TNRC Topic Brief Whistleblower Protection: An Essential Tool for Addressing Corruption that Threatens the World’s Forests, Fisheries and Wildlife

Whistleblower Protection:
An Essential Tool for Addressing Corruption that Threatens the World’s Forests, Fisheries and Wildlife

February 2021 | TNRC Topic Brief

Stephen Kohn, Kohn, Kohn, & Colapinto
John Kostyack, National Whistleblower Center¹

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Global progress on environmental conservation and management is greatly hampered by corruption. Weak law enforcement, which is both a facilitating factor and a result of corruption, is one important reason. The United Nations Environment Program identified a lack of law enforcement capacity as a key gap in tackling environmental crimes in 2018. In 2019, the United Nations’ first report on the global environmental rule of law found that “despite a 38-fold increase in environmental laws put in place since 1972, failure to fully implement and enforce these laws is one of the greatest challenges to mitigating climate change, reducing pollution and preventing widespread species and habitat loss.” Building stronger anti-corruption policy around the world and better utilizing existing laws is an urgent conservation priority.

One promising anti-corruption strategy centers on whistleblower protection. In the past few decades, whistleblowers have proven to be a powerful tool for detecting and prosecuting environmental crimes and corruption. Thanks to modern whistleblower protections, such as those incorporated into the U.S. Foreign Corrupt Practices Act, whistleblowers around the world are currently partnering with law enforcement officials to make a meaningful dent in corruption in a host of industry sectors such as oil and banking. To date, whistleblowers have relied heavily on U.S. laws because of the unique protections and rewards they provide. These laws have been widely praised by law enforcement officials knowledgeable of the direct contributions made by whistleblowers to the successful detection and enforcement of various crimes.

Conservation practitioners and anti-corruption professionals can support the use of these successful whistleblower laws for the benefit of natural resources conservation. Working to secure new whistleblower protections in the many places where there are serious gaps may also be an important contribution, where the conditions exist for those laws to be used effectively.

Key Barrier to Addressing Corruption: Widespread retaliation against whistleblowers

A recent UN report on wildlife crime indicates that corruption exists across all stages of the supply chain in the illegal wildlife trade and emphasizes the need for greater detection and effective enforcement as key to combating this crisis. Whistleblowers often are uniquely positioned to observe such corrupt activities, making them a powerful tool for detection.

Unfortunately, whistleblowers’ contributions to the fight against natural resource corruption have been greatly hindered by the threat of retaliatory measures by wrongdoers and their allies. For example, totoaba poachers, whose gillnets are responsible for the rapid decline of the endangered vaquita in Mexico’s Gulf of California, have attacked those attempting to monitor and report on their illegal activities. Those considering blowing the whistle are usually well aware of the risk of retaliation, which can range from lost opportunities at the workplace, job termination, and exclusion from working in one’s chosen profession, to enduring harassment and threats to oneself and family, to being physically harmed or killed. Strong protections are needed to ensure the safety of whistleblowers and to motivate individuals with evidence of corruption to become whistleblowers.

Whistleblower protections have been enacted in 59 countries (UNEP 2019). However, in many countries these protections are inadequate, and local and national governments fail to protect whistleblowers from reprisals. One measure of this failure is the treatment of environmental defenders, some of whom are whistleblowers due to their possession of incriminating information not widely known. A recent Global Witness study finds that 212 land and environmental defenders were killed in 2019, the highest annual total since statistics were first collected. In many cases, the governments did not simply fail to protect – they vilified the defenders and otherwise contributed to reprisals.

The workplace is often the place where whistleblowers are needed most because employees have access to otherwise well-hidden information about large-scale corruption. Yet whistleblower protections are often just as weak inside the workplace as they are outside. In 2018, the Association of Certified Fraud Examiners found that in the previous 10 years, occupational fraud referrals to prosecution had declined by 16 percent worldwide; this decline was attributed to whistleblowers’ fears that they would be identified and suffer retaliation.

