Whistleblower Protection Blog

National Whistleblower Center Continues Support of #MeToo Legislation

National Whistleblower Center (NWC), as a member organization of the Workplace Sexual Harassment Coalition, has signed a letter to Senate Majority Leader Sen. Mitch McConnell and Minority Leader Chuck Schumer to support the Congressional Accountability Act of 1995 Reform Act (H.R. 4924) which passed in the House of Representatives with bipartisan support last month. The Act, which seeks to improve workplace protections for Congressional staff, has gained broad public support due to the #MeToo movement.

In the letter, the Coalition makes recommendations as to the improvement of H.R. 4924. It also urges the Senate to include reforms passed in H. Res. 724. The Resolution requires that each “employing office” in the House establish an anti-discrimination and anti-harassment policy. It also calls for the creation of an Office of Employee Advocacy. The Office would assist employees with counsel and representation as they navigate Congressional Accountability Act processes.

This legislation, if implemented, would provide key protections for federal employee whistleblowers. It would also ameliorate the convoluted process currently in place for Congressional employees to report instances of sexual harassment, assault, or discrimination.

The Senate may pass these reforms as soon as this Friday, along with the $1.3 trillion spending bill that just passed the House this week.

Recommended reading:

National Whistleblower Center Meets with Top U.S. Department of Commerce Officials

This week the National Whistleblower Center (NWC) met with the U.S. Department of Commerce (DOC) General Counsel Peter Davidson and Senior Counsel James Uthmeier to discuss the implementation of whistleblower laws in their agency. NWC was represented by Executive Director Stephen M. Kohn, Managing Director of the Global Wildlife Whistleblower Program Scott Hajost, and Co-Chairperson of the Board Dr. Gina Green.

The meeting focused on how to combat illegal, unreported, and unregulated (IUU) fishing using whistleblower reward laws. Since the DOC has jurisdiction over the National Oceanic and Atmospheric Administration (NOAA), it is within their power to activate certain whistleblower reward provisions under U.S. wildlife laws, including the Lacey Act and Fish and Wildlife Improvement Act.

When speaking on IUU fishing, General Counsel Davidson commented that “Secretary Ross has a lot of interest in promoting U.S. aquaculture.” He continued, “combatting this illegal activity, it’s very similar to what we do on the trade front. It’s about unfair competition.”

The U.S. imports about 80% of its seafood. NOAA estimates that this leads to an annual seafood trade deficit of upwards of $13 billion USD. A 2014 study in Marine Policy shows that as many as one in three fish imported into the U.S. is caught illegally. In short, IUU fishing is a massive conservation and economic problem.

The implementation of whistleblower reward laws will serve to bolster the DOC’s 2018-2022 Strategic Plan. NOAA’s strategic goals and objectives include “enforc[ing] the nation’s trade laws and security laws.” Another goal includes “strengthen[ing] domestic commerce and the U.S. industrial base.” Combatting IUU fishing contributes to these objectives by cutting down on “unfair competition” against American industry and rebalancing the seafood trade deficit.

Mr. Kohn explained why leveraging U.S. whistleblower reward laws will prove to be a powerful tool in combatting illegal fishing. “Whistleblowers are key to stopping this kind of crime,” said Mr. Kohn. “Even with technological advances, the whistleblower is the human safety net when combatting IUU fishing. They are your eyes and ears on-the-ground.”

Mr. Kohn continued that implementing whistleblower reward laws does not cut into the DOC budget. In fact, sanctions gained from winning cases has the potential to recover millions of dollars for the government. Other laws with whistleblower reward provisions, such as the False Claims Act, have been tremendously successful in combatting criminal activity. In 2017 alone, whistleblowers filing under the False Claims Act recovered $3.4 billion in federal funds.

There is currently massive support within the U.S. for improving whistleblower protections in the Department of Commerce. NWC has already collected over 100,000 signatures on various petitions calling Secretary Ross to implement whistleblower reward laws in the DOC.

View the petitions here:

Bullet-Proof Qui Tam Case Settles

Attorney General Sessions Condemns Companies That Sell Defective Equipment to First Responders

The U.S. Department of Justice issued a press release late today announcing a settlement in a 13-year long False Claims Act case. Toyobo Co. Ltd. of Japan and its American subsidiary, Toyobo U.S.A. Inc., f/k/a Toyobo America Inc. (collectively, Toyobo), have agreed to pay $66 million to resolve claims under the False Claims Act that they sold defective Zylon fiber used in bullet proof vests that the United States purchased for federal, state, local, and tribal law enforcement agencies. 

The settlement was reached as part of a False Claims Act initiated by a whistleblower, Aaron Westrick, Ph.D. 

The attorneys for Dr. Westrick issued the following release following the DOJ’s announcement:

Bullet Proof Vest False Claims Act Case Ends in Victory for Whistleblower

Attorney General Sessions Condemns Companies That Sell Defective Equipment to First Responders

Washington, D.C. March 15, 2018.  The U.S. Department of Justice announced today that Japanese manufacturing company, Toyobo Co., Ltd., agreed to pay $66 million to settle allegations that it conspired to sell defective body armor to American police departments, federal law enforcement agencies and the U.S. military.  The settlement was reached as part of a False Claims Act initiated by a whistleblower, Aaron Westrick, Ph.D.

As required under the False Claims Act, Dr. Westrick will obtain a qui tam whistleblower reward of $5.77 million.  This award is designed to compensate Dr. Westrick for the damages he suffered and to incentivize other whistleblowers with evidence of fraud to report these crimes.

A detailed discussion on the national importance of this case is posted on The Whistleblower Blog.

Dr. Westrick, now employed as a tenured professor at Lake Superior State University in Sault Ste. Marie, Michigan and an active Michigan Deputy Sheriff, issued the following statement:

“I only wanted to stop the sale of unsafe Zylon vests to police officers, federal agents, and members of our Armed Services. I tried to convince my company to stop selling these vests.  They refused. I lost my job and career.  I have no regrets. I would blow the whistle again. The defective Zylon product was taken off the market and Toyobo (along with other companies) were held accountable. 

