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Transnational Whistleblower Protection & The Foreign Corrupt Practices Act Michael D. Kohn President 2011 Economic Forum – Krynica-Zdrój, Poland.

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Presentation on theme: "Transnational Whistleblower Protection & The Foreign Corrupt Practices Act Michael D. Kohn President 2011 Economic Forum – Krynica-Zdrój, Poland."— Presentation transcript:

1 Transnational Whistleblower Protection & The Foreign Corrupt Practices Act Michael D. Kohn President 2011 Economic Forum – Krynica-Zdrój, Poland

2 The National Whistleblowers Center’s online international resource center includes: Country-by-country database of relevant, external links for whistleblowers Confidential intake form specifically designed for international whistleblowers Variety of information on political asylum, international conventions, past cases, and relevant laws national

3 NWC Strategy Defend whistleblowers from employer retaliation Change society’s perception and policies Reward whistleblowers who do the right thing

4 Part 1: CORRUPTION “Corruption is an insidious plague that has a wide range of corrosive effects on societies. It undermines democracy and the rule of law, leads to violations of human rights, distorts markets, erodes the quality of life, and allows organized crime, terrorism and other threats to human security to flourish.” -United Nations Convention Against Corruption, signed by 140 nations

5 Council of Europe Recognition of the Need to Protect Whistleblowers Council of Europe Civil Convention on Corruption Article 9 – Protection of Employees “Each Party shall provide in its internal law for appropriate protection against any unjustified sanction for employees who have reasonable grounds to suspect corruption and who report in good faith their suspicion to responsible persons or authorities”

6 Part 2: Society Needs Whistleblowers Whistleblowers are #1 in: Fraud Detection

7 Whistleblowers #1 in Fraud Detection 2010 ACFE Global Fraud Study

8 Whistleblowers #1 in Fraud Detection 2010 ACFE Global Fraud Study

9 Part 3: crisis Most Employees Do Not Report Fraud to the Appropriate Authorities

10 Majority of workers never report fraud to authorities 2010 ACFE Global Fraud Study

11 Part 4: Solutions Whistleblower Reward Programs: Do They Work?

12 False claims act U.S. Civil Fraud RECOVERIES 2010 DOJ Fraud Statistics

13 False Claims act Recoveries are Growing 2010 DOJ Fraud Statistics

14 Part 5: Foreign Bribery Current International Protections

15 New Protections under fcpa Foreign Corrupt Practice Act (“FCPA”) - As part of the Dodd- Frank Act of 2010, the U.S. Congress authorized rewards for whistleblowers who provide original information on bribes paid to foreign officials in violation of the FCPA. Transnational Application - The law covers bribes paid outside the United States, to officials of foreign countries, by corporations that are publicly traded in the U.S. markets. Whistleblower’s are Entitled to Potentially Large Rewards - Qualified whistleblower are entitled to a reward of 10-30% of any sanction/monetary recovery obtained by the government. View the Dodd-Frank Act online at View the SEC regulations online at

16 How it works Qualifying for a reward – Whistleblowers must voluntarily submit original information that leads to the successful enforcement of the violation and collection of monetary sanctions Anonymous reporting – The law permits whistleblowers to file their claims anonymously in the United States – thus avoiding the need to utilize local court systems that may be hostile to the whistleblower Claims filed in USA – Whistleblowers file their claims directly with the U.S. Securities and Exchange Commission (SEC) Limitations – The Dodd-Frank Act disqualifies some individuals from obtaining a whistleblower reward (see § 922(b)(2) for details)

17 Current award offerings The U.S. Securities & Exchange Commission (SEC) recently identified 20 foreign bribery cases for which whistleblower are entilted to a reward

18 Current award offerings Companies involved in cases that the SEC has determined may have whistleblowers eligible for rewards:

19 FCPA Fraud recovery Examples of cases that the SEC has confirmed whistleblowers “may” be eligible for rewards: Alcatel-Lucent, a Paris-based telecommunications company – $137 million for paying bribes to foreign government officials to obtain business contracts in Latin America and Asia Johnson & Johnson – $70 million for bribes paid to public doctors in Poland, Romania, and Greece. Royal Dutch Shell (and 6 other oil service companies) – $236.5 million for bribing customs officials.

