December 31, 2013

Top-10 Whistleblower Developments of 2013

Top TenBy Gordon Schnell

There has been a great deal of activity this year in the wild world of whistleblowing — some of it good; some of it bad; much of it still waiting to unfold.  Here is our listing of 2013’s Top-10 whistleblower developments, many of which we surely will be wrestling with in 2014.

10.  UK Whistleblowers.  The United Kingdom seems to be moving in the direction of serious whistleblower reform.  And it is looking to the US experience for guidance.  In particular, it is considering whether the hefty financial incentives provided to whistleblowers under the False Claims Act and Dodd-Frank Act are a good idea.  Hopefully, the UK will find that this is not even a close call; that financial incentives are a just and necessary component of any successful whistleblower program and will adopt them as it moves towards improving and expanding its whistleblower regime.

9.  Antitrust WhistleblowersThe Senate recently passed the Criminal Antitrust Anti-Retaliation Act which would for the first time extend whistleblower protections to those reporting criminal antitrust violations.  It is a step in the right direction in terms of bringing antitrust whistleblowers into the whistleblower system and supplementing the government’s limited resources to enforce the antitrust laws.  The only problem is that as currently proposed, it would not provide any financial incentives for these whistleblowers to step forward.

8.  Sports Whistleblowers.   Lance, A-Rod, Oklahoma State, New Orleans Saints, Rutgers, Penn State, Barry Bonds.  The list of sports scandals goes on and on, all following a predictable course — the media frenzy; the public outrage; the investigation; the mea culpas; the punishment; and the promise for reform.  The fall-out lasts a while.  Then it all goes back to normal, eventually forgotten and ultimately supplanted by the next scandal which inevitably follows.  The overlooked lesson that continues to get lost in these  recurring sports sagas is the need for a full-fledged whistleblower program in professional and college sports.

7.  Catholic Whistleblowers.  They are a small, but growing band of renegade priests and nuns beseeching whistleblowers and everyone who cares about transparency and honesty in the Catholic Church to join them in their recently launched crusade.  Their objective is plain and simple.  Support victims of clergy sex abuse.  Encourage Church insiders to do more to expose and root out the abuse that stubbornly persists.  And ultimately, rouse the Catholic Church to take a more aggressive stand against this horrific scourge.

6.  Military Whistleblowers.  President Obama just signed into law section 1714 of the National Defense Authorization Act which revamps what many believe to be the weak and ineffective Military Whistleblower Protection Act of 1998.  This amendment is designed to strengthen the protections afforded to those in the military who report sexual assault, fraud or other misconduct.  It was prompted, in large part, by recent reports of the skyrocketing levels of sexual abuse and harassment against both men and women in the military.

5.  Factory Farm Whistleblowers.  There has been a flood of so-called “Ag-Gag” legislation this year which would make it a crime to photograph or videotape any activity on a farm or agricultural operation without the consent of the owner.  It would apply regardless of what misconduct may be occurring, whether it be mistreating animals, endangering our food supply or despoiling the environment.  Luckily, this anti-whistleblower legislation has not fared well.  Not one of the 15 Ag-Gag bills introduced this year has passed.  But we can be sure there will be a renewed drive in many states this coming year to push this legislation through.

4.  SEC Whistleblowers.  With its recent $14 million whistleblower award, the SEC has put some serious money behind all its talk on the importance of whistleblower enforcement.  It is only the fifth award since the inception of the SEC whistleblower program but by far the largest (the others not even crossing the $50,000 mark).  By all accounts, it is just the beginning with equally, and likely more, sizeable awards on the horizon.  Surely, no one at this point can still question the SEC’s commitment to making whistleblowers a major piece of its enforcement scheme.

3.  Dodd-Frank Whistleblower Protections.  The Fifth Circuit earlier this year significantly narrowed the scope of who qualifies as a whistleblower under the Dodd-Frank Act — only those individuals who actually provide information to the government (through the SEC or CFTC).  If a whistleblower only reports internally, to a supervisor or through the company’s internal compliance program, there is no coverage under the statute’s protections, the Fifth Circuit found.  It is a ruling that parts ways with the SEC and several other courts and if left to stand, will be bad for both whistleblowers and the companies on which they are reporting.

2.  National Security Whistleblowers.  If the escapades of Edward Snowden taught us anything, it is that despite the recent proliferation of whistleblower legislation, those who work in the intelligence community remain left out in the cold.  Until these types of whistleblowers are provided the same incentives and protections afforded everyone else, they will continue to have no viable option but to run to the press.  If the government really wants to prevent the next Snowden, it needs to shore up this gaping hole in its whistleblower regime.

1.  Whistleblower Retaliation.  It is not surprising that the number of individuals blowing the whistle on fraud or misconduct in the workplace is on the rise.  The incentives and protections are getting stronger, the awards getting richer, and a new mindset emerging that when you see something, you are supposed to say something.  But what is surprising is that as much as this whistleblowing activity has grown, the level of retaliation against whistleblowers has grown even more.  And it is going way beyond demotions, pay cuts and firings to include harassment and even physical violence.

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