Magazine

Year of the Whistleblower


In the 1980s, Parks became something of a cause c?l&egrace;bre in the fledgling whistleblowing movement. With two colleagues, he alleged that Bechtel Group Inc.'s cleanup after the Three Mile Island nuclear-power-plant disaster was faulty. He was suspended by Bechtel, then reinstated once multiple federal agencies exonerated him. But he was given a new job about as far from civilization as you can get--a natural-gas plant on the edge of Death Valley. After six months, his job was eliminated. The whole experience, he says, was "hell." Bechtel says Parks's charges were without merit.

Now, he has done it again. In March, Parks filed suit against L.S. Starrett Co. (SCX ), maker of devices that test parts for planes and other complex machines. Parks charges that Starrett, for whom he worked as a subcontractor, tried to conceal from customers such woes as defects in operating software. His charges were bolstered by a Pentagon investigator in an affidavit unsealed on Nov. 6 in U.S. District Court in Greensboro, N.C. A Starrett spokesman denies the charges as "untested hearsay allegations." What makes Parks go to all the trouble? "I've asked myself that many times," Parks says.

Another type, the self-protectors, know about problems that could lead to an investigation. They might even be responsible for some of them. By coming clean, they clear their consciences--and lessen the likelihood of going to jail. That may explain the actions of Rite Aid President Timothy J. Noonan, who wore a wire and recorded Grass allegedly plotting to foil the grand jury investigation. On one recording, Grass is quoted as saying that investigators would never get hold of a computer containing evidence that he backdated letters "unless they use a Trident submarine." On July 10, Noonan pleaded guilty to withholding information from investigators. In exchange for his cooperation, prosecutors are expected to seek probation. Noonan, through his lawyer, would not comment.

Then there are the corporate outliers, people who just don't fit into the culture of the company. Many women working in an environment dominated by men are in this category. Watkins and Cooper, for instance, both worked in macho cultures.

Whatever category they fall into, whistleblowers are going to find life a bit easier. Under the Sarbanes-Oxley law, they need only make a disclosure--to a supervisor, law-enforcement agency, or congressional investigator--that could have a "material impact" on the value of a company's shares. The Labor Dept. is responsible for investigating claims of whistleblowers who say they have been terminated, demoted, or harassed. So far, 16 people have filed complaints.

Sarbanes-Oxley could also rescue some complaints that used to fall by the wayside. Christine Casey, for instance, claims she left her financial-analyst job at Mattel Inc. (MAT ) in 2000 after being pushed aside by supervisors as punishment for pointing out what she believed to be intentionally inflated sales forecasts. Her wrongful-termination suit, filed under a California whistleblower law, was thrown out of Los Angeles County Superior Court in September because, the judge said, Mattel did not fire her. Under the new law, though, the mere allegation of retaliation would have triggered a review. Mattel says it has nothing to add beyond the judge's decision. Casey, who is appealing, says her fast-track career may have been permanently stalled by her choice to speak up.

There are critics who say the law doesn't go far enough. Their main beef: Unlike those who expose government fraud, there are no financial incentives for corporate whistleblowing in the new law. Nor does the act cover private companies. But while the law isn't perfect, Congress for the first time has erected a protective shield around employees who ring the alarm. Corporate managers had better brace themselves.

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