Some EU member states already have a law to protect whistleblowers. As a second step, how can member states provide an incentive to report violations?
Whistleblowers are regularly subject to reprisals despite existing laws protecting them. Let’s take a closer look at the approach outside the EU.
The Nigerian government pays 2.5% to 5% of the recovered amount to whistleblowers if the information provided led to the recovery of hidden assets. The policy does not provide whistleblowers with immunity from civil or criminal prosecution. In essence, a whistleblower could be charged for a crime in which he or she has participated if the investigation establishes a link between the whistleblower and the crime. The law is therefore not beneficial to conspirators or accomplices, but to non-involved whistleblowers.
In 2018, the Nigerian Minister of Finance declared bonus payments of USD 1.3 million to 14 whistleblowers. The payment was related to tips that had led to the recovery of some USD 41 billion in tax evasion.
In the USA, bonuses have been paid to whistleblowers for a century if certain conditions are met. The first law dates to 1863, and under the Dodd-Frank Act and the Consumer Protection Act of 2010, tip-offs to the Securities and Exchange Commission (SEC) that constitute a violation of the Securities Trading Act are rewarded with a bonus. Bribery of foreign public officials and other violations of the Foreign Corrupt Practices Act (FCPA) are also to be reported and rewarded.
On 15 September 2021, the OWB notified the SEC that it had distributed over $1 billion to whistleblowers from 2011 to 2020.
Whistleblower awards from the U.S. Securities and Exchange Commission’s (SEC) Office of Whistleblower (OWB) range from 10% to 30%. Provided the SEC’s successful and enforceable actions result in a fine of over $1 million.
In 2017, Daimler’s share price rallied after the group reported a possible cartel earlier than rival VW.
Daimler had approached the relevant authorities earlier with a voluntary disclosure, according to an ntv report. While the share price recovered after the whistleblower bonus was granted, VW’s share price continued to fall. Collusion by major automotive sector since the 1990s led to the emissions scandal. The share price of the three Dax-listed companies Volkswagen, BMW and Daimler lost more than EUR 10 billion in stock market value over a period of three days. The damage is now at least 11 figures.
Tax evasion, corruption and fraud damage the economy. The public interest in exposing such crimes outweighs the negative attitude towards possible denunciation through premium payments. In conclusion, we find that bounties encourage reporting of offences and self-reporting and should be introduced in all EU member states.
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