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Puckering up

Whether to blow or not to blow - that intriguing issue triggered heated debate at a session on criminal fraud and the global economic recession at this week's International Bar Association annual meeting, reports Reuben Guttman

Next stop -- collect large bounty

DUBLIN -- Should the US practice of paying bounties to whistleblowers be adopted by other countries?
Currently three US laws provide for bounties to be paid to individuals or entities providing information leading to the recovery of government money. The Internal Revenue’s code allows the Treasury Department to pay individuals that provide information enabling the government to collect unpaid taxes. The False Claims Act provides for bounties to be paid to those who have brought suit in the name of the government against entities or individuals that have filed or caused to be filed false statements causing the payout of monies which -- in whole or in part -- came from the government.
And, the Dodd-Frank Amendments provide for the payment of bounties to those whose original information or analysis enables the Securities and Exchange Commission to collect sanctions against those that have violated securities laws including the Foreign Corrupt Practices Act, which proscribes the bribery of foreign government officials by companies trading their stock on US exchanges.

Aggressive statutes

Each of these laws provides for the payment of bounties without regard to the whistleblower's citizenship or country of residence. This year alone the US will pay more than $300 million in bounties for efforts that will by the end of 2012 return $6 billion to treasury coffers.
While some countries have aggressive anti-bribery statues requiring the reporting of white collar crime, no country has a bounty system similar to that in the US. IBA session chairman Kenan Furlong of Dublin law firm A&L Goodbody observed that in Europe collaborators have not been favoured, which may explain why bounty systems have not evolved.
In the US, whistleblowers have been particularly effective in assisting government agencies that lack resources to engage in comprehensive compliance enforcement.  And indeed, a bounty system could be effective in Europe because, as Brian Spiro of London's BCL Burton Copeland noted, ‘now is the time to break the law because no-one has the money to prosecute’. Whistleblower assistance can -- as demonstrated in the US -- create efficiencies in the collection and analysis of information.

Exposing risks

Whistleblower information in the US has exposed schemes that have placed safety, health, and the economy at risk. Banks, pharmaceutical companies, and defence contractors have had their unlawful schemes exposed. This year, alone Glaxco-Smith Kline and Abbott Labs will pay out a combined $4.6 billion to settle claims that resulted from whistleblower action.  
Regardless of whether other nations move to replicate the US law, one thing is clear: the bounty system has grabbed the attention of lawyers around the world.

Posted by:

Reuben
Guttman

02 October 2012

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