The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.” The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected.

Fact Number 14:

The Chamber urged the court in KBR to find that KBR’s practice of not providing explicit warnings to employees was acceptable under federal law.  Under this precedent whistleblowers can be deceived into thinking they were talking to a truly independent compliance department, corporate counsel could in fact keep all their whistleblower concerns secret, and use the information obtained from the whistleblower to undermine the whistleblower.   
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The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.” The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected.

Fact Number 13:

The Chamber of Commerce uses the phrase “corporate compliance” in a misleading and disingenuous manner.  In a major U.S. Court of Appeals 2014 case, the Chamber’s position on such internal compliance programs was clarified.  The Chamber vigorously argued that such programs were, as a matter of law, part of a company’s General Counsel.  They argued that compliance departments were not independent investigatory bodies, but simply fact-finding bodies designed to provide information to company attorneys.  As such, compliance investigations could operate in complete secrecy, and their findings could be kept secret from the government, even if subpoenaed. 
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The Chamber of Commerce has commenced a well-financed and aggressive lobbying campaign to undermine America’s most effective whistleblower law, the False Claims Act. To justify its anti-whistleblower campaign the Chamber published a report entitled, “Fixing the False Claims Act: the Case For Compliance-Focused Reforms.” The purpose of this blog series is to combat the Chamber’s misinformation, and explain why the False Claims Act must be protected. Whistleblowers and their supporters are strongly urged to read this blog series and share it with friends.

Fact Number 12:

The Chamber of Commerce and its members have argued for the past 30 years that internal disclosures to corporate compliance programs or company managers are not protected whistleblower activities.  This argument has undermined compliance programs. In 1984, Brown & Root fired a corporate compliance inspector and argued that whistleblowers who only reported their concerns within the company had no rights, and could be fired at-will. 
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Originally published at Corporate Counsel on October 16, 2014.

What would it look like if the human resources team woke up one day and suddenly decided it was going to take over the job of the internal audit function? Would managers somehow be asked to incorporate audit activities into their performance reviews? Would audit become 90 percent training? And more importantly, would the organization find itself less capable of identifying and fixing control risks?

NO, you say! That could never happen! Because everyone knows Internal Audit has a certain highly developed subject matter expertise, and that’s why this must be left to the experts.

And you would be right, of course. Which is why so many compliance and ethics authorities are uncomfortable with the prospect of the legal department or the general counsel driving compliance. To paraphrase Sen. Charles Grassley, R-Iowa—You don’t have to be a former chief compliance officer and recovered lawyer to see/smell the General Motors-style folly of that arrangement.

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Compliance Professional Awarded $300,000 by SEC

Whistleblower Came to SEC After Reporting Fraud Internally and Company Failed to Take Action

On August 29, 2014, The Securities and Exchange Commission announced a whistleblower award of more than $300,000 to a company employee who performed audit and compliance functions and reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally.

It’s the first award for a whistleblower with an audit or compliance function at a company.

“Individuals who perform internal audit, compliance, and legal functions for companies are on the front lines in the battle against fraud and corruption.  They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower.  “These individuals may be eligible for an SEC whistleblower award if their companies fail to take appropriate, timely action on information they first reported internally.” 
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As companies head into 2013 facing yet another year of increasing and complex compliance and ethics challenges, here’s a threshold question for the Board of Directors: Does your chief compliance officer have the empowerment, independence, seat at the table, line of sight, and resources to do the job?

Following is a “boardworthy” sample of big developments from 2012 that should give some boards and C-suites (and you know who you are) pause:
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