Judith Wong, the stereotypical unnoticed middle sister, was WESB's Chief Financial Officer (CFO) and another member of its board of directors. She had the thankless job of managing the company's finances from stem to stern and was a tediously thorough financial steward, albeit unschooled in fraud prevention or detection techniques. After about 8½ years of Bryan's zombie windfall, just by happenstance, she decided to review the fronts and backs of the physical cancelled checks from WESB's business bank account for the previous fiscal quarter rather than just the monthly statements and fronts of checks. She saw several payroll checks endorsed over to Bryan. Curious and concerned, she then performed a 10-year spotcheck review of cancelled checks and found many more of these. Judith then retained an outside accounting and auditing firm to conduct a complete audit, which revealed the truth of these suspicious checks. 

The audit also discovered that the company had reported income for the zombie employees to the income tax authority (the Inland Revenue Board of Malaysia), which, of course, created huge tax problems for these very real people. At least one of the zombies had trouble filing for public housing assistance (“Program Perumahan Rakyat Termiskin” - PPRT) when the state department of housing reported his falsely inflated income to the local low-income housing authority. Sister whistle-blower was now downright scared. WESB had lost money in a contracting economy, and it had a thief as part owner, board member, manager, brother and son. The unwitting zombie employees might be able to sue WESB and wreck the company's standing in the community. WESB could stand to lose its business insurance coverage if it didn't address these thefts; WESB might be family-owned, but it still was a legally incorporated business. Judith presented her findings to the board of directors at a colourful board meeting attended by all members of Wong family, Bryan, and the outside auditor. Bryan apologized, tearfully said, "I made a mistake" and promised to pay it all back (probably after he got an increase in his allowance). The rest of the Wong family, who believed this was a private family matter, swallowed his apology wholesale. But sister whistle-blower would have none of it. She went to the police on the advice of the auditor because she intuited that Bryan's "mistakes" had criminal implications — potential chargeable identity theft crimes — that could come back to haunt the company. A detective assigned to the case issued a flurry of search warrants on WESB's bank accounts, the business offices and factory. In true modern dysfunctional family spirit, the Wong family implemented a new board policy: "shoot the messenger." 

They vilified sister whistle-blower and ostracized her from the business and the family for reporting the thefts to the board and to the police. All of them, except for Judith, circled the wagons around Bryan. At one point during the prosecution of the case, they said that the money he'd reaped were actually company "loans." (The prosecutors shot that down when it presented the minutes of the fateful board meeting during which the auditor first described Bryan's embezzlements.) Bryan was originally charged with five counts of theft by swindling over RM500,000 and 12 counts of filing false tax returns because he failed to report or pay taxes on the boodle. (Would-be embezzlers should always be wary of those possible tax evasion charges before they commit their crimes.) One of the theft counts was dismissed, and he was convicted on all of the others. He was sentenced to 23 months in prison and an RM508,000 restitution order. Deputies took him directly from the courtroom where most of the Wong family sat on one side of the gallery and Judith, the sister whistle-blower, sat on the other side — alone. Outsiders often automatically presume that the financial health and stability of a family business is always the top priority of the owners when they discover a skunk at their picnic. Inexplicably, family dynamics can be far more powerful than the family members' desire for the business's survival. They can forget that non-family employees also have rights. And Bryan also forgot that his sister was an honest woman.

REQUIRED:

Please write an analysis of the case above, to include the following in your discussion:

The difficult position of the whistle-blower.

Answer rating: 100% (QA)

Because the other members did not support the whistleblower in this instance when it came to the fr... View the full answer