Strengthening Whistleblower Laws

Those seeking to strengthen whistleblower protection laws should tread cautiously and avoid encouraging disclosures to officials and institutions not committed to whistleblower protection. Understanding a country’s history and its current political, cultural, and economic context is critical to ensuring adequate protection for whistleblowers. For example, in South Africa, a history of murders of high-profile whistleblowers has created widespread doubt about the government’s willingness and ability to protect whistleblowers; a history of police informants undermining the struggle against apartheid has also contributed to distrust of whistleblowers (Vandekerckhove, et al. 2014). As a result, whistleblowing is perceived to be reserved for the middle and upper classes in South Africa, who are more likely to be able to navigate the legal system (Vanderkerckhove, et al. 2014, Irish-Qhobosheane 2007).

Despite the challenges, whistleblower protection regimes can succeed in a variety of environments. In South Korea, where a high cultural emphasis is placed on group loyalty, important progress has been made with whistleblower reward laws. Since the establishment of a whistleblower channel through the Anti-Corruption and Civil Rights Commission (ACRC) in 2008, whistleblowers have helped the South Korean government recover USD 265 million. In a 2019 annual report, the ACRC attributed the whistleblower program with an improvement in the country’s Corruption Perception Index score.

In Canada, rewards are offered to those who help expose “major international tax evasion” and “aggressive tax avoidance.” Whistleblowers helped the government collect USD 19 million in the 2018-19 fiscal year, the first year when rewards were issued.

Elements of a Strong Whistleblower Protection Regime²

Whistleblowers and those who assist them need to find effective ways to disclose corruption and secure meaningful prosecutions of wrongdoers while avoiding disclosures to those who cannot or will not protect whistleblowers. The most effective whistleblower laws have the following components:

1. Confidential handling of whistleblower disclosures. Offering the ability to disclose wrongdoing confidentially, and faithfully implementing confidentiality commitments, is critical for reducing the risk of retaliation (Terracol 2018). Whistleblower programs enacted without sufficient confidentiality protections often leave the fate of whistleblowers in the hands of officials who may not be able to protect them or who may put them in greater jeopardy by tipping off wrongdoers about the allegations.
2. Financial awards linked to the whistleblower’s role in producing a successful outcome. Given legitimate fears of retaliation, financial incentives may help encourage whistleblowers to step forward. Prosecutors regularly praise financial awards for this reason. Although some commentators have questioned whether reward laws might create incentives for false reporting, empirical evidence of such an effect is lacking (Dyck, Morse, and Zingales 2010, Maslen 2018, Nyrerod and Spagnolo 2018). A study of all reported fraud cases involving large U.S. companies between 1996 and 2000 by the University of Chicago Booth School of Economics found “no evidence that having stronger monetary incentives to blow the whistle leads to more frivolous suits.” The best whistleblower laws provide a statutory guarantee that whistleblowers will receive a percentage of monetary sanctions recovered by prosecutors thanks to their disclosures (Schecter 2017, NWC 2015, Kohn 2017).
3. Independent reporting channels. Agencies within governments that are dedicated to supporting whistleblowers and investigating claims are an essential component of whistleblower programs (Worth et al. 2018). Strong whistleblower laws establish offices, such as the Office of the Whistleblower at the U.S. Securities and Exchange Commission in the United States, that are specifically designed for facilitating confidential whistleblower disclosures.

While many countries have made strides in creating or expanding whistleblower laws, significant gaps remain in both design and implementation (Chalouat, Carrion-Crespo, and Licata 2019). Often, countries include one or two of the key components of whistleblower laws but not all three, leading to disappointing results. A report by BluePrint for Free Speech evaluated whistleblower laws in G20 countries, finding weak implementation due to a lack of genuine confidentiality and a lack of a dedicated office to receive and investigate complaints. A similar report evaluated whistleblower laws in the European Union, finding that “without dedicated agencies to advise, support, and protect whistleblowers, the laws could not succeed in protecting whistleblowers.”

Ghana provides an example of how poor design undermines a law’s purported offer of confidentiality and rewards to whistleblowers. In 2006, the Parliament of Ghana passed the Whistleblower Act, Act 720 with the stated goal of combating corruption. The law includes provisions for confidentiality and included the first financial rewards for whistleblowers in Africa. However, the awards are offered only to whistleblowers who report to both a chief or elder and several government agencies, making it more difficult to maintain the whistleblower’s confidentiality (Faunce et al. 2014). Few Ghanaians have utilized the law, likely due to both to a lack of awareness and a well-founded fear of retaliation (Domfeh and Bawole 2011).