“I am proud that the United States joined in my False Claims Act case, and aggressively sought justice in this matter.”

In a statement released today by the DOJ, Attorney General Jeff Sessions said:

“Bulletproof vests are sometimes what stands between a police officer and death. Selling material for these vests that one knows to be defective is dishonest, and risks the lives of the men and women who serve to protect us. The Department of Justice is committed to the protection of our law enforcement officers, and today’s resolution sends another clear message that we will not tolerate those who put our first responders in harm’s way.”

Stephen M. Kohn, a partner in the law firm of Kohn, Kohn and Colapinto – who served as Dr. Westrick’s lead counsel said:

Dr. Westrick is a true American hero. He lost his job and career in the body armor industry by exposing Zylon safety risks. He provided the crucial documents and testimony justifying the removal of Zylon from the market, and compensation to states and the federal government due to the immoral sale of Zylon vests.

“The False Claims Act is America’s most important tool to fight fraud in government contracting.  It was enacted to protect and reward whistleblowers like Dr. Westrick, who sacrifice for the public interest, save taxpayers millions of dollars, and ensure that products sold to front-line responders are safe.”

Mr. Kohn also serves as the pro bono Executive Director of the National Whistleblower Center.

More information:

*Permission granted to reprint photo of Dr. Westrick.

Intelligence Community Whistleblower Ombudsman Fired

Intelligence community whistleblower ombudsman Dan Meyer has been fired. This is a disturbing and problematic move. It is particularly surprising, or perhaps cynically appropriate, that this occurred shortly after members of the intelligence community (IC) met with whistleblower rights organizations earlier this month.

Meyer had significant experience in whistleblower matters with the Department of Defense and served as an ombudsman in the Office of the Intelligence Community Inspector General (OIG).

Andrew Bakaj, also formerly of the OIG, stated, “Dan is a highly respectable individual with a lot of courage.” He added that Meyer advocated for a strong whistleblower program with a “two-fold purpose” of “encourag[ing] folks to come forward with information on a problem that the agencies need to know about,” and as a “mechanism to prevent people from making classified information public.”

Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) wrote to “express deep concern about the Office of Intelligence Community Inspector General.” Senator Grassley has previously asked that all documents be preserved in Meyer’s case.

NWC Executive Director Stephen M. Kohn attended a roundtable discussion with National Security Agency (NSA) Inspector General Robert Storch earlier this month and pointed out the serious deficiencies within the NSA’s current whistleblower law.

Current NSA whistleblower law does not provide for back-pay, lost wages, reinstatement of the whistleblower, statutory attorney fees, or judicial review of administrative decisions. Mr. Kohn advocated for informing whistleblowers of their rights under the False Claim Act and potentially arranging proffer agreements with individuals. The flaws within the NSA’s own whistleblower program apply across-the-board in the IC.

The Meyer firing demonstrates anecdotal evidence that the IC continues to conflate leakers with whistleblowers. Instead of firing intelligence officials for coming forward, they should be praised and rewarded for reporting NSA misconduct. The IC should be promoting people who understand this difference instead of firing them.

“No Right Without a Remedy”: Why NSA Whistleblower Protections Are Lacking

Earlier this month Stephen M. Kohn, executive director of the National Whistleblower Center, attended a roundtable discussion with the National Security Agency (NSA) Inspector General (IG) Robert Storch. The meeting served as an avenue for the IG to hear comments on the NSA’s whistleblower program.

In attendance was Andrew Snowdon, NSA whistleblower coordinator and Office of the Inspector General (OIG) counsel, as well as representatives from the American Civil Liberties Union, Project on Government Oversight, and Government Accountability Project, among others.

When explaining his commitment to strengthening whistleblower protections in the NSA, the IG stated, “there is no right without a remedy.”

Unfortunately, as the NSA whistleblower law currently stands, rights are only nominal. The law provides neither statutory attorney fees nor judicial review of Agency decisions. Additionally, there is no authorization for back pay, lost wages, compensatory damages, or reinstatement for the whistleblower. This is unlike other federal agencies’ policies covered under the Whistleblower Protection Act (WPA). Intelligence community agencies are excluded from WPA jurisdiction.

“There are bare minimum requirements for a real whistleblower program,” said Mr. Kohn. “Working under the current law raises serious issues as to whether the whistleblower can ever be truly protected,” he continued.

Mr. Kohn suggested that when informing whistleblowers of their rights, the NSA should make clear that 1) contractor employees have protections under the False Claims Act and 2) that a proffer agreement could be available to them. This would send a clear message that the NSA is interested in obtaining information, not targeting informants. It could also open the door to a discussion about immunity from criminal prosecution, a status that would encourage more individuals to openly and honestly come forward with information.

Mr. Kohn also strongly urged the IG to conduct an organization-wide climate survey to better understand knowledge and attitudes toward whistleblowing. Once this baseline is established, the program can set-up indicators to measure improvement.

Without strong, internal channels for reporting information in the NSA, the agency is incentivizing individuals to stay silent about possible problems. This is a lose-lose situation. There is great potential for whistleblowers and the NSA to cooperate, if protected avenues were available for reporting.

The NSA’s weak whistleblower protections are unsurprising. The intelligence community at-large has historically viewed whistleblowers as a threat, rather than a potential partner. In the wake of massive 21st century information leaks (e.g. the Chelsea Manning and Edward Snowden leaks), the Obama Administration Executive Order 13587 established the Insider Threat Program, whose mission is to “promote the development of effective […] programs within departments and agencies to deter, detect, and mitigate actions by employees who may represent a threat to national security.”

The Insider Threat Program has most certainly had a chilling effect on whistleblowing activity in the intelligence community. A compounding effect on whistleblowing is the Trump Administration’s aggressive stance on “leakers.” Attorney General Jeff Sessions’ comments and subsequent memo on the topic leave little doubt that the Administration is seeking to curb, not broaden, whistleblower protections.

