November 21, 2014

Another reason to like whistleblowers

Guardian, UK - A new study tracking the economic effects of whistleblowers has found that people who come forward to report wrongdoing helped the US government secure $21.27bn more in fines over 35 years.

The study, conducted by researchers from Arizona State University, American University, Texas A&M University and University of Iowa, set out to discover if the costs of promoting and maintaining programs set up for financial whistleblowers were worth it. It found that in cases where whistleblowers were involved:

    Firm penalties were $90.16m to $90.88m greater.
    Penalties imposed on executives and employees averaged $50.22m to $56.50m more than if no whistleblower was involved.
    The prison sentences for those involved were on average 21.86 to 27 months longer.

The $21.27bn collected thanks to involvement of whistleblowers accounts for 30% of the $70.13bn collected from 1978 to 2012.

Starting in 2011, thanks to the Dodd-Frank reform bill, the Securities and Exchange Commission began rewarding corporate whistleblowers with up to 30% of any settlement it recovered. The largest award yet was issued earlier this year and amounted to $30m.

For most whistleblowers, money is not the driving factor, said Louis Clark, president of the Government Accountability Project. Whistleblowers are usually hardworking people with high standards who believe in the institution they work for.

“Cynical people tend not to whistleblow,” he said.

Money can, however, make things easier.

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