Should whistle-blowing be financially rewarded?

When it comes to the Bribery Act, most, including us, would agree that the moral rationale behind this legislation is correct. Bribery is bad for society and bad for business, and both society and business are struggling big time at the moment.

In legal terms, the Bribery Act makes sense – it pulls together a lot of disparate and outdated strands of case law and legislation in the UK into one manageable and understandable piece of legislation.

However, where we have some disquiet is the political basis of the Act.

Put frankly, the Act, if the US experience is anything to go by, will end up being applied in reality for doling out some very very big fines to a few companies a year, a form of window dressing if you like. The other aspect which is troubling, which may or may not end up as part of the UK system, is the inducement for whistleblowing which is happening with the US anti-corruption legislation.

Is it moral for rewards to be paid to whistleblowers?

Some would say yes since there can be very big risks in whistleblowing but as against that, corporations may start looking for the “enemy within”, the mole that will be actively seeking some kind of wrongdoing so as to obtain a financial reward for purely financial rather than altruistic or moral reasons. The whistleblower might also be a business partner or supplier, will this threat impact on trust in business dealings? How might this affect overall morale in big corporations?

Reports in various publications this week suggest that foreign whistleblowers from the UK and China account for nearly 30% of foreign-based whistleblowing.

Under the Dodd-Frank Act the SEC rewards whistleblowers who voluntarily provide original information which results in successful enforcement and fines of more than $1,000,000.  It is not surprising that a reward of between 10-30% of these huge fines is very tempting. A further implication is likely to be that UK prosecuting authorities and regulators may end up launching a parallel UK investigation for any company that also has a UK presence.