The contribution of whistleblowers’ stories to the perception of fairness in financial
markets: A discourse analysis
Yves Gendron
Université Laval
École de comptabilité – Faculté des sciences de l’administration
Pavillon Palasis–Prince
2325, rue de la Terrasse – Local 2636
Québec (Québec) G1V 0A6 – Canada
Tel: 418 656-2131, poste 2431
Email: [email protected]
Luc Paugam
ESSEC Business School, CREAR
Av. Bernard Hirsch, B.P. 50105 – 95021 Cergy – France
Tel: 33-1-34-43-37-58
Email: [email protected]
Hervé Stolowy
HEC Paris, Université Paris-Saclay
1 rue de la Libération, 78351 – Jouy-en-Josas – France
Tel: 33-1-39-67-94-42
Email: [email protected]
This version: January 6, 2016
Acknowledgments. The authors express their gratitude to all the whistleblowers who
accepted to be interviewed for this research. The authors gratefully acknowledge comments
by Sebastian Becker, Danièle Eglem and Stéphane Trébucq. Responsibility for the ideas
expressed, or for any errors, remains entirely with the authors. Hervé Stolowy expresses his
thanks to the HEC Foundation for funding the research project 4F73F1502. Hervé Stolowy is
a member of the GREGHEC, CNRS Unit, UMR 2959. The authors acknowledge the research
assistance of Théo Allouch.
The contribution of whistleblowers’ stories to the perception of fairness in financial
markets: A discourse analysis
Abstract
It is widely understood that financial capitalism is especially dependent on the credibility of a
number of key assumptions, one of them being fairness surrounding financial markets.
Drawing on a social constructionist perspective, we aim to develop a better understanding of
the ways in which a perception of fairness is constructed in contemporary financial markets.
More specifically, we undertake a critical discourse analysis of seven whistleblowers’ wellpublicized stories through books, first-hand and second-hand interviews, websites and videos.
Our analysis indicates that these stories (or dramas) collectively contribute to promote the
belief that single actors in financial market communities are able to detect economic deviance
and try to notify relevant authorities – although such attempts are not always successful to stir
and move the authorities. When such difficulties arise, the audiences are nonetheless led to
assume that the whistleblower’s attempt to notify others could have been successful if better
conditions of receptivity had been established (e.g., more competent and powerful regulatory
agencies). In addition, ex post, the stories highlight the important role played by several
whistleblowers after the scandal broke, including participation in investigations that aim to
bring light on the matter and make suggestions to improve practices and policies. Thus, being
characterized by strong and powerful metaphors centering on noble values and feelings of
resoluteness, the whistleblowers’ stories play an important role as a platform that seeks to
secure the perception of fairness in financial markets. However, in so doing, the
whistleblowers’ stories paradoxically may deflect attention from the undertaking of
examinations that question the overall effectiveness of whistleblowing mechanisms.
Keywords
Whistleblowers, fairness, financial markets
JEL descriptors
G3, M4, P1
1
“Economists are tellers of stories and makers of poems, and from recognizing this
we can know better what economists do.” (McCloskey, 1990, p. 5)
Introduction
Social reproduction constitutes a key feature of society, and one of the most prominent
themes in social research. As such, it relates to the tendency for prevailing institutions and
beliefs to reproduce, not only in times of relative social stability but crucially, in the aftermath
of turbulent times (Bourdieu, 1984). Within this general trend, important intellectual efforts
have been devoted to develop a better understanding of the processes by which contemporary
economic regimes, especially neoliberalism, reproduce over time despite socioeconomic
turmoil. For instance, Foucault (2004) highlights the important means used by neoliberal
proponents (e.g., establishment of think-tanks, funding of academic research) to diffuse their
ideas in intellectual and political circles, and across society. MacKenzie (2006) points to the
role of neoliberal finance theories and models in impacting reality, that is to say in
engendering and reproducing a neoliberal economy in line with the models’ main assumptions
and conclusions. Boltanski and Chiapello (1999, 2004) document the remarkable capacity of
capitalism (including neoliberal variants) to reproduce despite social criticisms, highlighting
that a set of powerful ideas protect the system from systemic doubt. Guénin-Paracini,
Gendron and Morales (2014) underline the role of the press in interpreting economic crises
and business scandals in ways that put the blame on the role of specific actors who lack
morality, thereby protecting the neoliberal regime from systemic questioning.
In the accounting literature, a number of academics have sought to better understand how
prevailing accounting and corporate governance institutions in today’s neoliberal economies
reproduce in spite of regular socioeconomic crises. Some researchers brought to the fore the
endurance of financial auditing, whose role as a confidence-providing mechanism tends to
extend and solidify in the aftermath of accounting scandals (Power, 1997; Guénin-Paracini &
Gendron, 2010). The capacity of the risk management apparatus to reproduce despite
turbulence is underlined in Gendron, Brivot and Guénin-Paracini (Forthcoming), who
examined the rationales that board members mobilize to make sense of destabilizing events in
ways that maintain their confidence in the apparatus. In sum, this body of work both presumes
and demonstrates that the reproduction of neoliberal institutions constitutes a very significant
matter. Importantly in the context of the present paper, reproduction is not a natural
phenomenon; it needs to be sustained through discourse, ideas, and the agency of a number of
individuals and buttressing institutions.
2
Neoliberalism, in particular, is sustained by powerful discourses of legitimation, being
typically associated with notions such as freedom, openness, dynamism and innovation
(Bourdieu & Wacquant, 2001). One of the core assumptions of neoliberalism consists of the
apparently undeniable virtues of competition (Harvey, 2006). Competition is sustained
through a Darwinian logic, illustrated by Schumpeter (1942) “creative destruction”, in which
only the fittest should and does survive (Harvey, 2006, p. 43). For this ideal to be credible,
though, people need to be confident that cheaters and fraudsters are caught and appropriately
punished. Trust and fairness, therefore, are important elements in the functioning of financial
markets. As explained by Guiso, Sapienza and Zingales (2008, p. 2557), “the decision to
invest in stocks requires not only an assessment of the risk–return trade-off given the existing
data, but also an act of faith (trust) that the data in our possession are reliable and that the
overall system is fair”.
However, maintaining this aura of credibility is not that obvious given the numerous cases
of fraud, insider trading, and financial statement manipulation that the media, books and
magazines continuously report (Cooper, Dacin & Palmer, 2013). In other words, a perception
of fairness needs to be produced – otherwise the legitimacy of neoliberal governance is
threatened. Given their centrality in reproducing neoliberal regimes, there is a need to develop
a better understanding of the institutions, discourses and mechanisms involved in constructing
a sense of “fairness” in the economy.
The setting we privilege in studying the construction of fairness in financial markets
consists of whistleblowers’ well-publicized stories.1 The outbreak of numerous large scale
accounting frauds during the last decade in the United States, including Enron and
WorldCom, brought to light financial statement frauds as well as the role of whistleblowers as
a crucial detecting and preventing mechanism (Foley, Halper & Mathews, 2014).
Accordingly, whistleblowing became an increasingly popular phenomenon, not least after
Time Magazine nominated three female whistleblowers as “Persons of the Year” in 2002
(Lacayo, Ripley & Sieger, 2002).2 More recently, whistleblowing has been on the increase
since the 2007-08 financial crisis sparked a crackdown on corporate corruption and collusion
1
Near and Miceli (1985, p. 4) define whistleblowing as “The disclosure by organization members of illegal,
immoral, or illegitimate practices under the control of their employers, to persons or organizations that may be
able to effect action.” These authors add that a disclosure can be made to others within or outside the
organization (Miceli & Near, 1992). Whistleblowing “occurs when one or more individuals inform the public or
someone in authority about apparent dishonest, illegal, or inappropriate activities” (Mudrack & Mason, 2013, p.
644).
2
Sherron Watkins, vice president of Enron; Cynthia Cooper, vice president of internal audit at WorldCom; and
Coleen Rowley, an FBI employee.
3
(Anonymous, 2015, p. 65). Whistleblowing regulation was established concurrently in various
jurisdictions, in order to require organizations to establish sound protocols to address fraud
tips and offer some degree of legal protection to whistleblowers (e.g., the Sarbanes-Oxley Act
of 2002) (U.S. Congress, 2002). That being said, the detrimental consequences that
whistleblowers often experience are widely documented, and the legal protective mechanisms
that surround their role may be more symbolic than otherwise. According to Alford (2002, p.
109),
Unfortunately, most legal protection for whistleblowers is illusory; few whistleblowers are protected from
retaliatory actions because of numerous loopholes and special conditions of these laws and the major
disadvantage that individual plaintiffs have against corporate defendants.
The point is that most whistleblowers do not succeed and instead suffer from various
retaliations such as lay off, ostracism or pressure by hierarchy, other employees, etc., and are
never (or rarely) known by the public (Alford, 2002; Rehg, Miceli, Near & Van Scotter,
2008). As such, these criticisms pose an important threat to the hegemony of neoliberalism, in
that they carry, at least in theory, a potential to jeopardize the perception of effectiveness
surrounding whistleblowing acts. The ideal of fairness in financial markets is at stake if,
indeed, it is shown that fraudsters and abusers are unlikely to be properly detected, penalized
and expelled from job and financial markets. It is in this context that whistleblowers’
publicized stories are of particular importance, in that they may signal that the ideal of
fairness, as one of the main postulates of neoliberalism, is well-founded. As a result, people
may be led to believe that some actors defend a sense of “justice” in financial markets and
that immorality and cheating are fought actively.
Drawing on the above, this paper aims to better understand the role played by
whistleblowers’ publicized stories in establishing a perception of fairness in financial markets.
How do these stories construct the belief that fraud in financial markets can be reined in
through whistleblowing acts – despite the important difficulties that whistleblowers often
meet on their road to make truth and morality prevail?
To realize the investigation, we carry out a discursive analysis of a range of relatively
recent stories disseminated through books, first-hand and second-hand interviews, videos and
other whistleblowers’ testimonies available on the Internet. We focus on whistleblowers’ own
discourse because it may be perceived as more credible and genuine by the public than stories
told by other actors such as the press. Some of the main questions we investigate are as
follows. What images and metaphors are used in whistleblowers’ publicized stories? Are the
4
risks of whistleblowing underlined? How do stories account for the whistleblower’s decision
to divulge fraud and manipulation? What lessons do these stories emphasize? What kind of
recommendations do they make? Do stories take position vis-à-vis financial market
regulation? If so, how? Through these questions, we examine one of the main discursive
platforms upon which the edifice of credibility surrounding the notion of fairness in financial
markets is predicated. Our main interest is not to determine whether or not these stories are
valid, but to see how the whistleblower’s role is constructed and how this construction may
engender a sense of fairness in the eyes of the audiences.
In short, we argue that the resilience of neoliberalism partially relates to the persuasiveness
of discourses that promote the ideals of fairness and justice in financial markets. Specifically,
we consider that whistleblowers’ publicized stories contribute to a significant part of the
discursive ramparts that aim to protect neoliberal governance from systemic doubt. When
persuasive, these stories provide a sense that actors (whistleblowers) are able to defend
“justice” in free financial markets and fight against fraudsters. As a result, the legitimacy
surrounding the ideal of fairness is strengthened, at least in principle.
We hope to make the following contributions to the literature. First, our paper emphasizes
that it is relevant to study discourses involved in the construction of perceptions surrounding
key ideals in financial markets, such as fairness and trustworthiness. While the vast majority
of accounting studies in the financial market area are centered on analyzing the relationship
between corporate disclosures and stock returns, researchers most often do not often analyze
discourses beyond the conventional flow of corporate press communiqués, financial proxies
and financial statements. However, these discourses may play a key role in how people in
society understand financial objects and events, and how they confer trustworthiness or not to
claims upon which the smooth functioning of financial markets is founded.
Second, our findings make us further realize that games of persuasion abound in the
financial economy, with proponents advocating positions of trustworthiness while skeptics
promote criticisms and distrust. Confidence in financial markets implies much more than
rational or emotional reaction to stock returns; it also depends on the individual investor or
stakeholder having to make up her/his mind in the context of contradictory signals. The
construction of confidence is also a longitudinal process in which exposure to discourses, over
time, plays a significant role in shaping the individual’s mind in a certain way (Berger &
Luckmann, 1966).
Third, our analysis shows that the persuasiveness of whistleblowers’ publicized stories in
promoting a sense of fairness in financial markets, is independent from their apparent success
5
or failure in eradicating the specific fraud at the source of their whistleblowing act. That is,
“failure” is constructed in ways indicating that success could have been a likely outcome if
the relevant authorities had been more competent and more effective at reacting to fraud tips.
Collectively speaking, the stories feature experiential “evidence” regarding accounting and
financial fraud being knowable and detectable – which implies by extension that fraud risk is
manageable (Power, 2013) through “appropriate” regulatory control. Nonetheless, in
providing a signal that fairness in financial markets constitutes a realistic and reachable ideal,
the whistleblowing stories are not significantly supportive of deep examinations aiming to
reflect on the extent to which the ideal of fairness is well-founded, actually, in the field.
The remainder of the paper is organized as follows. In the next section, we provide an
outline of the surrounding literature on whistleblowing, which we use in order to position our
study. We then develop the theoretical concepts that guide our analysis. The subsequent
section describes our research approach and methods. Then, after providing some background
information on the empirical context of our study, we analyze how publicized stories
surrounding whistleblowers’ affairs are constructed. This is followed by a discussion in which
we summarize our findings and reflect on the main implications ensuing from our study.
Theoretical background
Being often viewed as one of the most vital and effective methods to detect fraud (Rapp,
2012), whistleblowing has become a popular topic among researchers. In line with a dominant
historical trend in business research (Morgan, 1980), the vast majority of extant studies
approach whistleblowing from angles reflective of the functionalist paradigm of research
(e.g., Near & Miceli, 1985). Prior literature on whistleblowers can be categorized along a
number of specific features.
Legal aspects
Legal aspects of whistleblowing have mostly been studied in relation to whistleblowers’
protection. One prominent line of research has sought to evaluate the extent to which
regulation is effective at protecting whistleblowers – in the UK (Lewis & Uys, 2007; Lewis,
2008), in South Africa (Lewis & Uys, 2007), in the USA (Rapp, 2012; Taylor & Thomas,
2013) and in Europe (Vandekerckhove & Lewis, 2012).
By and large, these articles conclude that while the provisions of current legislation, often
based on new acts, represent improvements vis-à-vis past situation, much more needs to be
6
done in terms of whistleblower protection, mainly because of a lack of or inconsistent
enforcement.
