Originally published in Mondaq
In order to be truly successful at preventing fraud, whistleblower protections must cover disclosures permitted under international anti-corruption conventions and encourage whistleblowers to cooperate with foreign governments’ law enforcement agencies as permitted by these conventions.
Explicitly permitting certain whistleblowers to cooperate with such law enforcement agencies without being subject to retaliation in their home countries is important for several reasons.
First, corruption (particularly bribery and fraud) and dangers to public health and the environment are often transnational in nature. For example, the current COVID-19 pandemic is worldwide, and whistleblowers from China providing information as to the nature and severity of the virus would have been instrumental combating its spread. Additionally, pollution and other environmental problems are inherently incapable of adhering to national boundaries. Moreover, as clearly illustrated by Foreign Corrupt Practices Act (a U.S. law prohibiting amongst other things, the bribery of foreign officials) cases, perpetrators of fraud often use the international system to try to escape liability. For example, U.S. regulators recently held the Swiss pharmaceutical company Novartis liable for paying bribes in Greece based on information provided by whistleblowers. However, in many countries, whistleblowers are discouraged, if not outright prohibited, from communicating with foreign law enforcement and regulators. In the Novartis case, for instance, Greek domestic law did not directly protect the whistleblowers, and there have been numerous reports that they suffered, or may suffer, retaliation.
Thus, given the highly destructive nature of bribery, public health crises, and environmental disasters on international development and democratic institutions, every nation around the world has an interest in ensuring that its whistleblower laws encourage citizens to participate in other nation’s whistleblowing programs, like the U.S. Foreign Corrupt Practices Act (“FCPA”).
Second, allowing citizens to take advantage of whistleblower laws will better facilitate coordination amongst all countries hurt by a given fraud scheme or harmful health issue. If officials know that whistleblowers may contact foreign governments, they will be more likely to reach out themselves. Additionally, allowing whistleblowers to be the direct source will ensure that information is not “lost in translation” between nations, and that whistleblowers will remain equally protected by their home nation.
Finally, some countries may be more effective at, or more interested in, prosecuting certain crimes than a whistleblower’s home nation, and allowing whistleblowers to report to foreign law enforcement will mean that wrongdoers will not fall through jurisdictional cracks. For example, currently, thousands of whistleblowers from around the world have filed cases under U.S. whistleblower laws, in part because their home nations do not have strong whistleblower programs and in part because the U.S. corporate fraud laws are effective and often reach conduct engaged in by U.S. corporations in other countries. For example, the U.S. Securities and Exchange Commission (“SEC”) has reported that since the enactment of the Dodd-Frank Act on July 21, 2010, over 1,100 citizens from the United Kingdom and EU Member States have filed whistleblower cases with the SEC under the Dodd-Frank Act (which covers securities frauds and violations of the Foreign Corrupt Practices Act). The IRS offshore compliance program has also had unapparelled success using international whistleblowers, mostly against Swiss banks, to obtain accountability for illegal undeclared offshore accounts and other tax violations. Amongst the many foreign persons that have been found liable under various U.S. laws incentivizing whistleblower disclosures are: Société General (French); Commerzank AG (German); Statoil ASA (Norwegian); JSC VTB Banks (Russian); Fresenius Medical (German); Credit Suisse (Swiss); Telia (Swedish); Biomet (Polish); VimpelCom (Dutch); GlaxoSmithKline (British); Allianz SE (German); ENI S.p.A. (Italian); Anheuser-Busch InBev (Belgian); Koninklijke Philips Electronics (Dutch); Royal Bank of Scotland (Scottish); and Tallinex (Estonian); Petroleo Brasileiro S.A. – Petrobras (Brazil); Akamai (China); Marubeni (Japan/Indonesia); Alere (U.S./Colombia/India).
Therefore, it is clear that explicit permission for whistleblowers to report to foreign officials from countries for which international treaty obligations already permit cooperation is good policy for any country considering implementing a whistleblower law. Procedures should be put in place that clearly spell out the nature and scope of such international cooperation. At a minimum, the whistleblower laws of any one country should require that each country respect the whistleblower laws of a sister nation that is a signatory to the respective convention.
