Transcript Whistleblowers #1 in Fraud Detection

Transnational
Whistleblower Protection
&
The Foreign Corrupt Practices Act
2011 Economic Forum – Krynica-Zdrój, Poland
Michael D. Kohn
President
www.whistleblowers.org/inter
national
The National Whistleblowers
Center’s online international
resource center includes:
•
Country-by-country database of
relevant, external links for
whistleblowers
•
Confidential intake form specifically
designed for international
whistleblowers
•
Variety of information on political
asylum, international conventions,
past cases, and relevant laws
NWC Strategy
• Defend whistleblowers from employer retaliation
• Change society’s perception and policies
• Reward whistleblowers who do the right thing
Part 1:
CORRUPTION
“Corruption is an insidious plague that has a wide range of
corrosive effects on societies. It undermines democracy and the rule
of law, leads to violations of human rights, distorts markets, erodes
the quality of life, and allows organized crime, terrorism and other
threats to human security to flourish.”
-United Nations Convention Against Corruption,
signed by 140 nations
Council of Europe Recognition of the
Need to Protect Whistleblowers
Council of Europe
Civil Convention on Corruption
Article 9 – Protection of Employees
“Each Party shall provide in its internal law for appropriate
protection against any unjustified sanction for employees who
have reasonable grounds to suspect corruption and who report
in good faith their suspicion to responsible persons or
authorities”
Part 2: Society
Needs
Whistleblowers
Whistleblowers are #1 in:
Fraud Detection
Whistleblowers #1 in
Fraud Detection
2010 ACFE Global Fraud Study
Whistleblowers #1 in
Fraud Detection
2010 ACFE Global Fraud Study
Part 3: crisis
Most Employees Do Not Report Fraud
to the Appropriate Authorities
Majority of workers never
report fraud to authorities
2010 ACFE Global Fraud Study
Part 4: Solutions
Whistleblower Reward Programs:
Do They Work?
False claims act
U.S. Civil Fraud RECOVERIES
2010 DOJ Fraud Statistics
False Claims act
Recoveries are
Growing
2010 DOJ Fraud Statistics
Part 5: Foreign Bribery
Current International Protections
New Protections under fcpa
• Foreign Corrupt Practice Act (“FCPA”) - As part of the DoddFrank Act of 2010, the U.S. Congress authorized rewards for
whistleblowers who provide original information on bribes paid to
foreign officials in violation of the FCPA.
• Transnational Application - The law covers bribes paid outside
the United States, to officials of foreign countries, by corporations
that are publicly traded in the U.S. markets.
• Whistleblower’s are Entitled to Potentially Large Rewards Qualified whistleblower are entitled to a reward of 10-30% of any
sanction/monetary recovery obtained by the government.
View the Dodd-Frank Act online at whistleblowers.org/DoddFrank
View the SEC regulations online at whistleblowers.org/SEC
How it works
• Qualifying for a reward – Whistleblowers must voluntarily
submit original information that leads to the successful
enforcement of the violation and collection of monetary
sanctions
• Anonymous reporting – The law permits whistleblowers to
file their claims anonymously in the United States – thus
avoiding the need to utilize local court systems that may be
hostile to the whistleblower
• Claims filed in USA – Whistleblowers file their claims
directly with the U.S. Securities and Exchange Commission
(SEC)
• Limitations – The Dodd-Frank Act disqualifies some
individuals from obtaining a whistleblower reward (see §
922(b)(2) for details)
Current award offerings
The U.S. Securities & Exchange Commission (SEC)
recently identified 20 foreign bribery cases for which
whistleblower are entilted to a reward
Current award offerings
Companies involved in cases that the SEC has determined may
have whistleblowers eligible for rewards:
FCPA Fraud recovery
Examples of cases that the SEC has confirmed whistleblowers “may”
be eligible for rewards:
•Alcatel-Lucent, a Paris-based telecommunications
company – $137 million for paying bribes to foreign
government officials to obtain business contracts in Latin
America and Asia
•Johnson & Johnson – $70 million for bribes paid to public
doctors in Poland, Romania, and Greece.
•Royal Dutch Shell (and 6 other oil service companies) –
$236.5 million for bribing customs officials.
