VideoWhose story—Whitley's or Coke's—is the real thing could be decided by a civil-court jury or the DoJ, which is investigating the alleged Frozen Coke fraud. But Whitley isn't pinning his hopes solely on Section 806 and OSHA. Why? "In many ways, Sarbanes-Oxley is toothless," says Marc Garber, Whitley's attorney, "because the [DoL] has no subpoena power and no authority to interview employees without a company representative present." That makes it difficult to gather the evidence necessary to win a case.
Thus, while OSHA is still investigating Whitley's case, Garber, a former federal prosecutor, is also relying on broader state and federal lawsuits. The latter offer the opportunity for fuller investigation, he explains, and the potential for a larger settlement.
Hanging on at Duke
Other whistle-blowers who have endured OSHA investigations agree that the protections aren't as strong as they might seem. "People ask me, do I think Sarbanes-Oxley will cause more people to come forward? I don't think so, not if they know their careers will be forever altered," says Barron Stone, an 18-year employee of Duke Energy Corp.'s finance department.
Stone's efforts to blow the whistle at Duke started in early 1999, when he told the American Institute of Certified Public Accountants, the South Carolina Board of Certified Public Accountants, and the Securities and Exchange Commission that Duke was intentionally understating revenues for its regulated energy division to avoid having its rates lowered. Stone says he waited in vain for regulators to catch the problems on their own, and finally, in July 2001, he decided to step forward. He put in an anonymous call to the company's ethics hotline and met with the head of the Public Service Commission of South Carolina (PSCSC).
As a result of the call and the meeting, both Duke and the PSCSC launched investigations into the accounting disputes, which to varying degrees vindicated Stone's claims that earnings had been understated. In November 2002, Duke agreed to pay the states of North Carolina and South Carolina $25 million to be applied toward rate reductions in connection with the charges.
Stone went public with his story last August because he believed that Duke officials had apprised senior finance staff of his call to the ethics line and had dropped hints to his colleagues as well (see "Talk, or Walk?" October 2002). Since then, Stone has also revealed that he tipped off the SEC about some other efforts to manipulate earnings in Duke's unregulated businesses.
Through it all, incredibly, Stone has hung on to his job (and even received an 8 percent raise)—but not to his career prospects, he says. Once a senior forecast analyst, Stone says he was essentially demoted to an undefined role in February 2002, and passed over for a new position that August after a history of frequent promotions and increasing responsibilities. He has been assigned to execute entry-level projects, and has been moved to an office far away from the rest of his unit. While he is technically a manager, he has no employees to manage—and has been told he will not get any. "They have been very calculated and very precise in trying to wear me down," he says. "They would never promote me again. They probably never will if I stay here 30 years."
For that reason, Stone and his attorney, Gerry Bos, sought whistle-blower protection under Sarbanes-Oxley in November 2002. But the DoL dismissed the case in March 2003, in part because the alleged retaliation started before the law went into effect, and in part because of insufficient evidence.
Stone and Bos contend that the dismissal was based on OSHA's deficiencies, not theirs. For instance, Stone says that for lack of subpoena power, OSHA investigator Dale Boyd "told me point-blank, 'I can talk to the controllers and the vice presidents, et cetera, but if they lie to me, I accept whatever they tell me.'" Boyd was also of little help in building Stone's case, the accounting manager says, eschewing much of the critical information he had previously provided to regulators. "He was very unclear about what he wanted, how he wanted it, and the ramifications of what had happened," says Stone. "I spent inordinate amounts of time getting him what he said he needed, and then he didn't use most of it."
Duke, for its part, sees the dismissal as the final chapter in the case. "Obviously, the [DoL] has looked at this case and found no wrongdoing on Duke's part," says spokesperson Randy Wheeless. Duke has contended all along that Stone's manager didn't know that Stone was a whistle-blower when he transferred him. The company maintains the transfer was part of a larger reorganization. "From our perspective, it's pretty much settled," says Wheeless. Stone notes that there is still a complaint pending in federal court in Charlotte filed on his behalf.
Waiting for OSHA
Anyone waiting to be rescued by OSHA is liable to be waiting for Godot," charges Devine of the Government Accountability Project. He says that given OSHA's track record handling other whistle-blower cases, "it's a black hole...cases languish indefinitely."
Although Sarbanes-Oxley gave OSHA new responsibilities, the agency received no additional resources to go along with them. It did bring in representatives from the SEC and DoJ to speak with its investigators, says OSHA's Spear, and "familiarize them with issues related to Sarbanes-Oxley." In any case, connecting the dots between a red flag raised and a subsequent act of retaliation—particularly if it doesn't involve a layoff or a salary cut—is always difficult.
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