In other cases, officials entrusted with implementation have undermined success. In January 2019, Lithuania introduced a new law providing financial rewards for whistleblowers who provide “valuable information.” However, rather than allowing rewards to be granted by an independent agency, the responsibility for rewards was left to the Prosecutor General. As of October 2020, none of the four whistleblowers who applied for a monetary reward has received one. A spokesperson for Lithuania’s Prosecutor General stated that the information provided did not qualify because it was not “absolutely new,” a requirement not found in the law.

Perhaps the most noteworthy example of the challenges in designing and implementing a whistleblower law is the United Kingdom, which in 1998 became the second country (after the United States) to enact a whistleblower protection law, the Public Interest Disclosure Act (PIDA). PIDA has since become a model used by many other countries, but unfortunately, PIDA has failed to adequately protect whistleblowers.

In 2013, a coauthor of the original legislation criticized the law, warning that “PIDA is dangerous for whistleblowers because people think they have stronger protection under it than they actually do.” The primary protection from retaliation offered through PIDA is not confidentiality, but compensation for retaliation, which whistleblowers can seek after the fact through UK Employment Tribunals. A report by the Thomson Reuters Foundation and BluePrint for Free Speech found that the focus on compensation after the fact rendered PIDA ineffective in both preventing retaliation and addressing ongoing retaliation.

A committee of the UK Parliament recently released a similar report criticizing the Employment Tribunals as a poorly-suited mechanism for dealing with whistleblower complaints, presenting whistleblowers with high legal costs and inadequate support. Because Employment Tribunals had become the “de facto bearers of justice for whistleblowers,” the report found that the actual wrongdoing reported by the whistleblower was “never, or rarely investigated.” The committee concluded that PIDA has imposed enormous costs on whistleblowers and deterred future whistleblowing. The committee recommended, among other things, creating an office for whistleblowers in the executive branch to expedite handling of claims and to reduce retaliation risks.

In contexts where there the rule of law is weak or where the threat of retaliation is particularly high, allowing whistleblowers to report to the government through an intermediary can provide an extra layer of security. NGOs can play this intermediary role, particularly in countries where there is a strong perception of government corruption (Loyens and Vandekerckhove 2018). In Indonesia, a case study on reporting corruption found that some whistleblowers were more likely to report local corruption to an NGO intermediary, rather than reporting directly to police or prosecutors (Rinaldi 2007). In 2018, South Korea adopted a system of proxy reporting that allows whistleblowers to report anonymously through a lawyer and provides funds to cover legal fees for whistleblowers.

How the U.S. Legal Framework Can Be Used Globally

The United States has enacted a host of whistleblower laws that include the key components of confidential handling of disclosures, financial awards and reporting channels (Schultz and Harutyunyan 2015). U.S. laws have served as a major influence for global whistleblower laws, as well as for international organizations such as the Organization for Economic Cooperation, the G20, and the Organization of American States (Johnson 2003). U.S. whistleblower laws are generally available to whistleblowers regardless of their physical location or citizenship status, allowing whistleblowers around the world to confidentially report corruption to U.S. law enforcement.

The global reach of U.S. laws allows the U.S. to play a major role in countering corruption abroad. Referring to the U.S. Internal Revenue Service’s work with whistleblower Bradley Birkenfeld, Swiss researcher Ellen Hertz explains that “the United States, when it wants to, can be extremely forceful in imposing its jurisdictional reach on other countries. The United States single handedly killed the Swiss banking secrecy tradition.” If used effectively, U.S. whistleblower laws could have a similarly significant impact of natural resource corruption.

Although U.S. whistleblower reward laws are the strongest in the world, whistleblowers seeking to use them nonetheless often face significant challenges, including complex procedural requirements, intransigence of public officials and problems with maintaining confidentiality. Consulting with qualified whistleblower attorneys prior to taking action is recommended.

Below we explain how key U.S. laws can be used immediately by whistleblowers around the world to combat natural resource corruption.

