*Note: GAP Legal Director Tom Devine and Confessions of a Microfinance Heretic author High Sinclair will be speaking tomorrow (Friday, July 13) at Politics and Prose. Both Confessions and Devine's book The Corporate Whistleblower's Survival Guide: A Handbook for Committing the Truth will be available at the event.
Event details:
Politics and Prose, 7 p.m.
5015 Connecticut Avenue Northwest
Washington, DC 20008 

Whistleblowers are individuals who use free-speech rights to challenge abuses of power that betray the public trust. Frequently they are human wild cards who speak truth to power and change the course of history by challenging bureaucratic bluffs with reality. A new whistleblowing book by British microfinance expert Hugh Sinclair, Confessions of a Microfinance Heretic, exposes a particularly painful truth: What has been promoted as a charity structured to empower the poor in fact is camouflage for heavy-handed loan sharking that regularly victimizes its so-called beneficiaries.

The noble vision, which led to a Nobel Prize for its modern champion, Muhammad Yunus of Bangladesh, is to empower the poor, usually women, in underdeveloped countries through seed capital to start small businesses and a chance at economic self-sufficiency, both normally out of their reach.

Sinclair realistically labels himself a heretic, and he is criticizing myths as sacred but false as celibacy by Catholic priests. Indeed, the churches are major players in this popular outlet for donations within congregations wanting to help. The burgeoning microfinance industry has grown to $70 billion in loans annually and has been celebrated by celebrities ranging from Bono to Oprah (and even Lisa Simpson on aSimpsons episode).

The Ethics Resource Center (ERC) – a research-oriented nonprofit aimed at promoting high ethical standards in business – released its 2011 National Business Ethics Survey (NBES) report recently.

Turns out the past couple years have been a pretty mixed bag for whistleblowers. So... good news or bad news first?

Let's start with the good news. The percentage of corporate employees surveyed who said they've seen misconduct at work fell to just 45 percent, compared to 49 percent in 2009 and a record high of 55 percent in 2007. On the flip side, the number of those who are reporting that misconduct at work is at a record high – 65 percent. This is up an impressive 12 points from 2005 (53 percent).

This is an uplifting trend. Employees are witnessing less misconduct at work, but when it happens, it is more likely to report it. This is one of the most effective ways to ensure the misconduct levels stay low.

Now for the bad news. The ERC also reports "ominous warning signs of a potentially significant ethics decline ahead." Retaliation against employees who reported misconduct rose 10 points from 2007 to 22 percent. That's more than one in five who faced some sort of retaliation for their disclosure. In addition, 42 percent of companies are reported to have weak ethics cultures, a steep rise from 35 percent two years ago. More employees (13 percent) are feeling pressure to compromise their ethical standards since 2000.

Journalist John Seigenthaler presented the Ridenhour Courage Prize to Rep. John Lewis (D-Ga.)Working in the nonprofit world can often be discouraging. So much to do, so little time. Not to mention fewer resources, less money, not enough people. Try to address one issue and five more take its place. Like I said, discouraging. And I haven’t even been around that long.

So, what keeps us going? Obviously, it’s a lot of things – optimism, idealism, determination, our “Save the world!” complex. But, really, it’s the moments. Those moments when you can see the difference you are making, when you realize you are a part of something larger.

I had one of these moments recently. I have been working at GAP for less than a year, and so this was my first time attending the Ridenhour Prizes. For those of you who don’t know, the Ridenhour Prizes honor people who speak truth to power – whether whistleblowers, lawmakers, authors or filmmakers.

Countrywide/Bank of America whistleblower (and GAP client, it so happens) Eileen Foster and Afghan war whistleblower Lt. Col. Daniel Davis co-won the Prize for Truth-Telling. The film Semper Fi: Always Faithful about one marine uncovering the military cover-up of contaminated water won the film award. Ali Soufan won the book prize for his memoir, The Black Banners: The Inside Story of 9/11 and the War Against al-Qaeda. Finally, Representative John Lewis (D-Georgia) was honored with the Courage Prize for his endless work in the civil rights movement.

Having those kind of people around will, of course, make for an inspiring event. But the ceremony was more than a sum of its parts. Being reminded that people like this exist renews your faith in the system. The corrupt ones will eventually be revealed. The military can’t hide behind “national security” forever. The disenfranchised won’t always be voiceless. Isn’t this what we’re working for?

Former Employee Awarded Highest Whistleblower Honor

 GAP client Eileen Foster, a former high-ranking official at Countrywide Financial and then Bank of America (BofA) after its purchase of Countrywide in July 2008, has been awarded the 2012 Ridenhour Prize for Truth-Telling. This prize is widely considered the highest honor a whistleblower can receive in the United States.

