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Proposal: Establish an Official National Whistleblower Day to Promote Transparency, Integrity, and Accountability

Whistleblowers are those who bravely come forward with information about fraud, corruption, and other criminal behavior. Despite enormous personal and professional risks, they bring to light evidence that would otherwise remain hidden. For the sake of truth and transparency, they step up. Explore how this proposal aims to better our democratic institutions by emphasizing the importance of  transparency and accountability.

The Issue

Problem Defined

Over the last decade, whistleblower tips have resulted in the recouping of billions of dollars against those who commit wrongdoing. Yet, those who blow the whistle on fraud, corruption, and other illegal actions do so at great risk to themselves, often facing severe retaliation. Even still, whistleblowers report wrongdoing knowing they may lose their jobs and income, only to face a negative social stigma while fighting an uphill battle. Such reprisal doesn't just cost whistleblowers money; it often also causes significant psychological and other harms. 

The problem is that at present, society does not honor whistleblowers, and therefore does not encourage them to come forward. Whistleblowers are not "snitches" or "rats", but rather courageous members of our community and democracy. We must change the culture surrounding whistleblowers. The establishment of an official, annual National Whistleblower Day is the crucial next step.

Background
Expand all bullets
1.
Whistleblower laws have existed since the Founding Fathers.MORE

The first recorded whistleblowers in the U.S. date back to 1778, when ten members of the Continental Navy blew the whistle on their superior officer. On July 30, 1778, following an investigation of their disclosures, The Continental Congress enacted America's first whistleblower law. The law states

Laws such as the False Claims Act, the Foreign Corrupt Practices Act, the Lacey Act, and the Dodd-Frank Act, among others, continue this legacy. Each addresses different aspects of illegal activity, and extends corresponding protections and rewards to whistleblowers. 

2.
The whistleblower process incentivizes those with information to step forward.MORE

Ratio of Department of Justice Qui Tam (Whistleblower) Cases to Non-Qui Tam/Non-Whistleblower Civil Fraud Cases

Prosecutors are increasingly relying on whistleblower information for civil fraud cases. This indicates not only that whistleblowers are increasingly incentivized to come forward, but also that the information they provide is often credible.

3.
Law enforcement and companies use whistleblower tips to detect crime worldwideMORE

Look at the data and compare! What are the top detection methods of corruption for law enforcement worldwide? 

i. In the U.S. for example, the whistleblowers were responsible for alerting the appropriate authority to criminal activity in 37.6% of cases, a far larger percentage that either of the two other most effective detection methods, management review (14.3%) and internal audit (14.1%).

ii. The ratios are similar around the world:

iii. So what does this mean? 

Source: Association of Certified Fraud Examiners

4.
Just the numbers: How we really know it works.MORE

The Act to Prevent Pollution from Ships ("APPS") implements an international treaty to fight ocean pollution, and includes strong whistleblower confidentiality and reward provisions. 

This law has been incredibly effective since it was signed into law: Of the 100 most recent APPS cases, court records reveal that whistleblowers were responsible for 76% of successful cases.

Here's how the math works: criminal fines of $175,617,054 plus restitution of $63,925,000 plus whistleblower rewards of $33,755,666 equals over $270 million dollars of illicit funds taken away from criminals.

5.
Whistleblowers are deeply effected by retaliation. Read about just a few of their cases here.MORE

Dr. Fredric Whitehurst is a former FBI scientist who exposed misconduct and forensic fraud within the FBI crime lab, resulting in extensive reforms at the agency. He faced severe retaliation.

In a 2017 interview with Stephen M. Kohn, Executive Director of the National Whistleblower Center, Whitehurst recalled how speaking the truth uprooted his life: “Well of course it changed my life dramatically. It changed the life of my family dramatically. I wasn’t allowed to stay at the FBI…When you go home to your family and you can’t feed them…and the stress on that house is unbelievable. That’s the hell that whistleblowers go through.”

Bunnatine Greenhouse stood alone in opposing the approval of a highly improper multi-billion dollar no-bid contract to Halliburton for the reconstruction of Iraq. In retaliation for her courage she was removed from her position as the highest-ranking civilian contracting official at the Army Corps of Engineers.