NSA Whistleblower Coordinator Snowdon stated during the roundtable that “it is part of our job to distinguish between the two. Sometimes it’s difficult to tell.” Given the climate of hostility toward “leakers,” it is critical that the NSA does not conflate leakers with whistleblowers.

If the NSA Inspector General truly intends to strengthen whistleblower protections, he should make a public statement and testify before Congress that the OIG is committed to protecting whistleblower rights, and that it supports legislation to bolster those protections. Until such remedial measures the NSA legal framework, NSA whistleblowers are without rights.

NWC Joins SCOTUS Amicus Brief with FBI Whistleblowers

Earlier today, the National Whistleblower Center (NWC) joined a friend-of-the-court brief filed with the Supreme Court in support of FBI whistleblower John Parkinson’s petition for certiorari, seeking review of the Federal Circuit’s decision denying veterans’ preference-eligible FBI employees the right to raise whistleblowing as an affirmative defense in an appeal to the Merit Systems Protection Board (MSPB).

The amicus brief, filed on behalf FBI whistleblowers Michael German, Robert Kobus, Jane Turner, and Frederic Whitehurst, as well as the NWC and the Project on Government Oversight, details why the Department of Justice’s procedures for FBI whistleblowers are not an adequate substitute for a veterans’ preference-eligible FBI employee raising a whistleblower claim in an MSPB case.

Lt. Col. Parkinson was dismissed from the FBI and sought to raise whistleblower reprisal as an affirmative defense at his MSPB hearing. He was denied the opportunity by the MSPB, won an appeal of that denial before a Federal Circuit panel, but then lost on rehearing en banc. The Federal Circuit overturned, in part, a panel decision and determined that FBI whistleblowers may not raise whistleblower reprisal as an affirmative defense before the MSPB.

The amicus brief chronicles the long-winded paths to justice of four former FBI whistleblowers, including former FBI crime lab expert Dr. Frederic Whitehurst, who bravely blew the whistle on flawed forensic science at the FBI lab; former FBI agent Michael German, who reported the FBI’s illegal recording of conversations in violation of Title III wiretap regulations during a counterterrorism investigation; former FBI agent Jane Turner, who reported to the DOJ Inspector General that colleagues had stolen items from Ground Zero after the September 11, 2001 terrorist attacks; and retired FBI employee Robert Kobus, who worked at the FBI’s New York Field Office for 35 years and made a protected disclosure regarding some of his colleagues’ abuses of the FBI’s leave policy. Both Whitehurst and Turner hold leadership positions at the NWC.

Unfortunately, this is not the first time the Federal Circuit has issued a decision denying whistleblowers the rights intended by Congress. The Supreme Court should agree to hear this important case in order to correct the Federal Circuit’s dubious decision and to ensure that veterans who work at our foremost law enforcement agencies are fully protected when they blow the whistle.

Gregory Dubinsky, of Holwell, Shuster & Goldberg, who co-wrote the amicus brief, emphasized that “veterans make incredible sacrifices for our country, and we owe it to them to deliver on the promises Congress made in federal law to protect their rights when they face retaliation for blowing the whistle.”

Joshua Geltzer, of the Institute for Constitutional Advocacy and Protection (ICAP) at Georgetown University Law Center, and co-author of the amicus brief, remarked the Federal Circuit’s “decision to strip veterans now working at the FBI of protections they’d enjoy elsewhere in government flies in the face of Congress’s persistent efforts to protect such whistleblowers, and the Supreme Court should step in to correct it.”

David Colapinto, NWC General Counsel and partner in the law firm of Kohn, Kohn & Colapinto, who represented Whitehurst, Turner, and Kobus in their FBI whistleblower cases, said that the NWC is “very grateful that Holwell, Shuster & Goldberg and ICAP agreed to file the amicus brief” on behalf of NWC and the other amici.

Read the complete amicus brief here.

U.S. NGO Calls Upon GRECO to Intervene in Libel Lawsuit Filed Against Whistleblower Valery Atanasov

National Whistleblower Center states that Malta Gaming Authority lawsuit is an attack on freedom of speech and expression

WASHINGTON, D.C. | MARCH 8, 2018—The National Whistleblower Center (NWC), in cooperation with the European Center for Whistleblower Rights, has written a follow-up letter to a February 28thcommunication to the Group of States Against Corruption (GRECO), urging them to intervene in the libel lawsuit that the Malta Gaming Authority (MGA) has filed against former employee and whistleblower Valery Atanasov.

To read the follow-up letter to the GRECO Executive Secretary, please click here.

In the letter, NWC cites U.S. legal precedents that place limits on the lawful use of libel suits in order to ensure that the U.S. Constitution’s mandate of freedom of speech and expression is not undermined. Iturges the court(s) adjudicating Mr. Atanasov’s case to apply these rules in order to protect these same rights in Malta.

Mr. Atanasov blew the whistle on oversight irregularities and lack of enforcement while working at the MGA. He believed these irregularities could allow for money laundering and other financial crimes. Since reporting his concerns, Mr. Atanasov has been formally disciplined, suspended with a salary reduction, and fired from his job. Mr. Atanasov is now being sued by the MGA for defamation.

Under Article 14 of the Council of Europe’s Civil Law on Corruption, GRECO has the responsibility to monitor the implementation of the Convention of the Parties, including Article 9 which protects employees from unjustified retaliation from authorities should they, in good faith, report information on corruption.

Stephen M. Kohn, executive director of the National Whistleblower Center said, “the threat of a retaliatory libel lawsuit renders any whistleblower protection law a dead letter. Unless GRECO aggressively prevents the misuse of libel lawsuits to harass and intimidate whistleblowers, the right of employees to expose fraud and corruption will continue to be undermined in Europe.”

Mark Worth, executive director of the European Center for Whistleblower Rights and a member of the UN Expert Group on Whistleblowing said, “officials in Malta have ignored their own whistleblower protection law and taken aggressive civil and criminal actions against a public employee whose disclosures of misconduct have been irrefutably confirmed. This is shocking and unacceptable on all levels.”

