Boeing Ruling on Whistleblower Firing May Discourage Leaks to News Media

Two Boeing Co. (BA) auditors in 2007 thought they found weaknesses in the security of the firm’s financial reporting data. They complained, setting off a chain of events that may chill whistleblower leaks to news outlets.

Nicholas Tides and Matthew Neumann say they told Boeing it might be violating the Sarbanes-Oxley investor-protection law by urging them to say data controls were in place that weren’t. Ignored and then pressured to look the other way, they said, the two spoke with a Seattle Post-Intelligencer reporter who had left messages asking about auditing problems.

“Computer security faults put Boeing at risk,” a subsequent headline said. The airplane maker, already suspecting leaks, investigated and fired the men for unauthorized talking to the news media. They sued, citing Sarbanes-Oxley’s whistleblower protection, and lost. An appeals court said last week that the law doesn’t protect tipping off journalists.

The ruling is now the law in nine western states. It will make hiding company wrongdoing easier, according to Ken Paulson, a former editor of USA Today who is president of the First Amendment Center, which follows free-speech issues.

“Fewer whistleblowers will share information with the news media,” Paulson said. “There is no faster path to reform or to disclosure of corporate misdeeds than putting that information on the front page of a newspaper.”

http://preview.bloomberg.com/news/2011-05-11/boeing-ruling-on-whistleblower-firing-may-discourage-leaks-to-news-media.html