Edwards Snowden, the noted NSA whistleblower, last night spoke up in defense of his partner in…crime? Concern is growing that journalists who use leaked documents are starting to be pursued more aggressively as criminals.

Snowden fled the country after he revealed the National Security Agency’s mass surveillance of program. Glenn Greenwald worked with Snowden, wrote about the leaks for the Guardian in 2013 and won a Pulitzer. See the whole thing play out in the documentary, CitizenFour. That won an Oscar.

Head shot Glenn Greenwald
Glenn Greenwald / Wikimedia Commons

Greenwald is an American based in Brazil, where he writes for The Intercept Brazil. Last week, prosecutors in Brazil charged him with cybercrimes for publishing information from government cell phone messages. He joins Julian Assange of Wikileaks in facing criminal charges not for leaking information, but for distributing it.

In a Washington Post column posted Sunday, Snowden argues:

The legal theory used by the Brazilian prosecutors — that journalists who publish leaked documents are engaged in a criminal “conspiracy” with the sources who provide those documents — is virtually identical to the one advanced in the Trump administration’s indictment of WikiLeaks’ founder Julian Assange in a new application of the historically dubious Espionage Act.

 The Obama administration was willing to go after whistleblowers, but not reporters, he writes.

 When I came forward in 2013 to reveal the global mass surveillance scandal, I understood these unwritten rules. As the same Glenn Greenwald patiently listened to me explain the classified evidence detailing the government’s crimes, everyone in the room knew — or we thought we knew — that as the original source of these disclosures, the consequences for our little truth-telling project would be mine alone.

Continue Reading Snowden: Greenwald charges represent pushback against whistleblowers

Securities and Exchange Commission

In announcing its first two whistleblower awards of the year, the Securities and Exchange Commission notes:

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.

In one case, a whistleblower alerted the agency to a fraudulent scheme and received a share of the recovery — $277,000.  In another case, an investor alerted the SEC. That person was awarded $45,000.

The SEC also notes: All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violation.

We await action on proposed changes to the SEC whistleblower law that could hurt whistleblowers.

Nigeria

Worldwide, whistleblowers have much less protection than they do in the U.S. Nigeria, for example, did poorly on this week’s Corruption Perception survey, scoring a 26 out of 100. A new video from an ongoing anti-corruption effort tells the stories of several Nigerian whistleblowers.

Continue Reading Whistleblower news round-up: DOD, SEC and all the way to Africa

The news from Transparency International is not good.

This year’s Corruption Perceptions Index (CPI) reveals that a majority of countries are showing little to no improvement in tackling corruption.

Our analysis also shows corruption is more pervasive in countries where big money can flow freely into electoral campaigns and where governments listen only to the voices of wealthy or well-connected individuals.

Corruption is difficult to quantify, so the worldwide anti-corruption group ranks 180 countries and territories by their “perceived levels of public sector corruption, according to experts and business people.”

It uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean. More than two-thirds of countries score below 50 on this year’s CPI, with an average score of just 43. Similar to previous years, the data shows that despite some progress, a majority of countries are still failing to tackle public sector corruption effectively. 

The report takes a close look at money and politics this year and concludes that the analysis “suggests that reducing big money in politics and promoting inclusive political decision-making are essential to curb corruption.”

There was good news too.

Continue Reading Transparency International: Little progress in “tackling corruption”

“This all supposedly started because of a whistleblower,” President Trump’s attorney Jay Sekulow said Tuesday during the first day of the Senate impeachment trial. “Where is that whistleblower?” he added as he closed his notebook and walked away from the Senate podium.

Whether you think that’s blaming the messenger or not, the reality is the Ukraine whistleblower’s job is done. The whistleblower, is however, still a target. Over the weekend, another of the president’s lawyers, Pam Bondi, said the whistleblower is “not a real whistleblower,” but an informant and leaker.

Whistleblowers, including this one, have been called worse. White House counselor Kellyanne Conway described the whistleblower as “more blowhard than whistleblower.” The president and others like to refer to the “so-called” whistleblower. Fox News correspondent Geraldo Rivera called the whistleblower a rat and a snitch. Rush Limbaugh also called the whistleblower a leaker.

So, we return to the question — What’s wrong with being a leaker? Are all leaks illegal? Can you be a whistleblower and not be a leaker? All this came up in 2017 when President Trump called former FBI chief James Comey a leaker.