Recommended reading:

National Whistleblower Center Executive Director Explains Why Supreme Court Decision in Digital Realty is Disastrous for Internal Compliance Programs  

In Digital Realty Trust v. Somers the Supreme Court issued a destructive decision that will have far-reaching consequences for whistleblowers. Seemingly unaware of the practical consequences of its decision, the Supreme Court unanimously ruled to leave whistleblowers who report internally without critical protections under the Dodd-Frank Act.

Writing for Law 360, NWC Executive Director Stephen M. Kohn explains that employees now take grave risks in using internal compliance programs. In light of the Supreme Court’s decision, whistleblowers should hire an attorney and take their complaints directly to the Securities and Exchange Commission (SEC).

The ramifications of the Court’s decision go beyond whistleblowers seeking to report to the SEC. Because environmental laws, worker protections, and other financial regulation provisions mirror Dodd-Frank, these provisions will now also fail to protect internal whistleblowers.

Everyone should read the full article, including a deeper discussion of the case and a full explanation of its consequences for whistleblowers, linked below.

Read Stephen Kohn’s article: Law 360: Digital Realty’s Victory Is A Loss For Corporate Compliance

Delegation from Armenia Visits the National Whistleblower Center

Yesterday, a delegation from the Republic of Armenia visited the National Whistleblower Center (NWC) for a presentation about best practices to fight corruption and the implementation of whistleblower laws. The visit was facilitated by the International Visitor Leadership Program (IVLP), an initiative of the U.S. Department of State.

Attendees from the delegation included representatives from Armenia’s criminal court system (including both a lead judge and prosecutor), the Judicial Department, the Council of Justice, and the Ministry of Justice.

The purpose of the delegation’s visit was to gain better understanding of whistleblower laws and the role that monetary awards play as an incentive for those with information to step forward. The group was also able to learn more about NWC’s work.

The presentation was led by NWC General Counsel Dave Colapinto and Legal Fellow Maya Efrati

It began with a discussion of NWC’s work on whistleblower cases, and then extended to a discussion of the international application of U.S. laws that have whistleblower award provisions, including the False Claims Act and Foreign Corrupt Practices Act. What followed was a lively discussion and a questions and answers session with the delegation about the U.S.’ experience implementing whistleblower protection and reward laws.

The delegation’s tour of the U.S. is incredibly timely, as Armenia just passed a series of laws in 2017 that established a new anti-corruption body, which will become fully operational later this year. Included in the anti-corruption package is whistleblower legislation. At the January 2018 Parliamentary Assembly of the Council of Europe, President of Armenia Serzh Sargsyan cited anti-corruption efforts as a top law enforcement priority.

NWC hopes the Armenian delegation will be able to learn from their time in the U.S. and use our lessons-learned to strengthen their democratic institutions back home.

5 Whistleblower Films to Watch If You Liked ‘The Post’

The 90th Academy Awards yesterday featured a diverse set of films nominated for Best Picture, including a whistleblower film called The Post. Based on a true story, the movie centers on the fight to publish top-secret U.S. government information on the Vietnam War leaked by whistleblower Daniel Ellsberg. The star-studded cast includes Meryl Streep and Tom Hanks.

In the spirit of The Posts’ Oscar recognition, here are some other riveting whistleblower films that you can enjoy on the big screen.

1. All the President’s Men (1976)

This classic whistleblower film follows the story of two Washington Post journalists, Carl Bernstein and Bob Woodward, as they dig to uncover the truth of the Watergate scandal. Their investigation reveals abuses of power that run all the way up to the highest seats in U.S. government. The movie stars Robert Redford and Dustin Hoffman.

2. Erin Brockovich (2000)

Starring Julia Roberts, this eponymous movie follows the story of a one woman as she uncovers a massive corporate cover-up of illegal toxic waste disposal. As she learns more about the detrimental impact the waste had on local residents, Brockovich decides to take the multibillion-dollar corporation to court. What follows is one of the biggest class-action lawsuits in American history.

3. The Constant Gardener (2005)

Based on a novel by John le Carré, this movie follows British diplomat Justin Quayle as he seeks to uncover the truth of his wife Tessa’s brutal murder. Interwoven with flashbacks of Quayle and Tessa’s romance, the present-day follows Quayle’s discovery of a pharmaceutical company’s deadly conspiracy. The movie stars Ralph Fiennes and Rachel Weisz.

4. North Country (2005)

North Country chronicles the story of the first class-action sexual harassment lawsuit in the United States, Jenson v. Eveleth Taconite Company. Lois Jenson and other women at a Minnesota mining company decide to file a lawsuit after being subjected to verbal and sexual harassment and physical abuse by their male co-workers. The movie stars Charlize Theron.

5. Enron: The Smartest Guys in the Room (2005)

A story about corporate greed and corruption, this documentary gives a detailed accounting of how and why the Enron Corporation, a multibillion-dollar company, ended up filing for bankruptcy. Part chronicle of the company’s downfall, part human drama, the movie raises important questions about business ethics and corporate culture.

National Whistleblower Center Celebrates World Wildlife Day

Today the National Whistleblower Center is excited to celebrate World Wildlife Day, a day that commemorates the signing of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) 45 years ago in Washington, D.C. CITES was an important step forward in promoting the protection of wildlife and biodiversity around the world. While this is a day to celebrate, we should also remember that wildlife is currently under threat like never before. We are currently in the midst of a global extinction crisis.

The Northern White Rhino is the latest, and among the prominent subspecies, on the verge of extinction. Earlier this week the final Northern White Rhino in the world, Sudan, became gravely ill. Unless he remarkably recovers and then breeds with one of the two remaining white rhinos, the species will soon go extinct.

In the ocean, things are little better. This week it was announced that Atlantic right whales, which saw zero births this year, will likely be extinct by 2024. At least 14 subspecies have become extinct in the 21st century.

Illegal poaching and illegal fishing have played a large role in this problem. Up to 32% of non-domestically grown seafood is illegal. Meanwhile, poaching rates have risen astronomically. Rhino poaching soared 9300% in South Africa between 2007 and 2014, as the numbers of illegally killed spiked from 13 to 1215 in just seven years. The news for elephant is just as grim: more than 100,000 elephants were killed in just three years in Central African nations, accounting for 64% of its elephants.

