lectures on workplace ethics.

7. Dammen Campbell, delivery order manager, Kellogg Brown & Root: Campbell worked for a unit of Halliburton, the giant Dallas energy company once run by Vice President Dick Cheney. Campbell, who helped prepare contract prices, filed a whistle-blower complaint that alleged the company submitted false claims and made false statements in connection with 224 delivery orders between April 1994 and September 1998. This month, the defense contractor agreed to pay the government $2-million to settle allegations it defrauded the military.

Cheney was Halliburton's chairman and chief executive when the alleged fraud occurred, but no evidence surfaced that he knew of it. Campbell will receive an undisclosed share of the settlement.

8. Robert Misbin, medical officer, Food and Drug Administration: The scientist blew the whistle on the dangers of the diabetes drug Rezulin. He resigned from the FDA in the fall of 2000, complaining that politics and bureaucratic concerns had replaced sound medical judgment in approving drugs. At issue: that drug maker Warner-Lambert Inc. had pressured the FDA to approve Rezulin, despite a number of patient deaths from liver failure. Rezulin was recalled in 2000, the same year that Warner-Lambert was acquired by Pfizer.

9. Karen Silkwood, Kerr-McGee, Oklahoma: Silkwood worked in the early 1970s at a Kerr-McGee plutonium processing plant in Oklahoma. She became contaminated with plutonium while working there. She was killed in a 1974 car crash on her way to meet with a New York Times reporter, apparently to reveal safety violations.

10. Scott Grove, auditor, Allina: Grove was director of internal audits for the Minneapolis health care provider. In 1994, he uncovered evidence Allina had overbilled Medicare and Medicaid by $19-million. Grove says the company ignored his findings and demoted him. Grove filed a whistle-blower lawsuit against Allina. Several grueling years later, the company settled for $16-million, of which Grove was awarded $1-million.

Says Grove: "I never intended to be a whistle-blower."

Who does?

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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