A. Foreign Corrupt Practices Act (FCPA)

FCPA, one of the most effective laws covering bribes paid to foreign officials, has broad transnational application. Since the whistleblower component of the law was passed in 2010, over 4,500 whistleblowers from 120 countries have filed whistleblower reports. The law permits whistleblowers to file anonymous claims and obtain mandatory financial rewards if their information results in successful enforcement actions. The Foreign Corrupt Practices Act can be a powerful global anti-corruption tool, as it applies to agents of companies selling shares in the U.S. For example, in September 2020, a former manager of a large global oil-trading firm, Vitol Group, was indicted for allegedly bribing Ecuadorian government officials to obtain a USD 300 million dollar contract with Petroecuador.

B. Act to Prevent Pollution from Ships (APPS)

APPS, one of the older U.S. reward laws, permits whistleblowers to obtain up to 50 percent of any sanctions obtained for violations of ocean pollution laws covered under MARPOL. The law has been successfully used in holding ship owners around the world accountable for dumping oil into the high seas. The overwhelming majority of whistleblowers have obtained rewards for reporting violations by ships flagged outside the U.S. Between 1993 and 2017, the United States collected over USD 270 million in sanctions from polluters and recovered more than USD 177 million based on whistleblower testimony. Additionally, courts have ordered over USD 63 million to be used for beneficial purposes in fighting ocean pollution.

C. False Claims Acts (FCA)

First enacted in 1863 during the U.S. Civil War, the False Claims Act is one of the most successful whistleblower laws in the world. It has been replicated in 31 U.S. states.

The law has a qui tam³ provision that empowers whistleblowers to expose a wide variety of corruption, so long as there is a link to contracting with the U.S. government. For example, a seafood company that obtained a USD 10 million loan from the U.S. Department of Commerce was successfully prosecuted under the FCA due to its false certifications of compliance with environmental laws in obtaining the loan. The company paid a USD 1 million penalty to resolve the case; the whistleblower who disclosed the wrongdoing received an award of USD 200,000. The law also has been used to hold companies accountable for importing goods in violation of federal laws and to hold offshore oil companies accountable for violations of their lease obligations. For example, BP was held accountable under the FCA for the Deepwater Horizon disaster.

Considering the broad reach of U.S. government contracts, the FCA represents a ripe opportunity for whistleblowers around the world who are working to counter natural resource corruption.

D. Lacey Act and Other Wildlife Laws

Enacted in 1900, the Lacey Act is one of the United States’ oldest conservation laws, regulating the transport, import and sale of fish, wildlife and plant species taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law. Convictions have been secured by the U.S. Fish and Wildlife Service, working in cooperation with law enforcement officials in other countries, in cases involving caviar smuggling, coral trafficking, and illegal trade of endangered reptiles (U.S. Fish and Wildlife Service 2000). Perhaps the best-known Lacey Act prosecution was the 2015 Lumber Liquidators case, in which the retailer of flooring products paid USD 13.2 million in penalties and forfeitures for, among other things, knowingly importing timber illegally harvested from the habitat of the Siberian tiger in eastern Russia.

In 1982, an amendment of the U.S. Fish and Wildlife Improvement Act provided for whistleblower rewards to be paid under all fish, wildlife and plant protection laws administered by the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service. Thus, the authorization to pay rewards now applies to over 40 major wildlife laws such as the Endangered Species Act. Moreover, payments of rewards need not be based solely on the amount of funds recovered in a specific enforcement action; appropriated funds may also be used to compensate whistleblowers (Kohn 2016).

Law enforcement officials within the U.S. Fish and Wildlife Service (FWS) have repeatedly emphasized the key role that whistleblowers have played in the enforcement of both the Lacey Act and the Endangered Species Act. Awards are given to non-U.S. as well as U.S. citizens, so long as the whistleblowers provide information not otherwise available to U.S. authorities. Moreover, harm to natural resources outside the U.S. (e.g., trade in imperiled species covered by the CITES convention) is regulated extensively. No other country has yet adopted wildlife protection laws that address transnational crime in this manner; practitioners working on natural resource corruption should look at these laws as models in crafting policies for their countries.