Determinants and incentives for employees
Several studies investigate the extent to which cultural, personal or contextual
characteristics are associated with whistleblowing – in order to better understand the
incentives or determinants of whistleblowing action. Among these characteristics, we find the
following: nationality and cultural orientation (Park, Blenkinsopp, Oktem & Omurgonulsen,
2008); value orientation and personality types (Park, Blenkinsopp & Park, 2014); obedience
pressure (Park & Blenkinsopp, 2009); subjective norms (Trongmateerut & Sweeney, 2013);
moral reasoning (Liyanarachchi & Newdick, 2009); value orientations (Nayir & Herzig,
2012), moral intensity (potential harm and social pressure) (Chen & Lai, 2014); positive
affect and organizational ethical culture (Zhang, Chiu & Wei, 2009); cross-cultural influence
of country of origin, justice, power distance, and gender (Curtis, Conover & Chui, 2012);
emotions (Hollings, 2013); Machiavellianism (Dalton & Radtke, 2013); contextual and
wrongdoing attributes (Robinson, Robertson & Curtis, 2012); religiosity and ethical ideology
(Barnett, Bass & Brown, 1996); and internal incentive (Brink, Jordan Lowe & Victoravich,
2013). From this analysis, it appears that many personality and cultural traits are related to the
decision to blow the whistle.
From another angle, some articles study the absence of whistleblowing, i.e., a person’s
decision to remain silent in spite of persuasive red flags. For instance, MacGregor and Stuebs
(2014) seek to identify factors that may motivate an individual to rationalize “fallacious”
silence. Knoll and Dick (2013) examine the extent to which a series of potential determinants
are associated with measures of silence while Fredin (2012) investigates the cost of remaining
silent. Finally, King III (1999) suggests that an organization’s structure may play a significant
role in the decision to report versus not report some observed case of wrongdoing.
Corporate governance
Dyck, Morse and Zingales (2010) analyze contemporary fraud cases in a large scope to
generalize the factors incentivizing the act of whistleblowing and then reflect on practical
implications in terms of better corporate governance. Vera-Munoz (2005) discusses the
shortcomings of SOX’s whistleblower provisions and concludes that the main challenge for
corporate employees is that whistleblowing sits at the intersection of an employee’s fiduciary
7
duties of care and loyalty. Holder-Webb, Cohen, Nath and Wood (2008) show that the
disclosure of whistleblowing procedures is positively associated with firm size while Lee and
Fargher (2013) suggest that the extent of whistleblowing disclosures is positively associated
with the permissibility of anonymous reporting, the organizational support for
whistleblowing, the number of external directors on the audit committee, and the existence of
concentrated shareholdings. Rachagan and Kuppusamy (2013) analyze whether the
introduction of new laws to encourage and protect whistleblowers is sufficient to improve
corporate governance in Malaysian public-listed companies. In general, these studies raise
questions about compliance with the regulatory requirements of whistleblowing and about the
quality of whistleblowers’ protection.
Justice
Seifert, Sweeney, Joireman and Thornton (2010) apply the theory of organizational justice
to the design of whistleblowing policies and procedures. Through an experimental design,
they find that whistleblowing policies and mechanisms incorporating higher levels of
procedural justice, distributive justice, and interactional justice were perceived to increase the
likelihood that an organizational accountant would internally report financial statement fraud.
Seifert, Stammerjohan and Martin (2014) investigate the mechanism of trust in the connection
between the perception of organizational justice and the possibility of internal
whistleblowing. Gundlach, Douglas and Martinko (2003) integrate the power, justice and
prosocial literature on whistleblowing with the attribution and emotion literature to develop a
social information processing model. Overall, these studies, consistent with the functionalist
paradigm, aim to better understand and improve the structural conditions surrounding
organizational whistleblowing.
Auditors and accountants
The relationship between whistleblowing and auditing has been investigated in different
ways: e.g., auditors’ likelihood to report observations of colleagues’ unethical behavior
(Taylor & Curtis, 2013); conceptual model to explain whistleblowing among auditors (based
on the theory of planned behavior) (Alleyne, Hudaib & Pike, 2013); effect of threat of
retaliation, age and gender on accountants’ propensity to blow the whistle (Liyanarachchi &
Adler, 2011); impact of Confucian culture on current and future accounting and auditing
professionals’ intent to be whistleblowers (Dennis, Blair, Ying Te & Jyh-Shan, 2008); factors
8
that influence the propensity or willingness to blow the whistle among trainee auditors – i.e.,
audit firm organizational structures, auditors’ personal characteristics and situational variables
(Brennan & Kelly, 2007); likelihood for in-charge auditors of internal whistleblowing
depending on the extent of anonymity provided (Curtis & Taylor, 2009). Being functionally
informed, these studies generally indicate a firm commitment to better understand the
determinants of whistleblowing acts. The longer term implicit objective is to generate
knowledge providing a platform for intervention through the establishment of policies and
organizational parameters which are understood as being facilitative of whistleblowing.
Best practices
Jian, Pany and Reckers (2013) examine the efficacy of externally administered versus
internally administered channels (hotline). They conduct a behavioral experiment and find a
significant main effect with reporting intentions being greater if the hotline is administered
externally. Gao, Greenberg and Wong-On-Wing (2015) find similar results. Through an
experimental study, Guthrie, Norman and Rose (2012) find that chief audit executives
consider that anonymous whistleblowing reports are significantly less credible than nonanonymous ones.
From a normative perspective, Loyens (2013) maintains that grid-group cultural theory
could help to construct a whistleblowing policy by linking reporting styles to the
organizational culture. Again, these studies are in line with the functionalist paradigm of
research, seeking to develop an instrumental understanding (Burawoy, 2005) of
whistleblowing processes.
Other topics
Other studies cover a range of different topics from a functionalist angle. Johnson and
Chope (2005) present principles for counseling potential whistleblowers. Based on a survey
made with US public servants, Jos, Tompkins and Hays (1989) found that respondents were
dissatisfied and skeptical of the degree of protection offered by a number of legal
mechanisms. Miceli and Near (2002) review the literature on whistleblowing, stressing that
the circumstances under which whistleblowers succeed in terminating perceived wrongdoing
have not been much studied.
9
Summary
In summary, previous research on whistleblowing has been pursued mainly from a legal
perspective, seeking to investigate specific issues in light of some existing legal framework,
or from a behavioral perspective, aiming to develop a better understanding of the antecedents
of whistleblowing acts. The behavioral studies have tended to put more emphasis on the
examination of determinants than in addressing the consequences of whistleblowing.
Importantly, perspectives predicated on the social constructionist paradigm of research
(Power & Gendron, 2015) have not been significantly mobilized; such perspectives are
especially relevant in examining how people within a given community interpret and give
meaning to the realities that surround them (Gephart, 2004). This is clearly an appropriate
intellectual endeavor given the extent of elusiveness characterizing the notions of
trustworthiness and fairness in the financial market domain. It can therefore be expected that
significant discursive and sense-making activity will be undertaken around these two core
concepts. Furthermore, as shown persuasively by Callon (2009), markets should not be
viewed as natural phenomena; they are socially constructed and vast energies are required in
order to develop and sustain them (see also Pollock & D’Adderio, 2012).
Theoretical underpinnings
Numerous statements in popular discourse highlight that confidence and fairness play a
central role in financial markets. For instance, the CFA Institute, a global organization
representing the investment profession, argues that “Financial markets should afford every
investor the opportunity to earn a fair return.”3 The formal mandate of a number of regulators
is couched in such terms. For instance, the Ontario Securities Commission (2015) stresses the
following when justifying its mandate: “Our statutory mandate is: To provide protection to
investors from unfair, improper or fraudulent practices and to foster fair and efficient capital
markets and confidence in capital markets.” At the other hand of the regulatory spectrum,
confidence in capital markets is invoked by stakeholders who view negatively the
development of additional regulation. For instance, the Prospectors & Developers Association
of Canada (PDAC) (2014) specify, “PDAC members strongly support effective enforcement
as a means through which to enhance investor confidence in capital markets, as opposed to
adding more layers of regulation.” Although confidence in the fairness of financial markets
3
http://www.cfainstitute.org/about/vision/Pages/index.aspx (Last retrieved: October 13, 2015).
10
appears as a fragmented notion, the important point to retain in the context of this paper is the
extent to which people view it as a central feature of markets’ smooth functioning.
Academic theories, in particular agency theory (Jensen & Meckling, 1976), also view
confidence in the fairness of financial markets as a primary belief upon which the legitimacy
of our political economy is established. For example, Healy and Palepu (2001, pp. 407-409)
highlight that lack of confidence is one of the central presumptions used to conceptualize the
functioning of financial markets – and that several solutions exist to mitigate or solve the
matter, i.e., the so called “agency problem”:
[O]nce savers have invested in their business ventures, entrepreneurs have an incentive to expropriate
their savings, creating an “agency problem”. (…) The agency problem arises because savers that invest in
a business venture typically do not intend to play an active role in its management – that responsibility is
delegated to the entrepreneur. Consequently, once savers have invested their funds in a business venture,
the self-interested entrepreneur has an incentive to make decisions that expropriate savers’ funds. For
example, if savers acquire an equity stake in a firm, the entrepreneur can use those funds to acquire
perquisites, pay excessive compensation, or make investment or operating decisions that are harmful to
the interests of outside investors. (…) There are several solutions to the agency problem.
In addition, numerous surveys are conducted by public and private institutions in order to
measure and evaluate society’s degree of confidence in the reliability and fairness of financial
markets. For instance, the French survey institute BVA regularly produces a “confidence
index”.4
In short, confidence in the fairness of financial markets constitutes a central referent in the
field – even a central stake that is monitored and acted upon when stakeholders perceive that
confidence may be jeopardized. Numerous resources are devoted to producing knowledge on
the extent to which people view financial markets as fair and trustworthy. Through a network
of statements and claims, the primacy of confidence as one of the most important ingredients
upon which is based the smooth functioning of neoliberal financial markets is widely
promoted and celebrated. This does not imply, however, that the audiences and parties
involved in financial markets will actually be confident in the fairness of financial markets.
Although financial markets are often viewed as sanctuaries of individual freedom, they do not
originate from nature; financial markets are social constructions that necessitate resources to
be established and maintained, as emphasized by Rose (1999, pp. 140-141),
In the United States, neo-liberals criticized the excessive government that had been developing since the
New Deal and through the Great Society and the War on Poverty, with its large bureaucracies, its welfare
programmes, its interventionist social engineering and the like. (…) Gradually, a new diagram of the
4
http://www.bva.fr/fr/sondages/barometre_de_l_economie/ (Last retrieved: October 13, 2015).
11
relation between government, expertise and subjectivity would take shape. This would not be a “return”
to the liberalism of the nineteenth century, or, finally, government by laissez faire. It was not a matter of
“freeing” an existing set of market relations from their social shackles, but of organizing all features of
one’s national policy to enable a market to exist, and to provide what it needs to function. Social
government must be restructured in the name of an economic logic, and economic government must
create and sustain the central elements of economic well-being such as the enterprise form and
competition.
Central to our argument, the configuration of beliefs upon which is established the
legitimacy of today’s neoliberal financial markets needs to be maintained once created
(Lawrence, Suddaby & Leca, 2009). In particular, the media are likely to play a central role in
the process, given their abilities to construct sense (Hall, 1997) and “manufacture” beliefs
(Herman & Chomsky, 1988). The point is that the media disseminate views and thoughts to
which the audiences are exposed, which individuals may then utilize in constructing their own
views of the world (or in reproducing the views of others) (Chwastiak & Young, 2003).
Our interest is toward the role of “well-publicized whistleblowers’ stories” in establishing
and maintaining a perception of confidence surrounding the notion of “fairness” in financial
markets. Drawing on sociologically-inclined literature, it can be maintained that a significant
part of societal learning occurs through the circulation of stories (Weick, 1995; Czarniawska,
2004). Czarniawska (2004, p. 36) elaborates on the matter,
[Stories] are offered to newcomers as the means of introduction to a community, but they are also
repeated in the presence of the very actors who participated in the event, thus consolidating a community
feeling by reifying its history. Many of them have a quasi-mythical character and are exploited in similar
fashion, as described in many anthropological studies.
According to Morgan (2006), the promotion of stories is a means through which cultural
beliefs are formed and reproduced. Importantly, stories are known to be influential
mechanisms through which certain meanings come to be shared and instituted in a given
community. As maintained by Reiter (1997), stories are powerful but their conceptual
underpinnings are often concealed. From this perspective, stories imply a range of underlying
assumptions which do not tend to be debated because the storyteller has power over the text
s/he develops (Witten, 1993). In short, stories convey “ready-made” knowledge.
Quite often, “well-publicized stories” in the political economy domain are noteworthy as
they tend to propagate a sense that leaders are able to change the world and their
organizations (Dolan & Naidu, 2013), and that courageous individuals will make all possible
efforts to defend “justice” and fight against evil and fraud. Well-publicized stories tend to
bring attention to individuals’ role, in particular their combativeness (Morales, Gendron &
12
Guénin-Paracini, 2014a). From a critical perspective, those stories may consolidate the
existing social order (Morales, Gendron & Guénin-Paracini, 2014b). They may be viewed as
myth constructions which can be exploited to motivate employees and others in achieving the
objectives of their organization (Boyce, 1996). Indeed, myths and illusions may be crucial to
the functioning of financial markets (Malsch & Gendron, 2009; Stolowy, Messner, Jeanjean
& Baker, 2014), notably in encouraging investors to think and behave as confident agents,
who are not overly skeptical of the extent to which the ideal of fairness is compromised in
financial markets. In such stories, the narrative may put emphasis on morally-right individuals
who eventually, somehow, manage to overcome the sturdy forces of evil. In terms of cheating
behavior in financial markets, investors through well-publicized stories may find it reassuring
to feel that some actors (e.g., whistleblowers) are able to detect fraud and defend a sense of
justice and morality.
Our paper is grounded on the view that such social construction processes could apply in
establishing a collective sense of confidence in the fairness of financial markets. Wellpublicized stories in the whistleblowing domain arguably could play an important role in the
construction of the belief that moral deviations in financial markets can be revealed, acted
upon and punished. While these presumptions may look credible, to our knowledge they have
not been empirically investigated and we do not know much about the ways in which
soothing discourse is articulated through whistleblowers’ well-publicized stories. Our
overarching research question is then the following: How do whistleblowers’ publicized
stories promote a sense of fairness in financial markets?
Research approach and methods
We focus on the role of images and more generally figurative language used by
whistleblowers to give sense to and disseminate their actions/stories/experiences. These
images and texts are conceived of as tools that may establish, in the public’s eyes, a sense of
confidence in the financial capitalist system. Positive images may also help a number of
individuals in their decision to undertake some whistleblowing actions. We examine the role
of images/figurative language stemming from whistleblowers’ well-publicized stories through
critical discourse analysis. As stressed by Czarniawska (2004, p. 5), a relevant approach to
understand society is to examine its “repertoire of legitimate stories” and how it evolved over
time. Our analytical emphasis is on the influence of publicized stories in shaping commonsense views that may play a role in the social reproduction of neoliberal capital markets. Of
13
course, other sources affect the reproduction of prevailing economic structures (Morales,
Gendron & Guénin-Paracini, 2014b). Our emphasis on discursive activity ensues from its key
role in influencing society (Hall, 1997; Chwastiak & Young, 2003).
