Benjamin Calitri
Kohn, Kohn & Colapinto, Washington, DC

Laws that reward whistleblowers in the United States and the United Kingdom have changed what it means to be a whistleblower and have made corporate defence clients prime candidates to become whistleblowers. Utilising these transnational whistleblower reward laws can be a useful tool and opportunity for white-collar corporate defence work, if lawyers and defendants are willing to use some creativity and outside-the-box thinking for their strategy. High-level executives involved in international corruption and fraud are not only eligible under these programmes, their positions and information make them the exact type of whistleblower that reward programmes are seeking. By voluntarily bringing information to these programmes before an investigation starts, they can qualify not only for non-prosecution agreements but also for substantial awards if the case is successful. These disclosures to whistleblower programmes can also be made fully anonymously, meaning that an individual can be cautious about not incriminating themselves or being known as a whistleblower.

The impact

Whistleblower reward laws, in the US and, more recently the UK, have been remarkably successful at targeting international anti-corruption activity. The US created the gold standard of whistleblower reward laws in 2012 with the passage of the Dodd-Frank Act, which established the whistleblower programmes for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).^[1] Since then, whistleblowers using the SEC’s programme have been responsible for the collection of over $6bn in sanctions and have been paid over $2.2bn in awards.^[2] Whistleblowers using the CFTC’s programme have been responsible for over $3bn in sanctions and have been paid $390m in awards.^[3] The US Internal Revenue Service’s (IRS) whistleblower programme, which predates the SEC and CFTC programmes, has also resulted in the collection of over $6bn in unpaid taxes based on information provided by whistleblowers.^[4]

The shift in focus

The new whistleblower reward framework has changed what it means to be a whistleblower. These laws have shifted the focus away from the retaliation whistleblowers suffer to what information whistleblowers know about illegal activity. This is because these reward laws are not about employment. They are valuable tools for transnational law enforcement.

With this new framework, some of the best whistleblower reward cases can come from corporate defence cases, where an employee fears personal liability. Most whistleblower reward laws do not require ‘clean hands’, so even individuals who were involved in the wrongdoing can still report misconduct and receive awards.^[5] This feature is intentional, as regulators recognise that the best inside information often comes from those directly involved in the illegal scheme. Investigators may also offer generous non-prosecution agreements, in addition to financial rewards. As a result, individuals involved in the scheme can confidentially use these laws to remove themselves from the scheme and potentially receive a large reward for their disclosures.

The greatest strength of whistleblower reward laws is their strong confidentiality and anonymity protections.^[6] Under these laws, the identity of a whistleblower will not be revealed, and even the existence (or non-existence) of a whistleblower will not be revealed.^[7] A whistleblower does not need to even disclose their identity to the regulators involved in order to utilise these programmes.^[8] Confidentiality and anonymity provide the best protection from retaliation available for whistleblowers and allow whistleblowers to remain in their profession.

Conclusion

Large corporate defence law firms have already heavily utilised these programmes to protect and reward their clients. Documents provided as a result of an SEC Freedom of Information Act request have shown that law firms that ‘primarily represent corporations and individuals accused of corporate crimes’ have collected millions for their clients in whistleblower rewards, while keeping these cases fully confidential and unannounced.^[9] These firms came to the smart decision that using whistleblower reward laws was in their client’s best interest, as well as being advantageous for the firm itself.

Firms with clients that would likely benefit from utilising whistleblower reward laws should explore this option for their clients. To best assist their client, firms without experience in this area of law can seek to co-counsel these cases with a whistleblower law firm that is familiar with reward laws. These whistleblower law firms can help ensure the confidentiality and anonymity of the client, as well as offer the best chance for securing non-prosecution agreements and awards based on the client’s information.