The Qui Tam Team Blog Join In the Fight Against Fraud

Whistleblowing Across the Pond

This post was written by Bonnie Harris

As one of our writers recently crossed the Atlantic to find out more about governance in Europe, she coincidentally came across this poster. Occupying ad space in numerous places on one of London’s major streets, the poster promotes blowing the whistle on housing fraud. While blowing the whistle on housing fraud is not our only focus, we were happy to find a poster which advocated whistleblowing, regardless of how specific the whistleblowing case may be.

Whistleblowing has become an international phenomenon. While rules and regulations pertaining to whistleblowing are different across national borders, many policy-makers, organizations, non-profits, and advocates are encouraging their citizens to speak up about fraudulent activity that they have witnessed. The U.S. is known to have some of the best whistleblowing protections and rewards programs. Because qui tam laws in the U.S. both protect the whistleblower and reward the whistleblower with a monetary incentive to report fraud, other countries are beginning to model their laws after the U.S.’s. In recent years, UK policy-makers have thought to ramp-up legislation to protect and reward whistleblowers in a similar fashion to the U.S. system.

In the U.S. whistleblowers cannot be fired nor punished in their field for blowing the whistle. Under the most recent law protecting whistleblowers, the Dodd-Frank Act (the new Financial Reform bill), employers cannot “‘discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistle-blower in the terms and conditions of employment because of any lawful act done by the whistle-blower’” (for more information on the new U.S. law see “New Financial Reform Law Provides Incentives for Whistleblowers”). Because of these stringent protections, other countries are modeling after the U.S. law. However, it is not only the protections that the U.S. offers whistleblowers, but the monetary incentives that make the U.S. system a good model. In cases that involve recoveries of $1 million or more, the whistleblower must receive a minimum of 10 percent to a maximum of 30 percent of the recovery. (In order to receive a reward the recovery must total $1 million or more.) This means that the lowest possible reward a whistleblower can reap is $100,000.

Because of the advantages of the U.S. qui tam law, some lawmakers in other countries, such as the UK, would like similar protections and rewards for their citizens. It appears that the most recent law protecting whistleblowers in the UK is the Public Disclosure Act 1998, which amends the Employment Rights Act 1996. Under the 1998 Act, citizens can disclose illegal activity including, “a criminal offence; the breach of a legal obligation; a miscarriage of justice; a danger to the health or safety of any individual; damage to the environment; or deliberate covering up of information tending to show any of the above five matters.” Under Part V, “Protection from suffering detriment in employment,” of this law, 47B on “Protected disclosures” states that, “A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the worker has made a protected disclosure.” Detriment includes a range of punishments including “denial of promotion, facilities or training opportunities which the employer would otherwise have offered.” In this case, a whistleblower in the UK cannot be punished by his employer for whistleblowing if the whistleblower has made a protected disclosure. However, it appears that under these laws, whistleblowers are protected but not rewarded.

Seeing that rewards are what push many to become whistleblowers, UK government officials have questioned whether it should provide such incentives to its citizens. In the “Asset Recovery Action Plan” the Home Office of the UK presents arguments for and against enacting a program similar to the U.S.’s qui tam under the False Claims Act (FCA). Some promising features of the qui tam law that would support the creation similar program include:
• Whistleblowing laws in the U.S. have been “strikingly successful, particularly in defence and healthcare sectors, with many billions of dollars raised annually.”
• “FCA recoveries far exceed the cost of prosecuting fraud—it has been estimated that for every dollar the federal government invests in investigating and prosecuting these case[s], it receives $15 back.”
• It is believed that the law allows for cases to be brought to the attention of the government that otherwise may not have been reported.
• It is believed that, because of qui tam provisions, companies are more likely to comply with the law and avoid committing fraud.
These are advantages to the law in the U.S. that could influence UK policymakers to attempt to create a similar law that would be effective in the UK. However, there are obstacles to qui tam that would require the creation of a similar yet different law that would suit the UK. Qui tam types of provisions have existed since 1790 in the U.S., whereas they would be new to the UK. Legislative differences in U.S. and UK laws would make a law similar to the U.S.’s qui tam hard to implement in the UK because of how unusual it would be in the UK system. Additionally, “Some organizations representing the interests of whistleblowers in the UK have been skeptical about the Qui Tam approach, arguing it would discredit the practice generally.” Because of these similarities and differences the UK government has welcomed debate on the creation of a law similar to the U.S. qui tam law.

This more open debate has sparked further knowledge of whistleblowing and U.S. whistleblowing laws in the UK as it has been reported in The Guardian and other news sources throughout the country. The UK government has not changed its present law, but is certainly on the way to offering a better incentive to blow the whistle.

Sources:
“Asset Recovery Action Plan.” Home Office, the National Archives. 24 May 2007.
http://webarchive.nationalarchives.gov.uk/+/http://www.homeoffice.gov.uk/documents/cons-2007-asset-recovery/asset-recovery-consultation.pdf.
“Asset Recovery Action Plan: A Consultation Document.” Home Office. May 2007.
http://www.lccsa.org.uk/assets/documents/consultation/asset-recovery-consultation.pdf.
“Employment Rights Act 1996.” The National Archives.
http://www.legislation.gov.uk/ukpga/1996/18/contents.
Henning, Peter J. “Come Blow Your Horn for the S.E.C.” The New York Times
DealBook Blog. 26 July 2010. http://dealbook.blogs.nytimes.com/2010/07/26/come-blow-your-horn-to-the-s-e-c/.
Laytons Solicitors. “Whistleblowing.” UK Employment Law. 2005.
http://www.roydens.co.uk/content40.htm.
“Public interest Disclosure Act 1998.” The National Archives.
http://www.legislation.gov.uk/ukpga/1998/23/contents.
Walker, Peter. “Fraud whistleblowers could get cash rewards.” Guardian.co.uk.
24 May 2007. http://www.guardian.co.uk/uk/2007/may/24/ukcrime.immigrationpolicy.
Wylie, Ian. “Whistleblowing that pays.” Guardian.co.uk Money Blog. 1 Feb. 2008.
http://www.guardian.co.uk/money/blog/2008/feb/01/whistleblowingthatpays.