Protecting The Company And The Whistleblower By Law

Organizational Leadership Degrees - Masters Degree - Undergraduate Degrees
Reasons for masters degree and undergraduate degrees on Organizational Leadership

Corporate law has many sides to it. Basically the company's officers have a responsibility to protect the company's assets and manage them to the best of their ability and generate profits that are at least commensurate the amount of money that has been invested in the company if not considerably more. Charged with this redoubtable task, the corporate entity will go about its business, reviewing its existing markets, searching for new ones, revitalizing its product range, reshaping its corporate image, reducing its overheads, increasing its efficiency, all with the aim to delivering the company's share holders with the only thing that brings a genuine smile to their faces: a healthy profit.

However while all this is going, a silent killer may be eating away at their profits, and that is fraud or theft or whatever you care to call it. It may seem innocent or even petty, but if carried out on a large enough scale can knock a fairly reasonable hole in a company's profits.

Large corporations can be fairly faceless organisations and tend to look at their employees as units or on costs and less as human beings. However along the way, someone somewhere began to realize that by encouraging employees to become whistleblowers.

Company managers have adopted the idea that there is no better ways to sniff out and stop fraudulent practices, than reaching out to the grass roots of their organisation than by encouraging their employees to weed out the bad habits of the co-workers no matter how petty it may seem. They are sending out the message loud and clear "If you know of something illegal going on in the department where you work, you can enjoy full protection from any negative consequences if you blow the whistle on improper practices."

This new way of corporate thinking was spurred on by the passing of the Sarbanes-Oxley Act in year 2002 as a response to a virtual epidemic of corporate scandals related to accounting. The financial markets were so shaken up and this act was specifically designed to implement tougher standards on financial reporting. With its implementation, congress began to enforce a series of the most extensive protection for whistleblowers, particularly in publicly traded companies who reported even the most seemingly insignificant of violations.

Violations that could primarily be ascribed to any form of financial misconduct, fraud, securities violations no matter the level of its severity.

The False Claims Act is possibly the single most efficient whistleblower law in the United States. It allows any individual who comes across a fraud on the federal government to make a report of it through the specialized procedures of the law. If the government is able to collect from a company or contractor who commits fraud, the law even allows the whistleblower to have a share in the funds recovered as a result of their actions.