Discourses can be viewed as interventionist projects that aim to stabilize “attributions of
meaning and orders of interpretation, and thereby to institutionalize a collectively binding
order of knowledge in a social ensemble” (Keller, 2013, p. 2). From this angle, discourses
constitute a key feature of social reproduction processes. For its part, critical discourse
analysis examines the relationship between discursive activity and the production and
reproduction of meaning systems and orders of knowledge, the interests involved in the
process, and the broader consequences of discursive influence on social collectivities (Keller,
2013).
Discourse analysis therefore implies an analysis of power – given that text and images
shape people’s understandings of the world and impact behavior (Cooper, Dacin & Palmer,
2013). According to Lukes (2005), discourses are involved in the framing of preferences, the
construction of self, and the development of people’s interpretive schemes. Drawing on this
perspective, our analysis centers on the construction of realities surrounding whistleblowers’
acts – including the attribution of roles to the actors involved, how morality and lack of
morality is mobilized, and the “lessons” which are presumably learned from the triumph of
what is presented as truth.
Before going further, it is important to mention that discourse analysis has engendered a
significant debate in the literature (Armstrong, 2015). For instance, Thompson (1990)
maintains that discourses cannot be understood without analyzing how the audiences interpret
and make use of text. In contrast, Phillips, Lawrence and Hardy (2004, p. 636) uphold that
discourse analysis is not focused so much on how text is produced and appropriated as how a
specific discourse:
(…) “rules in” certain ways of talking about a topic, defining an acceptable and intelligible way to talk,
write or conduct oneself [and how it] “rules out”, limits and restricts other ways of talking, of conducting
ourselves in relation to the topic or constructing knowledge about it.
While we recognize the merit of examining how discourses are interpreted and
appropriated by individuals, our analysis is more coherent with a view that assumes that
discourses play a central role in shaping social reality.
14
Scope of data collected
Our empirical evidence relates to whistleblowers’ “well-publicized stories” conveyed in
English through books, first-hand and second-hand interviews, conferences, and websites.
Our material, therefore, consists of text and images. Of course, as accounting researchers, we
were already aware of several prominent whistleblowing cases, which we included in the
scope of our analysis. We wanted our data to be more exhaustive, though. As a result, in order
to identify additional story cases, we browsed the Internet using search terms such as
“whistleblower”, “fraud” and “informant”. More specifically, our selection of cases was based
on the following conditions:
-
Inclusion of whistleblowers involved in accounting or financial fraud;
-
Exclusion of whistleblowers involved in political cases (e.g., Edward Snowden) or in the
healthcare sector (e.g., Peter Rost on Pfizer – (Rost, 2006)), without any apparently
significant accounting or financial connotation;
-
Exclusion of whistleblowers with no public statements available (books, videos…): e.g.,
Matthew Lee, Lehman Brothers (Devine & Maassarani, 2011, p. xviii); Roger Barnes,
Fannie Mae (Devine & Maassarani, 2011, p. 51); Jared Bowen, Walmart (Devine &
Maassarani, 2011, p. 297); David Welch, Bank of Floyd (Devine & Maassarani, 2011, p.
320).
As a result of this screening, we concentrate on the following seven cases:
1. Richard (Dick) Bowen (Citigroup)
2. Frank Casey (Madoff)
3. Cynthia Cooper (WorldCom)
4. Harry Markopolos (Madoff)
5. Weston Smith (HealthSouth)
6. Sherron Watkins (Enron)
7. Michael Woodford (Olympus)
Table 1 provides a brief outline of each whistleblower.
Insert Table 1 About Here
In order to keep the investigation tractable, we constrained our analysis to the material that
featured the whistleblowers’ own accounts.5 While we recognize that press articles play a
significant role in society as producers and conveyers of meaning (Cohen, Ding, Lesage &
5
For instance, a search on Factiva (August 18, 2015), using the terms Markopolos and Madoff, engendered 547
newspaper articles.
15
Stolowy, Forthcoming), we thought that whistleblowers’ own words constitute statements that
may be particularly credible and influential in the eyes of the audiences, as a result of their
quite often emotional, lively and exhaustive nature. Our inquiry is therefore predicated on the
following empirical material (see Appendix A for a comprehensive enumeration of the
material we constituted):
-
Whistleblowers’ websites;
-
Whistleblowers’ autobiography when available (e.g., Watkins, 2003; Cooper, 2008; Beam
& Warner, 2009; Markopolos, 2010);6
-
Our interviews (see below);
-
Written interviews with others;
-
Public videos (interviews, presentations at universities, conferences).7
We also ensured that the seven cases were, by and large, constructed as “well-publicized
stories”, which we assessed through the quantity (see Appendix A) and nature (books,
videos…) of available material.8
Interviews
We contacted the seven whistleblowers by e-mail or through a form on their website (when
an e-mail address was not available), providing a brief summary of the research project. Four
of them accepted an invitation to have a conversation with us.9 One answered negatively, and
two did not answer our numerous attempts to contact them (including through their
publishers). Given that the four interviewees were located in different cities of the United
States, we decided to conduct each interview by telephone (all were made by the same
coauthor).
The interviews were conducted between November 2014 and July 2015. We followed the
interview guide shown in Appendix B. We sought to ask the same questions in all interviews,
but we also asked additional questions that made it possible to delve deeper into our
interviewees’ views. At the end of each interview, we ensured that all of the main elements
6
Written by the whistleblower himself/herself or with a journalist or colleague.
Our seven stories are not fully consistent in the sense that, if one of the whistleblowers was involved in the
fraud (i.e., Weston Smith), the others were not. We do not believe that Smith’s position of repentant sinner
reduces the plausibility of his statements as whistleblower. Also, our stories include inside and outside
whistleblowers. While this distinction is often presented as theoretically important in the whistleblowing
literature, we do not think that it is a relevant differentiator in the context of our research question and approach.
8
For example, one testimony of Harry Markopolos (https://www.youtube.com/watch?v=uw_Tgu0txS0) has
been viewed 98,686 times on YouTube (as of September 17, 2015).
9
Richard Bowen, Frank Casey, Weston Smith and Sherron Watkins.
7
16
included in our listing of predetermined themes had been covered. The interviews were
recorded with the approval of the participants. The interviews, which lasted, on average, 30
minutes, were subsequently transcribed. Given the existence of information already publicly
available surrounding their case, the interviewees accepted that the verbatim extracted from
the discussion with them mention their name.
Data analysis
The data were analyzed through qualitative procedures (Patton, 1990). In particular, we felt
inspired by an approach that Czarniawska (2004, p. 23) describes in the context of studying
broadcasts.
The real challenge (…) is the emplotment of the broadcast. The broadcasters, says Ryan (1993), perform
it using three basic operations: constructing characters – that is, introducing legible differences between
the actors (a hero and an opponent); attributing a function to single events; and finding an interpretive
theme that subsumes the events and links them in a meaningful sequence.
The analysis took place in two stages. We first read and coded the books (when available),
using a coding scheme that we developed inductively. We sought to identify the main trends
and patterns in each book, as well as secondary themes. We paid attention to the
emplotment10, the role ascribed to the whistleblower, the metaphors used by the author(s) to
define characters, how claims of morality and immorality are attributed to the actors, views
expressed about the capitalist system, and how linkages are developed between accounts of
the whistleblower’s childhood and her/his subsequent whistleblowing behavior. Thereafter,
for each book, we developed a summary narrative that stressed the most important patterns
identified – which we sometimes illustrated graphically.
The second stage involved the development of an exhaustive coding template from the
work that we carried out and the conclusions that emerged in the first stage. We then used this
template to code the rest of the material. In carrying out our analysis, we were well aware that
meanings are not conveyed homogeneously across society. As a result, we focused our
investigative gaze on what appeared to us as dominant lines of thought developed by the
authors. As a team of three authors, we often discussed emerging themes ensuing from our
analysis of the whistleblowers’ discourse, to ensure that they are indeed significant and
sufficiently grounded in the data.
10
The concept of “emplotment”, developed in historiography by White (1973), means “introducing structure
that allows making sense of the events reported in a narrative” (Czarniawska, 2012, p. 758).
17
Promoting fairness through whistleblowing well-publicized stories
In all the material we analyzed, the whistleblowers’ stories often emphasize figures of
speech, i.e., “a form of expression (…) used to convey meaning or heighten effect often by
comparing or identifying one thing with another that has a meaning or connotation familiar to
the reader or listener”.11 As shown below, the most commonly used figure is the metaphor,
i.e., “a word or phrase for one thing that is used to refer to another thing in order to show or
suggest that they are similar”.12 The whistleblowers also often refer to different values (e.g.,
ethics, honesty) or feelings/emotions (e.g., doubt, fear, solitude).
Our main analytical objective is to examine how whistleblowers’ stories are made
persuasive in promoting a sense of fairness in financial markets. Specifically, the analysis of
the material is organized along the following four dimensions: (1) What roles are ascribed to
whistleblowers? (2) What shaped whistleblowers’ character? (3) How do whistleblowers
describe the triggering event that led them to blow the whistle? and (4) What normative
lessons do whistleblowers put forward?
A number of metaphors/values/emotions are common to several whistleblowing stories and
we tend to privilege these commonalities in our analysis below. We present in Table 2 a
summary of the elements of discourse that we found in the material we studied. 13
Insert Table 2 About Here
Ascribing roles
In the stories we analyzed several metaphors used in ascribing roles to the whistleblower.
The “journey” is one of the most common metaphors used in the whistleblowing stories,
along with the underlying role of “journeyer” indirectly ascribed to the whistleblower.
According to Milne, Kearins and Walton (2006, p. 810), the use of journey as a metaphor may
be particularly powerful because it embraces change, as opposed to more static conceptions of
social life. A sense of going through a difficult and unpredictable path indeed characterizes
Cynthia Cooper’s book, which even highlights the term “journey” in the title: “Extraordinary
Circumstances – The Journey of a Corporate Whistleblower” (Cooper, 2008). For instance,
11
Source: http://www.merriam-webster.com/dictionary/figure_of_speech (Last retrieved: June 11, 2015).
Source: http://www.merriam-webster.com/dictionary/metaphor (Last retrieved: June 11, 2015).
13
In interview and video transcripts, we replaced for the sake of readability some repetitive expressions, such as
“you know” or “um”, by “(…)”. Underlined elements represent our emphases.
12
18
My years in Atlanta had been a roller-coaster – moving, starting a new career, getting laid off, getting
married, having a baby, buying a house. But my life was about to dramatically change course once again.
(Cooper, 2008, p. 67)
It has been and will continue to be a rough road. (Cooper, 2008, p. 320)
Sherron Watkins and Harry Markopolos also refer to the journey metaphor, in a way that
stresses the underlying perils and uncertainties to which the whistleblower is confronted:
Sherron wasn’t sure that anything could be done about the present situation, but there was still time to
avert major disaster down the road. (Swartz & Watkins, 2003, p. 360)
At some point through the nightmarish journey, I feared for both my safety and that of my family.
(Markopolos, 2010, p. 3)
Emotions therefore characterize the undertaking of this difficult journey, in contrast to
classic stories and accounts in the business literature which tend to emphasize the imagery of
calm and rational decision-makers in the face of adversity (Zey, 1992). Sherron Watkins
refers several times to the image of a sinking ship, implying a sense of fragility and potential
failure in reining in the forces of adversity:
Late at night, or in the early-morning hours when sleep remained elusive, Sherron lay in bed, stared at the
ceiling, and tried to predict the future. She couldn’t get the image of a sinking ocean liner out of her mind,
one that lurched and listed through rough seas. The frightened passengers were howling, and the captain
had just commandeered a cigarette boat and was speeding safely toward shore. (Swartz & Watkins, 2003,
p. 273)
In such passages, the whistleblowers do not present themselves as disembodied
individuals, un-sensitive to the difficulties that stand along their journey. Instead, they are
represented as emotional beings, subject especially to the feelings of fear and breakdown. For
instance, Harry Markopolos often mentions being assailed with a feeling of extreme danger:
For several years I’d been living under a death sentence, terrified that my pursuit of Madoff would put my
family and me in jeopardy. (Markopolos, 2010, p. 6)
Weston Smith is also represented as having suffered from a feeling of severe threat ensuing
from the fraudster’s characterization as a merciless and inflexible individual:
A meeting was arranged with the FBI and the United States Attorney’s office. They were familiar with
Scrushy’s [HealthSouth’s CEO] power and greed, and felt the safest place to meet would be in the
Wynfrey Hotel at the Riverchase Galleria. I was told to park my car at the opposite end of the Galleria
and to take a serpentine route through the mall. I was legitimately afraid of what would happen if Scrushy
knew what I was doing, and believed in my heart that he would have no boundaries in stopping me if he
knew that I was about to destroy his empire. I feared for my life. (…) They did not want to meet in
Birmingham for fear of us all being seen together. (Beam & Warner, 2009, p. 133)
Michael Woodford also mentions the feeling of danger:
A Japanese journalist, working for American journals, (…) told me my life was in danger. (Woodford,
video, https://www.youtube.com/watch?v=eEBlound460)
19
In addition, the whistleblowing journey is often viewed as an individualizing one, in which
the actor is far from being supported by a network of people and resources. In a number of
cases, loneliness is combined with feelings of disappointment vis-à-vis one’s former
colleagues and even friends:
I was starting to realize that the road to becoming a whistleblower was a lonely one and sets you apart.
You become an island. There are times when some people are on the island with you, but generally
speaking you remain like Robinson Crusoe, or Tom Hanks talking to a basketball. It’s very isolating.
(Woodford, 2012, p. 38)
I was the lone wolf who had left the pack, and the pack had closed ranks against.me. Being readmitted to
the fold was never going to be easy. I had left the pack to fight for its collective well-being, its survival,
but, in doing so, had made myself an outsider. (Woodford, 2012, p. 206)
The person, the people I felt betrayed me most were not people, who were involved in the fraud, but they
were the senior managements in America, Germany and the U.K. Those people, who had helped me
expose the fraud, the day I got fired moved away in a way I would never have believed, and I considered
several of these people friends. (Woodford, video, https://www.youtube.com/watch?v=eEBlound460)
In other cases, loneliness implies a sense of frustration:
No one could argue with me. No one could point out that my logic was flawed. (…) I kept these warnings
up (…), trying to make some changes and, if anything, it became an increasing frustration that despite
everyone’s acknowledgment that there was a situation I was finding, there were series of excuses as to
what this situation could not be fixed. One of them was in trying to discount what I was finding. (…) So
there was an increasing frustration that built quite frankly fairly dramatically over a year and a half.
