It became known today that the Office of the President has introduced a draft law on corruption whistleblowers. Indeed, a separate law should be specially designed for those who report about crimes and threats to public interests.
Exposing corruption in Ukraine is no longer shameful, but has not yet become fashionable. The Anti-Corruption Court has not yet been launched, but the public has already taken steps toward exposing (or blowing the whistle on). However, as long as the citizens are not aware of their rights, the legislation is full of flaws and there is a lack of positive attitude to whistleblowers, corruption will live and multiply in silence.
What is noteworhty, the practice of working with corruption whistleblowers can be quite successful, since Ukrainians are much less likely to be afraid of that comparing to Europeans. The Transparency International 2016 Global Corruption Barometer survey found that only 14% of our citizens were afraid to report corruption. In Europe and Central Asia, however, one in three people was afraid to report corruption.
There are various practices in the world to protect whistleblowers of corruption. Some of the best are those that allow whistleblowers not only to get a substantial budget back, but also to earn a solid financial reward. There is a broad definition of the spheres the whistleblowers work with: not only corruption, but also human rights violations, ecology, food quality, and so on. Effective safeguards against illegal dismissal, reduction, reduction of wages, “changes” in working conditions and so on as well as the protection of anonymity and labor rights are of great importance. Also, the essential part is presence of various secure channels for communication: internal, external, regulatory. Let’s look at how this legislation works in different countries.
The South Korean law is assigned to protect and reward financially state and corporate whistleblowers who report violations related to safety, health, environment, consumer protection and fair competition.
The Civil Rights and Anti-Corruption combines the functions of the Anti-Corruption Bureau and the Ombudsman can be informed of illegal activities. It accepts statements, transmits proven facts to the appropriate agencies for investigation and sends the results back to whistleblowers. It also investigates allegations of reprisals against whistleblowers and can provide a wide range of protection services, including protection against revocation of permits, licenses and contracts. In one case, the commission even required the police to provide physical protection for the whistleblower, including patrolling the area where he lived. During the period 2002-2013 the Civil Rights and Anti-Corruption Commission received 28,246 reports of law violation. As a result, 220 cases were opened, $ 60.3 million returned to the budget, and $ 6.2 million were paid to the whistleblowers as rewards.
The defamation law allows individuals to file claims on behalf of the government to return funds stolen through contract fraud. As a risk compensation, whistleblowers can be transferred between 15% and 25% of any funds and penalties withdrawn.
According to the law, since 1986, the US government has been able to receive $35 billion in fines and stolen money, and the Securities and Exchange Commission alone paid more than $14 million in 2013 to its whistleblowers “in recognition of their contribution to the success of counteracting fraud.” From 2007 to 2012 the number of convictions reported by federal police officers increased from 482 to 1148, and the number of positively solved whistleblowers’ cases increased from 50 to 223. Many public organizations in the United States provide support for the whistleblowers and fight for their legal protection.
Here are just some examples of how corruption whistleblowers prevented crime, helped the country, and made money:
- In 2009, four whistleblowers filed claims against pharmaceutical company Eli Lilly for marketing an illegal drug not approved by the FDA. Eli Lilly was fined $1.415 billion, which included a $515 million criminal fine and $800 million civil settlement. Four whistleblowers divided the $78.87 million award between themselves.
- In 2009, a whistleblower claimed that Walgreens, a pharmaceutical company, had unlawfully raised prices for prescriptions paid by the state under the Medicaid insurance program. Pharmacist-whistleblower who filed a fraud case against the government received $5 million as a reward.
- In 2003, a pharmacist caught Johnson & Johnson’s leadership in fraudulent marketing actions. The lawsuit claimed that the pharmaceutical company promoted the FDA-approved schizophrenia drug to relieve anxiety and aggression in patients with dementia. The whistleblowers awarded $27.7 million reward.
During the period 2002-2013 the Civil Rights and Anti-Corruption Commission (South Korea) received 28,246 reports of law violation. As a result, 220 cases were opened, $60.3 million returned to the budget, and $6.2 million was paid to the whistleblowers as rewards.
Five years ago in Italy, Ciro Rinaldi, an employee of the Ministry of Economic Development, reported that his colleagues were out of work, filling out false reports about their presence in the office. Although the code of ethics for public servants requires reporting of illegal activities, Rinaldi was prosecuted and his report was ignored by local authorities. He then approached the financial police, who used hidden cameras to capture the violations. 29 persons, including four executives, became the defendants. A year later, in 2012, Rinaldi received a government award.
After this case an active public and political debate over the benefits of exposure began in Italy, and after a while in Milan, a system of whistleblowers protection – municipal officials, directed at preventing corruption and other violations, was created.
In 2013 alone, the Securities and Exchange Commission paid whistleblowers more than $14 million in recognition of their contribution to the success of anti-fraud activities.
Unfortunately, the law on the whistleblower protection in Japan is not perfect, for example, due to forced limiting the whistleblowers’ motives, including the requirement that the whistleblowers do not harm the interests of others. In autumn 2011, former Olympus CEO Michael Woodford reported to the law enforcement body that the company was hiding huge investment losses for 13 years. Woodford was fired in the same year before the company admitted that for more than 20 years it had concealed inefficient financial transactions and losses to maintain its high stock price. But as a result of an out-of-court settlement, Woodford received $15.4 million in compensation for his dismissal. Subsequently, four top executives accused of corporate fraud submitted for resignation.
Thus, the existence of strong legislation on protection of the corruption whistleblowers simultaneously directed at the following:
• Corrupt officials are liable to the law;
• the budget receives funds;
• whistleblowers are rewarded;
• crime detection is increasing;
• a state is improving its position in the corruption perception rating.
Everything mentioned promotes reduction of the corruption climate in the country.
In 2016, public activists, with the participation of the best international experts, drafted a bill to protect the whistleblowers of socially important information. It provides for the impossibility of a whistleblower’s dismissal, secured information channels, providing the whistleblower with social guarantees and financial compensation. Ukrainian whistleblowers of corruption deserve the due protection, remuneration and their rights recognition, while the perpetrators – well-deserved punishment.
As a risk compensation, USA whistleblowers can be transferred between 15% and 25% of any funds and penalties withdrawn.