Stop Blackballing

Most companies would not intentionally commit fraud, yet they routinely support fraud by blackballing whistleblowers.  This is not an abstract problem.  The big 4 accounting firms (Deloitte, PWC, EY and KPMG) employ over a million people.  Zero are known whistleblowers.  I wrote to 50 partners in each of the big 4 firms and challenged them to defend their record on blackballing.  They didn’t even try.  I have been looking for about a year, and I cannot find a single example of a major company hiring a whistleblower.  I found an RBS position called “Head of Whistleblowing and Speak Up.”  The person in that position is not a whistleblower.  The Fortune 500 has about 25 million employees – not one is a known whistleblower.  Blackballing is real.  

OK; so Blackballing is real; so what?  The world has lots of problems: poverty, disease, pollution, war, human trafficking…  Why focus on blackballing?  Well because blackballing is the #1 reason people do not speak up about fraud, and fraud is behind many of the world’s problems.  Fraud is a leading cause of poverty.  It causes resources to be improperly allocated.  Pollution is often performed illegally by companies with the knowledge of the employees (eg: the VW diesel pollution fraud).  Every corporate fraud requires complicity by employees.  Examples include overfishing, cheating on taxes, overcharging by government contractors, etc.  Yet few employees speak up.  The reason is obvious. Whistleblowing can lead to blackballing, and blackballing means a permanent inability to earn a living in a person’s chosen field.  That is something to fear.  Would-be whistleblowers may not only lose their current job but lose their ability to get a similar job ever.  That can be devastating to a person’s family – as many whistleblowers can attest.

The blackballing process is less nefarious than you might think.  This is how it works in tax.  When a tax professional wants to change jobs, he or she will reach out to their network of tax professionals, accounting firm partners, and headhunters.  This will inform him or her of open jobs in the market.  The candidate will send his resume around, and interviews will be arranged.  If the would-be employer likes the candidate's resume, the employer will check out the candidate’s reputation in the tax community.  For example, I worked for Walmart.  While at Walmart, I worked with Walmart’s auditor (one of the big 4 accounting firms) and their tax consultants (including the rest of the big 4 and several law firms).  Potential employers all use the same consultants.  99 of the Fortune 100 companies are audited by one of the big 4. Hiring managers call their local big 4 partner, who in turn calls the big 4 partners at the candidate’s prior employers.  Via this process, secrets come out.  If the employer discovers the candidate is a whistleblower, the process stops.  In tax, the big 4’s rumor network is a critical part of the blackballing infrastructure.  Every occupation has similar influencer networks.              

None of the actors in the blackballing process are necessarily being malicious, but the cumulative consequences are odious.  And the problem is almost invisible.  No one criticizes companies for failing to hire whistleblowers.  That’s the part that needs to change.  I suggest the media and people who care about eliminating fraud should start a new focus: shaming companies that blackball or fail to hire whistleblowers.  Every time a company says, "We have integrity," it should be challenged with "Talk is cheap; your company has never hired a whistleblower; you are part of the problem."  Over time, attitudes and practices will change.

I think people ignore the problem of blackballing because they think a company should be free to hire who it likes regardless of the reason.  That is no longer the case.  Companies cannot refuse to hire racial minorities or discriminate based on gender.  Society has adopted policies (and laws) prohibiting these kinds of hiring decisions.  I'm not suggesting whistleblowers should be a "protected class" under the law.  I'm suggesting companies' opinions should be changed with persuasive arguments repeated frequently.  

One obvious reason to end blackballing is the talent shortage.  Unemployment in the US is at its lowest level in 50 years, yet highly qualified whistleblowers cannot get hired.  That’s a waste of talent.  Another reason is based on morality.  If moral courage is a disqualifying attribute, the hiring company must be ethically challenged.  Another is based on diversity.  Organizations benefit from all kinds of people.  The whistleblower mentality has a place in corporate America.  Finally, there is pragmatism.  It’s harder than ever to keep fraud secret today.  We have whistleblower bounty programs, cell phones, anonymous tips, journalists, WikiLeaks, Panama Papers, Signal, social media, etc.  Fraud will come to the surface, and it will inflict less damage if it is caught early. 

Finally, stopping blackballing is “the right thing to do.” Eventually society will get to the right answer on this issue.  Let’s accelerate that beneficial future.