Challenges facing whistleblowers in the UK and US

A Comparative Study of Whistleblower Protection During COVID-19 in the United States and United Kingdom

  1. Introduction

False Claims Act (FCA) is the first—and one of the strongest—whistleblower laws in America. Enacted under President Abraham Lincoln’s leadership in 1863, the FCA was intended to control supply of substandard goods and services to US troops during the civil war. Basically, the FCA targets corruption in government as well as the fraudulent activities of government contractors[1]. Since its promulgation, the FCA has undergone several revisions to become increasingly powerful. But one aspect of the law which remains unchanged from its conception is “the qui tam” or whistleblower provision[2], which allows people (including non-governmental organizations) to take legal actions in US District Court on behalf of the government. Under this provision, whistleblowers are entitled to compensations for boldly exposing fraud involving public office holders, especially unethical practices that incurred financial loss to the federal government.

However, whistleblowers receive mandatory reward only if the disclosure results in successful prosecution of the accused person, group or organization. The amount is usually between 15% to 30% of the total recovered. Additionally, whistleblower compensations are substantial because the alleged criminal—under the FCA—is liable for a civil penalty and treble damages[3].

Remarkably, the FCA is expansive and applicable to events that occurred outside the US—especially if federal spending, procurement or contracting occurs[4]. The law also helps investigators to build criminal and civil cases. Additionally, the FCA offers reliable protection for whistleblowers whether they are individuals, NGOs or non-American citizens. This is more so because whistleblowing is central to achieving good corporate governance within a political system[5], a reason why countries need reliable mechanisms for identifying and correcting unethical and unlawful practices in organisations. But every action is open to a reaction; so, retaliation against whistleblowers is a common occurrence—as has been the case since COVID-19 pandemic. Evidence-based reports from Whistleblower Org show an increase in the number of whistleblower activities around the world[6]. Consequently, the number of reprisal attacks on whistleblowers has reached an unprecedented level. For example, China’s whistleblowing doctor Li Wenliang, who worked at a Wuhan-based hospital, was arrested for “disrupting public order” by “spreading false rumours” about the virus. He was forced to sign a police statement, agreeing that his decision to warn colleagues and post details of the novel coronavirus on social media was illegal. The doctor later contracted COVID-19 from a patient and died. But he was mourned as a national hero for the lives he saved[7].

Due to the lack of protective measures for whistleblowers, the UK’s annual financial loss to fraud is valued at more than 190 billion pounds ($237 billion). According to findings by the National Crime Agency[8], a large amount of this estimate is never recovered. Ironically, the US Treasury through collaboration with whistleblowers since 1986 has recovered billions in misappropriated funds even though the amount is still a fraction of total losses. But this achievement has established a culture of cooperation between whistleblowers and the US authorities under various laws.

The United States Department of Labour defines a whistleblower as someone (an employee or external observer) who, without permission but on reasonable grounds, divulges classified information about an organisation[9]. The term “whistleblower” was first used to refer to public office holders who reported corruption, waste of resources and mismanagement in the government[10]. Whistleblowers generally cite commitment to uphold legal and moral standards, including concern for public interest, as their reasons for disclosing private data. Whistleblowing now includes activities of employees in public/private establishments, which alert a larger group of past or present setbacks to their interests as a result of unethical conducts[11]. Whistleblower protection refers to the international framework, which offers legal cover from disciplinary or discriminatory actions against people who report workplace wrongdoings to competent authorities in good faith. This study investigates how employees’ involvement in corporate governance through whistleblowing activities can increase transparency and accountability[12].

1.1 Rationale of the Study

One example of the False Claims Act (FCA) is when an organization or individual tenders a bill to the government for work that was not done or poorly completed[13]. This violation is a common occurrence in defence contracting and Medicaid/Medicare[14]. As codified under 31 U.S.C. § 3729(a)(1), the FCA is also applicable when a wrongdoer stops the government from collecting what it is owed § 3729(b)(3). This includes customs violation, making a false statement on a custom declaration, and misclassifying or undervaluing goods—some of the acts known as “reverse false claims” § 3729(b)(4). Many whistleblowers have successfully filed FCA lawsuits uncovering fraud, corruption and unethical practices in different sectors of the US economy thereby helping to prosecute people exploiting the US government and recover damages[15]. The Department of Justice (DOJ) in 2019 recovered over $3.7bn—including $2.1bn from whistleblower cases—as FCA settlements and judgements by dint of major changes made to the provision in 1986[16].

Despite the achievements of FCA, recurring cases of unethical practices and fraud during COVID-19 pandemic presents governments and whistleblowers with the worst corporate governance challenge since World War II. The highly infectious disease, which spreads primarily through nasal discharge or droplets of saliva, presents a huge threat to human lives, leaving governments and whistleblowers with no choice but to act decisively and swiftly. But statutory laws offering protection to US whistleblowers is divided into State and Federal Statutes. Additionally, federal law provides higher compensations when compared to whistleblower statutes under state law[17].