(Bowen, our interview)
This feeling of frustration could have almost led Harry Markopolos and his team to
abandon their “fight”:
So we became jaded, if you will, disgusted. By, I would say, somewhere around 2007, we were almost
giving up. (Casey in Prosserman, 2011, mn 1:06:19)
The following excerpts from Cynthia Cooper’s (2008) book are also characterized with
emotional fear:
I’m nervous. As I hold up my hand, my fingers are shaking. My heart is thumping wildly. (Cooper, 2008,
p. 243)
When I finally reach home, it’s all I can do to sit on the couch in a daze, tears falling silently. The past
several weeks have been traumatic, but little do I know that my nightmare is only beginning. (Cooper,
2008, p. 267)
Sitting in Bob’s conference room with trial documents, I begin crying. It still feels as if I’m trapped in
someone else’s nightmare. (Cooper, 2008, p. 328)
The last excerpt is particularly poignant, as if the individual lost her sense of space-time
continuity, being “trapped in someone else’s nightmare”.
20
Overall, the whistleblowers are represented as journeyers who experienced challenging
obstacles and intense emotions along their quest – in ways that may convey a sense of
credibility to their respective stories. Like a good anthropological study that provides a bridge
to connect readers to the everyday experiences of people studied (Cunliffe, 2010), the reader
of whistleblowers’ journeys may almost “feel”, through detailed emotional accounts, what the
whistleblower experienced.
Until now, our analysis indicates that the whistleblowing stories are characterized with the
imagery of a long and perilous journey, which is punctuated with ordeals whose manifestation
engenders a flurry of intense emotions in the whistleblower’s mind. From this perspective, the
word “whistleblower” appears as an inappropriate metaphor in that it conveys a sense of
easiness and facility in making authorities, journalists and others aware of some case of moral
deviancy. “Just blowing a whistle” is far removed from the “realities” that are conveyed to the
readers through the whistleblowers’ accounts.
That being said, in order to construct a story that conveys a sense of capacity or power in
defeating the forces of wrongdoing, the whistleblower’s character has to be endowed with a
number of invigorating features, indicative of one’s strengths in overcoming adversity and
feelings of discouragement. In other words, a number of qualities or traits possessed by the
main actor are necessary for the emplotment to be persuasive in establishing and consolidating
the belief that the whistleblower is able, at least in principle, to make a difference in the drama
in which the prevalence of truth is at stake.
Accordingly, the whistleblowers’ characters that we examined are equipped with a number
of skills and values that are instrumental in the realization of their project to drive out
fraudsters and expose them in the regulatory and/or public arena. In general, these traits relate
to one’s sense of morality, determination, and combativeness. On Richard Bowen’s homepage
(www.richardmbowen.com), the picture of a compass is juxtaposed next to his name,
consistent with the metaphor of the journey and the necessity of taking the “right” direction
(see Figure 1).
Insert Figure 1 About Here
Our analysis suggests that the “right” direction is a moral one, in that in venturing through
a long and winding road the whistleblower needs not to lose from sight her/his ethical
referents – especially honesty. According to Markopolos,
My investigation team (…) was comprised of four honest people with the shared belief that good ethics
demands action. (Markopolos, 2010, p. 3)
21
Whistleblowers’ sense of morality is often represented as being unambiguous, i.e., as being
characterized with the ability to determine right from wrong and remain stiff on one’s ethical
position against winds and tides. Our analysis indicates that morality is often expressed
through the phrase “doing the right thing”, thereby signaling that the whistleblower’s quest is
a noble one. Religiosity sometimes impinges on morality when the story shows the
whistleblower, introspectively, seeking to comfort herself about the appropriateness of her
actions:
Still, my instinct told me to press forward. I found myself at a crossroads. Looking back, I would take the
same path again. But doing the right thing doesn’t mean there will be no cost to others, your family, or
yourself. (Cooper, 2008, p. ix)
I think about this all morning and pray, God please give me the strength in making the right decisions.
(Cooper, 2008, p. 242)
Doing the “right thing” is also prevalent in the discourses of Sherron Watkins and Michael
Woodford.
She believed that good always prevailed. The Raptors [name for some of the fraudulent special purpose
entities established by Enron] should be unwound. Enron should restate its financial reports. If someone –
someone like her – presented a rational solution to upper management, they would do the right thing.
(Swartz & Watkins, 2003, p. 275)
I get fired and lose my job for doing the right thing.
(Woodford, video, https://www.youtube.com/watch?v=NXZA08x4HZA)
Also, the ideal of “justice” is sometimes mobilized in rationalizing one’s ethical
commitment as well as a sense of modesty, in that the whistleblower’s actions are shown as
not being atypical – the actor’s behavior just being consequent with her/his morality:
I knew it was the right thing for me to do. (Markopolos, 2010, p. 61)
I certainly wasn’t looking for personal credit. I was hoping for justice. (Markopolos, 2010, p. 111)
We were basically trying to be good people, good participants in the marketplace, and so, hero is a
misnomer. We did it, because we thought it was expected of us, because we were right. (Casey, our
interview)
Being determined is also one of the principal traits of the whistleblower in the stories we
analyzed. In spite of difficulties and some transitory moments of hesitation, the actor tends to
be resolute in her/his commitment to make truth prevail. Woodford’s story oftentimes
highlights a sense of resolute determination – even when his marital life is jeopardized:
[Nuncy – Woodford’s wife] was already weighed down by anxiety, and Jake’s warning sent her over the
edge. Fearing for everyone’s safety and the toll the saga was having on the family; she asked, “Please,
Michael, why can’t you just drop it? What are you trying to achieve?” But I was resolute. “Look. There’s
no point in me lying curled up in my basket, licking my wounds. That’s never going to get us anywhere.
What I need to do - with or without your help - is to get Olympus on the right road.” I felt there was no
22
choice but to continue what I had been doing since 14 October. Talking to the media. (Woodford, 2012,
p. 148)
I was convinced the whole vile business could lead to the break-up of our marriage. (…) But that is the
way I have always been – problems are there to be solved. What do I need to do to get from A to Z? I
work out the route, surmount the obstacles and I get there. (Woodford, 2012, p. 149)
Cynthia Cooper’s story illustrates how she was provided, earlier in her adult life, with a
persuasive demonstration that determination pays off:
[Discussing her job as a waitress] I, on the other hand, with my small hundred pound frame, can manage
only one [plate] in each hand, my left hand shaking under the massive weight all the way from the kitchen
to the table. (…) Meanwhile, I ask my dad to buy me some weights so I can bulk up in order to carry
more plates. After weeks of lifting dumbbells and squeezing hand grips, I finally manage to carry two
plates in my right hand and one in my left without any shaking. (…) [quote from her waitress job’s
manager] “You were the worst waitress I ever hired,” he says. “I did everything I could to get you to
leave and you just wouldn’t quit. Now you’re one of the best waitresses I have.” (Cooper, 2008, pp. 3738)
Sherron Watkins’s account also shows a strong sense of persistence:
Restatement was the only course, she said. (Swartz & Watkins, 2003, p. 305)
Passages imbued with one’s strength of mind may be particularly inspiring to readers,
being provided with a representation that highlights determined people possessing sufficient
strength to detect wrongdoing and engage in the difficult journey of investigating the matter
and making others aware of the scandal. Even though the road is perilous and the
whistleblower does not always ultimately succeed in making fraudsters fall from grace, the
underlying message is important, signaling that the whistleblower is definitively able to detect
fraud and notify some relevant authorities. The extent to which the notification is successful
depends on whether or not the “right” institutional conditions are established (e.g.,
competence of staff).
Combativeness is another popular trait in the whistleblowers’ accounts – which is
conveyed especially through the chasing/hunting and military metaphors. Accordingly,
Markopolos’ and Casey’s stories often refer to chasing and hunting. The documentary based
on Markopolos’ book (Prosserman, 2011) is entitled “Chasing Madoff”. The soundtrack is
often consistent with the metaphor. Gun clicks and flame whooshes are heard (min 5:07 5:14, 7:50), gunshots are heard several times (e.g., min 24:00, 25.15), and Harry Markopolos
is seen with a gun several times (e.g., min 5:15, 45:00). It is also noteworthy that the
copyright of Markopolos’ book belongs to the company “Fox Hounds LLC”, which is the
nickname often used by Markopolos to designate his team mates (Frank Casey, Mike Ocrant
and Neil Chalo) and himself (Anonymous, 2013). In this book, Markopolos particularly refers
23
to hunting and chasing in a way that demonizes the character of the fraudster – who is
represented as a monster devoid of any morality in defrauding others:
We were beginning to see him [i.e., Madoff] as he really was: a monster preying on others. (Markopolos,
2010, p. 49)
Even though the hunting was long and arduous, the team’s leader is represented as
knowing how to reinvigorate members’ commitment,
We were constantly on the chase, because it became a game of intellectual challenge and curiosity. Every
time the team would begin to fade in their excitement to chase Madoff, Harry would rally the troops
again, renew their effort. (Casey, our interview)
The “chasing metaphor” is interesting because it is developed using the lexical field around
the concept of chasing. This type of metaphor is often referred to as an “extended metaphor”
(Montgomery, Durant, Furniss & Mills, 2012, p. 130) because it is repeated throughout the
text (see our analysis of the concept of chasing in Figure 2).
Insert Figure 2 About Here
In a few cases, the script of combativeness is juxtaposed to the image of team action. This
is particularly the case for Markopolos’ story, where the whistleblowing act is attributed to an
outstanding team whose work and internal cohesion were allegedly invaluable in combating
evil. The first line on the front cover of the DVD “Chasing Madoff” (Prosserman, 2011) is:
“Meet the team that uncovered the truth behind the notorious crime”. Also,
The team kept me going through this endless series of disappointments. (Markopolos, 2010, p. 169)
Combativeness is also conveyed through the military metaphor. Markopolos mobilizes
military images quite frequently – sometimes representing the whistleblowing team in a quite
heroic way, willing to do anything to defend the victims of white-collar crime:
The four of us were the last and unfortunately only functioning line of defense between Madoff (…) and
[his] victims. (Markopolos, 2010, p. 3)
As indicated below, danger always lurks around the corner, with a new enemy to combat
once a first mission is accomplished. The underlying, implicit message is that combative
whistleblowers are indispensable to the smooth functioning of our political economy, not only
to drive out fraudsters but in ensuring that regulatory institutions are seriously committed to
monitoring:
We’d won the biggest battle, but we hadn’t won the war. I believed the SEC [i.e., US Securities and
Exchange Commission] remained a serious danger to the American people. (Markopolos, 2010, p. 216)
As in the case of the chasing metaphor, Markopolos uses the lexical field around the
concept of military and applies an extended metaphor.
24
Casey develops a link between the morality of the Madoff whistleblowers and their
military past, which somehow instilled in their minds a sense of duty to fight and report
wrongdoing:
Harry and I are both ex-military officers. We believe in duty, honor and country. And it was our duty (...)
and our honor was at stake if we did not report a scam. (Casey, our interview)
Michael Woodford also refers to the military metaphor:
Whatever I might be accused of later (…) would be nullified because I had copied [i.e., Woodford had
sent a copy of the incriminating information he had to Ernst & Young] the world’s senior partners at
Ernst & Young, making it impossible for anyone to suggest that I could be silenced thereafter by offering
me inducements. It was a tactical process; it was almost like war. (Woodford, 2012, p. 47)
Such passages, which verge on the claim of heroism, contrast with others in which calls for
modesty are emphasized. The whistleblowing stories are not always consistent, both between
and within cases. Of course, meaning uniformity was not expected given the unpredictable
and ramifying processes by which discourses develop and circulate in societies (Hall, 1997).
For instance, the following excerpt implies that as the result of an intense introspective
process, the actor eventually came to admit to himself that his past behavior was unacceptable
and that it was imperative for the fraudulent scheme to come to an end. The relative fragility
of the whistleblower’s determination is noticeable:
I [i.e., Weston Smith] fully contemplated what a waste the past 13 years of my life had been. In order to
climb the corporate ladder I had committed securities fraud, lost a good marriage, entered a bad one, and
despite having become rich with the things of this Earth, felt guilty of how I’d gotten there and ashamed
that I’d allowed myself to go along with the demands of a narcissist sociopath for so many years. It was
time for all this to end, and whatever my punishment would be—I’d learn to deal with it. It was time to
do the right thing, and to focus every new day on doing the next right thing. (Beam & Warner, 2009, p.
132-133)
In spite of such discrepancies, the whistleblowing stories that we analyzed converge in
representing the act of whistleblowing as a noble one, which has a certain potential to
translate into fraudulent schemes being brought to a halt. In other words, the stories may be
instrumental in establishing a perception of fairness in financial markets: the signal provided
is that fraud is detectable and may be brought to a close. However, fraud lurks around every
corner and the whistleblowing accounts are quite effective at characterizing the role of the
fraudster in dramatic ways. For instance,
I know he’s a sociopath, he is a psychopath, he is a stone-cold ruthless financial killer, a predator, he
destroyed thousands of families, he took them literally from richness to rags overnight. And he insults his
victims, he said: “I carried them for decades. And this is the gratitude I get!” And that’s typical of a white
collar criminal. They always rationalize their behavior, and they feel no remorse. (Markopolos, video,
https://www.youtube.com/watch?v=d7F3NkVZ4Ww)
25
Weston’s comments are interesting because he not only connected the dots, but he also provided a much
different perspective on Richard [Scrushy]’s vindictive, ruthless leadership style, as he was not a founder
of the company, and was more subject to Richard’s daily cruelty than I [Aaron Beam] was as CFO.
(Beam & Warner, 2009, p. 104)
No one wanted to trade with the devils from Enron’s evil empire. (Swartz & Watkins, 2003, p. 359)
Each conversation with Scott [WorldCom CFO] is worse than the one before. This time, I can’t stop the
tears. My voice is shaking, but I keep talking. I tell Scott not to patronize me and try to move the
conversation to the issues. (Cooper, 2008, p. 210)
In so doing, the whistleblowing stories establish a tension between the demonization of
fraudsters, depicted as unethical, powerful and dangerous, and the characterization of the
whistleblower as a central figure in the noble quest to restore moral order. At the end of the
day, the construction of fairness in financial markets rests on a fine line between the
demonization of powerful fraudsters and trust in the capacities of a few valiant knights in
reining in business ethics deviancy.
Finally, it is worth noting that the whistleblower’s role is often cast as a role consistent
with masculinity, being based on traits such as uncompromising morality, inflexible
determination and combativeness – even when women take center stage. In developing their
stories, the whistleblowers somehow reproduced masculine hegemony – with a nuance,
however, in that the characters are unambiguously projected as emotional beings.
Shaping the whistleblower’s character
Like in conventional dramas, a majority of the whistleblowers’ accounts include a number
of flashbacks that provide readers with insight into the processes by which the actor
apparently came to be endowed with moral strength and determination. Socialization is the
dominant line of interpretation in this respect. For instance, Cynthia Cooper highlights that
her mother played a central role in inculcating her with pugnacity when facing intimidation
threats:
“Don’t ever allow yourself to be intimidated,” [Cynthia Cooper’s mother] would say, drawing the word
out in her heavy Mississippi accent, after we told her about someone bullying us at school. As much as
any advice she gave, this was the lesson that helped me push through my fears and find my courage when
I needed it most. (Cooper, 2008, p. 14)
Michael Woodford also emphasizes the role of his mother as an exemplar of
determination:
Despite being a single parent, my mum put herself through teacher-training college and was determined
to better her family’s prospects. These first years were easier than the ones which would follow. At the
age of seven I had become the man of the house. (Woodford, 2012, p. 83)
26
Another major factor being stressed in a few whistleblowers’ accounts is religion. For
instance, Cynthia Coopers’ discourse stresses the role of the Bible in forming, during
childhood, her way of thinking and sense of morality.