Foster exposed systemic fraud at Countrywide Financial and the corrupt activities of company officials, both pre- and post-purchase. In September 2008, BofA terminated Foster. Six months ago, the Occupational Safety and Health Administration (OSHA) found that BofA was wrong to terminate her, ordering her reinstatement and damages. However, BofA appealed that order, and Foster's fight continues with a hearing scheduled in October. More on Foster's case can be found below.

Foster's actions go a long way in dispelling the false belief that it was borrowers lying on their applications – rather than fraud on the part of commission-hungry loan officers – that fuelled the growth of the toxic loans that gave rise to the economic crash.

"I am honored to be a recipient of this award and want to thank the Nation Institute for recognizing the plight of whistleblowers within the mortgage industry," stated Foster. "I am proud to represent many others who had the determination to fight back, expose wrongdoing, and insist on corporate accountability."

In this past Sunday's New York Times, Gretchen Morgenson set out the lesson learned from Greg Smith’s public resignation from Goldman Sachs on March 14.

“Even now, after all we’ve been through, something is still wrong with Wall Street.”

In going public as he resigned from Goldman, Smith denounced a banking culture in which clients are seen as “muppets” who will invest in anything Goldman pumps up for them. He made clear that the Wall Street self-dealing and greed that crashed the economy in 2008 – he did not even mention fraud – remain unrestrained as we finally pull out of the resulting Great Recession.

If you think about it, this isn’t surprising. After all, there weren’t any criminal consequences for fleecing muppets, and in civil suits, the banks’ shareholders pay out, not the delinquent bankers. So why shouldn’t the Wall Street gang just keep on going?  Why change the rules when you’re winning?

Smith was right to go to the press as he quit Goldman Sachs because the people who should address these things – the company's management, for example – are part of the problem, as are the regulators and law enforcement – the SEC and Department of Justice.

 ‘Cry aloud, spare not, lift up thy voice like a trumpet’ Isaiah 58.v.1.

Surely these are the words that should be ringing out from the Vatican when questions about corruption and nepotism have been leaked to the Italian press, rather than the threat of criminal proceedings. It defies belief that this is the immediate reaction of the Vatican authorities, rather than asking why their staff have felt the need to anonymously leak this news to the press. To assume that this is a simple matter is perhaps naïve, but what sort of example is the Catholic Church presenting to the world at large when it comes to public interest whistleblowing?

We all know that there are some matters that have to be kept confidential or secret in order for institutions, government and organisations to properly function. But equally we want to know that where there is malpractice or wrongdoing, the cloak of confidentiality cannot be used to hide matters of public interest. This is backed up by a long-held common law principle, that there is no confidence in iniquity – time and again protected by the UK courts – and a principle upon which the Public interest Disclosure Act, the UK law that protects whistleblowers, is based. But it may not be well understood by those who witness malpractice and are unsure where to go with their concern, how to raise it or who to tell. 

These issues were as relevant in 1993 when my organization, Public Concern at Work (Britain’s equivalent of GAP) was set up as they are now: how do we learn the lessons from disasters and corporate collapses and ensure that those in a position to question malpractice, wrongdoing or unacceptable risk are able to raise their concern so that the damage is prevented? Workers are often the first to see that something is wrong and yet may risk their livelihoods in raising the issue and often work under obligations of secrecy. How do they, and we as a society, ensure that corporate cultures of silence in which dissent is crushed are challenged? 

Eyal Press wrote an interesting piece this week, comparing the excessive attention that Justice Department prosecutors have directed at whistleblowers in the national security world in recent years to the absolute disinterest with which these same attorneys treat Wall Street whistleblowers.

He’s right. In fact, it’s striking. But finally, the real story behind the lack of criminal prosecutions produced by the financial crisis of 2008 and the ensuing Great Recession is starting to seep out. It’s a sorry tale of edited testimony, arm twisting and rule changing.

After the financial meltdown in September 2008, the Obama administration “rescued” both commercial and investment banks, as well as insurance monolith AIG. Tim Geithner, Henry Paulson, Jamie Dimon and the other Masters-of-the Universe staged a revival of the US economy in a stunning, all-star production that fall season. It was a spectacular performance. There was the mystery of the closed-door deals, the suspenseful, whipsaw swings of the Dow, the zany antics of the Republican presidential candidate, and the breathtaking confrontation with Congress. When it was over, we were all exhausted, and the Justice Department rang down the curtain.