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WebinarUnited Nations
Whistleblower: Reporting Potential Violations or
Victim of Retaliation?United States
August, 17, 2020
What Is Being a
Whistleblower?
TATTLETALE
What Is Being a
Whistleblower?
A person who exposes information or activity of
alleged wrongdoing that is classified as follows:
▪ Violation of company policy/rules
▪ Violation of a law or regulation
▪ Threat to public interest/national security, as
well as fraud and corruption
Common Government
Whistleblower
Whistleblower protections are provided in two
important areas:
▪ Confidentiality
▪ Job Protection – Free from Retaliation
There is typically no reward. Investigators focus
on allegations not who reported
Laws & Institutional and
Legal Framework
Currently, there are two mainWB systems:
1) Anti-retaliation model
2) Reward-based
Whistleblower Laws
UNITED STATES HISTORY
In 1778, the Continental Congress passed a law
during the American Revolutionary War as the first
federal law protecting whistleblowers.
In 1978, the Civil Service Reform Act codified
some whistleblower rights and protections that
governed whistleblower cases filed by federal
employees for a decade before the passage of the
Whistleblower Protection Act.
Whistleblower Laws
▪ 1989 United States Whistleblower
Protection Act (WPA)
Prohibits a federal agency from taking action or
threatening to take action against an employee or
applicant for disclosing information that he or she
believes violated a law, compliance, rule, or another
regulation. The disclosed information could include
reports of management wrongdoing, the waste of
funds, an abuse of authority, and a potential risk to
public health or safety.
Whistleblower Laws
According to the act, a federal employee can report
misconduct to the Office of the Special Counsel (OSC).
The act considers misconduct to include:
It is important to note that the WPA does not cover all federal
workers, nor does it allow the OSC to handle all claims.
https://www.workplacefairness.org/federal-employee-whistleblowers#2
Option one—Affirmative Defense in MSPB Appeal: If the
agency takes an adverse action against you—directly
appealable to the Merit System Protection Board.
Option two—Individual Right of Action: If you suffer a
personnel action that cannot normally be appealed through the
MSPB process, file an MSPB appeal (“Individual Right of
Action” (IRA))—but only after going through a complaint
procedure with the Office of Special Counsel.
Option three—Union Grievance: If you are a unionized
employee, you may file a grievance alleging reprisal for
whistleblowing under the grievance and arbitration procedure
of the union’s collective bargaining agreement with the agency.
Federal WPA
Whistleblower Laws
▪ Other laws passed in the 2000s, such as the Sarbanes-
Oxley Act, and the Department of Veterans Affairs
Accountability and Whistleblower Protection Act, offer
protections for workers who act as whistleblowers.
WorldCom
WB Cynthia Cooper
▪ In 2002, Cynthia Cooper, Vice President of Internal Audit at
Worldcom, also known as MCI, carried on a secret investigation,
after discovering some suspicious entries in the company’s books,
that uncovered about $3.8 billion in corporate fraud.
▪ The telecommunications company was the second-largest long-
distance phone company in the country until the accounting scandal
led to the company filing for bankruptcy protection.
▪ Cooper’s revelations also lead to the imprisonment of five of
Worldcom’s executives. For her role in discovering the billion-dollar
fraud, the financial whistleblower was one of three people named as
Time magazine’s “Person of the Year” in 2002.
WORLDCOM & The
Whistleblower
Whistleblower Laws
▪ In 2010, the Dodd-Frank Wall Street Reform and
Consumer Protection Act added incentives to
whistleblowers. For example, if a whistleblower
provided information that led to recovery of $1 million,
the whistleblower could receive 10 to 30% of it.
MADOFF
Bernie Madoff & the
Whistleblower
WB Harry Markopolos
▪ In 2000, 2001, and 2005, Markopolos, a chartered
financial analyst, went to the U.S. Securities and
Exchange Commission to notify them, but was
ignored. Markopolos realized Madoff’s system
couldn’t have worked as claimed after he
analyzed the reports about the financial gains
Madoff obtained for his clients.
Bernie Madoff & the
Whistleblower
WB Harry Markopolos
▪ Bernie Madoff’s over $20 billion investor Ponzi scheme
went undetected for years.
▪ Madoff was uncovered in 2008 when his sons contacted
the FBI. In 2009, Madoff was sentenced to 150 years in
prison. Thousands of investors lost their life savings.
▪ From that scandal came the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 and two
new Qui Tam laws – Commodity Exchange Act and
Securities Exchange Act.
