by Stephen Kohn
• Confidentiality and anonymity must be realistically protected.
• The agency must pay a mandatory minimum award (no less than 10 to 15 percent) to qualified whistleblowers.
• There must be an “alternative remedy” provision that permits whistleblowers to obtain rewards based on all enforcement actions taken based on their disclosures.
• The decision to make an award cannot be discretionary. If a whistleblower provides information pursuant to the program’s rules, the reward must be paid.
• Whistleblowers must be able to review the record upon which a reward determination was made and be able to challenge any denial of a reward in court.
• The agency for which a whistleblower provides information, and which has the obligation to review the claim and pay the reward, must be highly specialized, trusted, and capable of protecting the identity of the whistleblower and advocating on his or her behalf.
Until other nations implement effective whistleblower programs, the U.S. laws offer the best opportunity for international whistleblowers to effectively expose fraud or pollution and then obtain fair compensation.
PRACTICE TIPS
The U.S. laws for which international whistleblowers can obtain a reward are discussed in Rule 1 and 3 (overviews), Rule 4 (Financial/banking frauds), Rule 6 (False Claims), Rule 7 (tax and offshore banking), Rules 8 and 9 (securities fraud and Foreign Corrupt Practices Act), Rule 10 (Auto Safety), Rule 11 (Ocean Pollution/Act to Prevent Pollution from Ships) and Rule 12 (wildlife trafficking).
• Online resource page for international whistleblowers: https://www.globalwhistleblower.org. This site has links to major international treaties and information on the FCPA translated into various languages.
• Information on the Canadian whistleblower laws: The Ontario Securities Commission Whistleblower Office is located at http://www.osc.gov.on.ca/en/whistleblower.htm.
• The University of Toronto held a seminar on whistleblower reward laws, with a focus on the new Canadian rewards law on January 26, 2017. The presentations, along with valuable links, is available here: http://www.rotman.utoronto.ca/FacultyAndResearch/ResearchCentres/CapitalMarketsInstitute/Events/Past-Events.
• A detailed report by Transparency International on the status of whistleblower laws in Europe is located here: http://www.transparency.org/whatwedo/publication/whistleblowing_in_europe_legal_protections_for_whistleblowers_in_the_eu.
CHECKLIST 1Whistleblower Reward Laws (Qui Tam)
Federal Qui Tam Laws
State and Municipal False Claims Acts
CHECKLIST 2Whistleblower Protections Under Federal Law
(Laws that have been effectively used to protect whistleblowers are marked with an *.)
A. Constitutional Protection: First Amendment “Freedom of Speech”
B. Consumer Product Safety Whistleblower Protections
C. Corporate Whistleblower Protection
D. Criminal Prohibition Against Retaliation
E. Environmental Protection, Ocean Pollution, and Wildlife Trafficking
F. Federal Contractor Fraud
G. Federal Whistleblower Reward and qui tam Statutes
H. Federal Court Witness Protection
I. Federal Employee Whistleblower Protections
J. Food Safety Whistleblower Protections
K. Health Care Whistleblower Protections
L. IRS Tax Whistleblower Reward (Qui tam)
M. Military Whistleblower Protection, Department of Defense Components (Including Military Departments, Combatant Commands, Secretary of Defense, and All Other Department of Defense Agencies)
N. National Security Whistleblower Protection
O. Nuclear Safety Whistleblower Protection
P. Occupational Health and Safety
Q. Privacy Act
R. Transportation Whistleblower Protection
S. Workplace Discrimination: EEO Retaliation
T. Workplace Discrimination: Labor Rights
CHECKLIST 3Whistleblower Protections Under State Common Law
CHECKLIST 4What to Look for When Blowing the Whistle on Fraud Against the Government
Examples Of Frauds Covered Under False Claims Act 31 U.S.C. § 3729
Type of Fraud Legal Authority/Source
CHECKLIST 5Proof of Retaliation
Facts Used to Demonstrate “Pretext” And “Causation”
A. Allegation of Disloyalty/Vague and Subjective Personality Issues
B. Antagonistic or Derogatory Remarks Concerning Protected Activity
C. Change in Conduct After Protected Disclosures
D. Conflicting Reasons/Shifting Explanations
