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Blowing the Whistle

Mar 17, 2014

Has the perception of whistleblowers changed? With high-profile cases like Edward Snowden and increased protections for those who accuse their employers of misconduct, have we moved away from the view that it "takes a rogue to catch a rogue"? Tobacco industry whistleblower Jeffrey Wigand and others discuss blowing the whistle in the U.S.

JULIA TAYLOR KENNEDY: You're listening to Impact from the Carnegie Council. Each episode we explore a different topic in global business ethics. This time, it's whistleblowing. I'm Julia Taylor Kennedy.

JEFFREY S. WIGAND: I think that most people who come forward are not prepared to do it. You've got to know that you will never ever be the same again.

JULIA TAYLOR KENNEDY: That's Dr. Jeffrey Wigand. I wanted to talk to him about how he became a whistleblower. He was eager to talk, too—he even drove out in a winter storm so that we could have a better phone connection for this interview.

JEFFREY S. WIGAND: I used to travel back and forth to the Food and Drug Administration [FDA] from Louisville, Kentucky under an assumed name. I would go through unmarked entrances, and deal with Kesslerand his staff on the science of addiction; how nicotine was made more potent with various additives; and how they targeted children; and how they engineered tobacco to have a higher nicotine content.

JULIA TAYLOR KENNEDY: But it took several years of increasing frustration before he got to Louisville. Wigand was a scientist at one of the top three tobacco companies in the early 1990's—it was called Brown & Williamson, or B&W. They made Kools, Lucky Strike—other brands. Wigand was really uncomfortable with the way things worked at the company. He kept telling me about all the things that bothered him.

JEFFREY S. WIGAND: Lawyers changing documents. Lawyers controlling science. Disregard for public health and safety. Targeting children, etc., etc., etc. And that bothered me greatly.

JULIA TAYLOR KENNEDY: So he approached his boss.

JEFFREY S. WIGAND: I mean, I had spent 20 years in the health care industry and some of the things that I saw, I observed and learned while I was there really bothered me . . . and I continue taking my issues to the president and chief operating officer of the company, Tommy Sandefur. And he kept blowing me off.

JULIA TAYLOR KENNEDY: Wigand was upset about an additive that B&W used in its tobacco called coumarin. Not to be confused with Coumadin, the blood thinner. Coumarin sweetens the taste of tobacco, but it was found to cause tumors in the livers of mice.

JEFFREY S. WIGAND: I took the data to Sandefur and he told me basically, he wasn't going to take it out, because it would affect sales and hence, would change the taste of the product—and it was his decision, not mine. Well, that bothered me greatly.

JULIA TAYLOR KENNEDY:Wigand kept finding health issues with B&W products, but attorneys would edit his written reports so the company could not be found liable for knowingly selling unhealthy tobacco products. Finally, Wigand wrote Sandefur a note documenting his concerns.

JEFFREY S. WIGAND: He raised hell. He became the CEO in March of 1993, and one of the first tasks he did when he became the new CEO was fire me for poor communication skills.

JULIA TAYLOR KENNEDY: Wigand left—he signed a confidentiality agreement in exchange for compensation that included health benefits for his daughter. She suffered from spina bifida, so she needed special care. But Brown & Williamson kept threatening to revoke his benefits while instating more extreme confidentiality requirements. Frustrated, Wigand slowly began talking to the press and government agencies behind the scenes, analyzing stories they were reporting on other tobacco companies as part of the tobacco wars.

Then, California congressman Henry Waxman's office contacted Wigand to help with congressional hearings on big tobacco.

JEFFREY S. WIGAND: So what I did was I reported to B&W that I had been contacted by the U.S. Congress—as per their recent agreement—and that I was going to honor that agreement because I did not want to stop my healthcare coverage to pay for my daughter's healthcare needs.

So I went ahead and I told them. And subsequent to telling them, I received two anonymous death threats in April of 1994 that were directed at my children. That was the last time I honored the agreement.

JULIA TAYLOR KENNEDY: Wigand stayed out of the congressional hearings, but he watched them.

JEFFREY S. WIGAND: I did not help Congress because they were unable to get a subpoena for me. I watched the seven CEOs, all of tobacco companies, get up and testify that nicotine was not addictive and smoking was not harmful, and one of those testifying was my boss, Tommy Sandefur. And he lied. And that bothered me

JULIA TAYLOR KENNEDY: And this takes us back to where we began our story. Wigand started helping the government in earnest, working with the FDA covertly. He became an expert witness in lawsuits against Philip Morris. And in 1995, he decided to speak to the late Mike Wallace at 60 Minutes about his experience. Here's an excerpt from the story:

What Dr. Wigand told us in that original interview was that his former colleagues, executives of Brown & Williamson Tobacco, knew all along that their tobacco products, their cigarettes and pipe tobacco, contained additives that increased the danger of disease. And further, that they had long known that the nicotine in tobacco is an addictive drug, despite their public statements to the contrary, like the testimony before Congress of Dr. Wigand's former boss, B&W's chief executive officer Thomas Sandefur.

