Whistleblowing: the pressure mounts: High profile investigations based on whistleblower information

High profile investigations and prosecutions are arising from whistleblowers’ reports, with enforcement agencies keen to improve their record of dealing with tip-offs.

At a glance:

  • Former JJB Sports chief executive jailed for fraud
  • Ongoing investigations based on whistleblower reports
  • Whistleblowing charity reports increase in enquiries

On 15 December the former Chief Executive of JJB Sports, Christopher Ronnie, was jailed for four years for three counts of fraud and two of furnishing false information. The charges related to payments he received from suppliers to JJB Sports that totalled £997,000. Two of Ronnie’s business partners, David Ball and David Barrington, were also jailed. The matter came to the attention of the Serious Fraud Office when an IT worker who was asked to remove e-mails relating to the transactions from computers became suspicious and contacted them.

The JJB Sports case is the latest of many substantial cases that have come to light through whistleblowing, including the 2011 Olympus scandal, where then chief executive Michael Woodford went public, having discovered that losses of £1.1bn had been covered up through false accounting. Three directors of Olympus were convicted in July 2013 as a result of Woodford’s whistleblowing.

Several ongoing investigations have been triggered by whistleblowers, including the SFO’s investigation into defence contractor GPT’s activities in Saudi Arabia, based on information provided by programme director Ian Foxley. It is understood that several other high profile investigations currently underway by the SFO and the FCA involve information from a number of whistleblowers.

However, authorities have been stung in recent years by allegations that information from whistleblowers was overlooked or inadequately investigated, sometimes allowing wrongdoing to persist. In the case of Bernard Madoff, his Ponzi scheme was famously brought to the attention of the Securities and Exchange Commission by Harry Markopolos in 1999, nine years before it collapsed. More recently, it has been alleged that HMRC received a tip-off relating to tax evasion by customers of HSBC Switzerland in 2008, but failed to act. Such criticisms have reinvigorated prosecutors’ efforts to attract whistleblowers. The SFO established the “SFO Confidential” service to reassure those with information on high value fraud or corruption that their identity could remain secret. Information can be provided by whistleblowers using a secure online reporting form and in the scheme’s first 18 months more than 4,400 tip offs were received.

The personal cost often incurred by whistleblowers from making disclosures is well documented, in terms of both career and also personal stress. Public Concern at Work’s 2014 UK Whistleblowing Report found that of those who had contacted them and answered follow-up questions, over half were dismissed or resigned following their disclosure. The increase in profile of this charity over the last few years, and the steadily rising number of people contacting it for advice, indicate a growing public awareness of whistleblowing. 1,910 individuals contacted PCAW in 2013, up 17% on the previous year, though the areas of greatest growth were in the public sector.

Recognising the value of some whistleblowers’ reports, authorities are likely to continue to work towards accommodating them further and supporting them through the process. In the US, the Securities and Exchange Commission has already used powers it obtained under the Dodd-Frank Act to charge a company with retaliation against a whistleblower, even though that person was neither sacked nor had his pay reduced. The SEC has also intervened in a case currently before the US Court of Appeals for the Second Circuit to argue that protections for whistleblowers should apply to those who report matters internally. In the UK the FCA and PRA have opted against proposing that they be given power to intervene directly, but have proposed in a consultation paper that certain regulated firms be obliged to inform them of any employment tribunal decision in favour of a whistleblower alleging retaliation.

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