EWJ FEB 59 2025 web - Flipbook - Page 65
Overcoming British Sensibilities on
Whistleblower Reward Payments
and Immunity from Prosecution
Nick Ephgrave – director of the UK’s Serious Fraud Office (SFO) – recently spoke to the
“enormous missed opportunity” to tackle high-level fraud due to the lack of whistleblower
incentives in the UK (The Telegraph, 8 Dec 2024). Since taking over leadership of the SFO in
October 2023, Ephgrave has been pushing the debate about two controversial issues in the UK:
paying whistleblowers and granting them immunity from prosecution (The Guardian, 22 Oct
2024).
Such practices are commonplace in many
jurisdictions, particularly in the United States. These
methods could be critical to enhancing the effectiveness of the SFO and other enforcement agencies, enabling them to tackle increasingly sophisticated forms
of fraud and corruption. Given the reported costs and
number of years the SFO spent on the now closed
ENRC investigation, any move to minimise the risk of
a repeat would naturally be welcome. However, realising the vision will require overcoming entrenched
sensibilities in the UK.
the low incidence of reports to the SFO and the number of British whistleblowers reporting to the US
might suggest that these UK protections alone do not
outweigh the perceived risks of retaliation, professional ostracism, legal battles and reputational damage. Providing reward payments could tip this
balance, particularly in high-stakes cases involving
corporate corruption or international fraud.
Rewarding whistleblowers “just isn’t British”?
Historically, the UK’s legal and cultural landscape has
been resistant to paying whistleblowers or offering immunity to those complicit in wrongdoing. British sensibilities lean heavily on notions of fairness, personal
accountability and the belief that justice must not be at
the cost of expedience.
British whistleblowers turning to growing incentives
schemes in the US
Whistleblowers are a cornerstone of fraud
investigations, often providing insider information
that is otherwise inaccessible, and quickly leading investigators to the heart of a matter. Yet only a small
number of the c.1,300 referrals to the SFO’s Intelligence division come from whistleblowers, with most
coming from other agencies and some from the
public 1.
Critics argue that offering financial incentives or
immunity could be perceived as “rewarding bad behaviour” or undermining moral integrity. The SFO
director in 2018, Sir David Green, said that paying
whistleblowers “just isn’t British” and that whistleblowing was often seen as a civic duty rather than an
act deserving of monetary reward.
The UK lacks robust whistleblower reward schemes
for complex economic crime. By contrast, the US offers financial rewards of up to 30% of recovered funds
through the Securities and Exchange Commission
(SEC) and Commodity Futures Trading Commission
(CFTC). The Department of Justice (DOJ) also
launched a three-year pilot programme in August to
incentivise whistleblowers to report corporate misconduct, with awards of up to 30% of the first $100
million in net proceeds forfeited, and 5% of any further proceeds between $100 million and $500 million.
Cultural and practical obstacles require political will
Apart from cultural leaning, there are practical risks to
paying whistleblowers. Incentives could attract unreliable or self-interested individuals. They may proliferate spurious allegations and taint evidence,
particularly if the whistleblower’s motives can be undermined in front of juries and judges. A reward
scheme could risk being perceived as encouraging opportunism or “bounty hunting”, exposing genuine
whistleblowers to attacks for seeking financial gain
rather than acting out of genuine ethical and moral
concerns.
These schemes have been credited with uncovering
significant frauds and recovering billions of dollars,
and often attract whistleblowers from other jurisdictions, including the UK. Ephgrave said in his recent
interview with The Telegraph that 700 British whistleblowers had turned to the US in the last 12 years,
expecting more “positive” treatment.
Other significant barriers to introducing a
whistleblower reward programme in the UK include:
· The need for significant legislative overhaul, which
could face political and bureaucratic inertia;
· The complexities of determining eligibility for a
reward, including establishing clear and fair criteria
and how much whistleblowers should receive;
The UK’s existing whistleblower framework, under
the Public Interest Disclosure Act 1998, primarily focuses on protecting whistleblowers from retaliation
rather than rewarding their contributions. However,
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