Now here is an example of a possible correct use of the Anonymous Forum.

The supervisor may be looking for confirmation if it was some other employee that reported the behavior and it might be wise for you to notify the supervisor also.  On the other hand, if you know that the supervisor is absolutely aware of the other employee's behavior and isn't concerned, I don't believe you have an obligation to pursue the matter.  

You could go over your supervisor's head and report both the employee's behavior and the supervisor's refusal to correct the matter, but I don't believe you have a moral obligation to do so.  Frankly, management may not care because management may have decided the employee's work output is worth the time he squanders--or he may just have the "right connections" with upper management.  While such things do tend to lower morale with other employees, there may just not be anything that can be done and you probably have no moral obligation to do anything further.

If he looked at me while doing this, I'd give him the raised eyebrows look back, shake my head, and go back to my work.  Otherwise, I'd keep my mouth shut.  These kind of people tend to out themselves.  Just concentrate on doing your own job.