INTERVIEW:Noreen Harrington's call to Eliot Spitzer's office led to fines of more than $5 billion and industry reforms that benefited 95 million US investors, writes Simon CarswellFinance Correspondent.

NOREEN HARRINGTON became a reluctant whistleblower when she picked up the phone in 2003 to inform the New York state attorney general that billions of dollars were being skimmed off mutual pension funds.

It was a brave move by Harrington, a Wall Street veteran, and a costly phone call for the mutual fund industry. The subsequent investigation by Eliot Spitzer's office led to fines of more than $5 billion (€3.2 billion) and industry reforms that benefited 95 million US investors.

"I had hoped for anonymity but I understood the risk," says Harrington, whose grandparents emigrated to the US from counties Cork and Kerry.

"The media in America is aggressive and they went looking for me, and they found me."

Harrington worked for 11 years for Goldman Sachs, six in London, but it was her time at US firm Stern Asset Management that brought her into the spotlight.

She resigned from Stern in April 2002 after her complaints about late trading in mutual funds were ignored internally.

Almost a year later, prompted by a conversation with her older sister, Harrington decided to expose the abuses at Stern and called Spitzer's office.

Worried about the declining value of her 401(k) pension plan, Harrington's sister had asked her for advice. "You don't think about the personal aspects of money or the human toll. My sister said she may not be able to retire because her 401 [ pension plan] keeps going down."

Harrington made a direct connection between the skimming of money in after-hours trading on mutual funds and the financial hardship faced by her sister. "I tried to move on, but it was difficult, given what I knew."

She knew the practices at Stern were wrong and that everyday pension investors were losing out.

"They were betting on the market after the race has been won, but the people taking the risk should have been taking the rewards."

Harrington estimates that some mutual fund managers were making between $10 billion and $15 billion a year on late trading and the practice had been going on for 10 years. She says it "might not amount to much in the $7 trillion mutual fund industry", but it was huge sum to pension holders.

After breaking her silence, Harrington took security precautions given that her information was about to bring down "very powerful people". She never travelled on her own and left New York city for her home on Long Island.

Some of her contemporaries in the financial world reacted angrily. "If you are in an industry where doing the right thing is a career-ending move, then you are in the wrong industry. We were trusted with money like doctors are trusted by their patients."

Despite the beneficial changes introduced in the industry following her exposures, Harrington believes whistleblowing should not happen. She believes proper corporate structures should be in place to allow employees to air their grievances openly and without retribution.

"I don't think whistleblowing should ever happen," she says.

"Doors should be open to hear people's conflicts and perceived problems, so there is no need for whistleblowing. It only happens when the system is not working."

She believes the current financial crisis may lead to more whistleblowers emerging to reveal unusual trading practices.

However, Harrington raised her concerns at a busy time for whistleblowers. Former Enron vice-president Sherron Watkins and ex-WorldCom vice-president of internal auditing Cynthia Cooper sounded alarm bells about dubious accounting practices at their respective companies.

Harrington does not like the term whistleblower because of its negative associations and because her entire career has since been "redefined by one moment".

"I received a truthsayer award. I think that sounds better," she says. "I think a whistleblower is doing a public service. They have stepped up to do something at risk to themselves and they should be celebrated."

Noreen Harrington, managing partner at New York investment management firm MD Sass, spoke at the Annual Investment Conference of the Irish Association of Pension Funds in Dublin yesterday.

"If you are in an industry where doing the right thing is a career-ending move, then you are in the wrong industry