NWC chair Stephen M. Kohn clarified the difference in this Washington Post video, where he states that criticism of some leakers “might be valid…but the real motive here is to scare people, to discriminate and distract.”  He points out that there are ways to blow the whistle and disclose information lawfully,

Continue Reading Whistleblower still a target for the President’s defense team

Corruption persists worldwide and whistleblowers in many countries risk everything. So, two years ago a group of lawyers, anti-corruption activists and investigative journalists founded PPLAAF – French acronym for Plateforme de Protection des Lanceurs d’Alerte en Afrique –  Platform to Protect Whistleblowers in Africa.

PPLAAF co-founder, veteran French human rights lawyer William Bourdon, told a recent ICIJ conference in Paris that protecting whistleblowers should be a duty for every government and society.

“Their sacrifice, their courage is crucial in opening the eyes of the world to the huge, complex, underground threats to the public interest,” he said.

Now, a trove of document from the program have led to a series of stories on Isabel dos Santos, described as the richest woman in Africa. The daughter of long-serving Angolan president, José Eduardo dos Santos, the stories report that she moved public money into tax havens and private businesses. Dos Santos told the BBC that the charges are false and politically driven.

The leak includes 715,000 documents, including emails, contracts, spreadsheets, audits, board of directors meeting minutes loan agreements, deeds, public contracts, invoices, and tax returns.

The stories conclude:

  • Western consulting, accounting and law firms played a key role in helping Africa’s wealthiest woman amass and shield a fortune.
  • PwC, Boston Consulting Group and other major firms facilitated dos Santos’ efforts to profit off her country’s wealth, apparently ignoring red flags along the way.
  • Regulators around the globe have virtually ignored the key role Western professionals play in maintaining an offshore industry that drives money laundering and drains trillions from public coffers.

From the story

As Isabel dos Santos tells it, she made her massive fortune through business acumen, grit and entrepreneurial spirit.

A global business celebrity, she is a regular presence in elite boardrooms and at such star-studded venues as the Cannes Film Festival. The eldest daughter of a former Angolan guerrilla-turned-autocrat also presents herself as the face of a new Africa.

The Luanda Leaks investigation tells a dramatically different story about how Isabel dos Santos became Africa’s richest woman.

A leaked trove of financial and business records reveals the inside story: how she moved hundreds of millions of dollars in public money out of one of the poorest countries on the planet and into a labyrinth of companies and subsidiaries, many of them in offshore secrecy jurisdictions around the world. The records also show how Western financial firms, lawyers, accountants and government officials — from Lisbon to London and Luanda, from Malta to Dubai — were only too happy to help.

More from The New York Times: How U.S. Firms Helped Africa’s Richest Woman Exploit Her Country’s Wealth

The Guardian

 

The business writers at The New York Times promise a bump in white-collar crime news in 2020. At the same time, a series of reports raises concerns about oversight of the accounting industry.

From The Times:

Goldman Sachs is negotiating with the Justice Department to pay a penalty of about $2 billion for its role in the 1Malaysia Development Berhad scandal, known as 1MDB.

Accounting fraud became a particular focus of the Justice Department toward the end of 2019. In December, federal prosecutors indicted executives from Outcome Health and MiMed, and opened an investigation into whether BMW, the German automaker, manipulated its sales figures.

The 1MDB case involves 17 Goldman Sachs executives accused by Malaysia of taking  $2.7 billion of the $6.5 billion raised for the 1MDB fund.

How that case will be resolved is an open question because the Malaysian authorities are looking to recoup all of the money raised on behalf of 1MDB.

In the United States, federal prosecutors are looking at possible money-laundering and Foreign Corrupt Practices Act violations by Goldman.

The Times reports the money raised by the fund was to finance infrastructure and other public development projects in Malaysia. But instead, it went to pay bribes and “fuel the lavish lifestyle” of a local financier involved in the case, according to charges.

Continue Reading 2020 may be a big year for white collar crime, but report cites poor oversight of accounting firms

We still hear a lot of talk about the reliability of second-hand information in relation to the Trump whistleblower. In November, a study of data from whistleblower reports filed at more than 1,000 companies found it very reliable. Secondhand reports are “47.7% more likely than firsthand reports to be substantiated by management, which suggests that management views many secondhand reports as credible.“

Read our interview with Kyle Welch, the George Washington University business professor who co-wrote the study. Then check out his new piece in the Harvard Business Review.