In her 2005 congressional testimony, Greenhouse stated, “I am the poster child of what federal employees can expect if they have the courage to blow the whistle on waste, fraud, or abuse. A lost career with the inability to wage a meaningful legal challenge. Federal employees deserve more than that.”  

Robert Maclean, a United States federal air marshal, disclosed a proposed TSA operational plan that would have reduced aviation security to the national media in 2003. Though these TSA policies were accidentally circulated to air marshals in a way that was explicitly confidential, he was subjected to a lengthy investigation culminating in his termination in 2006.

Maclean has since won whistleblower protections. However, his current status as a protected federal employee whistleblower was not secured until as recently as 2015. The Supreme Court ruled in his favor following years of court appeals by the Department of Homeland Security.


Meet more whistleblowers here.

6.
Glossary of TermsMORE

> Whistleblowers: Those who reveal bribery of government officials by persons seeking to obtain a business advantage; those who report illegal customs violations, trafficking, or other violations of law, often risking their job or personal security, and; those who disclose information regarding potential violations of law to appropriate authorities under a whistleblower protection or reward program. 

> Qui tam laws: Latin for "in the name of the King", these provisions allows for private citizens to file whistleblower lawsuits, when allowed for by the law, and then be rewarded a percentage of the ill-gotten gains for their bravery.

A few of the specific laws with whistleblower protections:

     > False Claims Act ("FCA")

Rewards for those who file qui tam actions in U.S. district courts concerning fraud that result in a financial loss to the federal government. Applies to customs violations on imports into the U.S.

The FCA can be used to impose liabilities on individuals or companies who commit customs violations at the U.S.’ borders, using paperwork to catch other illegal activities.

     > Foreign Corrupt Practices Act ("FCPA") 

Permits rewards to whistleblowers who provide original information about bribes paid to foreign government officials by publicly-traded companies or U.S. persons.

The FCPA is often known as the law used to prosecute bribes paid abroad.

     > Act to Prevent Pollution from Ships ("APPS") 

Permits federal courts to grant rewards to whistleblowers whose disclosures regarding pollution on the high seas result in a successful prosecution.

     > Dodd-Frank Act

Covering commodities and securities actions worldwide, the law is meant primarily to promote financial stability by improving accountability and transparency in the financial system. 

     > Sarbanes-Oxley Act ("SOX")

Protects employees of publicly traded companies who report violations of Securities and Exchange Commission regulations or any provision of federal law relating to fraud against the shareholders.

> Frivolous Lawsuits

a. A “frivolous” lawsuit is one which is insincere and inaccurate. The concern is that allowing citizens in the legal process – like whistleblowers – can lead to abuse of the system.

b. Frivolous lawsuits are not a real concern. The justice process is insulated from this type of misuse.

     i. The University of Chicago’s Booth School of Business study found that “There is no evidence that having stronger monetary incentives to blow the whistle leads to more frivolous suits.”

     ii. On top of this, the False Claims Act has a provision that requires federal courts to sanction relators who files frivolous lawsuits (See 31 U.S.C §3730(d)(4)). Since 1986, of the nearly 10,000 cases files, in only about a dozen cases have such sanctions been awarded.

     iii. Law enforcement investigates whistleblower tips with as much rigor as any other case, and prosecutorial discretion allows the government to take or decline a case.

c. Law enforcement investigates whistleblower tips with as much rigor as any other case, and prosecutorial discretion allows the government to take or decline a case.

Learn more: Check out our Frequently Asked Questions!

Sources
1.
The National Whistleblower Center is a non-partisan, non-profit organization that has worked for over thirty years to promote whistleblower rights, protections, and rewards, through a variety of avenues, including litigation, legislative advocacy, and public education.

Go deeper (below) to learn more, engage by joining the conversation on TheChisel (on the left), or visit the National Whistleblower Center's website! -

Go deeper
1.
Who Blows the Whistle on Corporate Fraud?