Such whistleblower protections would also indeed be consistent with many nations’ existing international treaty obligations.
For example, the UN Convention Against Transnational Organized Crime (which 190 countries are party to) requires, inter alia, state parties to provide “mutual legal assistance in investigations, prosecutions and judicial proceedings … to the fullest extent possible under relevant laws, treaties, agreements” under Article 18.
Similarly, Article 13 of the United Nations Convention Against Corruption (which 187 nations are party to) states that member countries must cooperate “in matters relating to civil proceedings in cases of corruption, especially concerning . . . obtaining evidence.”
Additionally, under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (adopted by the 37 OECD countries and 7 non-OECD countries: Argentina, Brazil, Bulgaria, Costa Rica, Peru, Russia and South Africa), nations must fully cooperate on bribery investigations initiated by other countries that are part of the OECD. Specifically, Article 9 of the Convention states:
Each Party shall, to the fullest extent possible under its laws and relevant treaties and arrangements, provide prompt and effective legal assistance to another Party for the purpose of criminal investigations and proceedings brought by a Party concerning offences within the scope of this Convention and for non-criminal proceedings within the scope of this Convention brought by a Party against a legal person.
The 2009 Recommendation for Further Combating Bribery of Foreign Public Officials in International Business, expands upon these obligations outlining that the OECD members should guarantee that:
- easily accessible channels are in place for the reporting of suspected acts of bribery of foreign public officials in international business transactions to law enforcement authorities, in accordance with their legal principles;
- appropriate measures are in place to facilitate reporting by public officials, in particular those posted abroad, directly or indirectly through an internal mechanism, to law enforcement authorities of suspected acts of bribery of foreign public officials in international business transactions detected in the course of their work, in accordance with their legal principles;
- appropriate measures are in place to protect from discriminatory or disciplinary action public and private sector employees who report in good faith and on reasonable grounds to the competent authorities suspected acts of bribery of foreign public officials in international business transactions.
Furthermore, the OECD has also explicitly recognized the important role of whistleblowers in combatting international corruption (albeit not in treaty form). In 2008, the OECD Working Group on Bribery in International Business Transactions explained:
In the absence of comprehensive whistleblower protections, public officials are unlikely to report suspicions of the bribery of foreign public officials involving other public officials as well as suspicions involving companies or individuals with close links to the government. Concerns about balancing an obligation to report with the interest of maintaining the confidentiality of companies’ operations might also deter reporting. The Mid-Term Study reports that comprehensive whistleblower protections are notably absent in many Parties . . . the Phase 2 reports disclose that for whistle-blowing protections to be effective they should: (a) provide a guarantee of confidentiality (e.g. via a hotline); (b) apply where the whistle-blowing concerns either an act by another public official or an act outside the public administration; and (c) apply where the whistle-blowing follows internal procedures as well as where the whistle-blower goes directly to the law enforcement authorities.
And in 2013, it published a report that included a discussion of the key role that whistleblowers can play in the detection of foreign bribery when legal frameworks and appropriate channels are in place to protect whistleblowers and encourage them to report illicit conduct to authorities.
Despite the fact that a vast majority of nations around the world are signatories to the conventions just discussed, domestic whistleblower laws in most countries do not currently protect citizens who provide information covered by these conventions, much less any other whistleblowing. This is an extremely problematic loophole that should be immediately closed in any state intent on creating truly effective whistleblower laws.
In sum, nations’ domestic whistleblower laws should permit cooperation between responsible law enforcement agencies with jurisdiction to investigate the crimes covered under international conventions. This should include an explicit recognition of individuals’ rights to report specific violations covered under international law enforcement treaties. The types of violations that can be reported should be explicated to include foreign bribery, tax evasion, and money laundering. The rights of whistleblowers to work with responsible law enforcement agencies from other countries, such as the United States, should be protected, and states should explicitly include in any anti-retaliation provisions that citizens or residents who are lawfully working within such programs are fully protected from domestic retaliation.