Jessica Fino 4 Sep 2018 03:12pm

Debate: should whistleblowing measures be strengthened?

We asked a number of experts, professors, business groups and firms if whistleblowing measured should be amped up

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Caption: Currently the UK does not have a mechanism in place for rewarding whistleblowers

Brenda Hill Skystad

On Twitter, who says Washington State’s first whistleblower law is named after her

“If you are promised $$ for becoming a whistleblower, do your homework. For every person who walks away with $$ there are dozens of us that get nothing and lose our homes, jobs. Do it because you care, no other reason!”

Judge Alex Ferrer

Responding to Skylstad

“That is absolutely correct. Even given the amount of money whistleblowers are paid each year, many, if not most, do not receive any compensation. Some become millionaires. Some do not get a dime. All suffer. Do it because it’s the right thing to do. Not for potential gain.”

Jason Zuckerman

Whistleblower lawyer at Zuckerman Law in Washington DC

“Incentivising whistleblowers to report wrongdoing has proven extraordinarily effective in the United States in protecting the public and investors. Cases brought by whistleblowers under the qui tam (whistleblower incentive) provision of the False Claims Act have enabled the US government to recover $30bn from contactors.

"And in just eight years, the Dodd-Frank corporate fraud whistleblower incentive has enabled the Securities and Exchange Commission to secure $1.4bn in financial remedies, including more than $740m in disgorgement of ill-gotten gains and interest. Whistleblower incentives are a critical tool to combat fraud.”

Daniel Barton

Managing director at Alvarez & Marshal, writing for economia online in April

“Currently the UK does not have a mechanism in place for rewarding whistleblowers. Therefore, it is in a prime position to forge its own structure and formalise how we approach this key action and protect those who are trying to turn a bad situation into a better one.

“Many in the financial sector agree that employees should speak up about potential wrongdoing because it is ethically sound. In other cases, however, some believe that a financial reward is necessary.”

Thomas Vink

Whistleblowing programme coordinator, Transparency International

“Yes. Whistleblowers often put themselves at high risk. They may be fired, blacklisted, or, in extreme cases, killed. “Cases such as LuxLeaks and the Panama Papers have highlighted the essential role that whistleblowers play. A 2016 report by the Association of Certified Fraud Examiners found that in more than 2,400 cases of fraud in 114 countries, around 40% were uncovered through tip-offs.

“It is essential that whistleblowers be protected with comprehensive legislation. In Europe, this looks likely to soon become a reality through a proposed EU-wide Whistleblowing Directive. We think that is a huge step in the right direction. But there are some important issues that need to be ironed out, like the provision that obliges whistleblowers to report internally before going to outside authorities. And whistleblowers’ identities need to be better protected.”

James Dungan

Postdoctoral researcher at the University of Chicago’s Booth School of Business, in an interview with MarketWatch

“It’s possible that adding extremely large incentives for blowing the whistle may backfire by simultaneously increasing the backlash that whistleblowers often receive from their peers.”

In other words, people may think: “They don’t care about the company, they are only in it for the money.”

Dave Lewis

Professor of employment law at Middlesex University

“Whistleblowers can save lives in raising concerns about suspected health and safety breaches and are recognised internationally as vital in the fight against corruption.

“The EU has produced a draft directive this year in recognition of the need to protect whistleblowers in the public interest. The UK has 20 years of experience of whistleblowing legislation. Unfortunately, the UK statute is not well publicised and, although redress for retaliation is available via employment tribunals, cases are costly and difficult to win. It is difficult to advise people about whether a disclosure of information will be regarded as in the public interest as this concept is not defined.

“If the UK is to comply with international standards of best practice, it needs to outlaw discrimination at the point of hiring and put the burden on employers to show that subsequent adverse treatment was not connected in any way with a public interest disclosure. Research globally shows that people raise concerns because they want wrongdoing rectified and not for financial reward.”

Kate Kenny

Professor in management, Queen’s University Belfast

“The current distaste for whistleblower rewards in the UK is unfortunate. Whistleblowers pay heavy personal and financial costs when they speak out. Reward schemes like the SEC’s in the US adequately compensate the discloser.

“The UK’s laws do little to incentivise speaking up, while the opposite is true under whistleblower reward schemes that increase positive attitudes towards whistleblowing. In the financial sector, 94% of professionals recently indicated a willingness to report wrongdoing because of SEC incentives; a percentage that is much lower in the UK finance sector. Perhaps most importantly, under the Public Interest Disclosure Act there is no mechanism to ensure the original wrongdoing is corrected, while the US scheme sees the Department of Justice partnering with the whistleblower to prosecute the lawbreaker and recoup monies lost.

“Of course, the SEC programme is not flawless. Lessons learned since its implementation must be heeded. Overall however, rewarding disclosures appears to help fight corruption.”

Stephen M Kohn

Executive director of the National Whistleblower Center and partner in the whistleblower rights law firm of Kohn, Kohn and Colapinto LLP

“Frauds are intended to be hidden; if insiders are not willing to risk their jobs and careers to report these crimes, the overwhelming majority of frauds will go undetected, and crime will remain profitable. In the US, 30 years of experience using reward laws to incentivise employees to have the courage to become whistleblowers has demonstrated one irrefutable fact: whistleblower rewards work. UK policymakers can no longer ignore the reality.

“The chairman of the US Senate Judiciary Committee recently strongly affirmed that these reward laws have transformed the ability of the government to police frauds, saved lives, and triggered billions of dollars in recoveries from fraudsters.

“Based on the record in the US, which also includes paying rewards to international whistleblowers, the success of whistleblower incentive programmes cannot be disputed.”