President Joseph Biden has made it clear that fighting corruption is at the core of his foreign policy. Kohn, Kohn and Colapinto’s pro bono team has taken the lead in advocating that laws protecting and incentivizing whistleblowers can and should be a central part of President Biden’s fight against corruption.
On June 3, 2021 President Joseph Biden issued a “Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest.” In the Memorandum, President Biden states that he wants his administration to “lead efforts to promote good governance; bring transparency to the United States and global financial systems; prevent and combat corruption at home and abroad; and make it increasingly difficult for corrupt actors to shield their activities.”
The Memorandum sets a deadline to receive recommendations from top government leaders, including the Vice President, the National Security Advisor, the Attorney General and numerous members of the President’s Cabinet, about the proper implementation of this anti-corruption agenda. KKC’s team had taken the lead in advocating that these recommendations include the full utilization of the Dodd-Frank Act’s (DFA) whistleblower protections as a tool in fighting corruption.
President Biden’s “Fighting Corruption” Memorandum recognizes that “corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself,” and targets crimes such as money laundering, bribery and other financial crimes as fueling corruption worldwide.
Whistleblowers can and should play a key role in detecting these crimes and their contributions toward fighting corruption need to be fully integrated into the White House’s final anti-corruption program. For example, the SEC’s Dodd-Frank Act whistleblower program currently incentivizes and pays monetary rewards to U.S. and non-U.S. citizens who report violations of the Foreign Corrupt Practices Act (FCPA). The FCPA is the most effective international anti-corruption law. Promoting the use of this law must become a central part of President Biden’s anti-corruption program.
Passed in 2010, the Dodd-Frank Act established whistleblower protections and rewards for individuals who report foreign bribery and violations of the FCPA. Importantly, the Dodd-Frank Act program not only allows non-U.S. citizens to anonymously report bribery schemes, the SEC has already paid numerous non-U.S. citizens millions of dollars in rewards. Additionally, the Commodity Futures Trading Commission’s whistleblower program, also established as part of the Dodd-Frank Act, protects international whistleblowers who report bribery impacting the worldwide commodities markets.
Through the SEC Whistleblower Program, qualified whistleblowers who voluntarily report original information about FCPA violations are entitled awards of 10-30% of the funds recovered by the government in connection with their disclosure.
The whistleblower provisions of the DFA have proven to be highly effective in fighting international corruption. In connection with the DFA, since 2010, over $14 billion in penalties have been collected from illegal practices committed by non-U.S. companies. Furthermore, as reported by the SEC’s Office of the Whistleblower, since 2011, 4,538 whistleblowers from 129 countries have filed whistleblower claims.
A recent report by the Organisation for Economic Co-operation and Development (OECD) about the United State’s anti-bribery and anti-corruption practices pointed to the DFA’s multi-faceted protections,” including its “powerful incentives for qualified whistleblowers to report foreign bribery allegations,” as among the U.S. government’s best practices.
Given the success of whistleblower laws in incentivizing individuals from across the globe to come forward with information on bribery and corruption, ensuring that the United States government incorporate whistleblower protections into its national anti-corruption program is now the main policy issue being advocated by the KKC team. KKC has commenced meetings with the administration officials responsible for drafting the anti-corruption recommendations, has published key articles in the National Law Review and the Columbia School of Law Blue Sky Blog explaining the importance of using whistleblowers in the fight against corruption, and is currently working, pro bono with the National Whistleblower Center in formulating official recommendations for the White House.
While the SEC Whistleblower Program has been the most successful international whistleblower program, other U.S. whistleblower laws have also demonstrated a transnational reach. For example, the Internal Revenue Service (IRS) Whistleblower Program successfully incentivized insiders to come forward and help combat illegal offshore banking in Switzerland and worldwide. The Commodity Futures Trading Commission (CFTC) Whistleblower Program was, like the SEC program, established by the DFA and international whistleblowers have helped the agency implement highly successful international corruption investigations. The DOJ uses the whistleblower provisions of the Act to Prevent Pollution from Ships (APPS) to recruit and reward international whistleblowers who expose pollution in the open ocean.
Given the success of whistleblower laws in incentivizing individuals from across the globe to come forward with information on bribery and corruption, the United States government should see these laws as a central element in its renewed fight against corruption.