Corporate compliance programs aim to make sure a company obeys laws and regulations. One problem with compliance — companies can sometimes make more breaking the rules than following them. And they are complicated. So, they mount compliance programs for show and look the other way. That’s where whistleblowers come in. Or go out. Some internal reporting programs work against whistleblowers, so insiders choose to report wrongdoing to a government agency or the press.

And when they do, companies are sometimes forced to assess the efficacy of their compliance programs.  At Danske Bank, the cost of doing so may lead to layoffs. Bank employees are being offered buy-outs, with managers of the international bank citing rising compliance costs. From Bloomberg.

 Danske Bank A/S is offering 2,000 of its employees in Denmark the option of stepping down as the cost of adapting to a world with stricter regulations and negative interest rates just keeps growing…

Danske has acknowledged its costs are still rising, following a vast Estonian dirty-money scandal. In an interview in Stockholm, the chief executive of Danske in Sweden, Johanna Norberg, said “the peak” level of investment to meet anti-money laundering requirements has “not yet been reached.” Continue Reading Why not beef up corporate compliance before you get caught?  

One company gave dementia patients drugs they didn’t need. A company working in the Middle East billed the Air Force for hours no one worked. Opioid makers treated loyal doctors to kickbacks in the form of “lavish meals and entertainment.”

Those are just a few of misdeeds catalogued in the Department of Justice annual report on False Claim Act cases. Whistleblowers helped the government collect $3 billion in fines and recoveries in fiscal year 2019, up from $2.8 billion in 2018.

Medicare and Medicaid were big targets for fraudsters this year, as they have been in years past, according to the annual report from the Department of Justice. The list also includes military contractors, universities and a fish oil producer. Read the full list here.

From the report:

Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions.

“Whistleblowers continue to play a critical role identifying new and evolving fraud schemes that might otherwise remain undetected,” said Assistant Attorney General Hunt.  “Taxpayers have benefitted greatly from these individuals who are often required to make substantial sacrifices to bring these schemes to light.”

Continue Reading Whistleblowers help DOJ collect $3 billion in fines and settlements under the False Claims Act

The men on the EPA’s wanted list didn’t kill anyone, but they could make a lot of people sick. They are accused of dumping mercury contaminated soil, smuggling ozone depleting freon into the US or covering up illegal cruise ship discharges.

But a story in The American Prospect magazine suggests that many states don’t have lawyers or detectives prepared to go after environmental criminals. The piece is based on an internal EPA document and was originally published for subscribers to The Capitol Forum.

Twenty states have zero dedicated criminal enforcement attorneys or investigators, according to a document maintained by the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance. The Capitol Forum obtained the document through an open records request.

To effectively monitor, enforce, and deter criminal environmental conduct, states should have dedicated staff members and resources, according to interviews with former EPA staff who collaborated with state-level environmental programs during their careers.

The document was a list of “full-time employee[s] whose job is investigating and/or prosecuting pollution control crime.” Only eight states had both an inspector and an attorney. The EPA told The Capital Forum that the agency does not have minimum law enforcement staffing requirements for state  programs. Sometimes they work with state police or an attorney general’s office on environmental crimes, according to the EPA’s comment. State regulators described similar partnerships.

Continue Reading Report: Many states lack law enforcement staff dedicated to environmental crime

The IRS just released its annual report on the whistleblower program – showing over $616 million dollars brought into the Treasury thanks to the work of tax whistleblowers speaking out about tax evasion. While the awards to tax whistleblowers is not as high as last year’s record of collection of over $1.4 billion dollars and $312 million in awards – the awards for FY 2019 are still a solid $120 million (by comparison a marked improvement still over the $33.9 million in FY 2017 awards).

The trend is clear that the IRS has embraced the modern mandatory tax whistleblower program created by my old boss Chairman Charles Grassley (R-IA) – and it is honest taxpayers who have most benefited. Credit to the director of the IRS whistleblower office Lee Martin and his team for getting these awards out (as well as the support from IRS Commissioner Charles Rettig for the program).

The report makes note that the clarification in the law (26 U.S.C. 7623(c)) that whistleblowers can be paid for FBAR violations (undeclared foreign bank accounts) as well as criminal fines has been a key – with $110 million of the $616 million collected based on that clarification of the law. From my own practice representing tax whistleblowers, it is clear that the IRS continues to take a strong interest in receiving information from informed whistleblowers about offshore accounts and criminal tax activity.  Interesting, the report highlights for the first time that the IRS received 282 submissions from whistleblowers overseas last year. Being a foreign national is certainly not a bar to blowing the whistle to the IRS – and receiving an award. Continue Reading 2019 IRS whistleblowers flag tax fraud, offshore accounts and unreported income

Bloomberg Law reports on an upcoming legal battle over the denial of Department of Justice request to dismiss a qui tam suit. Over the past two years, federal district courts have granted 25 DOJ motions to dismiss such suits, compared to six in the previous two years, the story notes.