HOW TO APPLY FOR
Current award offerings
• Under SEC rules, whistleblowers must act immediately
to qualify for rewards – failure to act within 90 days of
posting will result in automatic disqualification
regardless of the whistleblower’s contribution
• Deadline for current list of cases is October 20, 2011
• Current list of SEC whistleblower cases is available
online at www.whistleblowers.org/international
Protect your Rights
• Whistleblowers should seek
legal assistance from an
appropriate attorney or the
National Whistleblower Legal
Defense & Education Fund
(NWLDEF)
• Reports to the NWLDEF are
completely confidential
• To submit a report, visit
whistleblowers.org/NWLDEF
Part 6: Money Laundering
& Tax Fraud
Current International Protections
US TAX LAW: REWARDS
• 2006: U.S. Tax Whistleblower Rewards Law – 15%-30% reward
for Whistleblowers who provide original information on tax frauds
• Applies to International Banking – Law permits employees
working outside the United States to obtain large rewards for
reporting “undisclosed” secret bank accounts held in offshore banks
by U.S. citizens.
• UBS Bank Scandal – One whistleblower’s disclosure forced the
Swiss bank UBS to pay $780 Million Dollar fine and release the
names of thousands of U.S. Taxpayers who held secret accounts in
Switzerland to the American Government
Using Whistleblowers to Detect
Illegal Offshore Banking
• International bankers today can become
eligible for rewards by blowing the
whistle on money laundering and illegal
offshore accounts
• Every nation should duplicate the U.S.
efforts in order to facilitate the detection
of money illegally held offshore
• International tax whistleblower laws
should be designed to facilitate the
willingness of private bankers to
provide information anonymously and
confidentially to a competent
government authority
Brad Birkenfeld, UBS whistleblower
• Provisions for whistleblower rewards
should be written into international tax
whistleblower laws based on U.S. law
Key Components for Successful
Whistleblower Law
• Job Protection – Reinstatement, back pay, compensatory damages,
punitive damages, attorney fees, costs and injunctions
• Due Process and Independent Investigations -- Independent Judicial
Review, civil discovery, and jury trials.
• Promote Whistleblower Disclosures under Foreign Corrupt Practices Act –
Educate workers on their right to blow the whistle on bribes paid to
foreign officials by large multinational corporations
• Encourage Whistleblowers to Report Illegal Offshore Banking -- Enact laws
modeled on U.S. Tax Whistleblower Law; protect international
bankers who disclosure illegal accounts help by U.S. citizens
• Independent Investigations – Ensure that whistleblower disclosures are
properly investigated.
• Rewards for Doing the Right Thing -- Enact strong whistleblower
protection and reward laws
NWC Resources
21 rules for whistleblowers
“Whistleblowers should . . . read The
Whistleblower’s Handbook. It’s 21 rules
lay out the game plan for holding institutions
accountable while protecting your job.”
Michael Radutzky, Senior Producer “60 Minutes”
“Whether you are a corporate crime
defense counsel, a worker thinking on
turning in your crooked boss, or a
whistleblower’s lawyer – we recommend
you pick up this book.”
“Top Ten Things You Should Know Before You
Blow the Whistle”
Corporate Crime Reporter, March 9, 2011
Other NWC Resources
www.whistleblowers.org
World Wide Web: www.whistleblowers.org
Legal Defense Blog: www.whistleblowersblog.org
Facebook: www.bit.ly/9fpTcu
Twitter: www.twitter.com/StopFraud
Confidential Reports: www.whistleblowers.org/NWLDEF
Sources
• Association of Certified Fraud Examiners 2010 Global Fraud
Studyhttp://whistleblowers.nonprofitsoapbox.com/storage/whistleblowers/d
ocuments/acfe2010report.pdf
• “Fraud Statistics” Department of Justice 2010
http://www.whistleblowers.org/storage/whistleblowers/documents/DoddFra
nk/fca_statistics.pdf
• Ethics Resource Center: Blowing the Whistle on Workplace Misconduct 2010
http://whistleblowers.nonprofitsoapbox.com/storage/whistleblowers/docum
ents/DoddFrank/ercwhistleblowerwp.pdf
• Kohn, Stephen, The Whistleblower’s Handbook (Lyons Press 2011
http://merchant.auctivacommerce.com/s23497/The-WhistleblowersHandbook-A-Step-by-Step-Guide-to-Doing-Whats-Right-and-ProtectingYourself-P1807746.aspx
Stay connected
National Whistleblowers Center
3238 P Street, N.W.
Washington, D.C. 20007
[email protected]
© 2011 National Whistleblower Center and the
National Whistleblower Legal Defense and Education Fund