When an interviewer asks this question, what they’re looking for is an evaluation of your character and your ethics. The whole purpose of this question is to discover what you would do in a situation where you discovered that your company was doing the wrong thing.
The truth is that not everyone would do the right thing in a circumstance like this. Many people will simply turn a blind eye to a problem, or they will take a payoff to keep their mouths shut. A lot of people are so worried about losing their jobs that they’ll usually remain silent.
This is NOT what you want to say if you are asked this question in an interview!
How to Answer the Question
When asked this question, the best answer you can give is along the lines of "I would report it to the proper authorities". Remember that you’re likely talking to an HR manager, the people who are responsible for handling these types of situations. If HR finds out that you’re willing to cover up illegal activity, you’re not the right person for the job!
A good answer would be, "I would report the problem to the correct authorities within the company." This proves that you are a loyal person who cares about the company image, so you will try to handle the problem in-house first. When you report the problem to the company, they will usually take the steps to correct the problem on their own. The offending party or parties will be fired, and the issue will be resolved.
Basically, your answer should be that you will follow the proper chain of command to address the matter. If you report the problem to your boss and he/she does nothing, you will take it up a level, or report the problem to HR. You will continue to try to deal with the matter until it is proven that the company is going to do nothing about it. Only then will you report the problem to the proper authorities.
This is a question that is going to prove just how loyal you are, as well as how zealous you are. A loyal employee will do everything in their power to deal with the problem within the company first, but they will also take steps to deal with the problem properly should the company fail to deal with it themselves.
Finish off your answer by giving an explanation along the lines of "I wouldn’t want to work for a company that fails to deal with problems like this".
You really can’t fail with this answer, as the company you are applying to work for will very likely be an ethical company that also cares whether their employees are following the law or not. If you say that you care about following the law and are willing to bring problems to the attention of the correct managers and directors, you’re going to nail this question.
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