Companies that bill the federal government for services are eager in 2020 to see what courts say about Justice Department decisions to dismiss whistleblower cases it finds to be meritless or a burden on government resources.

The U.S. Court of Appeals for the Seventh Circuit is considering how much deference the federal courts should give to those dismissal decisions in a specific case over whether an Illinois federal judge erred in rejecting the DOJ’s move to dismiss a suit alleging a drug kickback scheme by CVS, Omnicare, and others.

More on the Granston memo, which triggered the dismissals:

Continue Reading Can courts proceed with a whistleblower suit after the DOJ seeks dismissal?

Just before the holiday, the American Bar Association published a statement on its “Legal Fact Check” webpage concluding that the whistleblower’s identity is NOT Protected by the law.

Stephen M. Kohn

The lawyer for the White House whistleblower has asked that the person’s identity be kept anonymous for the protection of the individual and his or her family. With some exceptions, lawmakers and media have honored that request. But in terms of federal law, the whistleblower has more assurance that his or her job, rather than identity, will be protected.

They conclude that the Intelligence Community Whistleblower Protection Act (ICWPA) stipulates that the inspector general not disclose a whistleblower’s identity without their consent, unless it is “unavoidable during the course of the investigation.” The ICWPA itself offers no further protections, they write, but other laws may offer protection from reprisals or punishment.

Stephen M. Kohn, board chair of the National WhistleBlower disagrees and makes his case in the National Law Review.

He starts with the privacy provisions in the disclosure form filled out IC whistleblowers.

The Disclosure Form provides intelligence community employees with two assurances that their confidentiality will be protected.  First, the Form states that the information provided by whistleblowers is covered under the Privacy Act.  The Privacy Act of 1974, 5 U.S.C. § 552a was passed after the Nixon White House was caught trying to obtain embarrassing information about another whistleblower, Daniel Ellsberg, in an attempt to discredit him.  The Privacy Act is very comprehensive and contains both criminal and civil penalties. 

The law also prohibits retaliation. Kohn argues that disclosure of the name is a form of retaliation.

Supporters of President Trump have argued that this law only protects whistleblowers from concrete employment actions, such as a termination or demotion.  They claim that guarding a confidential informant’s identity is not prohibited under the ICWPA, and the blowing a whistleblower’s cover is not an adverse action.

Years ago the U.S. Supreme Court ruled that anti-retaliation laws are not limited only to correcting “concrete” employment actions, like a discharge.  Instead, these laws cover a host of adverse actions that could “dissuade a reasonable employee” from making a protected disclosure.   If CIA or intelligence community employees feared that the privacy protections afforded under the law would not be applied to them, would that cause a chilling effect on their willingness to blow the whistle?  That question has been answered many times.  But even if there were no cases on-point, the disclosure of a CIA employee’s identity would severely limit, if not destroy, their employment prospects with that highly secretive agency.  

He argues that the ICWPA gives the president “enforcement authority” and thus the responsibility to prevent retaliation.

President Trump is mandated by law to protect the Ukraine whistleblower, ensure that he or she suffers no retaliation, and enforce the rules on confidentiality.  This is a non-discretionary duty. 

It is as simple as that.  The President “shall” “enforce” the whistleblower law that makes it illegal to retaliate against the Ukraine whistleblower or to expose his or her identity.  Unfortunately, as demonstrated by his public comments and Tweets, it is the President himself who is engaging in the retaliation.  This is a unique circumstance in American legal history.

President Trump’s retweet of an article that claims to identify the the whistleblower means the system failed, Kohn writes. 

When the Ukraine whistleblower signed the Disclosure Form to report an “urgent concern,” she or he was promised, in writing, confidentiality.  That promise was broken.  Privacy Act protections were ignored.  The Inspector General Act was undermined. The law prohibiting retaliation was violated by the very person mandated to enforce that law.  The Attorney General has sat on his hands while credible evidence of obstruction of justice was published in the national news media, on almost a daily basis.  

Will justice sleep forever?  This issue is now in the hands of Congress.   In November it will be in the hands of the American people. 

Audio: More from Kohn on protection for federal workers via The Federal News Network

It may be the end of the year for the rest of the world, but the fiscal year ended in October. As we wait for the Department of Justice to crunch its numbers for the year end report on False Claims Act collections, we look back on this year’s reports from other federal programs.

The Inspector General (IG) of the Intelligence Community, Michael K. Atkinson, called whistleblowers the agency’s  “first responders” in his semi-annual report to Congress. In April, the office issued a report entitled “Whistleblowing Works.”

The Commodity Futures Trading Commission awarded more than $75 million in FY 2019 to five whistleblowers  “who voluntarily provided original information or analyses that led to successful enforcement actions.” This total includes the program’s largest-ever award of approximately $30 million.