Without fail, each evening ended with Nannie Ferrel [Cynthia Cooper’s nannie] taking her Bible from the
nightstand. “Let’s read from the Bible.” (…) One of my favorite stories was Jesus telling the parable of
the Good Samaritan. (Cooper, 2008, p. 20)
Sherron Watkins mentions the key role her faith allegedly played in forging her mind and
in informing her behavior over the years:
[About religion] Most definitely it was important to me. In a number of ways (…) have you ever heard
the saying (…) “Character is what you do when no one is looking?” (…) I sort of add to it that “Well,
isn’t it easier to have character if you believe God is always looking?” (…) and you believe in (…)
honesty, integrity, because that’s what He asks of you. (…) I did feel like God is at my back (…) I was
taking a course of action that was risky and scary, but God would be with me. So, faith played a huge part
in there. (Watkins, our interview)
Accordingly, Sherron Watkins’ website (http://www.sherronwatkins.com) represents
religion as a key referent that she continuously relies upon in daily undertakings. The section
“My passion” displays a picture with a Christian cross and the text begins with the sentence,
“I found God through the Enron debacle”. This is followed by a development on the relation
between Sherron Watkins and religion, including the following statement, “I had to rely on
my faith that August [2001], I was worried about how my message would be received and
whether I’d be able to keep my job”. It is also worth noting that Sherron Watkins’ website is
dominated by a light blue color. Figure 3 reproduces the website’s homepage; light blue
characterizes the background, the wall on which Sherron Watkins leans, her clothes, as well
as the sky above blueish mountains. In Occident, the blue color is traditionally associated with
Christianity and the power of royalty (Pastoureau, 2000). As a result, it is not unrealistic to
believe that the blue emphasis on Watkins’ website resonates with the imagery of Christian
morality and sturdy determination as found in the corresponding whistleblowing account.
Insert Figure 3 About Here
Beyond influences, some whistleblowers are also characterized as having some deeplyingrained abilities, which reportedly played a key role in their decision to blow the whistle
and subsequent actions. Harry Markopolos insists on his mathematical skills, which arguably
helped him uncover Madoff’s Ponzi scheme. Note that the following excerpts speak highly of
Markopolos’ quantitative skillfulness.
I turned out to be a natural in math. More than a nature, in fact. I’m a quant, which is the slang term for a
quantitative analyst. Basically, that means I speak the language of numbers. Numbers can tell an entire
27
story. I can see the beauty, the humor, and sometimes the tragedy in the numbers. (Markopolos, 2010, p.
9)
I could calculate [some] prices faster than a computer. (Markopolos, 2010, p. 10)
One of chief messages ensuing from Markopolos’ self-depiction implies that one’s mastery
of mathematics can be instrumental in the detection of fraudulent financial statements,
thereby supporting, in a broader way, the notion of fairness in financial markets. In addition,
it appears that these “quants” persons are inherently motivated, in their daily undertakings, to
drive out fraudsters. Assuming that Markopolos is not an idiosyncratic character, the audience
may come to believe that a network of dispersed quants is involved in chasing financial
statement fraudsters in the financial markets.
I glanced at the numbers. (…) and I knew immediately that the numbers made no sense. (…) Numbers
exist in relationships, and after you’ve studied as many of them as I had it was clear something was out of
whack. (Markopolos, 2010, p. 30)
Every mathematician loves the hunt for the sour numbers in an equation. (Markopolos, 2010, p. 35)
Frank Casey confirms Harry Markopolos’ superior analytical abilities.
Harry’s a loveable, affable geek (…) He’s extremely bright, magnitudes brighter than me. And he can
make the numbers dance. I mean, he looks at numbers and they sing a song to him. (Casey in Prosserman,
2011, min 5:49)
Not unrelated to Markopolos’ sense of extraordinary mathematical abilities, he is quite
swift at pointing to others’ incompetency – most notably that of the SEC which reportedly
failed to properly investigate the detailed allegations against Madoff he provided to the
Commission.
Journalists, SEC staff, and others just didn’t have enough professional skepticism to at least conduct an
initial investigation to see if any of my claims just might be valid. (Markopolos, 2010, p. 79)
Because these people [the SEC] weren’t smart enough to understand my message, they decided the
problem had to be with the messenger. (Markopolos, 2010, p. 157)
I did not believe [Meaghan Cheung, i.e., employee of SEC] had the derivatives or mathematical
background to understand the violations. (Markopolos, 2010, p. 195)
In sum, except for Markopolos’ emphasis on mathematical skills, the processes by which
the whistleblowers are shown to have been constituted do not reflect invocations of natural
strengths; their character has been formed especially during their childhood and younger adult
experiences. They are thus typically represented as humans – not divinities – and this may
render their respective stories instrumental in constituting a sense that fairness may prevail in
financial markets. That is, whistleblowers are flesh-and-blood human beings – hence they are
not atypical. Paradoxically, the magnification of Markopolos’ mathematical skills may also
28
constitute a reassuring signal, in that a community of quants is actively and voluntarily
involved in driving out fraudsters.
Featuring the triggering event
The whistleblowers’ stories often indicate that the triggering event, i.e., what initially led
them to be suspicious of the fraudster and engage on the whistleblowing journey, happened
when they were confronted to a situation in which some awkward feature caught their
attention. In Michael Woodford’s case, this relates to the lack of precise answers on questions
he asked on important transactions that the company previously undertook:
There were questions to be asked, and I asked them within two days of getting back to Japan of the
president and of the vice president, and when I saw their evasive behavior, their discomfiture, I knew at
that moment there was something horribly wrong with the top of the corporation of which I was the
president. (Woodford, video, https://www.youtube.com/watch?v=eEBlound460)
For Sherron Watkins, the triggering event is linked to the resignation of Jeffrey Skilling,
which confirmed in her mind previous doubts she had about the veracity of Enron’s financial
accounts:
I understood of the fraud at the end of July of 2001. (…) I will (…) see the best way to confront Jeff
Skilling about these Raptor transactions. And it was really just two weeks after I found the fraud that
Skilling quit. He resigned August 14th, 2001. And that said two things to me: first that (…) if I had some
doubts, I didn’t have them anymore, because (…) there was no good reason for him quitting. (…) It’s not
like he had cancer or a family member had cancer. (…) These transactions that I had discovered (…) had
an expiry date of 2002 and 2003, and so my thinking was: “Jeff Skilling was just trying to leave the
company before these things explode on him”, (…) just so he can say: “Look, when I left in summer of
2001, everything was fine”. (Watkins, our interview)
She had also annotated a document on one of the suspect partnerships, writing in bright blue letters in the
margin: There it is! This is the smoking gun. You cannot do this! (Lacayo, Ripley & Sieger, 2002, p. 57)
The day after Jeff Skilling resigned, Sherron Watkins decided to make things right. She sat down if front
of her computer and started composing a letter. (Swartz & Watkins, 2003, p. 275)
Again, the reference to the blue color is noteworthy. Frank Casey explains, in the Madoff
fraud, that the triggering event is related to the discovery of suspicious numbers when Harry
Markopolos attempted to replicate Madoff’s strategy. In this excerpt, competition is viewed as
a structural feature that may be helpful in setting a context facilitating, to some extent, the
chasing of fraudsters.
And so we built the models, Harry built the models and proved it to me. So it was at that point, within
four hours of coming back to Harry, that we shook hands and we were going to take this guy down. And
blow the whistle on him. And the reason was initially that I was in a competitive situation with Madoff
(…). However, we realized very quickly that if this fellow Madoff was doing what we thought he was
29
doing, which was a total financial fraud, then it is impossible to compete against the fraud, because no
matter what numbers we put up as returns, he would put up better numbers. (Casey, our interview)
For Cynthia Cooper, the triggering event is also related to the discovery of the fraud.
It’s May, 2002. Glyn Smith, a senior manager in Internal Audit, saunters into my office (…) holding
several sheets of paper. “Mark Abide in the Property Accounting department sent me this article. He says
this may be worth looking into from an audit perspective”. The article called “Accounting for Anguish”
(…) describes the ordeal of Kim Emigh, a former WorldCom financial analyst who was laid off [and
who] complained about potential abuses related to capital spending. (Cooper, 2008, pp. 220-221)
Although characters such as Cooper play a central role in the respective dramas we
analyzed, their stories sometimes point to layers of different whistleblowers being involved in
the same case. As a result, the “triggering event” is not always clear-cut. For his part, Richard
Bowen mentions a sort of “continuous triggering event”:
So, in June of 2006 as I was attempting to get my arms around my new responsibilities and I discovered
that 60 per cent of the mortgages that we were buying did not meet our guidelines, we were talking about
some significant risk. And I started issuing warnings. I’ve sent e-mails. I’ve sent weekly reports, I made
presentations. I started yelling. (…) I knew that it was getting worse. I knew I had to warn the board of
directors. (Bowen, video, https://www.youtube.com/watch?v=DyFldyQ7plk)
For Weston Smith, the triggering event is of a different nature since he was initially
involved in the manipulation of the financial statements, under the umbrella of his CEO’s
authority. Instead, the SOX certification requirement apparently made him realize that the
manipulations were just unacceptable and needed to be brought to a halt.
At this time I learned that as CFO of the company I would be required under the new Sarbanes-Oxley
legislation to sign certification documents attesting to the truthfulness of the company’s financial
statements. The penalty for a fraudulent certification was monetary penalties and up to 20 years in prison.
Saying that this spooked me would be an understatement. On July 12, I told Bill Owens [former CFO
who became CEO when Weston Smith was appointed as CFO] that I would not sign the certification
statement, and if necessary, would resign before doing so. I knew that I was already potentially facing
serious consequences for participating in the fraud, and I had simply had enough. The certification letter
was a new line in the sand that I simply did not want to cross. Enough was enough. (Beam & Warner,
2009, p. 126)
In sum, the whistleblowers’ stories indicate that fraud detection is not limited to the actions
of a few individuals possessing some extraordinary capacities. Every person characterized
with curiosity, determination and inclination to follow one’s intuitions has the potential to
discover fraud and engage along the whistleblower’s journey. As a result, it can be understood
that a number of individuals in organizations and financial markets are, to some extent, able
to detect fraudulent activity – which arguably is an important signal concerning the
30
constitution of fairness in our political economy. Many pairs of eyes keep on watching, at
least in principle, for fraudsters.
Stressing normative lessons
In their books, the whistleblowers develop and promote a number of lessons which they
claim ensue from their respective stories. The latter are not only descriptive of the process by
which the key actor identified fraud and tried to notify others accordingly; the stories also
tend to take position at the normative level – in that “lessons” are promoted. Although they
are not always formulated in terms of recommendations, these lessons nonetheless convey a
sense of reflexivity regarding some central issues pertaining to the social and regulatory
context surrounding whistleblowing actions. The lessons we uncovered mainly relate to the
effectiveness of whistleblowing acts, the role of the media in providing a sustainable notifying
channel, and the appropriateness of current regulation. These lessons, even when framed
through a critical tone, promote a feeling that although fraud is not inevitable, it nonetheless
can be identified and ultimately brought to a halt if the “right” contextual conditions were
established, thereby possibly helping to consolidate fairness as a plausible ideal in our
political economy.
Before analyzing normative lessons, we can note that, quite interestingly, several authors
manifest some skepticism on the extent to which the notion of whistleblowing applies to their
specific case. According to Michael Woodford,
I was never sure that the term whistleblower quite described what I was. (…) Blowing the whistle wasn’t
really my style. I wasn’t a cop and I wasn’t the referee. I was a player who saw members of his own side
not following the rules. One of my Japanese colleagues who remains at Olympus described me as
someone who “rang the bell”. I like that: When there is a fire, the bell ringer runs to the church and stirs
people to action. He sounds an alarm. (Woodford, 2012, p. 233)
Whistleblowing
is
a
funny
term.
Truth-teller,
I
prefer.
(Woodford,
video,
https://www.youtube.com/watch?v=eEBlound460)
Woodford’s metaphorical points used in qualifying the concept of whistleblowing are
nonetheless consistent with a view of financial markets characterized with a sense of fairness,
in that these points promote the idea that fraud is detectable and that the “investigators” have
some agency in attempting to notify appropriate parties. Cynthia Cooper has a similar
reaction:
They are calling me a whistleblower. “Why are they calling me a whistleblower?” I ask my husband. “I
was just trying to do my job.” I never expected to be labeled a whistleblower. To many, the term has a
31
negative connotation. I even check to see how our ordinary defines it – “one who reveals wrongdoing
within an organization to the public or to those positions of authority.” (Cooper, 2008, pp. 275-276)
Sherron Watkins also discusses this issue.
People say: “Oh! You are not really a whistleblower, you didn’t go outside the company”, and I said
“That’s right. My goal was to have the company live, not go bankrupt.” (Watkins, video,
https://www.youtube.com/watch?v=GSxiG6U0lyY)
It therefore appears that being ascribed a whistleblower’s role was not obvious to some of
the main characters involved in the stories we analyzed. The stories also vary regarding the
extent of effectiveness surrounding the whistleblowing acts. While Markopolos’ saga implies
a sense of ineffectiveness in notifying regulatory authorities about Madoff’s fraudulent
scheme, it nonetheless emphasizes success in mounting a persuasive critique of the (in)actions
of the SEC, and in contributing to the development of some important organizational changes
within the Commission.
When it was over, the SEC had been exposed and embarrassed in front of the entire nation. (…)
Eventually all but one of the SEC directors on that panel was replaced. (…) It was nearly a clean sweep.
(Markopolos, 2010, p. 234)
Mary Shapiro began making significant changes to the structure and culture of the SEC. (…) I think it is
fair and accurate to claim that this restructuring never would have happened without the work done by my
team. (Markopolos, 2010, pp. 252-253)
Woodford also has a feeling of effectiveness:
Three directors were arrested and indicted, including the chairman Kikukawa. (Woodford, video,
https://www.youtube.com/watch?v=eEBlound460)
Some stories even underscore fame as one of the ultimate consequences characterizing the
whistleblower’s journey. As specified by Michael Woodford,
I was cheered up when I learned on 23 December that the Independent had named me its Business Person
of the Year (…). All I can say, as I sit here with my two-fingered typing and voice recognition software,
is that I am doing my very best. (…) The accolades were now coming in thick and fast, and I learned that
the Daily Telegraph’s Britons of the Year list had me just above P.D. James, the doyenne of British crime
fiction. Its headline was Whistleblower Who Paid the Price. The synopsis read: Michael Woodford
emerged from relative obscurity in October brandishing a folder, a laptop and a story that would lead to
the near collapse of one of Japan’s most famous companies. (Woodford, 2012, p. 205)
An imagery of heroism is even developed and stressed in Woodford’s depiction of his
journey in fighting fraud at Olympus:
And that day and those which followed were filled with interviews – the Japanese media were insatiable.