Whistleblower Laws
▪ In 2012, Congress passed the Whistleblower
Protection Enhancement Act (WPEA)
The WPEA of 2012 substantially strengthened
protections for federal whistleblowers. Those
additional protections included:
▪ Clarifying the scope of protected disclosures
▪ Creating enhanced remedies for workers who have
been subjected to retaliatory actions
▪ Requiring agencies to educate employees about
their rights
Whistleblower Laws
The United States Whistleblower Protection
Enhancement Act (WPEA) also mandates that:
▪ Inspectors General should designate a WB
Ombudsperson
▪ Educate employees about rights,
responsibilities, and remedies under WB laws
RECENT LEGISLATON
In 2018, Congress passed the “Whistleblower Protection
Coordination Act,” which permanently reauthorized a
Whistleblower Protection Coordinator (WPC) position in
certain OIGs.
Further, incorporating mediation into OIG whistleblower
programs and reprisal investigations is a new way to
move complaints thru the process expeditiously.
Department of Defense OIG
Alternative Dispute Resolution (ADR) Program in the
Whistleblower Reprisal Investigations Directorate
The OIG recognizes that in appropriate circumstances,
there may be more effective methods to resolve
whistleblower reprisal complaints, avoiding the potential
cost, delay, and unpredictability of the investigative process.
The voluntary use of ADR processes, such as mediation,
may often provide faster, less expensive, and more
effective resolution of such disputes. In recognition of this,
the OIG offers ADR services in a good faith effort to achieve
consensual resolutions of complaints.
State Whistleblower Laws
Under common law, 45 states and the District of
Columbia protect whistleblowers under a “public policy”
exception to the “at will” doctrine.
Each state has its own definition of what type of conduct
is protected under the “public policy exception,” but
almost every state protects the following types of
disclosures or conduct:
▪ Refusal to violate a law
▪ Performance of job duties required under law
▪ Exercising a legally protected right (e.g., testifying)
▪ Reporting violations of law for the “public benefit”
Florida Inspector General (IG) Act
The 1994 IG Act amended
Section 20.055, Florida
Statutes, which created an
Inspector General in each
state agency.
WB Act (112.3187-31895, F.S.)
It is the intent of the Legislature to prevent agencies or
independent (agency) contractors from taking
retaliatory action against any person who discloses
information alleging improper use of governmental
office, gross waste of funds, or any other abuse or
gross neglect of duty on the part of an agency, public
officer, or employee.
It also provides for prohibiting any adverse action against
an employee for disclosing information of a specified
nature that is prohibited (employee remedy and relief).
Actions Prohibited
An agency or independent contractor shall not:
▪ Dismiss, discipline, or take any other adversepersonnel action against an employee fordisclosing information pursuant to theprovisions of this section.
▪ Take any adverse action that affects therights or interests of a person in retaliation forthe person’s disclosure of information underthis section.
Process
Reporting of Waste, Fraud and
Abuse
/
Retaliation
What Should Be in Place?
MAIN COMPONENTS OF A WB PROTECTION SYSTEM
Disclosure Mechanisms and Protections Against Reprisal:
▪ Who it applies to
▪ Protections and channels of reporting
▪ Type (Nature of disclosure) of wrongdoing reported
by the WB
▪ Options for anonymous or confidential reporting
▪ Remedial measures for victims of retaliation or
disciplinary provisions for the perpetrators
▪ Financial incentives
▪ Awareness campaigns
Who Does It Apply To?
UNITED STATES
▪ Prospective job applicants
▪ Current employees
▪ Former employees
▪ Contractors (certain states)
DO THEY NEED TO REQUEST
WHISTLEBLOWER STATUS?
NO
In many countries, a WB also can be a private citizen,
business, or any individual with knowledge.
Key Concepts of
Whistleblower Legislation
A protected disclosure under a whistleblower protection law
should include any disclosure of information that an
employee, former employee, or applicant for
employment reasonably believes (good faith) evidences:
▪ Violation of any law, rule, or regulation
▪ Gross (significant) mismanagement
▪ Gross (significant) waste of funds
▪ Abuse of authority
▪ Substantial and specific danger to public health or
safety
Protected Disclosures
Key Concepts of
Whistleblower Legislation
❑ To whom information is disclosed (Channels):
▪ A member of Congress
▪ An agency Inspector General (OIG)
▪ A member of the Commission on Human
Relations
▪ Any person in the chain of command
(supervisor)
▪ Whistleblower hotline
▪ Any other person designated pursuant to
a law/regulation as having authority to
receive WB complaints
Key Concepts of
Whistleblower Legislation
❑ Nature of the information disclosed:
▪ Any violation or suspected violation of any federal, state, or
local law, rule, or regulation committed by an employee or
agent of an agency or independent contractor which creates
and presents a substantial and specific danger to the
public’s health, safety, or welfare
▪ Any act or suspected act of gross mismanagement,
malfeasance, misfeasance, gross waste of public funds,
suspected or actual Medicaid fraud or abuse, or gross
neglect of duty committed by an employee or agent of an
agency or independent contractor
Identification & Confidentiality
▪ The name, identity, and any information
derived from fact-finding or other
investigations is confidential and exempt
(protected) from public records.