E. Deviation from Procedure
F. Direct Evidence/Charges of Disloyalty
G. Disparate Treatment
H. Evidence of Violations/Antagonism Regarding Protected Activity or Safety
I. Knowledge of Protected Activity
J. Outside Chain of Command/Failure to Follow Chain of Command
K. Pretextual Justification for Termination/Adverse Action
L. Temporal Proximity
M. Unfounded Allegations/Lawsuits Against Employees/References Disclosing Protected Activity
N. Warning or Prohibition Against Blowing the Whistle
CHECKLIST 6Discovery in Whistleblower Cases: Obtaining the Evidence Needed to Win a Case Against an Employer
A. Whistleblowers Have a Right to Broad Discovery in Their Retaliation Cases
B. Ten Key Areas of Discovery
1. Disparate Treatment: Comparison between How Whistleblower Treated/Disciplined Compared to Other Employees
2. Use Discovery to Obtain Information on Investigations
3. Try to Obtain Access to Information on Investigations Conducted by Corporate Attorneys
4. Obtain Discovery from Government Regulators
5. Use Discovery to Prove That the Employer Engaged in Misconduct or Disregarded the Law
6. Get Every Document the Company Has About the Whistleblower
7. Learn About Witnesses and Obtain the Personnel Files on Supervisors Who Engaged in Retaliation
8. Obtain Documents on the Prior Discrimination Complaints Filed Against the Company
9. Beware of Employer’s Efforts to Abuse Discovery or Obtain Damaging Information on Whistleblower
10. Beware of Employers Using Discovery to Try to Obtain Evidence that the Whistleblower Engaged in Misconduct Such as Lying on a Résumé or Stealing Company Documents
CHECKLIST 7Dodd-Frank Act, Securities Fraud, and FCPA “Q&As”
Procedures for Obtaining Rewards from the Securities and Exchange Commission
(Some of the following “Q&A’s” were taken directly from the “Q&A” fact sheet published in August 2011 by the SEC’s Whistleblower Office, www.sec.gov/whistleblower)
CHECKLIST 8Foreign Corrupt Practices Act Recoveries 2015–2016
ANNOTATED CHAPTER SOURCES
Introduction: What to Do if the Boss Is a Crook?
Studies that document the importance of whistleblowing in the detection of fraud and misconduct: Association of Certified Fraud Examiners, “Report to the Nations on Occupational Fraud and Abuse: 2016 Global Fraud Study”; Alexander Dyck, et al., “Who Blows the Whistle on Corporate Fraud,” The Initiative on Global Market’s Working Paper No. 3, University of Chicago Booth School of Business (Oct. 2008); Corporate Crime Reporter, “Twenty Things You Should Know about Corporate Crime,” Corporate Crime Reporter (June 12, 2007); Ethics Resource Center, “The Ethics Resource Center’s 2011 National Government Ethics Survey: Workplace Ethics in Transition”; Julie Goldberg, “Compliance Officers Take Their Own Path,” New York Law Journal (April 19, 2007); PricewaterhouseCoopers, Investigations and Forensic Services, “Economic Crime: People, Culture, and Controls; Geoffrey Rapp, “Beyond Protection: Invigorating Incentives for Sarbanes-Oxley Corporate and Securities Fraud Whistleblowers, 87 Boston University Law Review 91 (2007). Andrew C. Call, et al., “Whistleblowers and Outcomes of F
inancial Misrepresentation Enforcement Actions,” papers.ssrn.com (last revised on January 24, 2017); Ernesto Reuben, “Nobody likes a rat: On the willingness to report lies and the consequences thereof,” Vol. 93 Journal of Economic Behavior & Organization 384 (Sept. 2013)
The National Business Ethics Survey is published by the Ethics Resource Center (Arlington, VA, 2007): see “An Inside View of Private Sector Ethics,” p. 1. A wide range of major corporations, such as Northrop Grumman, Shell Oil, Raytheon, and BAE Systems sponsored the 2007 ethics survey. The center has conducted five ethics surveys since 2000. Over the approximately ten-year time span covering these surveys, the center found an average of 51.6 percent of the work-force witnessed misconduct. See “2009 Ethics Survey: Ethics in the Recession,” p. 16. In its 2009 survey the center reported that 15 percent of employees reporting misconduct stated that they suffered some form of retaliation. Ibid. p. 36. In 2012 a survey was conducted limited to employees who work for the “Fortune 500” corporations. This survey found that 52 percent of workers in those companies admitted to observing “misconduct” at work.
