Honesty Without Fear Radio

NWC nabbed an exclusive interview with Jamison Firestone, the law partner and friend of Sergei Magnitsky – a whistleblower whose disturbing story reveals the ruthlessness and corruption of the Russian government. Sergei was tortured and killed after he exposed the looting of Russian taxpayers’ money.

Mr. Firestone explains how Sergei discovered a $230 million fraud in which legitimate Russian businesses were overtaken, and forged documents were used to obtain tax refunds that fattened the pockets of organized criminals as well as the crooked tax officials who approved the fraudulent transfers. Mistakenly believing that the Medvedev Administration would support his efforts to fight corruption, Sergei took a stand against this massive fraud, and filed numerous complaints with Russian law enforcement agencies. He never expected that his testimony against Russian officials would lead to his arrest and detention without trial for 51 weeks. Mr. Firestone describes the horrifying details of Sergei’s squalid prison conditions, and exposes the vicious cruelty by Russian officials who retaliated against Sergei and his family when he refused to change his story. Mr. Firestone explains the cozy relationships between the investigators and perpetrators of the crime, and reveals the shameful attempts by the Russian government to cover up their horrible actions and intimidate Sergei’s family. You won’t want to miss this explosive story – listen here.

Check out the Russian Untouchable’s website for more about Sergei’s story.

Blood MedicineKathleen Sharp’s book about pharmaceutical whistleblower Mark Duxbury will be released in paperback on September 1, 2012. It is Blood Medicine: Blowing the Whistle on One of the Deadliest Prescription Drugs Ever. I had the pleasure of interviewing journalist Kathleen Sharp on November 15, 2011.

Mark Duxbury was a star salesman for a subsidiary of Johnson & Johnson. He was selling Procrit. Procrit is a type of erythropoietin, which is also called EPO. Following management direction, he convinced doctors that prescribing high doses would help cancer and dialysis patients. At the time, Johnson & Johnson was engaged in a bitter turf battle with competitor Amgen. Procrit became Johnson & Johnson’s top selling drug. The U.S. government was paying more for EPO than it was for any other class of medications. Duxbury and a co-worker, Dean McClennan, became concerned about the reports of patients dying while taking Procrit. They insisted that their employer respond to this safety concern, and refrain from illegal marketing tactics. This issue cost him his job. By 2007, the dangers of Procrit became public, but not before too many Americans had died.

Duxbury and McClennan filed a whistleblower claim under the False Claims Act (FCA). Kathleen SharpDuxbury died before the litigation could be completed. Sharp (pictured) examines how a big pharmaceutical company can push its drugs through doctors and into patients’ veins before any of them are aware of the true risks. Sharp explains how federal regulators facilitated the pharmaceutical companies and reacted slowly to the reports of adverse reactions. Even today, EPO is on the market, albeit with enhanced “black box” warnings.

Sharp also makes Duxbury’s ordeal come to life. Much as attorney Steven Berk explained here, the recoveries of qui tam whistleblowers are rarely reported with the details of the suffering they endured for the public’s benefit. In Blood Medicine, Sharp does report the details, in a flowing narrative that makes for an easy read of such a hard story.

Blood Medicine is an important story for whistleblowers, taxpayers and patients. We are indebted to Kathleen Sharp for her thorough research and insightful writing.

I had the pleasure today of interviewing Donna Boehme about the impact Dodd-Frank has had on corporate compliance programs. Our discussion about creating a corporate culture open to employee reports led to an interesting case detailed in her recently published column in Compliance and Ethics Professional. In the article, she talks about a group of employees at two national banks (BNY Mellon and State Street) who blew the whistle on approximately $2 billion worth of systematic foreign exchange trading fraud. These employees were recruited to blow the whistle by Harry Markopolos, the man who figured out what Bernie Madoff was doing and tried to warn the SEC years before the case erupted.

Ms. Boehme says the fact that these employees were actively recruited might lead some to believe that a “new breed” of whistleblowers, recruited to expose fraud by investigators outside the company, might be born out of the Dodd-Frank Act, but it is too soon to tell. She explains that the new SEC program for whistleblower disclosures has received over 334 tips in its first seven weeks. Boehme argues that instead of trying to “find the whistleblower” when fraud investigations get started, corporations should have a high-level Chief Ethics and Compliance Officer who is independent from the legal department and with direct access to the Board of Directors. This first test case highlights that companies should seriously evaluate whether their corporate culture supports internal whistleblowing, or be prepared to pay the price when they decide to go directly to external authorities. She does not believe that monetary rewards are the sole motivator, and cites recent surveys that employees prefer to report internally (culture trumps money).

Listen to the podcast of today’s show to hear the rest of our discussion.

Ms. Boehme is the principal at Compliance Strategists LLC in New Providence, New Jersey, a former chief compliance and ethics officer, a member of the Society of Corporate Compliance and Ethics’s Advisory Board, and the editor of the weekly CS Newsflash.

* Legal Intern David Kutch contributed to this posting.