Wildlife whistleblowing can be a tool to curb these decimating trends. The Lacey Act grants the U.S. Departments of Treasury, Agriculture, Commerce, and Interior authority to give out whistleblower rewards to those who provide critical information about illegal trafficking. These agencies must develop a true wildlife whistleblower program that they publicize all around the world.

There are park rangers, customs officials, and wildlife traffickers that know about illegal poaching but have not had the incentive to come forward because the risks are high and the gains are low. Whistleblower rewards can change such calculations very quickly.

The National Whistleblower Center calls on the U.S. Departments of Treasury, Agriculture, Commerce, and Interior to implement effective wildlife whistleblower programs on this World Wildlife Day. These agencies have the power to ensure many species are spared the fate of the Northern White Rhino.

TAKE ACTION: Sign our petition to end the murder of wildlife crime whistleblowers

Bipartisan Bill Uses Whistleblower Incentives to Battle Foreign Corruption

On Tuesday, a bipartisan bill was introduced by Congressmen Stephen F. Lynch (D-MA) and Keith Rothfus (R-PA), that would help U.S. authorities combat terrorist financing and foreign government corruption. The Kleptocracy Asset Recovery Rewards Act (H.R. 5101), would establish a rewards program for whistleblowers who notify the U.S. government of assets in U.S. financial institutions that are linked to foreign corruption, allowing authorities to recover and return these assets and prevent further enabling of foreign corruption and terrorist financing.

The bill is modeled on existing successful U.S. programs that reward those who come forward to report fraud and aims to help return assets stolen from foreign state coffers, by encouraging whistleblowers to talk to US authorities. The bill would allow the Department of Treasury to grant asylum and monetary awards to whistleblowers who provide information about stolen foreign government assets that are stored in the US.

In a kleptocracy, or “government by thieves,” corruption is the heart of the problem. According to the International Monetary Fund, as much as 5 percent of the world’s gross domestic product is laundered money, and only 1 percent of it is ever spotted. The taking of money out of corrupt countries by kleptocrats is a long-standing practice but today the scale and sophistication of this activity presents new and serious challenges to democracy. This corruption constitutes a multi-faceted threat to global security and international stability. As countries plagued with endemic corruption become breeding grounds and havens for criminals and terrorist groups who threaten global security.

“The United States must intensify the fight against foreign government corruption and the money laundering that allows terrorist organizations to thrive,” said Congressman Lynch. “Foreign governments that are weakened by corrupt leaders do not have the financial or legal resources to combat terrorist financing, and the U.S. government should be doing everything we can to stop our financial institutions from unwittingly aiding corrupt officials and terrorist organizations.”

Over the past 30 years, laws that encourage whistleblowers to report serious wrongdoing by offering monetary rewards have proven to be “the most powerful tool the American people have to protect the government from fraud.”

The bill is co-sponsored by Representatives Kyrsten Sinema (D-AZ), James P. McGovern (D-MA), Norma J. Torres(D-CA), Maxine Waters (D-CA), Steve Cohen (D-TN), Ted Budd (R-NC), and Michael Capuano(D-MA).

Malta, We Have a Problem

National Whistleblower Center Executive Director Stephen M. Kohn, in cooperation with the European Center for Whistleblower Rights, has called upon Malta’s Prime Minister Joseph Muscat and the Group of States Against Corruption (GRECO) to protect whistleblower Valery Atanasov.

A former IT administrator at the Malta Gaming Authority (MGA), Mr. Atanasov blew the whistle on dodgy regulatory practices that could have allowed gaming companies to operate without proper oversight. Atanasov explains that some MGA practices “create[s] conditions that allow suspicious financial operations, money laundering, and other criminal practices.”

Kohn’s call to protect Mr. Atanasov has made waves in Malta. The popular publication Lovin Malta notes that Kohn is “one of the most eminent whistleblower lawyers in the United States,” and refers to NWC as the “USA’s leading NGO for whistleblowers.”

The piece also covers the MGA’s press release responding to Kohn’s letter. In the press release, the MGA claims that Atanasov’s statements were “factually and legally false and incorrect.” It also states that the MGA “respects Mr. Atanasov’s request for whistleblower status and will abide by any final and definitive judicial declarations.” To date, the MGA has not formally recognized Atanasov’s status as a whistleblower.

Both the EU and Malta must do better to protect whistleblowers. Kohn has demanded that “the Office of the Prime Minister immediately review the case of Mr. Atanasov,” and insisted that the GRECO “monitor the case of Mr. Atanasov and ensure that the Republic of Malta is following the legal requirements set forth in the Civil Law on Corruption and Malta’s Protection of the Whistleblower Act.”

For now, the Atanasov affair remains a concern of Maltese and European legal jurisdiction. But the United States’ Foreign Corrupt Practices Act permits the U.S. to exercise extraterritorial jurisdiction, and can cover non-U.S. citizens making bribes to foreign officials. Moreover, the law is not just about quid-pro-quo bribery—it also protects against false financial records and a lack of proper internal controls. International whistleblowers can file reports with the U.S. Securities and Exchange Commission (SEC) and receive significant financial rewards for doing so.

The U.S. Internal Revenue Service (IRS) (the tax collection agency) also rewards international whistleblowers who report on American tax avoidance. The rewards for such crucial information can be enormous. In 2012, Bradley Birkenfeld received the largest whistleblower reward ever at $104 million for uncovering tax fraud by the Swiss bank UBS. Birkenfeld’s lawyer was Stephen Kohn.

Whistleblower rewards, however, are only a means to an end. The purpose of rewards and protections for whistleblowers is to encourage other people to come forward when they uncover illegal activity.