Further, unlike the federal government, many states have functional whistleblower protection laws which prevent employees from retaliatory actions. Public employees in most US states—under the 1978 Civil Service Reform Act—have stronger protections although few state governments offer equal protection to private and public employees[18]. These discrepancies highlight a problem that requires careful investigation of the theory and practice of Whistleblower Protection Extension Act of 2017 in different sectors of the US economy – with reference to events during coronavirus virus. This study therefore, aims at sensitizing people on their moral obligation to enforce accountability, particularly in how public/private institutions accept/ use government allocations and scientific evidence as well as administer health services. Governments’ responsibility to protect the rights of whistleblowers and encourage whistleblowing activities such as the 1974 Watergate scandal which led to Richard Nixon’s resignation as US President takes centre stage in the research[19].

1.2 Problem Statement

Most people notice wrongdoing but are unable to take actions due to their ignorance of the specific law that applies, so it is hard for them to understand unlawful wrongdoing or probable wrongdoing has occurred[20]. In such cases, most people try to access material that they might not have the right to access. This implies that one doesn’t have proof without knowledge of the law, and there’s a considerable period of time before a whistleblower can have his/her claims validated—a circumstance which keeps an employee jobless throughout the duration of investigations. These are some of the problems constraining whistleblowing in both US and Britain[21].

Additionally, the UK government has protective frameworks that guarantee protection and remedies for whistleblowers. But there is no specific method for the implementation of whistleblowing policies under the Public Interest Disclosure Act 1998 (PIDA). In compliance with the Information and Consultation of Employees Regulations 2004, employers who have an employee representative association are required to consult that body on whether the whistleblowing procedure is necessary. Data protection issues and cumbersome whistleblowing policies stipulated in Article 29 Working Party’s Opinion also present constraints to corporate governance[22].

1.3 Objectives of the Study

Based on points raised in previous sections, the objectives of this study are:

  • To analyse the existence, purpose and the functioning of whistleblowing policies in the UK and US.
  • To examine the effectiveness of legal structures for empowering, protecting and compensating whistleblowers
  • To identify COVID-19 whistleblower risks and future implications around the world.
  • To explore the link between the effective whistleblower rights and protections and public trust in governments.
  • To understudy actions taken by the British and American governments to protect whistleblowers and prosecute offenders during COVID-19 pandemic.
  • To recommend highly-effective solutions for all stakeholders

1.4 Research Questions

(a) How does the rights and protection availed to whistleblowers in the UK measure up to their counterparts in America?

(b) What are the relevant whistleblower legislations in both countries?

(c) Under what circumstances are whistleblowers in the UK and the US denied legal protection?

1.5 Linking objectives with research questions

1) What are the similarities and differences between whistleblower protection laws in the UK and US?

1.1) Why is the US model of whistleblower protection considered a pacesetter in the international community?

1.2) Are the current EU Directives and UK legal system structured to motivate potential whistleblowers or breed corruption in public and private sectors?

2.1) What actions were taken to identify and prosecute individuals/institutions involved in COVID-19 fraud??

2.2) Are whistleblowers in the US and UK adequately protected by existing legal frameworks?

2.3) What are the different perspectives on whistleblower benefits?

2.4) What are the conditions for compensating whistleblowers?

3.1) Are the US and UK governments committed to abating retaliatory actions against whistleblowers?

3.2) Does poor handling of COVID-19 fraud have future implications for both countries?

4) What are protected disclosures, and under what circumstance are whistleblowers in the UK and the US denied legal protection?

5) What remedial strategies can the UK and US governments adapt to improve accountability, transparency and probity among employers in both countries?

1.6 Importance of the Study

Findings from this research will:

a)      Expose the cost implications of COVID-19 fraud.

b)      Explain how employees, consumers and stakeholders can improve disaster preparedness and corporate governance in every nation.

c)      Help employees understand “protected disclosures” and the appropriate internal or external channels to share their grievances.

d)      Highlight the consequences of retaliation against whistleblowers thereby motivating more people to expose wrongdoings.

e)      Serve as a reference note to government institutions, multinational corporations and individuals in the future.

f)       Identify loopholes in existing whistleblower legislations that should be amended or withdrawn for more effective protection and motivation as well as prosecution of law-breakers.

g)      Add to the body of knowledge in whistleblower protection, corporate governance and disaster risk management.

1.7 Importance of the Research Questions

i) Research questions define the theme, terms (i.e. keywords) and scope of the inquiry.

ii) They influence most of the other steps taken to conduct the research.

iii) Research questions greatly improve the researcher’s confidence based on the reliability of collated data, including knowledge of terms, theories or case studies used in the study.

iv) Research questions form a basis for conscious thought and thorough analysis which are a prerequisite for quality inferences, conclusions or recommendations.

v) They are useful in proffering valid and testable results.

vi) They aid identification of knowledge gaps to be filled by more inquiries.

