Just in Time for the Holidays…

A Whistleblower Report on International Corruption

Yes indeed, the National Whistleblower Center has produced a report that shows something those of us who follow this area of law know, but do not always have the evidence easily at hand to support—namely that whistleblower reward laws can work not only here in the U.S. but all over the world. It’s a real service that the Center (disclosure: I used to work there) provides us with a review of important studies on the topic.

My favorite headline is “Employees Outside the USA are Benefitting from American Reward Laws” and the report cites SEC information to support that:

The failure of nations to enact whistleblower reward laws has resulted in numerous foreign nationals seeking protection under the U.S. Securities and Exchange Commission’s Whistleblower Reward law. For example, from 2011 through September 2014, 1136 foreign nationals filed whistleblower disclosures with the U.S. Securities and Exchange Commission, and non-U.S. citizens have already been paid over $30 million U.S. dollars in whistleblower rewards for reporting securities violations or foreign bribery committed internationally….

Perhaps now is a good time to add that in addition to the SEC whistleblower law, other U.S. laws make it possible to fight corruption on an international scale.  In fact the False Claims Act has no particular requirement that a person be a U.S. Citizen or that fraud against the United States occur locally.

Indeed there have been successful cases involving fraud committed against the United States Government that involved spending abroad or for contracts abroad. However that is not the heart of the National Whistleblower Centers’ report, which aims to spread the success of U.S. reward law through international support.  Countries that have a robust judicial system should consider it. The report recommends:

Where possible, all nations should enact whistleblower reward laws modeled on the successful U.S. laws. The laws must protect the identity of the whistleblower, guarantee due process, and establish mandatory monetary rewards for whistleblowers who disclose original information resulting in successful anti-corruption enforcement actions.

The report cites some important studies and provides useful statistics both to show how whistleblower reward laws work and to debunk some common myths about such laws.  The fact is that reward laws do work and they do provide a way for people to fight corruption.  Corruption and fraud are very hard to fight and they are even harder to fight without the information that insiders may have. To me, the whole idea is encapsulated by these sentences from the report:

Reward laws establish safe and protected channels for reporting.

Reward laws place a premium on raising concerns that are valid, well documented, and provable.

At their best, that is exactly what these laws can do.  All whistleblowers face the possibility of retaliation if and when they and their allegations become well known. That is why these laws include seal provisions and confidentiality provisions which in some cases allow the whistleblower to act anonymously and or make it possible to sue for retaliation.

In addition, the second point goes a long way in demonstrating the need for real information about real fraud and wrongdoing to be presented as a part of this process. There simply is no reward for information that does not point to a real allegation. That keeps the reward law procedures themselves free of abuse.

The report backs up these statements with statistics and easy-to-interpret graphs. It’s more than worth a review and it’s a good resource for those who want to make a point about these laws.