Alexander Dyck, Adair Morse, and Luigi Zingales - The Journal of the American Financial Association (November 10, 2010)

https://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2010.01614.x

An in depth report on all reported fraud cases in large U.S. companies between 1996 and 2004 aimed at identifying the most effective mechanisms in detecting corporate fraud.

2.
Breaking the Silence: Strengths and Weaknesses in G20 Whistleblower Protection Laws

A J Brown, Suelette Dreyfus, Simon Wolf, and Mark Worth, for Blueprint for Free Speech - (October 1, 2015)

https://blueprintforfreespeech.net/wp-content/uploads/2015/10/Breaking-the-Silence-Strengths-and-Weaknesses-in-G20-Whistleblower-Protection-Laws1.pdf

This report analyzes the current state of whistleblower protections in each of the G20 countries, as they apply to the identification of wrongdoing in both the public and private sectors.

3.
Foreign Corrupt Practices Act: How the Whistleblower Reward Provisions Have Worked

National Whistleblower Center - (August 1, 2018)

https://www.whistleblowers.org/wp-content/uploads/2018/12/nwc-fcpa-report.pdf

This report analyzes the data from every case under the FCPA since the law was passed, and finds that, for over 4 decades, it has proven to be one of the most effective laws at halting corruption and capturing illicit funds worldwide.

4.
U.S. Securities and Exchange Commission Whistleblower Program Annual Report to Congress, 2018

Office of the Whistleblower, U.S. Securities and Exchange Commission - (November 14, 2018)

https://www.sec.gov/reports?aId=edit-tid&year=All&field_article_sub_type_secart_value=Reports+and+Publications-AnnualReports&tid=59

This report provides an analysis of the continued, demonstrable benefits that the SEC’s whistleblower program provides to the its  efforts to uncover and stop fraudulent investment. Since the programs inception seven years ago, the SEC has ordered wrongdoers in enforcement matters involving whistleblower information to pay over $975 million in total monetary sanctions.

5.
Myths and Numbers on Whistleblower Rewards

Theo Nyreröd and Gianarlo Spagnolo - Stockholm Institute of Transition Economics (January 1, 2018)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3100754

Despite the success of financial incentives for whistleblowers in the U.S., there is a  debate in Europe regarding whether to introduce whistleblower rewards. This report reviews the potential benefits and costs of financial incentives for whistleblowers while trying to separate existing evidence from conjectures with no empirical support.

6.
International Principles for Whistleblower Legislation: Best Practices for Laws to Protect Whistleblowers and Support Whistleblowing in the Public Interest

Transparency International - (July 1, 2018)

https://www.whistleblowers.org/blowing-the-whistle-best-practices/

This report from Transparency International recognizes the importance of whistleblower protections and rewards, and seeks to provide principles and guidelines for countries to formulate new and improve existing whistleblower legislation.

8.
Nobody Likes a Rat: On the Willingness to Report Lies and the Consequences Thereof

Ernesto Reuben and Matt Stephenson - Journal of Economic Behavior & Organization (January 1, 2013)

https://academiccommons.columbia.edu/doi/10.7916/D8N01HDW

This study demonstrates the continued risk of being a whistleblower, as individuals who report lies are generally shunned, even by groups where lying is absent.

Authors

The National Whistleblower Center is a non-partisan, non-profit organization that has worked for over thirty years to promote whistleblower rights, protections, and rewards, through a variety of avenues, including litigation, legislative advocacy, and public education. 



Maya Efrati
Policy Counsel - National Whistleblower Center
A resident of Washington, D.C., Maya Efrati serves as the Policy Counsel of the National Whistleblower Center. Her work focuses on strengthening the institutions of our democracy and advocating for good governance reforms with nonprofit organizations, including policy analysis, legislative advocacy, and as legal counsel. She earned her J.D. from the University of Michigan Law School, simultaneously earning her M.P.P. from the University of Michigan Gerald R. Ford School of Public Policy. In a legal capacity, she previously worked with Represent.Us, FairVote, the Center for American Progress, and the Michigan Innocence Clinic; before law school, she also worked with a large congressional campaign, AFSCME Council 36, and the Peres Center for Peace, among others.
Stephen M. Kohn
Chairman of the Board - National Whistleblower Center
Stephen M. Kohn, a partner in the law firm of Kohn, Kohn & Colapinto and a founding director of the National Whistleblower Center, has represented whistleblowers since 1984, successfully setting numerous precedents that have helped define modern whistleblower law. He currently represents whistleblowers at major international financial institutions, including the Danske Bank manager who reported a massive multi-billion dollar money laundering scheme. He obtained the largest reward ever paid to an individual whistleblower ($104 million for exposing illegal offshore bank accounts) and is widely recognized as the leading U.S. authority on whistleblower laws. Mr. Kohn is the most published author on whistleblower law, including The New Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself.