Kyle Welch

Whistleblowing stories are all over the news. Some observers have attributed this to a systemic change in society. There are more stories about whistleblowing, the argument goes, because there are more crimes to report.

However, rather than an increase in criminal activity, we may instead be observing an increase in the willingness of employees to speak up

The researchers looked at anonymous data from NAVEX Global, which runs employee hotlines for some of the world’s largest companies.

Our study of the data led us to two important findings: First, whistleblowers are crucial to keeping firms healthy. The average manager seems to take these reports seriously and uses them to learn of and address issues early, before they evolve into larger, more costly problems. We also found that second hand reports are more credible and more valuable, on average, than firsthand reports.

Companies that have a higher volume of complaints from whistleblower hotlines report fewer lawsuits and smaller legal settlements, they found. The HBR piece quotes Daniel Garen of Pivot Point Compliance Management. He says employee hotlines “have been the single greatest source for uncovering problems at the organizations I have worked with.”

Unless they are used against employees, he noted.  Some lawyers advise whistleblowers to seek outside counsel first and approach company hotlines with care. The program’s aim is to protect the company, not the whistleblower, creating a built-in conflict of interest. Continue Reading Harvard Business Review: The case for robust corporate whistleblower programs

Corporate compliance programs aim to make sure a company obeys laws and regulations. One problem with compliance — companies can sometimes make more breaking the rules than following them. And they are complicated. So, they mount compliance programs for show and look the other way. That’s where whistleblowers come in. Or go out. Some internal reporting programs work against whistleblowers, so insiders choose to report wrongdoing to a government agency or the press.

And when they do, companies are sometimes forced to assess the efficacy of their compliance programs.  At Danske Bank, the cost of doing so may lead to layoffs. Bank employees are being offered buy-outs, with managers of the international bank citing rising compliance costs. From Bloomberg.

 Danske Bank A/S is offering 2,000 of its employees in Denmark the option of stepping down as the cost of adapting to a world with stricter regulations and negative interest rates just keeps growing…

Danske has acknowledged its costs are still rising, following a vast Estonian dirty-money scandal. In an interview in Stockholm, the chief executive of Danske in Sweden, Johanna Norberg, said “the peak” level of investment to meet anti-money laundering requirements has “not yet been reached.” Continue Reading Why not beef up corporate compliance before you get caught?  

One company gave dementia patients drugs they didn’t need. A company working in the Middle East billed the Air Force for hours no one worked. Opioid makers treated loyal doctors to kickbacks in the form of “lavish meals and entertainment.”

Those are just a few of misdeeds catalogued in the Department of Justice annual report on False Claim Act cases. Whistleblowers helped the government collect $3 billion in fines and recoveries in fiscal year 2019, up from $2.8 billion in 2018.

Medicare and Medicaid were big targets for fraudsters this year, as they have been in years past, according to the annual report from the Department of Justice. The list also includes military contractors, universities and a fish oil producer. Read the full list here.

From the report:

Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.  During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions.

“Whistleblowers continue to play a critical role identifying new and evolving fraud schemes that might otherwise remain undetected,” said Assistant Attorney General Hunt.  “Taxpayers have benefitted greatly from these individuals who are often required to make substantial sacrifices to bring these schemes to light.”

Continue Reading Whistleblowers help DOJ collect $3 billion in fines and settlements under the False Claims Act

The men on the EPA’s wanted list didn’t kill anyone, but they could make a lot of people sick. They are accused of dumping mercury contaminated soil, smuggling ozone depleting freon into the US or covering up illegal cruise ship discharges.

But a story in The American Prospect magazine suggests that many states don’t have lawyers or detectives prepared to go after environmental criminals. The piece is based on an internal EPA document and was originally published for subscribers to The Capitol Forum.

Twenty states have zero dedicated criminal enforcement attorneys or investigators, according to a document maintained by the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance. The Capitol Forum obtained the document through an open records request.

To effectively monitor, enforce, and deter criminal environmental conduct, states should have dedicated staff members and resources, according to interviews with former EPA staff who collaborated with state-level environmental programs during their careers.

The document was a list of “full-time employee[s] whose job is investigating and/or prosecuting pollution control crime.” Only eight states had both an inspector and an attorney. The EPA told The Capital Forum that the agency does not have minimum law enforcement staffing requirements for state  programs. Sometimes they work with state police or an attorney general’s office on environmental crimes, according to the EPA’s comment. State regulators described similar partnerships.

Continue Reading Report: Many states lack law enforcement staff dedicated to environmental crime