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Riding a Wave of Whistle-Blowing

Associated Press

Home on sick leave two years ago, Ammar Halloum said he watched the Enron Corp. investigation play out on television -- then decided he had to blow the whistle on his own employer.

His former company, Santa Clara, Calif.-based computer chip maker Intel Corp., says that’s just a flimsy cover story. Halloum’s whistle-blower allegations -- that the company purposely delayed payments for factory parts to bolster its earnings -- are the invention of an employee who knew he was on thin ice for poor job performance, Intel says.

Either way, the run-in between Halloum and Intel points to the tensions generated by a recent surge of workers accusing their firms of fraud or misconduct, a wave touched off by high-profile scandals.

The rise in workers claiming whistle-blower status began after Congress’ approval of a law in 2002 offering new protection to corporate insiders willing to flag financial trickery at publicly traded companies. Just a handful of workers stepped forward at first, but 181 filed such complaints in the year ended Sept. 30, making them the fastest-growing category of whistle-blower cases handled by the Labor Department.

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Workers like Halloum seeking to take shelter under the new law, the Sarbanes-Oxley Act, are just the most visible part of the rise in whistle-blower complaints, including some by employees of privately owned companies, employment lawyers say.

Other workers accusing their companies of misconduct are attempting to take shelter under state whistle-blower laws and other measures.

“This isn’t just people who read the Wall Street Journal. This is the average American,” said Sara Goldsmith Schwartz, an Andover, Mass., lawyer who represents employers.

Lawyers representing companies say many complaints are bogus and are largely efforts by marginal workers to squeeze settlements out of employers.

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“Some of the more difficult problems I’ve had is whistle-blowers who will raise issues in which we find some merit, but where they will raise them to gain personal protection for marginal performance,” said Victor Schachter, a Mountain View, Calif., lawyer who argues on behalf of companies. “It’s very much a mixed bag.”

Under the new federal law, companies are not allowed to fire or otherwise retaliate against a worker who reasonably believes financial fraud is taking place and files a complaint, either with the company or an outside agency. Investigators or judges who find that a worker’s whistle-blower activity resulted in retaliation can order reinstatement, back pay and some compensation for the worker.

That protection is far from automatic. But the Occupational Safety and Health Administration, which administers the law, has received numerous claims from workers at a variety of companies, many of them far lower in profile than Enron.

According to court documents, Halloum, a former group leader at an Intel plant in Chandler, Ariz., took a medical leave for stomach problems about a month after managers criticized his work and gave him a plan to address his shortcomings. While on leave, he contacted the Securities and Exchange Commission, alleging that his boss had instructed him to delay payments for parts purchases.

Halloum then watched the Enron investigation unfold.

“Basically from watching what was going on, I felt this was wrong,” he said of the alleged wrongdoing at Intel.

Intel spokesman Chuck Mulloy said the timing of Halloum’s claim, coinciding with the Enron scandal, ensured that the company took quick and careful notice of his claim. But three internal investigations found nothing to Halloum’s story except an employee trying to save his own skin, Mulloy said.

“At every step of the way, the allegations failed to stand up,” Mulloy said.

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