Malta, largely known as a sunny, historical Mediterranean paradise with a loosely-regulated and low-taxed economy, has struggled with corruption for years. Daphne Caruana Galizia, a prominent Maltese journalist covering corruption, was murdered by a car bomb on October 16, 2017, in what has been called the “darkest moment in the country’s political history.” She devoted her career to uncovering bribes, money laundering, and disturbing connections between the country’s online gambling industry and other crime

For a nation struggling with allegations of corruption and misconduct, stronger whistleblower laws could greatly remedy many of the Malta’s governance issues. The country could take a big first step in the right direction by protecting (and rewarding) Mr. Atanasov for having the courage to come forward in an environment that is historically hostile toward those who reveal corruption.

Recommended further reading:

U.S. NGO Calls Upon GRECO to Monitor Malta’s Implementation of Whistleblower Law in Valery Atanasov Case

National Whistleblower Center warns that Malta Gaming Authority lawsuit threatens rule of law

WASHINGTON, D.C. | FEBRUARY 28, 2018—The National Whistleblower Center (NWC), in cooperation with the European Center for Whistleblower Rights, requested the Group of States Against Corruption (GRECO), and the Prime Minister of the Republic of Malta to take immediate action to ensure that the whistleblower, Mr. Valery Atanasov, is not subjected to retaliation in violation of the Council of Europe’s Civil Law on Corruption and the domestic Malta whistleblower law.

Mr. Atanasov blew the whistle on IT irregularities and lack of enforcement while working at the Malta Gaming Authority (MGA), which he believed could allow for money laundering and other financial crimes. Since reporting his concerns, NWC has learned that Mr. Atanasov has been formally disciplined, suspended with a salary reduction, and fired from his job. Mr. Atanasov is now being sued by the MGA for defamation.

In the letter, NWC expresses its deep concern that Mr. Atanasov has suffered severe retaliation and has requested GRECO to officially monitor this case, and Malta’s implementation of mandatory whistleblower protections required under the Civil Law on Corruption.

Under Article 14 of the Council of Europe’s Civil Law on Corruption, GRECO has the responsibility to monitor Malta’s implementation of whistleblower laws and protections.

Stephen M. Kohn, Executive Director of the National Whistleblower Center, said: “Without strong oversight from GRECO, whistleblower laws in Europe will never be effective.  GRECO must act to ensure that whistleblowers such as Mr. Atanasov are not subjected to any retaliation, and that the Civil Law on Corruption is not toothless.”

The National Whistleblower Center is a non-profit, non-partisan legal advocacy organization that seeks to strengthen whistleblower rights and protections.  To learn more about the NWC please visit its website at www.whistleblowers.org. To learn more about the European Center for Whistleblower Rights, visit its website at www.whistleblower-rights.org.

To read the NWC letter to the GRECO Executive Secretary and to the Prime Minister of Malta, please click here.

Whistleblowers Get Some Good News in Genberg v. Porter

Following Wednesday’s devastating Supreme Court decision in Digital Realty Trust, Inc. v. Somers, whistleblowers were in need of some good news. The Tenth Circuit answered the call yesterday with a solid decision in Gensberg v. Porter affirming an amicus brief submitted by the National Whistleblower Center.

Carl Genberg was an executive for the Ceregenix Corporation who suspected misconduct by the Board of Directors. When he suspected misconduct including insider training, he reported this to the Board. As a result of his actions, Genberg was fired. Yet when he brought a whistleblower suit before a federal district court, the judge dismissed his case upon a summary judgment motion by Ceregenix.

In reaching its decision, the District Court claimed that whistleblower reports needed to be “definitive and specific.” Yet this was the wrong standard. A quarter century ago the Third Circuit ruled in in Passaic Valley Sewerage Commissioners v. Department of Labor that whistleblowers only need to have a reasonable belief that their claims amount to a violation of the law. In 2002, the Sarbanes-Oxley law (SOX) was passed in wake of the Enron and Worldcom scandals, and the Senate Judiciary Committee stated in its final legislative report that the Passaic Valley standard protecting any “non-frivolous” report should control in a Sarbanes-Oxley whistleblower case.

Alas, big corporate interest groups like the Chamber of Commerce did not concede defeat. Instead, courts around the country pushed for the “definitive and specific” standard, which makes it much harder for whistleblowers to get their cases to the trial stage. A surprising and disturbing number of decisions ignored the reasonableness language and adopted the “definitive and specific” standard.

The National Whistleblower Center counterpunched in a case before the Administrative Review Board and won an important victory, firmly establishing the Department of Labor standard, namely whether a whistleblower “reasonably believes” a violation of law has been committed. Moreover, DOL specifically rejected the “definitive and specific” language.

But some discredited ideas just don’t die, and the District Court in Colorado revived “definitive and specific” again. Genberg appealed the decision, and NWC again responded with an amicus brief explaining why the Tenth Circuit must use the “reasonably believes” standard.

The Tenth Circuit agreed. It explained the “statement of the burden [put forth by the District Court] was incorrect, for the Administrative Review Board of the Department of Labor has explicitly disavowed the definitive and specific evidentiary standard” (internal quotations omitted).

Stephen M. Kohn, the National Whistleblower Center’s executive director who submitted the amicus brief in Genberg v. Porter stated, “corporations must stop retaliating and start listening to their whistleblowers. The Tenth Circuit reaffirmed basic rules of law governing SOX. These rules were drafted to help whistleblowers report wrongdoing, not to help corporation’s cover-up fraud.  The culture of shooting the messenger must end.  We are proud to have supported Mr. Genberg in this very important case.”

For more information:

Supreme Court Rejects Protecting Internal Whistleblowers

Corporate Compliance Programs Crippled and Thousands of Employees Lose Protection

Washington, D.C. | February 21, 2018 — In a groundbreaking anti-whistleblower decision, the U.S. Supreme Court ruled today that employees who report violations of securities law to their supervisors or corporate compliance programs, but not to the Securities and Exchange Commission (SEC), are not protected from retaliation under the Dodd-Frank Act (DFA).

Stephen M. Kohn, Executive Director of the National Whistleblower Center (NWC) and an attorney who has represented “internal” whistleblowers since 1984, described today’s Supreme Court decision in Digital Realty Trust v. Somers (No. 16-1276) as “devastating.”