JULIA TAYLOR KENNEDY: Thus began extensive legal proceedings. Brown & Williamson spend millions of dollars on a public relations firm and on lawsuits to tarnish Wigand's reputation. His wife divorced him and then became a witness for B&W. At one point, Wigand found a bullet in his mailbox he was sure was meant for him.

Being a whistleblower isn't easy. And it never has been, really. Accusing your employer of breaking the law doesn't tend to win popularity contests. After all—

STEWART J. SCHWAB: It's complicated to know, in any particular case, whether the person is a hero or a villain.

I'm Stewart Schwab, the Alan R. Tessler Dean, and professor of law at Cornell Law School. And I taught last spring, and plan to teach again "Whistleblower Law."

JULIA TAYLOR KENNEDY: It turns out whistleblower law in the United States dates back to the Revolutionary War. And the federal False Claims Act, the main protection of whistleblowers, dates back to the Civil War.

STEWART J. SCHWAB: It's often called "Lincoln's law" after Abraham Lincoln and the Civil War. A major problem that they had was that a lot of unscrupulous people were doing war profiteering. And they'd sell the government what was supposed to be ammunition, gunpowder. But it was really sawdust, and clothes that would fall apart, etc.

JULIA TAYLOR KENNEDY: U.S. Senator Jacob Howard sponsored the False Claims Act in response. He famously said the law was "setting a rogue to catch a rogue."

STEWART J. SCHWAB: A private citizen could report that there had been fraud against the government, and the private person could claim part of the recovery.

JULIA TAYLOR KENNEDY: But the law wasn't used much for centuries. President Reagan resuscitated it at the height of the Cold War, which produced enormous private military contracts for gigantic sums of money.

STEWART J. SCHWAB: And so when there are gigantic sums of money, there is very often some fraud and abuse that goes with it.

JULIA TAYLOR KENNEDY: So Congress amended and modernized the Federal False Claims Act in the mid-1980s.

STEWART J. SCHWAB: Some employee who knew of fraud against the government—whether it was an airplane that was being built—could report, initially, anonymously. And it became sort of a partnership between private persons and the government prosecutors to bring this lawsuit against the company.

JULIA TAYLOR KENNEDY: What started as a government contracting law has now been applied in pharmaceutical cases and in finance. The federal False Claims Act has been joined by whistleblower protections in Sarbanes-Oxley and in Dodd-Frank.

STEWART J. SCHWAB: And even most recently, some of the tax fraud. The IRS now has a new whistleblower program.

JULIA TAYLOR KENNEDY: Times may be changing for whistleblowers since Dr. Wigand opened his mailbox to find a bullet inside.

STEWART J. SCHWAB: Certainly in terms of recoveries under the federal False Claims Act, the amount that the federal government gets from these lawsuits has really grown very dramatically since the 1980s when the statute was resurrected.

JULIA TAYLOR KENNEDY: And, oddly enough, the supporters of whistleblower laws cross party lines. On the right—

STEWART J. SCHWAB: We can make a more efficient government.


STEWART J. SCHWAB: The large companies of this country are ripping off the people and the society.

JULIA TAYLOR KENNEDY: It's not just about crossing party lines. Think about the whistleblower icon that has been the source of so much attention lately—

STEWART J. SCHWAB: Snowden is a little different from those some of those classic cases, but whether he's a hero or a villain is, of course, very hotly contested.

JULIA TAYLOR KENNEDY: So the whistleblower hasn't quite made the leap from rogue to hero.

STEWART J. SCHWAB: Now the law is trying to be there and to protect these people but there certainly are many cases, and even recently, where whistleblowers are hounded out and are not vindicated. I think sometimes these lawsuits and statutes get wrongly criticized that way. That these are just avenues for bonanza time by employees.

JULIA TAYLOR KENNEDY: So, if you're risking accusations of gold-digging, if you could lose your lawsuit, your reputation, your job, your home, why do it?

DANIEL OLIVERIO: My name is Daniel Oliverio. I am the chairman of Hodgson Russ.

JULIA TAYLOR KENNEDY: Oliverio specializes in whistleblower cases that are covered by the False Claims Act.

And when you say "relator," that term could also be whistleblower or—

DANIEL OLIVERIO: Whistleblower is kind of a term that the media has coined. So the term is relator.

JULIA TAYLOR KENNEDY: Now, back to the original question. Why become a whistleblower, or a relator, or whatever you want to call it, if you're risking so much?

