Dr Minh Alexander retired consultant psychiatrist 9 May 2023
This is a post to spell out the stark numbers behind the unethical and exploitative US bounty model of “whistleblowing” rewards that the whistleblowing APPG is trying to introduce.
All Party Parliamentary Groups have no official status whatsoever.
Some do good work.
Many are shady lobbying devices for wealthy and powerful private interests that subvert our democratic process.
They positively abuse parliament’s dignity, flinging the portcullis about as a branding and marketing tool.
The APPG sleaze story is a long running and ongoing scandal. These are the typical concerns about APPGs:
In this context, the Whistleblowing APPG was established with money from US bounty hunting lawyers, and it has an external secretariat in the form of a private company, WhistleblowersUK.
WhistleblowersUK has advocated for whistleblower rewards, and latterly has euphemistically dressed this up as “compensation” but in contexts which indicate rewards are being posited. Members of the APPG have also advocated for whistleblower rewards and “incentives”.
The trouble with the US bounty model is that it is utterly ruthless. It is focussed on recovering money for the State, from the financial sector. It is not about other forms of whistleblowing in the public interest. It does not care about the welfare of all whistleblowers. It wishes only to identify those who will recover the most money for the State, be they genuine whistleblowers, or criminals who rat on other criminals.
Indeed, a lawyer from the US firm which funded the whistleblowing APPG publicly compared whistleblowing to the use of paid informants in law enforcement at a Bylines festival.
Bona fide whistleblowers who report wrongdoing, and suffer for it, are discarded by the US bounty system if their disclosures do not result in recovery of a sum beyond a target threshold, (a million dollars under the US Security and Exchange Commission rules). Some whistleblowers wait years under this system to receive nothing.
Then factor in secondary effects from perverse incentives: regulatory corruption, which has made an already heartless system even worse. In short, game keepers setting up a poaching monopoly for financial gain from the bounties. This is research from Kansas University which exposed the corruption.This is corroborating work by investigative journalists which supported that research. It is no surprise that monetising whistleblowing leads to unseemly consequences.
And what of the cold mathematics of SEC’s whistleblowing hunger games?
Since 2011, the US Securities and Exchange Commission (SEC) says its whistleblower programme has received a total of 64,755 whistleblowing tips about financial wrongdoing.
Source: SEC annual reports from SEC’s Dodd-Frank whistleblower programme
SEC says that from all of these tips, it has made 328 awards to individuals under its whistleblower programme:
Although there are complexities, that roughly gives a conversion rate of only 0.5%.
That is, 99.5% are junked. Some after many years of waiting.
And bear in mind that investigators have discovered that scandalously, SEC have given some of the awards to individuals who did not even meet SEC’s own definitions of a whistleblower.
Here is an example of a genuine whistleblower who failed to qualify under SEC’s Byzantine process:
| GENE ROSS He Waited 17 Years to Be Denied an SEC Whistleblower Award Gene Ross discovered the theft of $175K from a client and reported it. He suffered serious detriment. After seventeen years, he was told that he would not qualify for a SEC award, although his report eventually led to SEC recovering more than $50 million from a fraud. “What has moved far more slowly is the story of Gene Ross, father of three, who, in the process of voluntarily cooperating with government prosecutors and regulatory agencies in the criminal and civil actions against Amerindo, lost his job at Bear Stearns, which strongly discouraged his participation in the legal reckoning that followed, cut his pay, took away his sales team, and subjected him to unchecked harassment and retaliation. After leaving Bear, Ross was forced to sell his home to cover mounting legal bills that eventually bankrupted him. Yet he continued to provide evidence, documents, and testimony as a star witness in the 2008 criminal case that put Vilar and Tanaka behind bars.” Ross commented of the SEC decision: “It kind of made me feel like a victim again.” |
The real winners from the cruel SEC and other related US programmes are the lawyers and other middlemen.
And the obscene bounties that are paid out in the few, select cases are excessive set against losses suffered by victims who remain uncompensated.
Occasionally, some whistleblowers have refused SEC awards out of conscience:
Deutsche Bank whistleblower rejects award because SEC ‘went easy’ on execs.
“I request that my share of the award be given to Deutsche and its stakeholders,”
The whistleblowing APPG and its secretariat WhistleblowersUK have waged a clearly well-resourced and increasingly glossy media campaign about UK whistleblowing reform which camouflage their intentions and their vaguely and worryingly drafted law to replicate SEC’s much maligned Office of the Whistleblower.
One of the APPG’s MPs is now in power and has wasted no time in calling for a review of UK whistleblowing law:
The Whistleblowing APPG have used poster boys and girls from health and social care in their campaigns, when whistleblowing about poor care is the last thing that would attract bounties. It is the financial sector that is the real prize. And even then only a few whistleblowers would benefit.
The great risk is that the APPG’s proposed vision would quickly descend into a racket, with the whole system trained on money making rather than public protection, with the great majority of whistleblowers discarded. The more lowly paid and disenfranchised, the more neglected. Nursing and care assistants have little enough voice already.
We have already seen quite enough degradation of our public life with greed, chumocracy and misconduct in public office.
We don’t need anymore.
No thank you to failed US policies or the bounty hunting sharks and their companions.
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A much better US model is that of the Office of Special Counsel which looks after public sector whistleblowers – federal employees – it works on a lean model, seeks to apply redress during employment rather than after dismissal and works on the principle of restoring a whistleblower to the position they would have been in but for the whistleblowing. Most valuably, it can address non-financial detriment, such as restoring lost seniority and erasing unfair performance and disciplinary records. The principle is of more justice, not incentivising greed, stoking wasteful conflict or feeding a legal industry.
UK whistleblowing law, PIDA, is hopelessly weak, wasteful and was explicitly drafted to appease industry. It benefits the lawyers. It has caused no end of suffering to whistleblowers and contributed to countless public protection failures:
Replacing the Public Interest Disclosure Act (PIDA)
The law needs urgent replacement, but in that space, opportunists will exploit any chance they can to make money or build careers.
Those who have earned their daily bread from not rocking the boat and selling whistleblowing products from the last twenty years of PIDA’s jurisdiction will want to continue their business in a newly configured form. The bounty hunters will obviously want their taste. The academics will want to preserve their access to power and grants, and some may not be too discriminating about which tables they sit at. Some politicos will expect a berth in the Pullman carriage of the gravy grain.
It falls to un-captured and genuine whistleblowers with no personal agendas, seeking no personal gain, to speak up for the public interest and for future whistleblowers.
For any journos who want a quick primer on the legislative intentions of the whistleblowing APPG and the now Parliamentary Under Secretary of State at the Department for Business and Trade, here is a summary:
A Bounty Hunters’ Bill? A critique of the Whistleblowing APPG’s April 2022 Bill
Alexander's Excavations 