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Project on Government Oversight
 

 

 

 

Good Government Groups Hail Historic Whistleblower Accord As Legal Revolution For Corporate Freedom Of Speech

July 24, 2002 

 

POGO: Beth Daley, 202-347-1122
GAP: 202-408-0034, Tom Devine (Ext. 124) or Martin Edwin Andersen (Ext. 143)

For the first time in history, corporate employees who reveal business crime or other misconduct threatening shareholder investments will be protected under the provisions of an accounting reform bill agreed to Wednesday morning by a panel of House-Senate conferees. The corporate reform legislation, which President Bush urged Congress to send to him, is expected to sail through both chambers by the end of next week. The Government Accountability Project (GAP) and the Project on Government Oversight (POGO) hailed the step as "equivalent to a lunar landing in terms of strengthening corporate responsibility to shareholders and employees alike."

"This is a landmark breakthrough in corporate accountability, and a legal revolution for corporate freedom of speech," said Tom Devine, legal director for GAP, a Washington, D.C.-based public interest law firm. "Until a 1959 court decision workers could be fired at will for defending the public or shareholders--now they have state-of-the-art whistleblower protection by law.

"It is a victory both for the shareholders and management's right to know, so that avoidable disasters can be prevented the next time. Today's agreement is an important first step in restoring the confidence of shareholders and the general public alike.

"Protecting whistleblowers is one of the most important ways for Congress to restore public confidence in corporations," added Danielle Brian, executive director of POGO, a non-profit watchdog group. "This legislation provides an early warning system for government overseers trying to prevent future Enrons and WorldComs."

On Wednesday, House and Senate leaders announced an agreement in principal on legislation that tightens oversight of the accounting industry, reforms securities laws and sets down tough new penalties on corporate fraud. The whistleblower clause is an outgrowth of revelations that employees at Enron and WorldCom sought to warn senior management of problems with their accounting practices, but were not heeded. In the absence of concrete protections, good government groups pointed out, there was little incentive for conscientious employees to risk their families' livelihood by stepping forward to try to correct problems before they became disasters.

The bill creates comprehensive whistleblower rights for all employees in publicly traded corporations. It also allows whistleblowers to file suit for a jury trial if they do not receive an administrative ruling within six months of bringing forward their cases.. These would be governed by the modern legal burdens of proof that Congress unanimously passed in the Whistleblower Protection Act covering government workers.

GAP and POGO singled out Senators Patrick Leahy (D-Vermont) and Charles Grassley (R-Iowa) and their staffs for their roles in hammering out a bipartisan compromise on the whistleblower issue that was eventually became a unanimous consensus in the corporate accountability legislation. "The breakthrough would not have occurred without Mr. Grassley and Mr. Leahy's leadership and the agreement of Representative James Sensenbrenner (R-Wis.)," Devine said.

"The Leahy-Grassley compromise is a win-win for everyone except corporate crooks."


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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