Encouraging whistleblowers

It’s important to encourage and protect whistleblowers—they’re the ones who expose the wrongdoing. Business Week:

Employees lead the pack in corporate whistleblowing, accounting for 19% of those reporting fraud. But they suffer for it, despite Sarbanes-Oxley protections, say researchers at the University of Chicago and the University of Toronto. Some 82% of those who uncovered fraud from 1996 to 2004 said they were penalized—ostracized, demoted, or pressured to quit, for instance. So how can society urge more workers to come forward? Offer cash rewards, say professors Adair Morse and Luigi Zingales at Chicago and Alexander Dyck at Toronto. Their model: the federal False Claims Act, which gives whistleblowers 15% to 30% of any damages recovered in cases where the government is defrauded.