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the energy-trading firm Enron, previously a favorite among investors. In February
2001, Fortune Magazine had named the energy giant the “most innovative company in
America” for the sixth year running. However, over the next several months, insider selling
of company stock accelerated, internal memorandums questioning the accuracy of Enron’s
accounting practices started to circulate, and reports of financial problems began to leak.
By the end of 2001, it had emerged that Enron executives had lied about profits and
concealed debt, the company had filed for Chapter 11 bankruptcy protection, and the
stock price had plummeted from a high of $90 to around 30 cents a share, costing
investors billions of dollars and wiping out employees’ retirement benefits. The auditing
firm Arthur Andersen was soon implicated in the accounting fraud, which led to the
exposure of major accounting scandals at other companies. One such firm, WorldCom, later
admitted to overstating its earnings by $3.2 billion over the previous five quarters.
The corporate scandals enraged the American public, drew scorn from an administration
trying to distance itself from the executives involved, and spurred Congress into action.
The result was Sarbanes-Oxley, a monumental piece of legislation designed to rebuild
public trust in corporate accounting and reporting by enhancing government oversight,
holding executives personally responsible for company practices, and establishing
stringent auditing procedures. While legislators proved eager to weed out corruption and
develop new, higher standards for the country’s corporations, they have been much more
reticent to apply similar scrutiny to themselves or the executive branch.

In late 2005, following the Abramoff affair and other Capitol Hill scandals, Congress came
under intense pressure from the press and the public to pass ethics reform legislation.
Members of Congress from both parties promised to improve transparency and
accountability in legislator-lobbyist relations. They introduced proposals to create an
independent Office of Public Integrity, strengthen lobbyist disclosure rules, prohibit private
financing of congressional travel, and establish a longer “cooling-off” period before a
former representative or congressional staffer could lobby members of Congress. However,
lawmakers failed to pass any such measure over the following year. All significant efforts at
lobbying reform either failed in committee or passed in only one chamber.

In the 2006 congressional elections, American voters seemed to weigh in on the matter.
With a few exceptions, they ousted incumbent representatives who had been involved in
recent corruption scandals, and the overall result led the Republicans to lose control of
both chambers. The new Democratic leadership vowed to make ethics reform a priority of
the 110th Congress, but it remained unclear whether the legislation making its way
through the body in the first half of 2007 would have a significant impact on entrenched
political practices.

Since elected officials and bureaucrats cannot always be relied upon to police themselves,
the protection of whistleblowers—employees who bring evidence of waste, fraud, and
wrongdoing to the attention of the appropriate authorities—is fundamental to ensuring
that governments act within the scope of the law and government officials are held
accountable for their actions. Such protection also increases the likelihood that potential
threats to public health, safety, and security will be neutralized before disaster strikes. Yet
under current rules, many U.S. civil servants who bring complaints to their superiors, the

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