Wouldn’t it be great to receive a $114 million payout? One lucky chap in the US actually in October 2021 was awarded exactly this amount by the Securities and Exchange Commission (SEC) and another agency for blowing the whistle on some shady business business practices by his financial markets employer. As a matter of fact, since the programme started in 2011, the SEC has paid out more than $1 billion to whistleblowers. And it gets even better: Also in October 2021 the US Commodity Futures Trading Commission (CFTC) awarded $200 million for blowing the whistle on banks and traders banding together to rig the London Interbank Offered Rate (Libor), which has since been abandoned as a result. The Libor, just for those interested, provided loan issuers with a benchmark for the interest rates they charged on different financial products.
Under the Dodd-Frank act whistleblowers in America are entitled to a payout of between 0 and 30 percent of the financial sanctions levied on the perpetrators. As fines are often quite substantial, this results in tidy sums being paid out to those who snitch on such offenders. In this respect the USA are exceptional though: In the UK, for example, compensation is assessed on losses suffered by the person blowing the whistle; there is no reward for disclosures. Many other countries have at least laws protecting them, for example, from being sacked (although why on earth would anyone still want to continue to be employed by a firm which they have just publicly humiliated?).
And things don’t necessarily always turn out well: Mordechai Vanunu, a former Israeli nuclear technician and peace activist, who, citing his opposition to weapons of mass destruction, revealed details of Israel’s nuclear weapons program to the British press in 1986. He subsequently spent almost 18 years in prison, of which 11 in solitary confinement. Vanunu has been characterized internationally as a whistleblower and by Israel as a traitor, which demonstrates the fine line between fame and shame. Time in jail (albeit for embezzlement of nearly $10 million) was also spent by Mark Whitacre, who as a division president of Archer Daniels Midland (an American multinational food processing and commodities trading corporation) between 1992 and 1995 acted as a cooperating witness for the FBI, which was investigating ADM for price fixing. This story was turned into a movie, The Informant with Matt Damon playing Whitacre.
Back in 1997 even tiny Switzerland had what was then probably its first whistleblower case. One evening a security guard doing his round in the bank’s offices in Zurich, noticed that the bank was destroying documents about orphaned assets, believed to be credit balances of deceased Jewish clients whose heirs’ whereabouts were unknown. Having stolen and handed some of the files to a local Jewish organisation who published an handed them to the police, the guard and his family fled to the US where they are most likely to this day the only Swiss to have ever been granted political asylum.
While most whistleblowers prefer to stay out of the limelight for obvious reasons, Frances’ Haugen’s testimony in Washington D.C against Facebook (the company which will soon be noon as Meta) was a very public affair. The testimony was even broadcast on television and has certainly not enhanced the firm’s standing. Moreover, Ms Haugen’s evidence is leading now to the US government scrutinising in some detail tens of thousands of pages of internal research and documents indicating the company was aware of various problems caused by its apps, including Instagram’s potential “toxic” effect on teen girls.
But this then also raises the question whether I am a snitch if I report my misbehaving employer to the relevant authorities? And is it ok to be more than handsomely rewarded in return for grassing up the perpetrator rather than trying to do the decent thing and attempt to make them change their ways? The award is only made at the end of often lengthy (we’re talking potentially lasting many years) enquiries, while in the meantime the whistleblower would probably have left or even lost their job and will be considered a pariah in their industry and hence unemployable, quite possibly for the rest of his or her working life. Ms Haugen, for example, is only 37 years old.
Our Swiss whistleblower too didn’t exactly have an easy run: two failed marriages later and broke he returned after a decade in California to Switzerland where he is jobbing on fixed term, temporary assignments. In a recent interview with a journalist he stated that his actions almost 25 years ago still put future employers off from offering him a regular, permanent job.
So unless you’re in America, where at least you stand a chance of getting a life changing payout (even if you may have to wait a very long time for it), blowing the whistle is a career stopper. Legislation protecting informants various widely, ranging from very low protection in Switzerland (which means courts rule on each case individually) to dedicated national laws such as in Australia, Britain, Canada, the USA and others. And however noble the motives, whistleblowing can often be illegal if the exposed information threatens national security. For example, leaking unauthorized government information could leave the military or other federal employees vulnerable. And a substantial payout isn’t guaranteed either: In the US, according to Taxpayers Against Fraud, 80% of cases filed under the False Claims Act end in zero reward and the average reward after taxes is $150,000.
Most informants I suspect (or hope), act out of altruism. But many also may not be considering the implications their actions have on others. Some groups may be threatened or put in danger by the whistleblowing, such as, for example, soldiers on battlefields, even if the denunciation itself serves a greater good. So The question whether whistleblowing is good or bad will probably remain unanswered for quite a while yet. What definitely needs to stop though are the mind-boggling payouts, which in most cases are in no relation to the potential hardship an informant faces.
The grumpy older man 