▪ The WB can waive their protection—it
should be put in writing to protect all
parties.
Is a Person Reporting
Anonymously a Whistleblower?
REPORTING ANONYMOUSLY
▪ Renders an ineffective system due to large
volume of insufficient information to pursue with
limited options for follow-up
▪ Can provide a strong incentive for WBs to come
forward; however, if you do not disclose who you
are, you cannot be officially deemed a
whistleblower by certain governments.
WHISTLEBLOWERS
USB Swiss Bank & the
Whistleblower
WB Bradley Birkenfeld
▪ In 2005, Birkenfeld turned over to the Department of
Justice evidence of over 19,000 U.S. clients, all of whom
had illegal and undeclared bank accounts designed to hide
assets from government review, thus avoid paying taxes.
▪ USB paid $780 million in fines and turned over information
on 4,450 U.S. clients.
▪ Triggered by the new IRS whistleblower law, in 2012,
Bikenfeld received the largest single payment of $104
million.
▪ Edward Snowden, a computer professional,
created the biggest intelligence leak in the National
Security Agency’s history in 2013 when he
released classified information without
authorization.
▪ Snowden’s disclosures revealed a number of
global surveillance programs, many run by the
NSA and a global alliance of intelligence agencies
with the assistance of several telecommunication
companies.
Edward Snowden
▪ Snowden is reported to have said that he couldn’t
allow the U.S. government to “destroy privacy,
Internet freedom and basic liberties.”
▪ Shortly after the release, the U.S. Department of
Justice unsealed charges against Snowden of two
counts of violating the Espionage Act of 1917 and
theft of government property.
▪ Snowden reportedly lives in Russia after having been
granted asylum by the Russian government in 2013.
Edward Snowden
Interesting changes in
method of reporting…
▪ According to the Association of Certified Fraud
Examiners (ACFE) Report of the Nations 2020 Global
Study, in cases where a reporting mechanism was used
to report fraud, there was a substantial decline in
telephone hotline use since the past two ACFE Reports
while email and web- based/online reporting each rose to
become nearly equal to telephone hotlines.
▪ The use of mailed forms also dropped from 17% to 12%
since 2016. These findings indicate that whistleblowers’
preferred methods of reporting fraud may be shifting,
particularly toward online and in electronic written form.
▪ Consequently, organizations should consider
maintaining multiple reporting channels to fit the needs
of those who submit tips.
Reporting Mechanisms
Reporting Mechanisms
TOP THREEWBs Reported to:
Direct Supervisor
Investigative Team
Internal Audit
Parties to Whom Whistleblowers Report
In approximately 33% of cases where a tip was made, the
whistleblowers did not use a formal reporting mechanism.
Instead, they reported their suspicions directly to supervisors,
investigators, or other interested persons.
Source: 2020 ACFE Report of the Nations
Reporting Mechanisms
Identifying how often whistleblowers tend to report fraud to
various parties can help organizations answer several
important questions.
1. Who should be trained to handle a complaint if they
receive one?
2. How likely are whistleblowers to report outside of the
organization?
3. How should complaints lodged outside a formal
reporting mechanism be recorded and escalated?
Source: 2020 ACFE Report of the Nations
Reporting Mechanisms
To whom did whistleblowers initially report?
Direct Supervisor 28%
Other 15%
Fraud Investigative Team 14%
Internal Audit 12%
Executive 11%
Co-Worker 10%
Law Enforcement/Regulator 7%
Owner 7%
Board/Audit Committee 6%
Human Resources 6%
In-House Counsel 4%
External 1%
Source: 2020 ACFE Report of the Nations
Two Types of
Whistleblowers Today
Accountability
Reward
It Doesn’t Go Unnoticed – It’s What
You Do With The Information
A wrongdoer doesn’t go unnoticed; colleagues and
external parties working for/with him/her are likely to
know there is something wrong. It is, therefore,
crucial for any organization to know about potential
misconduct as soon as possible.
The Challenge
They either expose the
company/organization and
stand atop the moral and
ethical high ground; or
expose the company, lose
their job and reputation, and
potentially lose the ability to
be employed again.
Despite government efforts to help regulate the private
sector, employees must still weigh their options.
THANK YOU FOR LISTENING