Now I was seen as the hero, and Kikukawa the villain. (Woodford, 2012, p. 145)
A short while later, one of the ANA [All Nippon Airways] stewardesses came up to me and quietly said,
“Japan needs you”. These spontaneous and unguarded few words touched me with their sincerity.
(Woodford, 2012, p. 156)
32
In the stories we studied, heroism sometimes implies a feeling of compassion toward the
victims – such as in Markopolos’ or Cooper’s account:
The most important audience was going to be the victims around the world. They deserved an explanation
of what had gone so terribly wrong, and I was going to give it to them. Someone owed them the truth.
(Markopolos, 2010, p. 224)
It wasn’t much compared to what Madoff’s victims had lost, but at least they would know that someone
cared about them and the SEC leaders were not going to walk away unscathed. (Markopolos, 2010, p.
233)
Hundreds of thousands of shareholders lost all or portion of their retirement. Any people in Mississippi
had invested everything they had in WorldCom stock because it was the only Fortune 500 company in the
state. (…) Watching all this suffering (…) Behind all these frauds, there are so many stories, just
heartbreaking stories of people who lost everything. (Cooper, http://www.c-span.org/video/?2018291/book-discussion-extraordinary-circumstances)
These excerpts highlight a strong commitment in terms of accountability from the part of
the whistleblower, who somehow feels responsible for the wellbeing of investors in financial
communities. From this perspective, the central message is not ultimate effectiveness in
bringing down fraudsters but doing one’s best in trying to do the right thing, as a result of a
feeling of caring for individual investors having fair chances in their financial undertakings.
As persuasively maintained by Frank Casey,
When (…) Harry and I would speak, [investors] would come up, and you knew they were victims without
them saying so. They would shake your hands with their two hands and they would say, “Thank you for
trying.” And I will tell you, “it brought tears to my eyes”. And it still does, when I come across a victim,
who would announce himself to me. And it is because we were trying to be good guys in the industry.
And the industry just did not care. (Casey, our interview)
Overall, these positive characterizations convey a sense of effectiveness and even heroism
surrounding the whistleblower’s acts. Whistleblowers can make a difference – for instance in
providing detail and interpretation allowing people to make sense of the circumstances in
which some fraudulent scheme developed in the past. Also, a number of their stories promote
a perception of fairness in demonstrating that fraud can be identified and actually reported
(although the authorities do not always react appropriately once they are notified). Further,
the accounts often imply that regulation can be enhanced, which is consistent with a powerful
imagery in society – that of learning from mistakes (Gendron, 2013). A strong indication of
this is found in some passages which highlight that famous whistleblowers are now invited to
address audiences as keynote speakers, therefore being provided with a platform to promote
ideas – including the one that we, collectively, can learn from mistakes.
I was starting to lead a new life. I began to travel the world and talk about the Olympus scandal and the
lessons that could be learned from it. (Woodford, 2012, p. 220)
33
That being said, a number of the stories are far from suggesting unequivocal effectiveness.
Markapolos’ book sometimes highlights failure in bringing down Madoff:
And this, then is the complete story of how my team failed to stop the greatest financial crime in history.
(Markopolos, 2010, p. 7)
My error was in believing that the SEC actually was capable of protecting investors. (Markopolos, 2010,
p. 63)
We were focused on the institutional accounts, so we didn’t have the slightest concept that Madoff was
using separately managed accounts to ransack the synagogues for every cent he could pull out of them. I
should have guessed that. (Markopolos, 2010, p. 114)
Although these excerpts imply failure, they nonetheless suggest that with the benefit of
hindsight, Markopolos’ “fox hounds” could have been effective at notifying authorities and
bringing down Madoff. Sherron Watkins shares a similar feeling:
Sherron Watkins took no comfort in the events that unfolded after she drafted the memo. The scenario she
envisioned – that the company would act on her suggestions, come clean, and avert disaster – was not
going according to plan. (Swartz & Watkins, 2003, p. 321)
In contrast, the personal consequences for whistleblowers are sometimes shown to be quite
negative. Richard Bowen, Sherron Watkins and Harry Markopolos respectively provide such
examples:
I was informed of a “reorganization” and all of my underwriting responsibilities were reassigned to others
(…) That’s when I became quite disturbed. I hired an attorney. I was told by Citigroup not to bother
coming back in the office. They placed me on paid administrative leave. That’s when I filed a complaint
under Sarbanes-Oxley for retaliation. (Bowen, our interview)
My life is really different. I can’t get a job in corporate America, I’ve lost friendships over this, but on the
good side I also have had amazing miracles happen. (…) I am living a whole different life, where the
spiritual aspect is (…) much more vivid and alive (…) I don’t make as much money as I did in corporate
America. However, I am able to travel the globe, speaking about Enron. (Watkins, our interview)
Usually if you are an internal [whistleblower] working at a company, then they don’t ignore you, they fire
you. They actively crush you. You’ve basically committed an economic career suicide. And you get
industry blacklisted. (Markopolos, video, https://www.youtube.com/watch?v=cfwJ06hc0_8)
Weston Smith expresses a rather pessimistic view on whistleblowing.
I don’t think that there are adequate protections against whistleblowers. I think that the majority of the
time whistleblowers end up to be the victims themselves, perhaps even (…) with worse consequences
than the people they are blowing the whistle against. In this country (…) it’s a career suicide for people to
blow the whistle, because (...) right or wrong, they are then viewed as people who are not team players,
they are viewed as people who can’t be trusted. And the consequences are extremely negative, despite the
fact that there is the Dodd-Frank act, another federal legislation, out there just designed to protect these
people. You know, in the real world it is just simply not working. I tell folks today (…): whistleblowing
should only be used as one of absolute last resort. Even if they are successful, and if they receive some
34
pay-out, it’s still going to be very, very difficult to get that next job. Because of the stigma, that goes
along with being a whistleblower. (Smith, our interview)
Interestingly, this excerpt implies a feeling of sacrifice that is not far remote from the claim
of heroism mentioned above, in that the reader may be led to assume that the whistleblower is
so greatly committed to turn down fraudsters and establish fairness in financial markets that
this commitment prevails over the expectation of potential negative consequences on her/his
personal career. Even Weston Smith suggests that with the benefit of hindsight, he would still
engage in the whistleblowing activity if confronted to a similar situation – but this time
through a strategy more likely to pay off: blowing the whistle collectively.
If I were in an identical situation again, I would again blow the whistle (…) Can [people] develop a
strong enough group inside the company to go to the top and stop what’s going (…) [In] my example,
(…) if we as a group went to Richard and said “No! We are not going to do business this way”, he could
not fire the entire group. (Smith, our interview)
Sherron Watkins held a similar view:
I think I would, but (…) I would (…) do it differently. I’d get more people to go with me and meet with
Ken Lay [Enron’s chairman]. (Watkins, our interview)
Another “lesson” promoted quite prominently in Weston Smith’s account relates to the
dangers inherent to “crossing the line” – an ethical line between right and wrong. Indeed,
My message today is one of (...) never crossing a line for the very first time. (Smith, our interview)
Recall that Smith engaged in fraudulent manipulations, under the guidance of
HealthSouth’s CEO, but eventually decided to bring the scheme to a halt. The homepage of
his website emphasizes the line metaphor through a succession of images that make it clear
that Smith’s discourse relates to morality (http://www.westonsmith.biz/). Specifically,
through his website Smith proposes companies and organizations to invite him in order to
deliver speeches on ethical boundaries. In a picture of him, he stands on a baseball field next
to a chalk line (see Figure 4). To the right of the picture, several messages appear
subsequently. In one of the messages, the line disappears. The corresponding message to the
picture changes to: “Corporate greed has led to ethics without a line”. The baseball field is
depicted in grey, as is Smith’s suit – as if crossing the line implies venturing on the kingdom
of shade and evil. Again, the blue color of his tie quickly catches the eyes – a “tie” that can be
viewed as a virtual link with the domain of morality, thereby reminding the individual of the
dangers and moroseness of evil territory. The implicit message is that with sufficient
introspection and reflexivity, the individual is able to keep on maintaining a sense of morality
and make the right decisions in her/his professional life.
Insert Figure 4 About Here
35
In the same vein, Weston Smith states:
It started with very small transgressions. And behind that we had all these rationalizations of why it was
okay to start bending some of the rules. And the amounts were so small (…) but it was getting on the
slippery slope, and once you get into that area, it grows (…) it was like a cancer, almost. (…) the
dictionary should really have the word “lying to yourself” next to rationalizations. (Smith, video,
http://www.westonsmith.biz/media/video/weston-at-red-hat-inc.html)
The whistleblowing stories also tend to develop “lessons” regarding the role of the media
in providing, or not, a sustainable channel for notification. Harry Markopolos projects a much
negative role.
For some reason I just couldn’t figure out, journalists didn’t seem to understand the magnitude of this
story. (Markopolos, 2010, p. 151)
I never found out why the [Wall Street] Journal had not done the story. (…) After it was clear the Journal
was not going to investigate Madoff, I didn’t know where else to turn. (Markopolos, 2010, p. 168)
Such reservations on the role of the media can, in principle, threaten the persuasiveness of
whistleblowing stories as devices promoting fairness in financial markets. However, again,
Markopolos develops in the concluding part of his book a number of recommendations that
suggest that there are ways to strengthen the role of the media as a facilitator of notification in
the public sphere. Fraud is detectable and notifiable – as long as appropriate institutional
conditions are established.
On the Madoff fraud, Frank Casey shared the same problems as Harry Markopolos.
You know, I was trying to get the media pay attention. And the world doesn’t know this, but I went to
Forbes. I sent them 12 pages. And we have a conversation, and for some reason, their publisher killed the
story, didn’t want to do it. (Casey in Prosserman, 2011, mn 24:51)
The case of Michael Woodford is totally opposed to Markopolos’ situation. Conversely,
the media played a very positive role in exposing the fraudulent scheme at Olympus.
Sacked Olympus chief had sought answers to over $1bn in payments. As Jonathan had promised, my story
had made the front page, and also the famous Lex column, together with a major feature in the centre
pages. (Woodford, 2012, p. 93)
My mobile phone was ringing non-stop. I was continuing to give interviews to any media source that got
in touch. Even if my old colleagues did not want to talk to me, plenty of journalists did (…) True, they
wanted something from me, but their energy and good humor often kept my spirits up during what was to
prove a long autumn and winter. I learned how to pick and choose the right journalist to present with a
scoop. I always returned the call. I was always available morning, noon and night. (Woodford, 2012, p.
121)
During these first weeks following my dismissal, I developed a great respect for investigative journalists,
who so often seemed to be ahead of the authorities. (Woodford, 2012, p. 130)
36
Also, the stories indicate that the media can help whistleblowers after the case has been
exposed by providing some recognition – and a demonstration that whistleblowing acts can
play a role in policing fraudulent activity and, as a result, promote fairness as a realistic ideal
in financial markets. This is the case for Cynthia Cooper.
“Cynthia, this is Jim Kelly with the Time Magazine.” I try to compose myself and mask the fact that I
have just been awakened, as I listen to him say that we will be the 2002 Persons of the Year and that it
will be announced first thing tomorrow morning. It is a call I will not forget. For an average citizen who
has never been in the public eye, it is an incredibly humbling part of my journey. Beneath our photo, Time
prints “the Whistleblowers,” a term I don’t much care for until my mother calls to tell me what one of the
news stations is saying: Three snitches were named Persons of the Year. Maybe “whistleblower” isn’t so
bad after all, I think. (Cooper, 2008, pp. 310-311)
Finally, some stories convey lessons on capitalism and the issue of business regulation. In
particular, Markopolos expresses views consistent with the image of unbridled capitalism,
with no holds barred:
Madoff was a creation of the profit-at-all-costs culture of Wall Street. And maybe the scariest thing about
Bernie Madoff? He isn’t the only one. Like unvanquished monsters, there are more of them out there in
the dark. (Markopolos, 2010, p. 178)
And that is what capitalism is. In its pure sense, it is predator/prey. And if you do not know who the
predator
is,
well,
guess
what?
You
are
the
prey.
(Markopolos,
video,
https://www.youtube.com/watch?v=8ITxDjOiSm0)
This is a vision which is far from being reassuring from a fairness perspective. Fraud is an
inescapable and inevitable feature of financial markets, and fraudsters are always searching
for preys to rob. Markopolos even highlights that compassion and ethics do not belong to the
financial market area:
Mother Teresa did not work on Wall Street. The object of the business is to use money to make money;
there is no interest in saving souls. (Markopolos, 2010, p. 30)
Even though Mother Teresa did not work on Wall Street, Harry Markopolos’ book
nonetheless emphasizes that a number of moral guardians surround financial markets, being
committed to fight the forces of evil. In this respect, Markopolos (2010, p. 75) concludes that
self-regulation does not work while developing a few lines of thought that suggest that
regulators’ powers can be enhanced (to some extent) if more resources are devoted to
regulatory agencies and if the latter’s sensitivity and reactivity to fraud tips are strengthened:
It was then that I began to understand that the SEC is a government agency that had been captured by the
private industry it was created to regulate. (Markopolos, 2010, p. 127)
What depressed me was how easy it was to find my cases. Fraud in the United States was a growth
industry (…) It required an unusual level of stupidity or tremendous bad luck to get caught by any
37
government agencies other than the IRS, the FBI, and the Department of Justice, which are highly
competent but vastly underresourced. (Markopolos, 2010, p. 193)
Sherron Watkins is more optimistic about regulation and the protection of whistleblowers.
I am encouraged about (…) the new laws in the United States like Dodd-Frank that now reward a bounty
program to whistleblowers for financial matters. And that bounty program has attracted the lawyers to the
cause of whistleblower. And there is ways that the whistleblower can stay anonymous. So I am hoping
these wrongdoings just get corrected when there is still a chance, when they are small. And now the cost
of it hopefully would not be so high. (Watkins, our interview)
Cynthia Cooper stresses that while fraud is inherently unavoidable, she views positively
the enactment of new regulation which may ultimately help to strengthen the institutional
context in which whistleblowing acts take place:
I continue to include the consequences of bringing forward wrongdoing in my speeches because I think
understanding is important to changing behavior. Laws will only go so far in protecting whistleblowers
from being isolated, “laid off”, or pressured. (Cooper, 2008, p. 312)
I thought very positive about some of the improvements that we’ve seen in corporate governance (…)
post Sarbanes-Oxley (…). All companies, public companies now have fraud hotlines, and as you
probably know, something like over 40 per cent of frauds are identified due to tips. (…) the CEOs, the
CFOs sign off, there are a lot of positive changes. Boards are certainly more engaged, more active (…).