References


[1] The FCA does not apply to claims, records, or statements made under the Internal Revenue Code of 1986. 31 U.S.C. § 3729(d).

[2] 31 U.S.C. §§ 3730(a) and (b)

[3] 31 U.S.C. § 3729(a)(1)

[4] See 28 C.F.R. § 85.5 (2018) (adjusting the per-claim range upward, pursuant to the Federal Civil Penalties Inflation Adjustment Act)

[5] Peltier-Rivest D “The battle against fraud: do reporting mechanisms work?” 2018 Journal of Financial Crime (25) (3) 784-794

[6] Samantha “COVID-19: The Largest Attack on Whistleblowers in the World” https://whistleblower.org/blog/covid-19-the-largest-attack-on-whistleblowers-in-the-world/ (Date of use: 20 June 2020)

[7] Ibid

[8] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Opioid Manufacturer Insys Therapeutics Agrees to Enter $225 Million Global Resolution of Criminal and Civil Investigations (June 5, 2019), https://www.justice.gov/opa/pr/

opioid-manufacturer-insys-therapeutics-agrees-enter-225-million-global-resolution-criminal?utm_medium=email&utm_source=govdelivery.

[9] United States Department of Labour “COVID-19 Response Summary” https://www.whistleblowers.gov/covid-19-data (Date of use: 19 June 2020)

[10] See Press Release, Office of Public Affairs, U.S. Dep’t of Justice, Justice Department Obtains $1.4 Billion from Reckitt Benckiser Group in Largest Recovery in a Case Concerning an Opioid Drug in United States History (July 11, 2019),

[11] Scheetz A M and Wall J “Making Crime Pay: Timing of External Whistleblowing” 2019 Baker C R (eds) Research on Professional Responsibility and Ethics in Accounting (22) 1-30

[12] Noam S and Brian M R “Nurses and Doctors Speaking Out on Safety Now Risk Their Job” https://www.nytimes.com/2020/04/09/business/coronavirus-health-workers-speak-out.html (Date of use: 18 June 2020)

[13] See, e.g., United States ex rel. Purcell v. MWI Corp., 807 F.3d 281, 287 (D.C. Cir. 2015); United States ex rel Lemon v. Nurses To Go, Inc., 924 F.3d 155, (5th Cir. 2019).

[14] The term “material” appears only in the text of § 3729(a)(1)(B) (making or using false statements or records in support of a claim) and § 3729(a)(1)(G) (false statements or records used to reduce payment owed to the Government, known as “reverse false claims”). Materiality also is required element in implied false certification theories, which are discussed in greater detail in Part One, Section B(4).

[15] Claims do not include requests or demands for money or property that the Government has paid to an individual as compensation for Federal employment or as an income subsidy with no restrictions on that individual’s use of the money or property. 31 U.S.C. § 3729(b)(2)(B)

[16] See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Justice Department Recovers over $3 Billion from False Claims Act Cases in Fiscal Year 2019 (Jan. 9, 2020), https://www.justice.gov/opa/pr/justice-department-recovers-over-3-

billion-false-claims-act-cases-fiscal-year-2019; U.S. Dep’t of Justice, Fraud Statistics – Overview, Oct. 1, 1986 to Sept. 30, 2019, https://www.justice.gov/opa/press-release/file/1233201/download

[17] There is also a criminal statute, 18 U.S.C. § 287, that covers fraud against the United States. In United States v. Maher, 582 F.2d 842, 848 (4th Cir. 1978), cert. denied, 439 U.S. 1115 (1979), the Fourth Circuit summarized the distinction between the civil and criminal aspects of these statutes: “Under § 287, the government must prove beyond a reasonable doubt that the defendant performed forbidden acts with a criminal intent. The prohibition of the statute is absolute in that the defendant’s liberty is at stake. Under [the Civil FCA], the government is empowered to enforce the underlying civil duty to submit to the government only valid claims for payment by bringing an action for imposition of civil penalties. The nature of the proceedings, the standards of proof, and the defendant’s interests at stake are wholly different under these two statutes.”

[18] Civil Service Reform Act of 1978, [Public Law 95-454, Approved Oct. 13, 1978, 92 Stat. 1111].

[19] Alam M M, Said J and Abdul Aziz M A “Role of integrity system, internal control system and leadership practices on the accountability practices in the public sectors of Malaysia” 2019 Social Responsibility Journal (15) (7) 955-976

[20] ABAZI V. (2016), Trade Secrets and Whistleblower Protection in the European Union, in European Papers, Vol. 1(3), pp. 1065-1072: 1065-1066.

[21] ANVARI F., WENZEL M., WOODYATT L., HASLAM S. A. (2019), The social psychology of whistleblowing: An integrated model, pp. 1-60.

[22] Helen D “Chinese inquiry exonerates coronavirus whistleblower doctor” https://www.theguardian.com/world/2020/mar/20/chinese-inquiry-exonerates-coronavirus-whistleblower-doctor-li-wenliang (Date of use: 18 June 2020)