Statistics documenting the successful monetary recoveries obtained by the United States under the False Claims Act are available online at: U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Civil Fraud Division: Fraud Statistics—Overview: Oct. 1, 1987–Sept. 30, 2016, www.doj.gov/civil/frauds.
Greenberg Quinlan Rosner Research, “Democracy Corps Frequency Questionnaire” (Feb. 14-19, 2007) (79 percent support for “strong whistle-blower law”).
The hardships and emotional distress facing whistleblowers, even those who prevailed and obtained large monetary recoveries, are set forth in “Special Report” published by the New England Journal of Medicine: Aaron Kesselheim, et al., “Whistle-Blowers’ Experiences in Fraud Litigation against Pharmaceutical Companies,” N. Engl. J. Med. 362:19 (May 13, 2010). Institute of Internal Auditors, “Political Pressure Intense on Internal Audit: IIA Research Report Reveals Pervasive Efforts to Influence Internal Audit Findings,” press release (March 10, 2015).
Early whistleblower cases: Daniel Ellsberg, “Secrets: A Memoir of Vietnam and the Pentagon Papers” (Viking Press, NY: 2002); Nixon v. Fitzgerald, 457 U.S. 731 (1982); Romesh Ratnesar and Michael Weissakopf, “How the FBI Blew the Case: The Inside Story of the FBI Whistle-blower Who Accused her Bosses of Ignoring Warnings of 9/11,” CNN.com/Inside Politics (May 27, 2002); Silkwood v. Kerr-McGee Corp., 667 F.2d 908 (10th Cir. 1981), reversed at 464 U.S. 238 (1984); Bob Woodward, “The Secret Man: The Story of Watergate’s Deep Throat” (NY: Simon & Schuster, 2005).
The Pen Center USA selected the “Top Ten Books About Whistleblowers,” listed at https://penusa.org/blogs/mark-program/top-ten-books-about-whistleblowers. The books include No Place to Hide: Edward Snowden, the NSA, and the U.S. Surveillance State by Glenn Greenwald, State of War: The Secret History of the CIA and the Bush Administration by James Risen, All the President’s Men by Carl Bernstein and Bob Woodward, The Pentagon Papers leaked by Daniel Ellsberg, Power Failure: The Inside Story of the Collapse of Enron by Mimi Swartz with Sherron Watkins, No One Would Listen: A True Financial Thriller by Harry Markopolos, The Whistleblower: Sex Trafficking, Military Contractors, and One Woman’s Fight for Justice by Kathryn Bolkovac and Cari Lynn, Bad Blood: The Tuskegee Syphilis Experiment by James H. Jones, and The Whistleblowers: Exposing Corruption in Government & Industry by Myron Peretz Glazer and Penina Migdal Glazer.
Early books by and about whistleblowers include Clark R. Mollenhoff, Washington Cover-Up (New York: Doubleday, 1962); A. Ernest Fitzgerald, The High Priests of Waste (New York: W.W. Norton, 1972); and Ralph Nader, et al., Whistle Blowing (New York: Grossman Publishers, 1972).
Richard Lacayo and Amanda Ripley, “The Whistleblowers: Persons of the Year,” Time (Dec. 22, 2002).
Tom Herman, “Whistleblower Law Scores Early Success,” Wall Street Journal (May 16, 2007), quoting Senator Grassley plea that whistleblowers “not be treated like skunks at the picnic.”
The international conventions requiring the protection of employees who blow the whistle on fraud include: Council of Europe, Civil Law Convention on Corruption, Article 9 (Strasbourg, 1999); Organization of American States, Department of International Law, Inter-American Convention Against Corruption, Article III (8), ratified by the United States Senate on July 27, 2000, available at www.oas.org; United Nations, Convention Against Corruption, Article 33 (Vienna: UN Office on Drugs and Crime, 2004).