So,
overall
I
feel
good.
But
we
will
always
have
fraud.
(Cooper,
https://www.youtube.com/watch?v=6yXuNnjnnEA)
These last excerpts develop the viewpoint that although fraud is inevitable, society can
establish better conditions to facilitate the undertaking of a successful whistleblowing act.
Through such statements, learning from mistakes is constituted as an undeniable reality,
which indirectly promotes a sense of fairness in financial markets. While fraud cannot be
annihilated, the governance systems surrounding our neoliberal economy are becoming
increasing effective at preventing and detecting it.
Discussion and conclusion
The calming of doubt and anxiety is far from being a trivial affair in financial markets –
given that confidence is widely understood as one of the main foundations of markets’
“smooth” functioning. Investors’ confidence may be jeopardized, in particular, by financial
scandals and other disrupting information produced by the modern media. Our study is part of
a broader intellectual endeavor aiming to better understand institutions and mechanisms that
play a role in protecting today’s neoliberal financial markets from significant doubt. We
investigate how, against the backdrop of recurrent fraud and wrongdoing in financial
38
reporting, certain types of discourses on whistleblowing promote one of the key ideals upon
which the legitimacy of neoliberal markets is established.
Drawing on the presumption that discourses are instrumental in constructing perceptions at
the individual and inter-individual level, we sought to analyze how well-publicized stories on
whistleblowing promote the belief that fairness characterizes the undertaking of investment in
financial markets. As a socially constituted system, financial capitalism depends on the extent
to which a series of key assumptions are accepted and recognized as well-founded, one of
them being the perception of fairness regarding investment (Harvey, 2006). From this
perspective, the legitimacy of financial capitalism is influenced by the extent to which the
system is perceived as offering equal opportunity to every investor, whose prospects should
not be undermined by fraud and similar types of wrongdoing. Our theoretical point is that
discourses play a key role in sustaining or undermining the perception of fairness in financial
markets. Hence the relevance of our research on the role of discursive activity engendered
through whistleblowing well-publicized stories – specifically in promoting a sense of
confidence in the fairness of financial markets.
Fundamentally speaking, the social construction of fairness is far from being an easy task
given the recurrent occurrence of fraud, which points to the inevitability of the phenomenon.
By and large, the professional and academic literature indeed both agree on the inescapability
of fraud, whose agreement nowadays is often expressed through the notion of fraud risk
(Power, 2013) which implies, by definition, that fraud cannot be entirely reduced – no matter
the extent of organizational and regulatory control established to address it. This conceptual
impasse, however, does not prevent society from charging regulators and organizations for
establishing a battery of control mechanisms to fight fraud (Morales, Gendron & GuéninParacini, 2014a). Whistleblowing is increasingly considered as one of these controls, as a
matter of fact one of the “best” mechanisms to reveal fraud according to various specialists in
the accounting practitioner community, such as the Association of Certified Fraud Examiners
(Association of Certified Fraud Examiners, 2014). Whistleblowing mechanisms are even
mandated by law, in the USA, through the Sarbanes-Oxley Act of 2002 and the Dodd-Frank
Wall Street Reform and Consumer Protection Act. As such, when it is successful,
whistleblowing constitutes a convincing demonstration that fraud is detectable and can be
brought to a halt – thus promoting the perception that investment in financial markets is “fair”
since fraudsters can be effectively stopped, banished from markets, and penalized. The
problem is that whistleblowing is far from being always successful – and its difficulties have
39
been documented (e.g., Alford, 2002). The role of whistleblowing as a confidence-inducing
mechanism is, therefore, not that obvious.
In order to promote confidence in the fairness of financial markets, the whistleblowing
discourse needs to demonstrate that whistleblowing as an institution works even when it
seems to fail in its mission to stop fraud. Accordingly, each of the seven well-publicized
stories that we analyzed implies a script that conveys the idea that fraud is detectable and can
be brought to a halt if the right institutional conditions prevail in the whistleblower’s
environment. As a result, failure is seen as having been preventable, in that it could have been
avoided if the relevant authorities had reacted properly to the whistleblower’s notification.
In the scripts we examined, the dominant role ascribed to the whistleblower is that of a
journeyer facing important operational and emotional challenges – yet s/he is endowed with
several skills to overcome these obstacles, especially moral strength, inner determination, and
combativeness. Thus, although the obstacles they face are significant, the whistleblowers are
not depicted as being thrown into the den of lions. Their role implies agency and reliance on a
habitus (Bourdieu & Wacquant, 1992) which is quite in line with the field in which they are
involved. Most scripts contain flashbacks allowing the audience to realize that the
whistleblower’s habitus was constituted through childhood and other previous socialization
experiences. Further, the scripts specify that the undertaking of the whistleblowing journey
began when the individual was confronted to a situation in which some awkward and atypical
feature caught her/his attention. Importantly, although a few scripts sometimes tend to glorify
some of the whistleblower’s skills, the dominant line of thought is that every person
characterized with a habitus privileging curiosity, determination and inclination to follow
one’s intuitions has the potential to detect fraudulent schemes and engage along the
whistleblower’s journey. Thus, one of the chief messages ensuing from our analysis is that
fraud is detectable and fraud spotters are able to notify authorities accordingly. From the
viewpoint of audiences concerned over the fairness of financial market investments, it may be
quite reassuring to see that many pairs of eyes are looking to drive out fraudsters. In a sense,
the whistleblower’s role can be conceived of as a morality gatekeeper. In sum, the stories we
examined are reassuring for several reasons: (1) they point to the existence of whistleblowers;
(2) they show that some people were able to detect fraud; (3) they demonstrate that these
people had the courage to reveal fraud; (4) when notification was unsuccessful, the dramas
point to institutional deficiencies which, if remedied, are likely to make notification more
impactful; and (5) the authors wrote books to influence the future, that is to say in informing
40
the public and policy-makers of “lessons” which are offered as a suggestive base to improve
the system.
As mentioned above, the promotion of fairness particularly depends on the ways in which
the scripts interpret the failure to make authorities react to one’s fraud tip. Such a failure
characterizes about half of the stories that we analyzed (Markopolos/Casey for Madoff,
Bowen for Citigroup, and Watkins for Enron). We found that it is when they deal with the
normative, that is to say when they make recommendations or formulate “lessons”, that the
scripts interpret failure in a way that is consistent with the broader idea of fairness. One of the
chief messages ensuing from the scripts is that the institutions that surround whistleblowers
are perfectible and can be enhanced through additional regulation, better enforcement, more
effective policies, additional resources, and better staff. The logical consequence is that what
is currently portrayed as a notification failure probably would not have turned out this way if
better systems and institutions had characterized the environment surrounding the
whistleblower’s journey.
Overall, our analysis leads us to conclude that hope is the main conceptual platform
through which the whistleblowing stories promote a sense of fairness in financial markets.
The scripts do not provide certainty in this respect – as the whistleblower’s journey involves a
significant degree of experimentation whose outcomes are quite unpredictable. Furthermore,
although the surrounding institutions are perfectible, fraud is inevitable and the fraudsters are
all but represented as powerless beings. On the contrary, they tend to be framed as weighty
and immoral monsters. What the scripts do promote, instead, is a sense of hope – in that a
realistic expectation is that fraud is detectable and it can be acted upon properly, both by the
whistleblower in notifying some relevant authorities and by the authorities in reacting
appropriately once they are notified.
According to the sociological literature, hope is one of the main referents used by humans
in making sense of the world and of their realities (Peterson & Wilkinson, 2015). Hope tends
to characterize people’s sense of identity, in that their narrative of life often comprises the
expectation that their own future and/or that of their family will improve in some ways. Also,
hope is recognized as one of the main vectors by which people come to recognize and accept
the benefits of consumerism – viewing potential improvements in consumption as promising
indications of happiness (Williams, 1980). In short, hope tends to seduce people and as a
result, it plays a key role in the provision of legitimacy to various institutions surrounding us
– in healthcare, education, the political economy, and so on (Peterson & Wilkinson, 2015). In
a way, our study brings hope to the fore, demonstrating that it constitutes a central notion in
41
the “smooth” functioning of financial markets – in other words, hope is understood as playing
a key role in the processes in which markets are socially constructed. Importantly, the scripts
we analyzed do not feature “utopian” hope; instead, they imply a sense of “realistic” hope
(Dahrendorf, 1976) – i.e., what usual actors, through appropriate habitus, can realistically
expect to achieve in their daily undertakings. In brief, the books and other discursive sources
we analyzed may be viewed as vectors of hope, supported through a constellation of
buttressing points that collectively promote a sense that fairness in financial markets is a
realistic and achievable ideal.
However, in promoting hopefulness regarding the controllability of fraud in financial
markets, the stories paradoxically obscure the need for the realization of deep examinations
targeted at some of the key assumptions that underlie the functioning of monitoring
mechanisms such as whistleblowing. In other words, the promotion of fairness may reduce
the audiences’ reflexivity skills, in that they may find it increasingly difficult to question
knowledge claims, norms and underlying assumptions (Alvesson & Spicer, 2012).
Functionally speaking, whistleblowing is viewed as a mechanism that “works”; it can detect
fraud and stop it, while also being instrumental in providing suggestions on improving the
effectiveness of the systems that govern the political economy. Our point is that the
promotion of confidence regarding fairness comes with a potential price, though, in that it
may downplay any momentum toward deep structural examinations, for instance regarding
the lack of whistleblowers’ legal protection as documented in the literature. In other words,
the promotion of fairness may reduce the audiences’ inclinations to question whether or not
fairness is a valid assumption. This theoretical point arguably relates to the development of
what Meyer and Rowan (1977) identify as rational myths – in our case fairness being
discursively perceived and constructed as a valid concept while, in the backstage, the extent to
which this perception relates to substance is unknown or even dubious. One of the key
implications ensuing from our findings, thus, is to reinforce an emerging line of analysis in
the literature regarding the socially and fragilely constituted nature of financial markets.
In sum, being characterized by strong and powerful metaphors centered on noble values
and feelings of resoluteness, the whistleblowers’ stories play an important role as a platform
that seeks to secure the perception of fairness in financial markets. However, in so doing, the
whistleblowers’ stories paradoxically may deflect attention from the undertaking of
examinations that question the overall effectiveness of whistleblowing mechanisms. Is the
perception of fairness surrounding financial markets well-founded? Is this perception
reflective of rational myth? Are rational myths indispensable to the reproduction of political
42
economy? All of these questions point to a need to better understand, through future research,
the extent to which discursive activity impacts the mind – not least how the audiences make
sense of the whistleblowers’ sense-giving (Gioia & Chittipeddi, 1991). In particular, one
promising line of thought relates to the processes by which institutional investors, for
instance, make sense of the tension between the inevitability of fraud and the discursive
activity that promotes fairness in financial markets, including in light of disruptive events.
Functionalist studies may also be envisaged in order to better understand the usefulness or
impact of whistleblowers’ stories – for instance on the policy-making community.
The motivations underlying the production of whistleblowers’ accounts through books and
videos are also of interest. To what extent are their motivations informed by a desire to
legitimize the ideal of fairness while demonstrating that fraud can be reined in? How are these
accounts produced? Why are certain metaphors privileged while others are being ignored?
Finally, we would like to point out a new development in the whistleblowing area that may
play a significant role in engendering discourse supportive of the fairness ideal in financial
markets. Recently, financial markets have seen the development of a new type of
whistleblowers: private investigation companies self-described as “equity research”
organizations that expose alleged wrongdoings by listed companies through the public
distribution of “research reports” on websites. Those organizations sometimes take (openly or
not) “short” positions on the stocks of companies covered, which implies that they (may) have
a financial interest in the decreasing stock price of targeted companies. Little is usually
disclosed about these private organizations on their websites. They usually employ a small
team (sometimes, most likely one person) of analysts who possess technical expertise in
financial analysis, credit analysis and finance (sometimes former financial analysts of targeted
companies). These whistleblowing organizations have exposed wrongdoing in a number of
companies, particularly accounting fraud cases. A well-known example of such an
organization is Gotham City Research, name obviously chosen in reference to the comic
character Batman, whose accounting fraud allegations reportedly led to the fall of the Spanish
company Let’s Gowex in 2014. Other whistleblowers of this new type comprise Muddy
Waters Research (its director of research gives public interviews to finance-oriented TV
channels such as CNBC and Bloomberg)14, Iceberg Research, an organization that appeared
in 2015 and released several reports in relation with a large Asian commodity trader (Noble
Group), Copperfield Research, and Citron Research. These organizations are a case in point
14
http://www.muddywatersresearch.com/category/articles/.
43
regarding the role played by whistleblowers for the perception of fairness in financial markets
as these firms claim to draw from superior financial analysis to detect and expose financial
frauds. They appear to be similar to the community of “Quants” described by Markopolos in
their ability to drive out fraudsters. Table 3 presents this new type of whistleblowers.
Insert Table 3 About Here
It would be relevant to examine the discourses produced by these whistleblowers, notably
through the research reports they disseminate, and how their claims are reflected in the press
and the Internet in signaling a strong line of defense against fraudsters.