If fully utilized, the Lacey Act and Endangered Species Act have the potential to significantly contribute to the detection and enforcement of laws regulating international wildlife trafficking, protecting forests from unsustainable harvest, and countering Illegal, Unregulated and Underreported (IUU) fishing. The U.S. Government Accountability Office carefully studied these laws and recommended that additional steps be taken to utilize them for combating wildlife trafficking. The FWS and National Oceanic and Atmospheric Administration have begun implementing some of these reforms, including alerting potential whistleblowers that financial rewards are available on their web sites.

Near-Term Opportunities to Strengthen Whistleblower Protections Outside the U.S.

Large-scale natural resource degradation is often driven by consumer demand for timber, seafood and wildlife (Kissinger, Herold, and De Sy 2012; Pfaff et al. 2010; Lambin and Meyfroidt 2011). Tackling this requires focusing on places where the demand for these products originates. Of the major demand centers outside the U.S., Europe is perhaps the most promising location for strengthening the role of whistleblowers. In 2019, in response to the Panama Papers scandal, which revealed the corrupt financial dealings of public officials and other major figures around the world, the European Union adopted a Directive for Whistleblower Protection, which set the minimum protections, including confidentiality and reporting channels, that all member countries must provide for those exposing violations of EU law.

Although the minimum requirements are inadequate – awards are not required and most forms of bribery are not covered – member countries have the ability to go far beyond the minimum. With a December 2021 deadline facing the member countries, conservation practitioners concerned about combatting natural resource corruption have an important opportunity to lay the groundwork for a powerful new enforcement regime.

As interest in whistleblower protection grows around the world, new opportunities to empower whistleblowers to help combat natural resource corruption are surfacing every day. Mexico and Japan have recently added or amended whistleblower protections, while new whistleblower protections are being considered in Colombia and Mongolia. In addition, Pakistan, Nigeria, Canada, and China have recently added monetary rewards for blowing the whistle on specific types of corruption, while politicians in Brazil and Papua New Guinea have discussed including monetary rewards in new or pending legislation.

Recommendations for Practitioners

1. All practitioners should familiarize themselves with the options available for those who witness natural resource corruption in their country, including opportunities for securing protections and rewards under U.S. laws.
2. Practitioners should seek out opportunities for expanding whistleblower protections, like the implementation of the European Union Directive in 2021, to ensure that new laws incorporate best practices: confidential handling of whistleblower disclosures, mandatory financial awards linked to the whistleblower’s role in producing a successful outcome, and an independent reporting channel.
3. Practitioners who witness corruption or other violations should consider safe options for reporting, whether through a strong whistleblower program in their country, a third-party intermediary, or a relevant U.S. whistleblower law. It is recommended that practitioners consult with a qualified whistleblower attorney prior to blowing the whistle or acting on behalf of a whistleblower.
4. Practitioners who think their organization could serve as an effective third-party intermediary between whistleblowers and enforcement agents in their country or enforcement abroad should familiarize themselves with the relevant law, establish strong partnerships with non-corrupt enforcement officials, and publicize opportunities for members of the public to safely disclose evidence of natural resource corruption. If practitioners plan to work with whistleblowers, they must ensure the confidentiality of those coming forward through, among other things, staff training on cybersecurity and other information security practices.
5. Practitioners should assess other opportunities for assisting whistleblowers in countries where protections are lacking. Because natural resource corruption frequently traverses national borders, such whistleblowers may benefit from introductions to NGOs and officials in countries with strong whistleblower protections.

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¹ The authors gratefully acknowledge the invaluable assistance of Carly Fabian and Kait Pararas. The authors also would like to thank the following reviewers for their insightful comments: Charles V. Barber (World Resources Institute), Melissa Blue Sky (Center for International Environmental Law), Elizabeth Hart (WWF-US), Aled Williams (U4 Anti-Corruption Resource Centre), Hadas Kushnir (USAID) and Megan Hill (USAID).

² Readers should note this section mainly refers to public legal regimes and not to project- or institutional-level hotlines or other arrangements. While some of the same principles may apply, projects or institutions may be subject to, among other things, donor restrictions on providing financial rewards for informants. Any reporting or whistleblowing system should be established with these principles in mind, but also a careful review of the relevant rules governing the project or institution, along with the legal, political and economic context already discussed above.

³ Qui tam means “in the name of the King” and empowers citizens to file suits directly to enforce anti-corruption laws.