20 HOW TO APPLY FOR Current award offerings Under SEC rules, whistleblowers must act immediately to qualify for rewards – failure to act within 90 days of posting will result in automatic disqualification regardless of the whistleblower’s contribution Deadline for current list of cases is October 20, 2011 Current list of SEC whistleblower cases is available online at

21 Protect your Rights Whistleblowers should seek legal assistance from an appropriate attorney or the National Whistleblower Legal Defense & Education Fund (NWLDEF) Reports to the NWLDEF are completely confidential To submit a report, visit

22 Part 6: Money Laundering & Tax Fraud Current International Protections

23 US TAX LAW: REWARDS 2006: U.S. Tax Whistleblower Rewards Law – 15%-30% reward for Whistleblowers who provide original information on tax frauds Applies to International Banking – Law permits employees working outside the United States to obtain large rewards for reporting “undisclosed” secret bank accounts held in offshore banks by U.S. citizens. UBS Bank Scandal – One whistleblower’s disclosure forced the Swiss bank UBS to pay $780 Million Dollar fine and release the names of thousands of U.S. Taxpayers who held secret accounts in Switzerland to the American Government

24 Using Whistleblowers to Detect Illegal Offshore Banking Brad Birkenfeld, UBS whistleblower International bankers today can become eligible for rewards by blowing the whistle on money laundering and illegal offshore accounts Every nation should duplicate the U.S. efforts in order to facilitate the detection of money illegally held offshore International tax whistleblower laws should be designed to facilitate the willingness of private bankers to provide information anonymously and confidentially to a competent government authority Provisions for whistleblower rewards should be written into international tax whistleblower laws based on U.S. law

25 Key Components for Successful Whistleblower Law Job Protection – Reinstatement, back pay, compensatory damages, punitive damages, attorney fees, costs and injunctions Due Process and Independent Investigations -- Independent Judicial Review, civil discovery, and jury trials. Promote Whistleblower Disclosures under Foreign Corrupt Practices Act – Educate workers on their right to blow the whistle on bribes paid to foreign officials by large multinational corporations Encourage Whistleblowers to Report Illegal Offshore Banking -- Enact laws modeled on U.S. Tax Whistleblower Law; protect international bankers who disclosure illegal accounts help by U.S. citizens Independent Investigations – Ensure that whistleblower disclosures are properly investigated. Rewards for Doing the Right Thing -- Enact strong whistleblower protection and reward laws

26 NWC Resources 21 rules for whistleblowers “Whistleblowers should... read The Whistleblower’s Handbook. It’s 21 rules lay out the game plan for holding institutions accountable while protecting your job.” Michael Radutzky, Senior Producer “60 Minutes” “Whether you are a corporate crime defense counsel, a worker thinking on turning in your crooked boss, or a whistleblower’s lawyer – we recommend you pick up this book.” “Top Ten Things You Should Know Before You Blow the Whistle” Corporate Crime Reporter, March 9, 2011

27 Other NWC Resources World Wide Web: Legal Defense Blog: Facebook: Twitter: Confidential Reports:

28 Sources Association of Certified Fraud Examiners 2010 Global Fraud Study ocuments/acfe2010report.pdf ocuments/acfe2010report.pdf “Fraud Statistics” Department of Justice 2010 nk/fca_statistics.pdf Ethics Resource Center: Blowing the Whistle on Workplace Misconduct 2010 ents/DoddFrank/ercwhistleblowerwp.pdf ents/DoddFrank/ercwhistleblowerwp.pdf Kohn, Stephen, The Whistleblower’s Handbook (Lyons Press 2011 Handbook-A-Step-by-Step-Guide-to-Doing-Whats-Right-and-Protecting- Yourself-P1807746.aspx Handbook-A-Step-by-Step-Guide-to-Doing-Whats-Right-and-Protecting- Yourself-P1807746.aspx

29 Stay connected National Whistleblowers Center 3238 P Street, N.W. Washington, D.C. 20007 © 2011 National Whistleblower Center and the National Whistleblower Legal Defense and Education Fund

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