Thursday, January 28, 2021
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Articles
    • See All Articles
    • NEW: COVID-Related
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Leadership and Career
  • Vendor News
  • Jobs
  • Events
    • Webinars & Events
    • Submit an Event
  • Downloads
    • eBooks
    • Whitepapers
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Whistleblowing: More Than Just Bounty Hunting?

by Wendy Wysong
March 24, 2017
in Compliance
man in suit holding red whistle

Australia’s Position on a Compensation Scheme

Australia’s stance on financial remuneration for whistleblowers could be changing. The nation recently launched a Parliamentary inquiry into the appropriate legal framework for whistleblowers. Currently Australia offers no financial compensation for whistleblowers; supporters feel a “bounty” system is inappropriate, but it could be a profitable business.

with co-authors Diana Chang and Dominique Yong

Amidst global efforts to provide safe paths for whistleblowers to report wrongdoing, Australia has launched a Parliamentary inquiry into the appropriate legal framework for whistleblowers in the public, private and not-for-profit sectors. One of the more controversial issues will be whether there should be financial compensation for reporting. Although whistleblowers in Australia presently receive no financial compensation, last year Australian sources provided the third-largest number of tips to the U.S. Securities and Exchange Commission (SEC), just behind those in Canada and the U.K.

If Australia allows a compensation scheme, there is no doubt it would be used. However, until Australian regulators are successful in advocating for higher penalties and consequent higher potential compensation for whistleblowers, the flow of tips from Australia to the United States is likely to continue given the currently much higher U.S. penalties and greater rewards for whistleblowers.

The U.S. System

The whistleblower reward system has its roots in the United States, where potential whistleblowers may be motivated by sizable awards in return for disclosure. The SEC has the power to award up to 30 percent of the money collected as a reward to whistleblowers who disclose information leading to an enforcement action (where the penalty exceeds US$1 million). Since the programme was established six years ago, it has awarded US$149 million to some 41 whistleblowers. Individuals can also bring claims on behalf of the government under the False Claims Act. These claims allow prosecuting individuals to recover a proportion of any resulting judicial reward, which can be highly lucrative. More than US$500 million was handed out by way of these types of awards in 2016 alone, compared with recoveries of more than US$4.7 million.

The U.K. Position

In the U.K., there are currently no legal provisions which provide for financial incentives to whistleblowers for regulatory enforcement matters. There is also no current indication that the U.K. will adopt a regulatory bounty system. In a Parliamentary report in July 2014, the Financial Conduct Authority and the Prudential Regulation Authority found there was “no empirical evidence to suggest that the U.S. system raises either the number or the quality of whistleblowing disclosures within financial services.”

Australian Position

Despite the flow of whistleblower tips to the United States, views vary as to whether Australia should move in that direction or remain in the U.K. camp. One submission to the inquiry took the stance that a so-called “bounty” system is inappropriate for the public sector given existing codes of conduct and legislation. Another thought that providing an additional incentive to come forward could counter the disincentive many whistleblowers face through retribution and bullying.

Ethical issues arise when considering possible financial remuneration for whistleblowers, particularly those who have participated in wrongdoing. On the one hand, such people should still be encouraged to report the wrongdoing notwithstanding their involvement, particularly because they will likely have the best information. The extent to which culpable whistleblowers could be eligible for financial rewards is up for debate. One approach would be for culpable whistleblowers to benefit from reduced or deferred sentences for their wrongdoing, depending on the usefulness of their reporting, but they would otherwise not receive a financial reward. Alternatively, they could be compensated for the loss of their reasonably expected income in cases where whistleblowing may affect their ability to continue their employment.

Another issue will be the involvement of litigation funders in whistleblowing cases, particularly if Australia introduces a system allowing individual claims similar to the U.S. False Claims Act. One litigation funder, which has already been very successful in the Australian market funding class actions, has recently announced an initiative offering assistance to potential U.S. whistleblowers. The creation of a financial compensation regime in Australia, depending on how it is structured and whether stronger penalties are introduced for white collar crime, could see further developments of this kind and the creation of a whole new market.

Whether Australia makes whistleblowing a profitable business remains to be seen. Current submissions to the Parliamentary inquiry, which closed in February 2017, are divided on this issue. Until the issue is resolved, given the demonstrated willingness of Australians to whistleblow, it appears to be a question of where and how much, not whether or when.


Tags: whistleblowing
Previous Post

SEC Votes on Use of Inline XBRL

Next Post

New York DFS Finalized Cybersecurity Regulations Take Effect

Wendy Wysong

Wendy L. Wysong is a partner at Steptoe & Johnson. She served previously as a litigation partner with Clifford Chance, offering clients advice and representation on compliance and enforcement under the Foreign Corrupt Practices Act, the Arms Export Control Act, International Traffic in Arms Regulations, Export Administration Regulations, and OFAC Economic Sanctions. She was appointed by the State Department as the ITAR Special Compliance Official for Xe Services (formerly Blackwater) in 2010. Wendy combines her experience as a former federal prosecutor with the United States Attorney for the District of Columbia for 16 years with her regulatory background as the former Deputy Assistant Secretary for Export Enforcement at the Bureau of Industry and Security, U.S. Department of Commerce. She managed its enforcement program and was involved in the development and implementation of foreign policy through export controls across the administration, including the Departments of Justice, State, Treasury and Homeland Security, as well as the intelligence community. Wendy received her law degree in 1984 from the University of Virginia School of Law, where she was a member of the University of Virginia Law Review.

Related Posts

dollar bill, stimulus check, american flag

FCA Compliance in an Era of Unprecedented Government Stimulus

January 28, 2021
folder of Chinese apps blacklisted in the US (QQ, Alipay, CamScanner, WeChat, SHAREit, WPS Office)

EO Sets in Motion Ban on Transactions with Chinese App Developers and Owners

January 27, 2021
illustration of mafia man in silhouette with red tie

The Mafia’s Jackpot: How Criminal Organizations are Profiting from COVID-19

January 22, 2021
illustration of videoconference, screen and speech bubbles

New Risks as COVID-19 Forces Rapid Technology Adoption

January 21, 2021
Next Post
hooded figure behind laptop

New York DFS Finalized Cybersecurity Regulations Take Effect

Access realtime data
Dynamic Risk Assessments with Workiva

Special Coverage

Special COVID page graphic

Jump to a Topic:

anti-corruption anti-money laundering/AML Artificial Intelligence/A.I. automation banks board of directors board risk oversight bribery CCPA/California Consumer Privacy Act Cloud Compliance communications management Coronavirus/COVID-19 corporate culture crisis management cyber crime cyber risk data analytics data breach data governance decision-making diversity DOJ due diligence fcpa enforcement actions financial crime GDPR GRC HIPAA information security KYC/know your customer machine learning monitoring ransomware regtech reputation risk risk assessment Sanctions SEC social media risk supply chain technology third party risk management tone at the top training whistleblowing
No Result
View All Result

Privacy Policy

Follow Us

  • Facebook
  • Twitter
  • LinkedIn
  • RSS Feed

Category

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Whitepapers

© 2019 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
  • Articles
  • Vendor News
  • Podcasts
  • Videos
  • Whitepapers
  • eBooks
  • Events
  • Jobs
  • Subscribe

© 2019 Corporate Compliance Insights