An increasing number of international organizations are advocating for international whistleblower protections. See Transparency International, “Whistleblowing: an effective tool in the fight against corruption,” Policy Position #01-2010.
Rule 1: Use the New Legal Tools
The Chair of the SEC’s statement on the effectiveness of whistleblower reward laws is found at: Mary Jo White, “Remarks at the Securities Forum” (Oct. 9, 2013), located at https://www.sec.gov/News/Speech/Detail/Speech/1370539872100.
Statement of Attorney General on the False Claims Act: Eric Holder, U.S. Department of Justice, “Attorney General Eric Holder Speaks at the 25th Anniversary of the False Claims Act Amendments of 1986” (Jan. 31, 2012).
Statement of the Assistant Attorney General on the False Claims Act: Assistant Attorney General, U.S. Department of Justice, “Remarks at American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement,” (June 5, 2014).
Motion by U.S. Attorney Christopher Christie on whistleblower rewards in ocean pollution cases: United States v. Sun Ace Shipping Company, 2:06-cr-00705, “Motion and Memorandum in Support of Award” (D. N.J. Nov. 15, 2006).
The testimony of the Senate Judiciary Chair in support of the False Claims Act: “Statement for the Record by Senator Chuck Grassley of Iowa Chairman, Senate Judiciary Committee at a House Judiciary Subcommittee on the constitution and Civil Justice Hearing on ‘Oversight of the False Claims Act’ April 28, 2016.”
Overview of effectiveness of reward laws: Testimony of Stephen Kohn, House Committee on Government Oversight and Reform: https://oversight.house.gov/wp-content/uploads/2016/12/2016-12-01-NWC-Kohn-Testimony.pdf
Decisions that whistleblower allegations need not be proven true, but only made in good faith: Passaic Valley Sewerage v. Department of Labor, 992 F.2d 474, 478-79 (3rd. Cir. 1993); DeKalb County v. Department of Labor, 813 F.3d 1015 (11th Cir. 2016).
Association of Certified Fraud Examiners, Report to the Nations on Occupational Fraud and Abuse (2016) (excellent source for statistics on fraud detection). The Department of Justice publishes annual statistics on civil fraud recoveries, as well as rewards paid under the False Claims Act. See Civil Division, US Department of Justice, “Fraud Statistics—Overview” (Oct. 1, 1987–Sept. 30, 2016).
The Ethics Resource Center conducted numerous studies on employee reporting behavior. The study that focused on whistleblowers was Blowing the Whistle on Workplace Misconduct, published by the ERC in December 2010; available at www.whistleblowers.org/storage/documents/DoddFrank/ercwhistleblowerwp.pdf.
Alexander Dyck, Adair Morse, and Luigi Zingales, Who Blows the Whistle on Corporate Fraud? The University of Chicago Booth School of Business Working Paper No 08-22 (2009); http://faculty.chicagobooth.edu/luigi.zingales/papers/research/whistle.pdf.
Citations to the relevant reward laws, and supporting materials, are contained in the Practice Tips and Sources for the following rules: 3, 6–12, 30 and Checklists 1 and 4.
Rule 2: Navigate the Maze
William J. Broad, “The Shuttle Explodes; 6 in Crew and High School Teacher are Killed 74 Seconds after Liftoff,” New York Times (Jan. 28, 1986); Roger M. Boisjoly, “Ethical Decisions—Morton Thiokol and the Space Shuttle Challenger Disaster,” http://onlineethics.org/essays/shuttle (Last modified on Oct. 18, 2005).
Checklists 1–3 cite the numerous federal and state laws that protect whistle-blowers. In addition to these laws, traditional common law remedies such as breac
h of contract, libel, and intentional interference tort claims may also be applicable in a whistleblower case. See Empiregas v. Hardy, 487 So.2d 244 (Ala. 1985) (intentional interference with contract); Bass v. Happy Rest, Inc., 507 N.W.2d 317 (S.D. 1993) (intentional infliction of emotional distress). It is important to remember that laws are constantly being amended and reinterpreted by court rulings. Additionally, Congress and various state legislatures are still enacting whistleblower protection laws to fill in the numerous loopholes in protection.