The Solution

Proposed Actions
Expand all bullets
1.
Establish an official U.S. National Whistleblower Day MORE

a. A federal holiday explicitly honoring whistleblowers and their bravery is a vital step toward creating a positive culture surrounding them – one that values accountability and transparency.

b. In the past, the U.S. Senate has passed resolutions declaring National Whistleblower Day on a bipartisan basis.

c. Both the U.S. House of Representatives and the U.S. Senate introduced resolutions on a bipartisan basis calling for July 30th, 2019 to be declared National Whistleblower Appreciation Day. Read more about enacting a National Whistleblower Day here

2.
Take Action Today!MORE

a. Urge the federal government to recognize National Whistleblower Day - time is running out!

b. Engage with the authors - join the conversation on TheChisel!

Expected Results
Expand all bullets
1.
As more whistleblowers are incentivized to come forward, the more funds they bring in for the government. MORE

In 2017, the U.S. government recovered over $3.7 billion through its civil fraud program. Of this amount, whistleblowers were directly responsible for the detection and reporting of over $3.4 billion, under qui tam provisions.

This means that whistleblowers were the source of detection in 92.8% of all civil fraud reported in that year.

Source: U.S. Department of Justice, demonstrating a clear upwards trend.

2.
A cultural shift in the perception of whistleblowers in the U.S. would help to advance their rights and protections on a global scale.MORE

In under a decade (FY 2011 – FY 2018), the SEC has received a total of 3,305 international whistleblower tips from 119 countries, bringing in millions of dollars in revenue from the program, and halting a significant amount of ongoing, otherwise undetectable, crime.

3.
Establishing an official National Whistleblower Day will fortify our democratic institutions; recognizing the contribution of whistleblowers, and inspiring others to come forward as well.MORE

As whistleblower are increasingly recognized as active members of civil society and tools for good governance, they help to reduce crime and strengthen the internal integrity of our businesses and democracy.

4.
In the long-run, a cultural shift in the perception of whistleblowers in the U.S. would help to advance their rights and protections on a global scale.MORE

Since U.S. whistleblower laws, such as the False Claims Act (FCA), Foreign Corrupt Practices Act (FCPA), and Act to Prevent Pollution of Ships (APPS) have proven successful, other countries are beginning to take note.

For example, the UN has established an International Anti-Corruption Day, the European Union is currently debating an important regional whistleblower directive that is in the legislative process, and Korea conducted anti-corruption celebrations with a major emphasis on whistleblowers and has enacted whistleblower protection and reward legislation. 

5.
There is not an expected administrative burden.MORE

a. In fact, Congressional testimony by the U.S. Department of Justice confirms that qui tam lawsuits do not cause the government unnecessary litigation costs, but rather save it significant amounts of money by providing the DOJ with high-quality information necessary to investigate complex and secretive fraud. (S. Rep. No. 110-507 (2008))

b. And, some administrative work is expected with any law or policy. “Concerns over administrative burden and costly government structures are not salient enough to warrant a rejection of reward policies, as benefit in deterrence and quality outweigh the administrative costs of reviewing even large quantities of incorrect claims."

Budget

We anticipate that honoring whistleblowers and encouraging them to come forward with crucial information about legal violations will result in a growth in whistleblower tips and so the amount of funds obtained by the government. Therefore, the monetary burden necessary to create an official National Whistleblower Day will be minimal, and any education and outreach programs that have yet to be established have a built-in funding source. The work can be easily absorbed into the other advocacy work of our government and community.

The Conversation

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