“The overwhelming majority of whistleblower report violations directly to their managers and internal corporate compliance programs. Stripping internal whistleblowers of protection could negatively impact over 90% of corporate retaliation cases,” Kohn said.

“The Digital Realty Trust case establishes national precedent on interpreting numerous whistleblower protection laws that define ‘whistleblower’ in the same manner as defined in the DFA. By strictly construing the scope of protected activity, the Supreme Court has upended over 50 years of decisions interpreting numerous whistleblower statutes that have for years protected employees who report concerns to compliance officials and managers,” Kohn added.

Other whistleblower laws undermined by this decision include the whistleblower provisions in the Commodity Exchange Act, numerous banking whistleblower laws, the Clean Air Act,  Safe Drinking Act, Occupational Safety and Health Act, Credit Union Employee Protection Act, FDIC Act, International Monetary Transactions Act, Superfund, Water Pollution Control Act, Toxic Substances Control Act, and Surface Mining laws.

“Thousands of employees who were deemed protected as of yesterday have now lost protection,” Kohn said. This is the largest setback for whistleblower protections decided within the past 50 years. The scope of employees losing protection under this decision is mind-boggling, as past studies have demonstrated that over 90% of whistleblowers report their concerns to their managers.

“We are now forced to urge employees who want to be protected under federal law to anonymously and confidentially report violations directly to the government, and avoid making internal disclosures,” Kohn said. “Under this precedent, any employee seeking to report corporate fraud must seek legal advice before reporting concerns to their managers. An innocent and good faith disclosure can now result in summary termination, and the stripping of important legal rights that an employee may otherwise have,” Kohn added.

The NWC  previously filed a brief urging the Supreme Court to protect internal whistleblowers. The NWC also operates a confidential fraud-reporting program, permitting corporate employees to obtain confidential legal advice and referrals.

For more information:

National Security Whistleblowers: Systemic Failures and Broken Promises Exposed in Leaked Report

Over the weekend the Daily Beast reported on a leaked draft investigative report that exposed the systemic failures in the flawed intelligence community whistleblower program. According to this report, late last year the Trump Administration put a lid on the finalization of an investigation of the whistleblower program failures by the Inspector General for all intelligence agencies. 

However, the leaked draft report reveals that the intelligence community has utterly failed to protect whistleblowers who work for the intelligence agencies—including the CIA and the NSA—and report waste, fraud, abuse, or criminality to the Inspector General, or to Congress as permitted by law. These findings should be neither shocking nor surprising to anyone who has followed the intelligence community’s continual lack of interest in protecting whistleblowers.

What should be shocking and disturbing to every American is that the Trump Administration has tried to bury an investigation revealing that legal protections for intelligence community whistleblowers are really a hoax. The statistics from the suppressed draft report demonstrate a complete failure in the intelligence community whistleblower program.

Reportedly, the Offices of Inspector Generals at 6 intelligence agencies received 190 allegations of whistleblower reprisal from 2010 through 2016. However, of those 190 complaints, only 61 were investigated, and of those 57 were ruled “unsubstantiated.”

Even worse, the Daily Beast further reports that:  “In the entire batch of 190 cases, only once did an OIG find in favor of the whistleblower. That was in a DIA case that took 742 days to complete. Other cases remained open longer. One complaint from 2010 was still waiting for a ruling.”

That’s right. Only one whistleblower prevailed out of 190 cases filed in six years.  That’s a success rate of about 0.05%.

There are three takeaways from this startling failure.

First, the intelligence community whistleblower program was created by President Obama after he broke his promise to support full due process rights for all federal employees, including access to courts and jury trials. The National Whistleblower Center predicted this program would fail because putting the agencies in charge of deciding whistleblower claims, without allowing employees to file in court and seek a jury trial, inevitably results in the agency denying any wrongdoing or reprisal. Everyone knew long ago that whistleblowers can’t win when there is no outside review of reprisal claims by courts and juries. It’s even worse when the intelligence agency that fired the whistleblower has final say in the case.

Second, the Trump administration has created an even bigger scandal by trying to suppress the investigation into the obvious failures of the intelligence community whistleblower program. On the one hand, President Trump talks a good game about the “Deep State” (i.e., the intelligence agencies and the FBI) being out to get him. But, on the other hand, here is a chance for Trump to actually do something to hold the intelligence community accountable and his administration is caught suppressing the investigative report that proves a systematic failure is crushing intelligence agency whistleblowers.

Third, there is a way out of this distressing place. If Trump really wanted to hold the so-called “Deep State” accountable he should join good government reformers in Congress and support real whistleblower reform.  While the intelligence community has repeatedly opposed legislation to provide real due process rights for all federal employees, including intelligence community whistleblowers, that very reform passed the House in 2009 with strong bipartisan support, including a majority of Republicans voting in favor.

In July 2009, a number of leading national security whistleblowers urged Obama to keep his campaign promise to support passage of full rights for intelligence community whistleblowers and all federal employees. As I pointed out in my 2009 testimony before the House Committee on Oversight and Government reform, in 1996 the GAO independently determined that letting intelligence community employees take legal claims to courts and juries did not risk revealing national security secrets because the courts were equipped to handle classified information. However, the intelligence community has defeated every effort to strengthen whistleblower protection and its influence over members of Congress to kill whistleblower reform is legendary.

Now that the weaker whistleblower program that the intelligence community wanted has proven to be a disaster, it is time for Congress and Trump to support the real reform that would provide full due process rights, with access to courts and juries, for all federal whistleblowers.

Sessions’ Memo To DOJ Threatens Whistleblower Rights

In a memo dated January 29, 2018, Attorney General Jeff Sessions instructed Department of Justice (DOJ) heads to not communicate with “senators, representatives, congressional committees, or congressional staff” without first consulting with the DOJ Office of Legislative Affairs (OLA).

Senator Chuck Grassley (R-IA), a long-time advocate for whistleblower rights, has expressed his concern regarding the legality of the Attorney Sessions’ memo. In his response letter, Grassley writes that the memo “does not appear to comply with existing law.” In particular, it infringes on the rights of DOJ employees to “make protected disclosures directly to Congress.”

