EYES EVERYWHERE: WHISTLEBLOWING AND COMPLIANCE
Eyes are everywhere and the world is watching, it can often seem. In the business world, the conduct of companies of all types and sizes, particularly those in highly regulated industries, is under increasing scrutiny and open to claims by whistleblowers.
As well as major transgressions, such as corruption, bribery, fraud, money laundering and theft of public funds, even the simplest of mistakes can trigger a whistleblower claim that quickly becomes headline news, with the potential to damage a company’s stock market price and brand value, among other things.
One of the key drivers behind the increase in whistleblowing activity over the past couple of years has been the devastating impact of coronavirus (COVID-19). “The global pandemic has created a surge in whistleblower complaints,” says Mary Inman, a partner at Constantine Cannon. “From mid-March to mid-May 2020, the US Securities and Exchange Commission (SEC) observed a 35 percent increase in whistleblower claims from the previous year.”
Furthermore, this increase held through the end of 2020, when, in its ‘2020 Annual Report to Congress’, the SEC’s Office of the Whistleblower received a total of 6911 tips from whistleblowers compared to 5212 in 2019, representing a 32.5 percent increase. A resounding success, to date the Office of the Whistleblower has paid $1.1bn in rewards to 214 whistleblowers and helped the SEC impose over $4bn in fines.
According to Ms Inman, a key factor behind the whistleblowing uptick is the rise in unemployment and remote working that accompanied the pandemic. “Physically isolated from their peers, whistleblowers may feel less connected to their employers and colleagues and more motivated to speak up about wrongdoing,” she says. “Unemployed whistleblowers also have less reason to fear retaliation by their former employers.”
Jan-Mar 2022 Issue
Fraser Tennant