Question

Is whistleblowing the best option when it comes to trying to prevent or report illegal activity such as fraud, insider trading, price fixing, or bribery within a corporation? Are there any instances in which employees should approach management first, with their concerns regarding illegal activities they have witnessed, prior to going outside the company?

Answer 1

Whistle blowing is a best option to report or prevent illegal activities in a corporation. Whistle blowing helps to make the operations more transparent in the case of corporations which in turn help to improve investor confidence. Any chances of fraud by the top management can be prevented with the help of whistle blowers who successfully reports the fraud to the regulators and public. Other options like implementing policies may not work when the fraud is committed by the officials on top of the corporation.

The employees should approach management first in case of frauds committed by lower and middle level employees as these kinds of issues can be successfully controlled by the senior management by taking appropriate disciplinary actions. When all the small issues are reported outside the company, it may affect the company reputation as well as shareholder’s trust. When there are strong policies to control illegal behavior in the corporation, the employees should approach the management first regarding their concerns on illegal activities performed by the fellow employees.