44
Appendix A. List of material studied
#
4
Type of
material
Website
Our
interview
Interview in
the press
Video
5
Video
6
Video
7
Video
8
Video
9
Video
10
Video
11
Video
12
Video
13
Video
14
Video
15
Video
16
Video
17
Video
#
5
Type of
material
Book
Movie
Our
interview
Interview in
the press
Video
6
Video
1
2
3
1
2
3
4
Richard Bowen (Citigroup)
Title/Address
http://www.richardmbowen.com/
Cohan (2013)
https://www.youtube.com/watch?v=DyFldyQ7plk
(Ethical challenges in the financial crisis: Part 1) (37:14 min)
https://www.youtube.com/watch?v=JGdXrSe5OLI
(Ethical challenges in the financial crisis: Part 2) (27:52)
https://www.youtube.com/watch?v=jxhKQCgPnRk
(Whistleblowers: Inside the mortgage meltdown) (13:26 min)
http://www.cbsnews.com/videos/prosecuting-wall-street-pt-2/
(Prosecuting Wall Street, part. 2) (12:43 min)
http://www.bloomberg.com/news/videos/2015-03-20/was-there-wrongdoing-done-in-thefinancial-crisis(Interview: Was there wrongdoing done in the financial crisis?) (6:39 min)
https://www.youtube.com/watch?v=bQnnUCwcx6I
(Warnings ignored - Ethical leadership speaker & Citigroup whistleblower Richard
Bowen) (4:46 min)
https://www.youtube.com/watch?v=fESjcxgVsWM
(Did Citi lie? Ethical leadership speaker Richard Bowen shares his story) (3:10 min)
https://www.youtube.com/watch?v=ogKMrgELRr8
(Silence: go directly to jail - Ethical leadership speaker Richard Bowen explains) (3:09
min)
https://www.youtube.com/watch?v=VNGoPratZco
(Why has no one been prosecuted? Ethical leadership speaker Richard Bowen) (2:48 min)
https://www.youtube.com/watch?v=2E55tpVz2zk
(Someone is always watching - Ethical leadership speaker Richard Bowen) (2:31 min)
https://www.youtube.com/watch?v=la31cqohfRc
(Letter to Robert Rubin - Ethical leadership speaker & Citigroup whistleblower Richard
Bowen) (2:27 min)
https://www.youtube.com/watch?v=-hnRahHTv8Q
(Keeping quiet costs you money! Ethical leadership speaker Richard Bowen explains)
(2:01 min)
https://www.youtube.com/watch?v=Ac1LAdH4DxQ
(Citi’s dark story - Ethical leadership speaker & Citigroup whistleblower Richard Bowen)
(1:02 min)
https://www.youtube.com/watch?v=42dhhtLwrZ4
(Informs & entertains - Ethical leadership speaker Richard Bowen) (0:34 min)
Frank Casey (Madoff)
Title/Address
Markopolos (2010)
Prosserman (2011)
Anonymous (2013)
https://www.youtube.com/watch?v=i1621nd0G-k (Frank Casey - Ethics Day 2013) (45.32
min)
https://www.youtube.com/watch?v=b73EyrbWfk4 (Interview with Don Conelly) (22:56
min)
45
7
Video
#
4
Type of
material
Website
Book
Interview in
the press
Video
5
Video
#
1
2
3
4
Type of
material
Website
Book
Movie
Video
5
Video
6
Video
7
8
9
Video
Video
Video
#
5
Type of
material
Website
Book
Our
interview
Interview in
the press
Video
6
Video
7
Video
8
Video
9
Video
10
Video
#
Type of
material
Website
Book
Our
interview
1
2
3
1
2
3
4
1
2
3
http://video.foxbusiness.com/v/3883423/casey-took-four-hours-to-see-throughmadoff/#sp=show-clips (Interview Fox Business) (4:48 min)
Cynthia Cooper (WorldCom)
Title/Address
http://cynthiacooper.com/
Cooper (2008)
Lacayo, Ripley and Sieger (2002)
http://www.c-span.org/video/?201829-1/book-discussion-extraordinary-circumstances
(Conference) (1:16:00 min)
https://www.youtube.com/watch?v=6yXuNnjnnEA
(Interview) (4:41 min)
Harry Markopolos (Madoff)
Title/Address
https://www.facebook.com/harrymarkopolos
Markopolos (2010)
Prosserman (2011)
https://www.youtube.com/watch?v=8ITxDjOiSm0 (Interview DP:30 - part 2 of 2) (46:48
min)
https://www.youtube.com/watch?v=cfwJ06hc0_8
(Interview DP:30 - part 1 of 2) (31:17 min)
https://www.youtube.com/watch?v=d7F3NkVZ4Ww (Interview Interest.co.nz) (20:40
min)
https://www.youtube.com/watch?v=s68FR1MXT8Q (The man who knew) (13:50 min)
https://www.youtube.com/watch?v=uw_Tgu0txS0 (Court room testimony) (12:25 min)
https://www.youtube.com/watch?v=8pzKyfYI7y4 (Presentation of his book) (2:28 min)
Weston Smith (HealthSouth)
Title/Address
http://www.westonsmith.biz/
Beam and Warner (2009)
Anonymous (2014)
http://www.westonsmith.biz/media/video/weston-at-red-hat-inc.html
(Weston at Red Hat) (33:18 min)
https://www.youtube.com/watch?v=rjgLRRoc_JU/http://www.westonsmith.biz/media/vid
eo/weston-smith-at-unm.html
(Lecture at the University of Notre Dame) (30:48 min)
https://www.youtube.com/watch?v=gytOl7719S0/
http://www.westonsmith.biz/media/video/conversation-with-the-dean-weston-smith.html
(Conversation with the Dean) (28:21 min)
http://www.westonsmith.biz/media/video/healthsouth-whistleblower-speaks-out.html
(Interview Fox Business) (11:34 min)
https://www.youtube.com/watch?v=PLaEi2s01UU/http://www.westonsmith.biz/media/vid
eo/the-cost-of-crossing-ethical-lines.html (Interview) (5:07 min)
http://www.westonsmith.biz/media/video/how-fraud-happens-a-what-it-takes-to-digout.html (Interview) (4:29 min)
Sherron Watkins (Enron)
Title/Website address
http://www.sherronwatkins.com/
Swartz and Watkins (2003)
46
4
5
6
Interview in
the press
Movie
Video
7
Video
#
1
2
3
Type of
material
Website
Book
Video
4
Video
5
6
Video
Video
7
8
Video
Video
9
Video
10
Video
11
Video
12
Video
13
Video
14
Video
Lacayo, Ripley and Sieger (2002)
Gibney (2005)
http://www.c-span.org/video/?176149-1/book-discussion-power-failure-inside-storycollapse-enron (discussion of the book) (43:41 min)
https://www.youtube.com/watch?v=GSxiG6U0lyY (short presentation) (1:59 min)
Michael Woodford (Olympus)
Title/Address
http://www.michaelwoodfordassociates.com
Woodford (2012)
https://www.youtube.com/watch?v=eEBlound460 (Interview Saint-Gallen Symposium)
(52:34 min)
https://www.youtube.com/watch?v=AwDgIS4orZg (Interview Capital account) (28:01
min)
https://www.youtube.com/watch?v=p1a53C_Fsz8 (Interview Reuters) (15:20 min)
https://www.youtube.com/watch?v=gsmGSwDCrXM (Interview WRIN TV Rewind)
(9:23 min)
https://www.youtube.com/watch?v=7HfuhWRIQNU (Interview ABC News) (9:02 min)
https://www.youtube.com/watch?v=bXawS6pYt0g (Interview Bloomberg Business) (6:27
min)
https://www.youtube.com/watch?v=0lsqogvT-vU (Interview Compliance Institute) (4:00
min)
https://www.youtube.com/watch?v=NXZA08x4HZA (Interview ShingetsuNews) (3:56
min)
https://www.youtube.com/watch?v=Fy0afnz6z8w
(Interview Greater Talent Network Speakers Bureau) (1:59 min)
http://www.theguardian.com/business/2012/jan/06/olympus-whistleblower-michaelwoodford
(The Guardian) (1:18 min)
http://www.telegraph.co.uk/news/worldnews/asia/japan/8915146/Olympus-whistleblowerMichael-Woodford-returns-to-Tokyo-for-constructive-talks-with-investigators.html
(Interview The Telegraph) (1:16 min)
https://www.youtube.com/watch?v=9Bs_nS3i2uE
(Interview Public Concern at Work) (0:39 min)
47
Appendix B: Interview guide
Before the interview starts:
-
Explain the purpose of the interview: to gain a better understanding of the motivations of
the whistleblower and the emotions felt; stress the academic purpose.
-
Explain that we will not ask technical questions about the fraudulent aspect of the case
because this is outside the scope of our research project (and also because we have
extensively worked on these aspects).
-
Explain that we are interviewing several whistleblowers and that we will also study public
statements (namely through books and videos)
-
Ask for permission to record the interview, as this is important for the study’s academic
purpose
Questions:
1. Why did you decide to blow the whistle? What was the triggering event?
2. Were there some elements in your background (education, family, friends,
environment…) which helped you/made you become a whistleblower?
3. What were your feelings, emotions, difficulties during the events?
4. In retrospect, what are the main messages/lessons that you would like to highlight as a
result of what you went through?
5. How did the events affect your life?
6. Would you redo it today?
7. What is your opinion on the legal protection of whistleblowers?
8. Do you have any contact with other whistleblowers?
48
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55
Table 1
Short presentation of the whistleblowers15
Whistleblower
Richard (Dick) Bowen
Frank Casey
Cynthia Cooper
Harry Markopolos
Weston Smith
Sherron Watkins
Michael Woodford
Short presentation
In early 2006, he was a business chief underwriter with City Financial Mortgage,
which was a subsidiary of Citigroup. He was promoted to the position of Business
Chief Underwriter for the whole group. He had responsibility for overseeing the
credit quality of over 90 billion dollars annually of mortgages, residential
mortgages, etc. He discovered that over 60 per cent of these that Citigroup was
purchasing did not meet the group’s guidelines. He then started issuing warnings,
e-mails, etc. He is known as the Citigroup whistleblower.
He worked in the finance industry. As a senior executive at Rampart Investment
Management, in 1999, he asked Harry Markopolos to replicate the strategy used
by Bernard Madoff for his wealth management activity. He was involved with
Markopolos in a team known as The Fox Hounds or the Madoff whistleblower(s).
She was vice president of internal audit for WorldCom and subsequently MCI. In
2002, she uncovered a $3.8 billion dollars fraud (amount which would grow to
some $11 billion dollars) in relation to capitalization of line costs (intangible
assets). She exposed the fraud and became known as the WorldCom
whistleblower.
He was securities industry executive when he was charged by his boss at Rampart
Investment Management to replicate the strategy used by Bernard Madoff for his
wealth management activity. He found that Madoff’s business was a fraud (Ponzi
Scheme) and blew the whistle, to no avail, several times to the SEC. He is known
as the Madoff whistleblower.
As CFO of HealthSouth, he took part in a massive financial statement fraud to
inflate earnings. But in 2002, he decided to expose the fraud to the FBI. He spent
14 months in federal prison and then four months in a halfway house. He is
known as the HealthSouth whistleblower.
A former Arthur Andersen consultant, she joined Enron in 1993. She worked in
Enron’s finance group, its international company and its broadband division,
before being appointed as vice president in corporate development. As a result of
her memos to Ken Lay urging the company to change its accounting practices and
restate its earnings (in particular in relation to Special Purpose Entities, which had
for effect to hide one part of Enron’s debt), she is known as the Enron
whistleblower.
A British citizen, he worked for Olympus for 30 years, initially for the UK
subsidiary, Olympus KeyMed, joining as a surgical salesman, progressing to sales
manager and sales director before being appointed as managing director in 1990,
at the age of 29. After a successful career in the group, he was appointed in April
2011 President and COO of the Olympus Corporation. On October 1, 2011, he
was made the first non-Japanese president and CEO, but only two weeks later on
October 14 was dismissed after querying inexplicable payments in excess of $1.5
billion concerning three acquisitions made by Olympus. He is known as the
Olympus whistleblower.
15
This table has been prepared on the basis of the following sources: biographies from the books analyzed in
this study (when available), whistleblowers’ websites (when available), and our summary of all available sources
(to complement the first two sources).
56
Table 2
Main elements of discourse
Topics
1 – Ascribing roles
Journey
Sinking ship/Titanic
Danger/Threat/Fear
Feelings: solitude, isolation,
frustration
Honesty/Ethics/Morality
Doing the “right” thing
Determination, persistence
Chasing/Hunting
Team action
Military/War/Battle
Guilt
Fraudster as devil/monster
2 – Shaping the
whistleblower’s character
Influence of family
Importance of religion
Math skills
Incompetence of others
3 - Featuring the triggering
event
Lack of answers
Unexpected resignation of
wrongdoer
Discovery of the fraud
SOX certification
4 – Stressing normative lessons
Am I a whistleblower?
Effectiveness regarding
whistleblowing act (positive)
Characterized as hero/Fame
Feelings towards the victims
New life after whistleblowing
Failure to save company/ victims
Negative consequences
Collective/group whistleblowing
Crossing the line
Role of the media (positive or
negative)
Views on capitalistic system
Views regarding regulation
Richard
Frank
Cynthia
Harry
Weston
Sherron Michael
Bowen
Casey
Cooper
Markopolos
Smith
Watkins Woodford
(Citigroup) (Madoff) (WorldCom) (Madoff) (HealthSouth) (Enron) (Olympus)
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
57
x
x
x
x
x
x
x
x
x
x
x
x
x
Table 3
New types of whistleblowers
Name
Gotham
City
Research
Website address
http://gothamcityresearch.com
Muddy Waters
Research
http://www.muddywatersresearch.com
Iceberg
Research
http://iceberg-research.com
Copperfield
Research
http://seekingalpha.com/author/copperf
ield-research
Citron Research
http://www.citronresearch.com
58
Official objectives
“May Truth, Justice (and not vengeance),
Restoration, and Redemption prevail”
“We are focused on ferreting out individual
companies that we believe are Frauds, Fads, and/or
Failures. Gotham City Research tends to be ‘big
picture’ optimist. We believe it is foolish to bet
against humanity and human ingenuity, over the
long term.”
“Muddy Waters, LLC is a pioneer in on-theground, freely published investment research.
Muddy Waters peels back the layers, often built up
by seemingly respected but sycophantic law firms,
auditors, and venal managements. We pride
ourselves on assessing a company’s true worth, and
being able to see through the opacity and hype that
some managements create. Our research approach
is to combine diverse talents, including forensic
accountants, trained investigators, valuation experts
and entrepreneurs, many of whom have hands-on
experience running businesses in the U.S. and
emerging markets.”
“Iceberg Research identifies substantial earnings
misrepresentation and accounting irregularities in
financial statements issued by public companies.
Complacent auditors are rarely subjected to fines
despite their role in a growing number of
accounting scandals. Too often, they validate
fraudulent or highly misleading accounts, and
discreetly write their ‘reserves’ at the end of the
annual report.
We locate these notes in the financial
documentation in order to provide a complete
picture for investors.”
“Copperfield Research is the pseudonym of a
research team focusing on publicly traded equities.
As of the publication date of our articles, we may
have long or short equity positions in the
companies covered. We do not discuss unpublished
reports, or provide any advanced warning of future
reports to others. Due to the danger of retaliation,
our reports are written under a pseudonym”.
“Citron Research has been publishing columns for
over 11 years, making it one of the longest-running
online stock commentary websites. With over 150
reports, Citron has amassed a track record
identifying fraud and terminal business models
second to none among any published source. The
goal of this website is and has always been to
provide truthful information in an entertaining
format to the investing public. Our goal has never
been to engage in ‘gotcha’ journalism”.
Figure 1
Image from Richard Bowen’s website (www.richardmbowen.com)
59
Figure 2
Illustrative narrative of Markopolos (2010) book
Obstacles preventing chasing:
- Incompetency of the SEC
- Story too big to be credible
- Lack of interest from the media
- Madoff provided plausible answer
- Madoff’s clients (notably funds) did not want to know the truth
Hunting trophies:
- Madoff as an
ever frightening
and dangerous
monster
- The SEC (after
the “elimination”
of Madoff)
Precise sense
of what is
right and
wrong
Military past
(“Duty,
Honour and
Country”)
Chasing
Investigating
Strategizing
To flush out the
wicked enemy
Hunting failure:
- Impossibility to
save the victims
Selfconfidence in
mathematical
abilities
60
Figure 3
Image from Sherron Watkins’ website (www.sherronwatkins.com)
61
Figure 4
Image from Weston Smith’s website (www.westonsmith.biz)
62