TransnationalTransnationalWhistleblower Whistleblower PProtectionrotection

& & The Foreign Corrupt Practices ActThe Foreign Corrupt Practices Act

Michael D. Kohn

President

2011 Economic Forum – Krynica-Zdrój, Poland2011 Economic Forum – Krynica-Zdrój, Poland

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

www.whistleblowers.org/www.whistleblowers.org/internationalinternational

NWC StrategyNWC Strategy

• Defend whistleblowers from employer retaliation

• Change society’s perception and policies

• Reward whistleblowers who do the right thing

Part 1: Part 1: CCORRUPTIONORRUPTION

“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 Council of Europe Recognition of the Need to Protect of the Need to Protect

WhistleblowersWhistleblowers

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: Part 2: Society Society Needs Needs

WhistleblowersWhistleblowers

Whistleblowers are #1 in: Fraud Detection

Whistleblowers #1 in Whistleblowers #1 in Fraud DetectionFraud Detection

2010 ACFE Global Fraud Study

Whistleblowers #1 in Whistleblowers #1 in Fraud DetectionFraud Detection

2010 ACFE Global Fraud Study

Part 3: crisisPart 3: crisis

Most Employees Do Not Report Fraud to the Appropriate

Authorities

Majority of workers never report Majority of workers never report fraud to authoritiesfraud to authorities

2010 ACFE Global Fraud Study

Part 4: SolutionsPart 4: Solutions

Whistleblower Reward Programs:

Do They Work?

False claims actFalse claims actU.S. Civil Fraud RECOVERIESU.S. Civil Fraud RECOVERIES

2010 DOJ Fraud Statistics

False Claims act False Claims act Recoveries are GrowingRecoveries are Growing

2010 DOJ Fraud Statistics

Part 5: Foreign BriberyPart 5: Foreign Bribery

Current International Protections

New Protections under fcpaNew Protections under fcpa

• Foreign Corrupt Practice Act (“FCPA”) - As part of the Dodd-Frank 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 worksHow 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 offeringsCurrent 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 offeringsCurrent award offeringsCompanies involved in cases that the SEC has determined

may have whistleblowers eligible for rewards:

FCPA Fraud recoveryFCPA 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 FORHOW TO APPLY FORCurrent award offeringsCurrent 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 RightsProtect 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 & Part 6: Money Laundering & Tax FraudTax Fraud

Current International Protections

US TAX LAW: REWARDSUS 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 Using Whistleblowers to Detect Illegal Offshore BankingIllegal Offshore Banking

Brad Birkenfeld, UBS whistleblower

• 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

• Provisions for whistleblower rewards should be written into international tax whistleblower laws based on U.S. law

Key Components for Successful Key Components for Successful Whistleblower Law 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 ResourcesNWC Resources21 rules for whistleblowers21 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 Other NWC Resources

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

www.whistleblowers.orgwww.whistleblowers.org

SourcesSources

• Association of Certified Fraud Examiners 2010 Global Fraud Studyhttp://whistleblowers.nonprofitsoapbox.com/storage/whistleblowers/documents/acfe2010report.pdf

• “Fraud Statistics” Department of Justice 2010 http://www.whistleblowers.org/storage/whistleblowers/documents/DoddFrank/fca_statistics.pdf

• Ethics Resource Center: Blowing the Whistle on Workplace Misconduct 2010 http://whistleblowers.nonprofitsoapbox.com/storage/whistleblowers/documents/DoddFrank/ercwhistleblowerwp.pdf

• Kohn, Stephen, The Whistleblower’s Handbook (Lyons Press 2011 http://merchant.auctivacommerce.com/s23497/The-Whistleblowers-Handbook-A-Step-by-Step-Guide-to-Doing-Whats-Right-and-Protecting-Yourself-P1807746.aspx

Stay connectedStay connected

National Whistleblowers Center3238 P Street, N.W.

Washington, D.C. 20007contact@whistleblowers.org

© 2011 National Whistleblower Center and the National Whistleblower Legal Defense and Education Fund