The effectiveness of foreign bribery whistleblowers was lauded last week by an official from the U.S. Securities and Exchange Commission (SEC), as the agency, along with the U.S. Department of Justice (DOJ), explained the benefits of companies self-reporting violations of the Foreign Corrupt Practices Act (FCPA). Representatives for the agencies stated at a conference on Thursday that companies that failed to self-report instances of foreign bribery detected within their company would be subject to considerably larger fines under the FCPA than those who did report such FCPA violations to the federal government.
According to Law360, Kara Brockmeyer, the SEC’s FCPA unit chief, stated that the whistleblower provisions of the Dodd-Frank Act have created significantly higher risks for companies that fail to report FCPA violations. Brockmeyer noted that regardless of their motivation for providing information to the SEC, the agency does “get quality information out of whistleblowers,” including information provided to the SEC by a foreign national that led to the Commission awarding that whistleblower $30 million.
As Brockmeyer’s comments indicate, whistleblowers who report foreign bribery may be entitled to significant rewards under the Dodd-Frank Act. The SEC Whistleblower Office, which was created by the Dodd-Frank Act, provides awards of 10 to 30 percent of the amount of sanctions and penalties over $1 million that the SEC imposes on wrongdoers as a result of a whistleblower’s information. Faced with the risk of being “outed” by ever-growing numbers of FCPA whistleblowers and recognizing the potential savings that may arise from self-reporting their FCPA violations, companies have increasingly powerful incentives to begin to voluntarily report such violations to the government.