DANIEL OLIVERIO: Most of my successful whistleblowers—all of them—it was about the issue and about righting a wrong. The money became secondary, and always remained secondary.

JULIA TAYLOR KENNEDY: Not that he's talking about peanuts. Oliverio recently represented two relators in a major lawsuit against Janssen; it's a subsidiary of Johnson & Johnson. The total settlement of that suit was for $2.2 billion—and $170 million of that went to a group of five relators in the case.

DANIEL OLIVERIO: Well it was the biggest relators' share ever in history in any case. Were my relators satisfied? Yeah, but it was never about the money.

JULIA TAYLOR KENNEDY: In fact, Oliverio tests potential clients to make sure they're blowing the whistle for the right reasons.

DANIEL OLIVERIO: I ask them if they have talked to their employer. I ask them what proof they have, serious proof they have of what they're alleging. I just don't go by somebody's word. I want to see documents. I want to see other stuff that corroborates what they are saying. And they have to be firmly committed and have strong feelings about what they are doing.

JULIA TAYLOR KENNEDY: Judith Doetterl was his main client in the Johnson & Johnson case. She fit all the criteria.

DANIEL OLIVERIO: I realized that Doetterl, in particular, had the personality where she was very mad at her employer, where she could wear a wire and do it well. And not freak out over the whole thing.

JULIA TAYLOR KENNEDY: Here's the problem. Janssen, the Johnson & Johnson subsidiary, had developed a drug called Risperdal to treat schizophrenia—that was its "on-label" use. But Janssen was asking Doetterl to sell is to doctors for "off-label" uses, to treat the elderly with dementia and to treat teenagers with behavioral problems.

DANIEL OLIVERIO: Janssen had studies that showed there were serious side effects of use of Risperdal in the elderly and in children.

JULIA TAYLOR KENNEDY: In the elderly, it increased the risk of stroke and heart attack.

DANIEL OLIVERIO: And in children, it had all sorts of side effects that involved hormonal changes—one being gynecomastia in young boys.

JULIA TAYLOR KENNEDY: Gynecomastia is a condition where boys grow breasts.

DANIEL OLIVERIO: The only way that's cured or fixed, is unfortunately, with surgery.

JULIA TAYLOR KENNEDY: But Doetterl was still asked to encourage doctors to prescribe Risperdal for adolescents and the elderly. She complained to her boss and her bosses' boss.

DANIEL OLIVERIO: The one woman who is now a vice president of Johnson & Johnson said to my relator, Doetterl, "Look if you can't do your job I'll find someone else to do it."

JULIA TAYLOR KENNEDY: That was the response.

DANIEL OLIVERIO: And that caused Doetterl to say, "Enough, I got to go see a lawyer. I'm concerned."

JULIA TAYLOR KENNEDY: Enter Oliverio. Eventually, he did ask Doetterl to wear a wire to record conversations at a Johnson & Johnson conference.

DANIEL OLIVERIO: Judith is headstrong. She's tough. She comes from an area of Buffalo called South Buffalo, primarily Irish-Catholic and German type neighborhood, old school neighborhood, you know. I mean, spunky wouldn't describe it. It's spunky on steroids.

JULIA TAYLOR KENNEDY: So she wore a recording device for two days to capture conversations her colleagues had about selling Risperdal off-label. And after nine years of legal battles, she and the four other relators in the lawsuit walked away with the largest relators' share in history.

DANIEL OLIVERIO: People are realizing now, out there, that there are such things as whistleblower statutes. And they can get satisfaction outside their company. And also, the law is being very aggressive. Prosecutors are being very aggressive, state and federal. And there is some momentum out there. So it's a combination of those two and the publicity surrounding these cases. Potential whistleblowers know what's going on these days.

JULIA TAYLOR KENNEDY: Both Dotterl and Johnson & Johnson declined interview requests for this podcast. And Oliverio fears the case won't have lasting impact on Johnson & Johnson's reputation. But tobacco whistleblower Jeffrey Wigand says bringing a whistleblower case, even today, has lasting impact on the whistleblowers themselves.

JEFFREY S. WIGAND: Coleen Rowleyand I talk frequently.

JULIA TAYLOR KENNEDY: Rowley blew the whistle after 9-11 about FBI mishandling of cases that may have made the United States vulnerable to the World Trade Center attacks.

JEFFREY S. WIGAND: Jim Murtagh, I mean we talk on a regular basis.

JULIA TAYLOR KENNEDY: Murtagh cooperated in cases that exposed corruption and fraud at Emory University.

JEFFREY S. WIGAND: I mean, they are struggling. Coleen's struggling.

I think that most of the people who come forward are not prepared to do it. You've got to know that you will never, ever, ever be the same again. And you've got to understand that there is no sacrosanct environment that you can go to that you're not exposed in.

