The FT reported this week that:
A whistleblower rewarded for exposing accounting violations has taken the unusual step of naming his employer, Monsanto, in the hope of prodding the regulator to take action against its auditor, Deloitte.
The Securities and Exchange Commission on Tuesday said it had awarded $22.4m – the second biggest payout since the programme was set up six years ago – to the corporate insider who helped the agency uncover a “well-hidden fraud”.
The award came six months after the SEC reached an $80m settlement with Monsanto, the agribusiness company, to resolve claims that it failed to properly account for the costs of a sales rebate programme for Roundup, its best-selling weedkiller.
The follow on question is obvious, and is why aren't we paying whistleblowers, whether on fraud, tax abuse or anything else that costs society dear?
Whistleblowers take real risk. Most act only because a situation has become intolerable. Ethically they have reached the point where the conflicts they face require them to disclose misconduct. That misconduct almost invariably has a high social cost. That cost will rarely, directly, be to the whistleblower. For them the price is to their conscience.
And then to their career, family and future well-being because we treat whistleblowers abysmally. It's as if we have never got over the schooldays idea that telling takes is wrong, even if what is told is right. So it's the teller who always transgresses, however well motivated their action.
I think this has to change.
And I think that the time has come for such payments to be structured, predictable and significant enough to cover whistleblower risk.
And I think we would all gain as a result.
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Richard – can I put this another way?
Maybe the whistle blowers you talk of ARE being paid? As CEOs of companies hauling in million pound remuneration and bonuses?
This group are the biggest potential whistle blowers of the lot and are being paid to keep such secrets in my view.
Interesting idea
Did you put it in writing? If it’s not in the contracts they don’t have such obligations.
In my 30-year-plus experience of industry, 20 or so at Board level, quite a substantial proportion of the growth in remuneration ‘awarded’ to senior executives in that time has been to buy silence and their complicity in ethically difficult decisions taken.
Gagging clauses as a standard part of employment contracts are now commonplace when they only started being used to silence people who left companies; stuffed pension pots dangling invitingly some distance in the future in front of older, experienced middle-ranking executives who have found out a thing or two are often simple ways of guaranteeing compliance with strategies and tactics which the executive knows are questionable; lucrative bonuses are freely-given for the most miniscule and rococco of ‘results’ which normally indicates, in my experience, that what is being rewarded is continued complicity and silence over something far larger.
Consciences are bought and sold daily; as ‘Private Eye’ shows however, some people set the price higher than will be bought. These people should be protected and sheltered as they are immensely valuable.
Yes indeed!
FT based their article on https://www.sec.gov/news/pressrelease/2016-172.html in which I find the most appealing following:
“Company employees are in unique positions behind-the-scenes to unravel complex or deeply buried wrongdoing. Without this whistleblower’s courage, information, and assistance, it would have been extremely difficult for law enforcement to discover this securities fraud on its own,” said Jane Norberg, Acting Chief of the SEC’s Office of the Whistleblower.
Not all Whistleblowers are employees (just to avoid PSR says:
September 4 2016 at 10:49 am). Everybody is paid more or less, directly or indirectly for rendered service starting from QE,PM,MP,judges,accountants,CEOs… why not Whistleblowers.
What we need is transparency. How much and why Whistleblowers were/will be paid or not.
Not only should we pay whistleblowers, but they must be offered a degree of immunity from legal prosecution. Of course many people who release confidential information may also have other motives, so we should not ignore damage which their revelations may do to third parties. However, it seems grossly unjust that far from being rewarded, the employee of HSBC who exposed their deliberate tax evasion practices was sentenced to 5 years in jail by a Swiss Court.
There must be a point at which breach of commercial confidentiality (and even potentially of national security) is judged to be in the public interest. But I am not aware if such a principle even exists in our legal system?
Very good idea. I also think that whistleblowing should be a human right. If a whistleblower is then accused of acting against the law, the judge has to weigh this against his right to whistleblowing, which may make whistleblowing less of a risk.
The Guardian in 2014 wrote http://bit.ly/2bNxn7R
“A new study tracking the economic effects of whistleblowers has found that people who come forward to report wrongdoing helped the US government secure $21.27bn more in fines over 35 years.” And, it was achieved with minor engagement compared with other investigations. This is the path HMRC should follow facing limited budget.
FT wrote in 2014 in article http://on.ft.com/2bR5QB3 George Osborne announced “Revenue will seek to improve incentives for whistleblowers”.
Did he kept the promise? Did Revenue improve incentives?
I am not aware of any material change
Only today find The Guardian article with your very good observations in this regard
http://www.theguardian.com/politics/2015/jun/15/uk-tax-authorities-hmrc-record-informants
But that is an insignificant amount
Pay whistleblowers?
Give them immunity?
Then anyone who knows things will be spelling the beans!
Can’t be ‘aving none of that then….this is the United Kingdom of Crooks and City Spivs.
Really Richard…..you’ll be giving those City Spivs coronaries if you go-on like that….
Morality.
Legality.
Not in The City dictionary old chap….
Too true, old boy
Must remember to put my old tie back on