This memo follows comments Sessions made in August 2017, in which he threatened to prosecute anyone who released sensitive government information. In a Justice Department briefing, Sessions stated that the “culture of leaking must stop.”

The pre-approval requirement laid out in the DOJ policy memo encompasses communications “pertaining to policy, legislation, political appointments, nominations, intergovernmental and public liaison relations, cases and investigations, and administrative matters.” The policy also requires DOJ “attorneys, officers, boards, divisions, and components” to immediately direct all “congressional inquiries and correspondence from” Congress to the OLA.

On February 5, Senator Charles Grassley, a long-time advocate for whistleblower rights, responded to the troubling DOJ policy guidance. Senator Grassley wrote that the memo “does not appear to comply with existing law and request[ed] that [Attorney General Sessions] revise it accordingly.” Although recognizing that “the Department … must speak with one voice on official matters,” Senator Grassley pointed out that the memo “fail[ed] to address the rights of employees to make protected disclosures directly to Congress.”

As noted by Senator Grassley, the memo “could leave the impression that the [DOJ] is attempting to prevent lawful disclosures and discourage employees from exercising their statutory and constitutional rights to directly communicate with Congress.”

Nonetheless, the rights of federal employees “to petition Congress … or to furnish information to either House of Congress … may not be interfered with or denied.” The laws governing the rights of federal employees clearly state that non-disclosure agreements or policies must contain a clear exception for lawful whistleblowing.

The DOJ memo is a direct attack on federal employee whistleblower rights. As the DOJ continues this troubling trend of hostility toward whistleblowers, it is important to remember that federal employee whistleblowers are key actors in rooting out government fraud and corruption. Suppressing whistleblowers will only serve to empower fraudsters.

Important links:

Big Win for Whistleblowers in Bipartisan Budget Act

Crippling Loopholes in the Tax and Wall Street Whistleblower Reward Laws are Closed

WASHINGTON, D.C. | February 9, 2018The Bipartisan Budget Act of 2018, approved today by the U.S. Congress, included two key whistleblower-rights amendments initially introduced by Senator Charles Grassley (R-IA). These amendments ensure that employees who blow the whistle on criminal tax fraudsters are covered under the IRS whistleblower law, and end the double-taxation of whistleblower awards under the Dodd-Frank Act.

The amendments fixed devastating loopholes in two major anti-fraud corporate whistleblower laws.  The criminal loophole in the tax law would have disqualified most whistleblowers who reported illegal offshore tax-avoidance schemes.  The Grassley amendment completely eviscerated that loophole, permitting employees who risk their careers to disclose criminal tax frauds to obtain an award under the law.

The double-taxation loophole had a debilitating impact on the Dodd-Frank Act’s whistleblower program.  Under this loophole whistleblower had to pay taxes on the fees they paid to their attorneys.  In practice, this meant that whistleblower could be taxed as high as 80% on their net-award.  This loophole had the practical effect of negating the entire DFA-award program.

Stephen M. Kohn, Executive Director of the National Whistleblower Center, said:

“Today is a great day for whistleblowers and American taxpayers.  Thousands of Americans sent letters and emails to their elected representatives demanding that these two devastating loopholes in whistleblower law be fixed.  The Chairman of the bi-partisan Senate Whistleblower Caucus, Senator Charles Grassley, forged the bipartisan coalition needed to ensure that whistleblowers are protected.  The IRS and Dodd-Frank whistleblower laws are the cornerstone of America’s anti-fraud program. These two amendments breathe new life into these vital laws.”

“The National Whistleblower Center has been working for three years to fix these problems, challenging the anti-whistleblower interpretations in court, mobilizing thousands of citizens to send letters/emails to their representatives, and educating Members of Congress concerning the destructive nature of these two loopholes. Our campaign has been successful,” Kohn added.

Dean Zerbe, an expert tax attorney and the NWC’s Senior Policy Analyst, described today’s law as a “game changer” in fighting tax frauds:  “The clarification on collected proceeds for tax awards puts out a big welcome mat to tax whistleblowers with information about illegal offshore accounts and major tax crimes.   It is a day of mourning for Swiss bankers and Panamanian lawyers.  Once again the patron saint of whistleblowers –Senator Grassley — answers the prayers of whistleblowers.  This is a game changer.”

A copy of the two whistleblower amendments are linked here.

Recommended reading:

National Whistleblower Center Names Scott Hajost Managing Director of Global Wildlife Whistleblower Program

The National Whistleblower Center (NWC) is proud to announce that Scott Hajost has been named the new managing director of the NWC’s Global Wildlife Whistleblower Program. Mr. Hajost will work to forge new partnerships, both in the U.S. and globally, to refer and protect whistleblowers in the areas of wildlife crime, including illegal logging and fishing.

“We are very happy to welcome Scott to the NWC team. With his decades of experience, and as former executive director of the IUCN-US, we believe that Scott will be a driving force behind the development of our Global Wildlife Whistleblower Program,” says Stephen M. Kohn, executive director of NWC.

Mr. Hajost is an international environment and conservation policy and law expert and manager with over 36 years working with the US Government, NGOs, multilateral institutions, and leading global environment and development projects. Most recently, he was the Chief of Party for the Wildlife Crime Tech Challenge, a global initiative of USAID in partnership with National Geographic, the Smithsonian, and TRAFFIC. In 2016, NWC’s Global Wildlife Whistleblower Program was selected as a Grand Prize winner of the Challenge and won the People’s Choice Award.

Mr. Hajost is also vice-chair of the board of the Antarctic and Southern Ocean Coalition (ASOC), senior adviser to the Global Island Partnership (GLISPA), and is an elected member of the Executive Committee of the U.S. IUCN National Committee.

As managing director, Mr. Hajost will play an integral role in educating NGOs, international institutions, and whistleblowers, among others, worldwide, about how U.S. laws such as the Foreign Corrupt Practices Act, False Claims Act, and the Lacey Act, can be leveraged as tools to combat wildlife trafficking.

For Mr. Hajost’s extended bio, please visit our website.


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