JULIA TAYLOR KENNEDY: Wigand continues to speak out and lobby against smoking. And he says he still receives death threats. It's not an easy existence. Would he do it again?

JEFFREY S. WIGAND: Most certainly yes. I mean there is no conflict in my mind on that issue.

I am free. And what set me free was the truth.

JULIA TAYLOR KENNEDY: Is that enough, though—the truth will set you free? It hasn't set Edward Snowden free.

How can we make sense of when to raise our voices, when to stay quiet?

Well, in 1970, economist Albert Hirschman published a short book called Exit, Voice, and Loyalty. It's become a staple in college classrooms and many use it to frame conversations about whistleblowing. Remember the Cornell Law School Dean Stewart Schwab?

STEWART J. SCHWAB: I love that really path-breaking book by Hirschman, Exit, Voice, and Loyalty, and I do think he has captured, in that frame, the avenues available to anyone who's facing a difficult situation.

JEREMY ADELMAN: It went viral because he put a vocabulary to what people were doing and thinking about at the time.

My name is Jeremy Adelman. And my title is—I have a couple, but I will abbreviate. I am the director of the Council for International Teaching and Research at Princeton University. I am also a professor of history at Princeton. I hold a chair called the Samuel Carpenter, III, Professor of Spanish Civilization and Culture.

JULIA TAYLOR KENNEDY: I love that that was the abbreviated version. That's great. And the title of your biography of Hirschman?

JEREMY ADELMAN: So the Hirschman biography is called Worldly Philosopher—the Odyssey of Albert O. Hirschman.

JULIA TAYLOR KENNEDY: Okay, great. So it seems like Exit, Voice, and Loyalty can really help sum up the options for people who disagree with behavior at their companies.

JEREMY ADELMAN: Do you opt out of the system? Do you protest the system? Do you declare your loyalty to the system?

JULIA TAYLOR KENNEDY: So, as Hirschman writes it, "exit" is pretty clear as a concept—you leave a place that you disagree with. It's the cleanest break, the rational economic act. "Voice" is protest—a political act. It's calling attention to a perceived wrong. The hardest part of the framework is the concept of "loyalty." It doesn't necessarily mean silence.

JEREMY ADELMAN: He revisited his concept of loyalty—kept turning it over trying to find ways in which voice was a way of being loyal. And I think, in part, because he started with the premise that loyalty was passive. That loyalty was about "not acting"—whether leaving or voicing. That really bothered him.

JULIA TAYLOR KENNEDY: After all, loyalty is not so passive. Loyalty requires all kinds of activity.

JEREMY ADELMAN: Companies spend a lot of money trying to produce loyalty. Governments promote loyalty to flag, constitution, we have all kinds of rituals around this.

JEREMY ADELMAN: And so if loyalty is complicated, perhaps it's possible that whistleblowing, that raising concerns about an employer's behavior, can be a loyal act. Back to Stewart Schwab at Cornell.

STEWART J. SCHWAB: Loyalty is a good trait rather than a bad trait. And I think one of the things a whistleblower or a potential whistleblower wrestles with is, "I'm being disloyal to this company that I have helped grow and build up for five or 10 or 20 years."

JULIA TAYLOR KENNEDY: And Adelman agrees.

JEREMY ADELMAN: What's important about this as we step back and think about the book—it's important to recall the conjunction in the title—"exit, voice and loyalty."

JULIA TAYLOR KENNEDY: That's and, not or.

JEREMY ADELMAN: And any individual is at any given time always weighing up his or her options about which strategy to take.

JULIA TAYLOR KENNEDY: And sometimes the options reinforce each other.

JEREMY ADELMAN: And sometimes they undermine each other.

JULIA TAYLOR KENNEDY: It really depends on the circumstances.

JEREMY ADELMAN: And it really depends on how the individual himself or herself, sees the situation.

So "exit, voice, and loyalty" and the combinations and re-combinations that it offered for him, was a way of thinking about social activity in a way that allowed people to expand the horizons of possibilities.

JULIA TAYLOR KENNEDY: Exit, voice and loyalty—with that conjunction "and"—can be quite freeing. As Stewart Schwab says, sometimes our inner conflicts are the biggest obstacles to giving voice.

STEWART J. SCHWAB: I think the larger challenge is the question of self-doubt. I think this is wrong. I really think it's bad, but I might be wrong. And is it me that's crazy? Or is it all these others around here that are crazy? That is the harder question for the individual whistle blowers to wrestle with.

JULIA TAYLOR KENNEDY: Thanks for listening to Impact from the Carnegie Council, and a special thanks to our crack production team Mel Sebastiani, Terence Hurley, Deborah Carroll, and Mei-Yu Lui. I'm Julia Taylor Kennedy. You can find out more about this podcast at carnegicouncil.org.

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