SEC

The Securities and Exchange Commission reported that it awarded approximately $60 million in awards to eight people  “whose information and cooperation assisted the Commission in bringing successful enforcement actions.” This included a $37 million award to a whistleblower who supplied information that led to a settlement against JPMorgan Chase & Co. over claims the company was not transparent with investors about conflicts of interest.

The most recent report from the IRS came out in February and reported that whistleblowers helped the agency collect more than $1.4 billion in criminal fines, and civil forfeitures in fiscal year 2018. Since 2007, the program has made more than $800 million in whistleblower awards based on the collection of $5 billion.

Continue Reading How many whistleblowers helped the feds uncover fraud this year? Reports are still coming in.

Today we remember Dennis Brutus, a poet and international anti-apartheid activist who died ten years ago. While in exile in the U.S., he became a founding director of the National Whistleblower Center. Brutus understood the power of whistleblowing and pushed to expand the center’s efforts internationally.

He led the effort to get apartheid South Africa barred from the Olympics. His activism landed him in the same Robbin Island prison as Nelson Mandela and then, on to exile. In the U.S., he taught, wrote poetry and promoted the divestiture movement. When President Ronald Regan ordered him deported, NWC founding board members Michael and Steven Kohn successfully defended him. He returned to South Africa in 1991 and continued pushing for justice there and worldwide.

Patrick Bond a professor of political economy at the University of the Witwatersrand in Johannesburg, South Africa offers this tribute to Brutus.

The memory of Dennis Brutus will remain everywhere there is struggle against injustice. Uniquely courageous, consistent and principled, Brutus bridged the global and local, politics and culture, class and race, the old and the young, the red and green. He was an emblem of solidarity with all those peoples oppressed and environments wrecked by the power of capital and state elites. But in his role as a world-class poet, Brutus also taught us well, that social justice advocates can have both bread and roses.

Continue Reading Remembering Dennis Brutus, poet and international activist

The New Yorker declares it the year of the whistleblower, and we offer some of our popular posts of 2019.

From The New Yorker:

This year, as one scandal after another played out in the news, it was easy to become overwhelmed. Amid all the noise, there’s been a common theme in many of the reports—the increased profile and significance of whistle-blowers. It’s hard to think of another recent period when the act of whistle-blowing has had such a consequential impact on our politics and culture.

From the Whistleblower Protection Blog:

Ukraine whistleblower
  • Can the Ukraine call whistleblower remain anonymous? And, who is obligated to protect his or her anonymity?
  • The journalist and the whistleblower. Every journalist who has ever worked with a whistleblower knows these are fraught relationships.
  • Remember when the whistleblower complaint was seen as “hearsay”? Turns out secondhand whistleblower “reports are 47.7% more likely than firsthand reports to be substantiated by management, which suggests that management views many secondhand reports as credible.“
Climate Corruption Campaign
  • NWC announces new program; Only company insiders would know of climate change-related risks concealed from shareholders, the IRS and the public. The campaign will help these insiders secure confidential whistleblower status.
  • More here. Can whistleblowers save the Amazon rainforest?

Continue Reading Whistleblowers were big news in 2019. Here’s a sample.

The New York Times offers a profile of a family that had to flee their Russian homeland — to an American city “they would rather not name’ — after blowing the whistle on athletic doping.

“We are just like any middle-class American family,” Vitaly Stepanov said of life with his wife, Yuliya, and their kindergartner son, Robert. “Well, except for the whistle-blower part.”

Oh, yes. That. The Stepanovs, in truth, are not a typical family at all: Yuliya, 33, once was a top middle-distance runner on Russia’s national team. Vitaly, 37, worked for the Russian Anti-Doping Agency. 

Earlier this month, an international anti-doping panel barred Russia from competition for four years, a period that includes the upcoming Olympic Games in Tokyo.

“As whistle-blowers, we never imagined things going this far, and it’s surreal that the cheats won’t be welcomed at the Olympic Games,” Vitaly said. “Finally, after so many half-measures, something real is being done to Russia as a punishment.”

The Times reports that they have been labeled as traitors in Russia, where president, Vladimir Putin, has called Yuliya “Judas.”They want to stay in the U.S. and have applied for asylum.

As for those back in Russia who have verbally attacked her and her husband, Yuliya was straightforward in her response. “They hate us for telling the truth,’’ she said. “I’ve seen comments on the internet like, ‘We should kill those traitors, we should go poison them.’ But we feel safe here. We want to stay here.’’’

More on the case here from the NWC.

In the meantime, Time magazine reports that Russia plans to appeal the recent ruling  and has charged it’s former anti-doping laboratory director Grigory Rodchenkov with tampering with a lab database.  Rodchenkov has also fled the country and is now working with the World Anti-Doping Agency.

With Russia planning a legal challenge to WADA’s sporting sanctions, the next step for Rodchenkov could be testifying at the Court of Arbitration for Sport in the spring. His lawyer said he’s ready.

“If WADA or any other agency needs Grigory to testify, Grigory will uphold his promise to cooperate fully to help atone for his role,” Walden said.