Whistleblower

With the Ukraine scandal in the news 24/7, whistleblowing has received more publicity in the past couple of months than ever before. Most of it has not been positive. "Print his name," "subpoena the … whistleblower," we hear. "Investigate him for fraud!" is another demand that is growing popular among President Trump allies.

As an attorney who counsels companies on remedial compliance measures following internal and government investigations, I cannot help but wonder what effect such rhetoric and possible developments yet to come may have on potential workplace whistleblowers.

Federal (and state) law protects whistleblowers against retaliation. Whistleblower protection and policies that encourage employees to come forward with concerns without the fear of retaliation are the cornerstone of any effective compliance function. To minimize any chilling effect the political debate may have on workplace whistleblowers, companies would benefit from reaffirming their appreciation for whistleblowers and their commitment to non-retaliation against bona fide employee complaints. If companies do not do that, they may run the risk of losing opportunities to investigate and put a stop to fraud and other compliance violations, as employees may be more reluctant to come forward in the current whistleblower climate.

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The Current Context

The recent public debate about the whistleblower at the center of the Ukraine scandal has been fierce and nonstop since the complaint became public on Sept. 26, 2019. The whistleblower quickly became the subject of numerous tweets by President Trump, calling for the whistleblower's identity to be revealed, and, more recently, for an investigation of the whistleblower (and his attorney) for fraud. President Trump's allies have embarked on the same quest to out the whistleblower and "bring him to justice."

This persistent focus on the whistleblower has led to numerous counteractions and counterarguments that are equally forceful and passionate. These included the whistleblower's attorney's cease-and-desist letter to the White House, in which he emphasized such "rhetoric and activity … places my client, the Intelligence Community Whistleblower, and their family in physical danger." Two weeks ago, we saw several major news outlets ban their employees from revealing the whistleblower's identity. Facebook and YouTube followed the same course, blocking spread of the whistleblower's name and photo.

There has also been much discussion of whistleblower treatment in the intelligence community and analyses of just what exactly President Trump and members of Congress stand to risk by unmasking the whistleblower's identity. Whether or not one is interested in all these discussions, they are virtually impossible to escape. Even to an inattentive ear, one thing is clear—whistleblowing can carry many unintended (and undesirable) consequences.

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Whistleblower Protections

Much has been said about whistleblower protections generally, and in the intelligence community specifically, in which the Ukraine complaint originated. Without rehashing these analyses, three points are worth mentioning.

First, as a society, we place high value on whistleblower disclosures. In the public sector, they "play a critical role in keeping our Government honest, efficient, and accountable" and "can save lives as well as billions of taxpayer dollars." In the private sector, "whistleblowers are the single most important corporate resource for detecting and preventing fraud."

Second, consistent with the conviction that whistleblowing matters a great deal, federal and state law protects whistleblowers against retaliation. Federal protections apply to federal employees generally, the intelligence community specifically, and also the corporate world. In all three contexts, the applicable laws prohibit retaliatory actions against a whistleblower. Retaliatory actions may include disciplinary or corrective action, transfer, reassignment, demotion, suspension, termination, a performance evaluation, and decisions concerning pay, benefits or awards, among other things.

Third, there is no law expressly prohibiting the unmasking of a whistleblower's identity, except for by the inspector generals who receive whistleblower complaints. Nevertheless, experts agree revealing a whistleblower's identity—in and of itself, or followed by more traditional retaliatory measures—may constitute or amount to retaliation.

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U.S. Authorities on Whistleblowing in the Workplace

The U.S. government could not be clearer on its view that a company's effective whistleblowing mechanisms are "among the most powerful weapons in the law enforcement arsenal." Under the Principles of Federal Prosecution of Business Organizations, the existence of confidential reporting mechanisms is one of the strongest indicators of whether a "corporation has established corporate governance mechanisms that can effectively detect and prevent misconduct." The U.S. Sentencing Guidelines provide that "an effective compliance and ethics program"—at a minimum—must "have and publicize a system … whereby the organization's employees and agents may report or seek guidance regarding potential or actual criminal conduct without fear of retaliation."

Just a few months ago, two enforcement authorities—the U.S. Department of Justice (DOJ) and the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC)—almost in unison issued guidance on corporate compliance programs, in which both agencies emphasized the critical role a strong confidential reporting function plays in a company's compliance program.

In the DOJ guidance, "an efficient and trusted mechanism by which employees can anonymously or confidentially report allegations" is the fourth of seven hallmarks of a "well-designed compliance program." In deciding whether to bring charges, negotiate a plea or other agreements, and at sentencing, among other things, prosecutors are to "assess whether the company's complaint-handling process includes pro-active measures to create a workplace atmosphere without fear of retaliation, appropriate processes for the submission of complaints, and processes to protect whistleblowers."

Similarly, OFAC made clear in its guidance, an effective sanctions compliance program should ensure personnel have the ability "to report sanctions related misconduct by the organization or its personnel to senior management without fear of reprisal." Like the DOJ prosecutors, OFAC's Office of Compliance and Enforcement considers this factor in conducting investigations and determining penalties and mitigation, if any, under the Economic Sanctions Enforcement Guidelines.

Several years ago, the DOJ and the U.S. Securities and Exchange Commission's (SEC) 2012 Resource Guide to the U.S. Foreign Corrupt Practices Act highlighted the SEC Whistleblower Program for corporate employees to use in case of possible securities laws violations. Touting the non-retaliation provisions of SOX and the Dodd-Frank Act, the DOJ and SEC urged whistleblowers to come forward "to minimize the harm to investors, better preserve the integrity of the U.S. capital markets, and more swiftly hold accountable those responsible for unlawful conduct."

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What Now?

On Nov. 15, 2019, former U.S. ambassador to Ukraine Marie Yovanovitch was asked if, considering her ouster and despite the smear campaign against her, she "will continue to fight corruption." The former ambassador answered in the affirmative, adding she will do that "with her work." However, whether a government or corporate employee who witnessed corruption in their workplace would provide the same answer does not seem certain.

Granted, the Ukraine whistleblower is a member of the intelligence community, and the subject of the complaint is unique. But, undoubtedly, the current environment could have a chilling effect on all whistleblowers, in public and private sectors alike. Would employees want to blow the whistle when the Ukraine whistleblower is called a "fraud," a spy, and a traitor, and where calls are made for an investigation of him and even execution of his sources? It seems reasonable to conclude employees at a minimum would think twice before coming forward.

Considering this, companies should reaffirm their commitment to employees' reporting of potential compliance violations. Companies that do not currently have a whistleblower policy that prohibits retaliation should implement one. A non-retaliation policy should: (1) make clear employees are required to report potential misconduct, (2) explain the reporting procedure, and (3) assure employees that retaliation for such reports is strictly prohibited.

The third point, that the company has zero tolerance for retaliation, is perhaps the most important to reiterate. Notwithstanding the current rhetoric, federal (and state) laws encourage whistleblowing and prohibit retaliation against the same. As noted above, among other things, in evaluating a company's compliance policy, prosecutors ask: "Does the company have an anonymous reporting mechanism, and, if not, why not? How is the reporting mechanism publicized to the company's employees? Has it been used?" Your company would be better off if it can answer these questions in the affirmative.

Kristina Arianina represents companies and executives in internal investigations, enforcement actions and commercial litigation. Her investigation practice includes bribery and securities fraud allegations and violations of US economic sanctions, the Foreign Corrupt Practices Act (FCPA) and False Claims Act.