Is it time for a scheme to reward whistleblowers?

US Deputy Attorney General, Lisa Monaco, recently announced a new Department of Justice-run corporate whistleblower rewards pilot programme, highlighting the critical role whistleblowers play in uncovering corporate misconduct. The new pilot programme also aims to encourage more corporate self-reporting.

Whistleblowers can report to the US Department of Justice from anywhere in the world if there is a US link in a case. The new scheme is therefore of relevance to companies across the globe and should be considered carefully, particularly when deliberating corporate self-reporting.

Joint head of the Serious Fraud Office (SFO), Sara Chouraqui, recently hinted that work is already under way to introduce a new whistleblower reward mechanism in the UK and the SFO has confirmed it “will explore incentivised options for whistleblowers, working with partners in the UK and abroad.”

Speaking at the Global Investigations Review Conference, Sara Chouraqui said: “Only five per cent of SFO referrals come from whistleblowers. Paying monetary rewards to whistleblowers is a pragmatic approach to secure better evidence and progress cases more quickly.”

In the UK, whistleblowers are protected under the Public Interest Disclosure Act 1998. The legislation ensures that individuals who disclose information about wrongdoing in the workplace are safeguarded from retaliation. The protections cover a range of disclosures including criminal offences, health and safety dangers, environmental damage, and miscarriage of justice.

However, critics argue that the existing laws do not go far enough to protect whistleblowers and that more needs to be done to encourage individuals to come forward with information about wrongdoing, with the recent introduction of new corporate whistleblower awards in the US reigniting calls for reform in the UK.

Advocates for stronger whistleblower protections argue that the UK should follow the US example by introducing financial incentives for whistleblowers and that such incentives could encourage more individuals to report wrongdoing, thereby enhancing corporate accountability and transparency.

For a company, it is incredibly damaging if a whistleblower goes to a law enforcement body with their concerns. The way a company’s whistleblowing/speak-up programme should work is to encourage whistleblowers to report matters to the company in the first instance so that they can investigate and take effective action, including consideration of self-reporting suspected wrongdoing which may avoid harsher financial, or even criminal, penalties.

In any situation where corruption or fraud is suspected, a company must act at pace to assess the situation and take advice on whether self-reporting is appropriate.

The US Department of Justice has made it clear it sees foreign bribery as an area of interest. This, coupled with its latest whistleblower rewards scheme and repeated calls in the UK to replicate whistleblowing incentives will add to that urgency.

However, encouraging whistleblowing is not just a question of financial incentives. Other considerations must also be examined, including the need for robust protections from retaliation. Trust and confidence in an internal whistleblowing programme is essential.

Tom Stocker, Partner and specialist in corporate criminal defence at Pinsent Masons