June 26, 2014

UK Rejects Whistleblower Rewards; At Least For Now

shutterstock_312126623By Gordon Schnell

The good news is the United Kingdom has spoken loud and clear on the critical role whistleblowers must play in rooting out fraud and misconduct in the workplace.  The bad news is it continues to believe whistleblower rewards is a bad idea.  This comes out of the response released yesterday by the UK Department for Business Innovation & Skills to the “Call for Evidence” it put out last year soliciting comments on how to improve the country’s burgeoning whistleblower system.

One of the key issues the UK teed up was whether it should adopt the US-styled financial incentives provided to whistleblowers under the False Claims Act and Dodd-Frank Act.  Each provides successful whistleblowers with up to 30 percent of any government recovery and has led to some rather hefty whistleblower rewards, many in the eight and nine-figure range.  After tallying up the 78 written responses — (here is our response) — the UK came back with a resounding NO to adopting the financial bounty so integral to the US system:

While we have made clear through this response document that the culture surrounding whistleblowing needs to change, we remain unconvinced that the introduction of financial incentives would change the cultural landscape in a positive way.

Apparently, the majority of respondents concurred with the UK’s negative take on whistleblower rewards.  The common view among this constituency seems to be that introducing financial incentives would corrupt the process and replace justice with greed as the whistleblower’s driving motivation.  The problem is what continues to be left out of the debate is the staggering success of the US whistleblower system and how financial rewards have been so integral to that success.  Also ignored is an honest recognition of the character and purpose that drives most whistleblowers to stand up and step out against misconduct and the hurdles they face and sacrifices they make in doing so.  See Message to the UK — Whistleblower Incentives Work.

Fortunately, the potential for whistleblower rewards in the UK is not a totally lost cause.  Other UK governmental bodies — such as the Financial Conduct Authority and Prudential Regulation Authority — are still considering the issue and specifically how whistleblower rewards have fared in the US.  Likewise, through its Serious and Organized Crime Strategy, the government has supposedly committed to considering the adoption of whistleblower rewards in the specific context of fraud, bribery and corruption.  With a more complete and open study on the question, hopefully the UK will come to see the question of whistleblower rewards should not even be a close call — that they are a just and necessary component of any successful whistleblower program.  And that the UK would be wise to adopt them as it moves towards improving and expanding its whistleblower regime.

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