Bribery Library Blog - Commentary on the UK Bribery Act and Its Impact on International Business

Just before Christmas, Transparency International UK (TI-UK) published a short article reviewing the highs and lows of 2012 in terms of corruption. The article can be found here.  Many of these stories we covered in our blog posts.  It was an interesting year. Ignoring for the moment the long running Leveson Inquiry into the cosy relationship between the media, the police and politicians, the conclusions of which will be debated for years, no doubt, the stories actually listed by TI-UK concerned the police, politicians, banks and former soldiers, and not so many from big business itself (although Oxford University Press reached a settlement in July and Rolls Royce PLC referred some information concerning historic activities to the SFO in November).

Doubtless other less famous companies have also been in touch with the SFO to notify them of other potential corruption issues. It should be assumed that the SFO has a growing pile of cases to investigate. We will blog on the growth in self-reporting to the SFO separately. The common theme between those individuals identified in the TI-UK end of year report was that they were all in a position of power and decided to try to take advantage of it for personal gain in an illegal manner.  For some, there was a swift end and resolution to their conduct, but for others the prosecution and civil litigation will follow them for years and may taint themselves for ever.  

In December 2012,  TI published its annual Corruption Perceptions Index. The graphics are quite jazzy and informative and it is well worth a visit via this link.  The United Kingdom is still much lower than it should be, at 17, with a score of 74 out of 100, compared with Denmark and Finland which scored 90. I will now let Susan Côté-Freeman, Programme Manager, Private Sector Programmes, at Transparency International, explain Transparency International’s Corruption Perceptions Index 2012:-

Corruption is the world’s most talked about global problem according to a survey commissioned by the BBC. It’s up there with other seemingly intractable problems like poverty and unemployment.

Transparency International’s Corruption Perceptions Index 2012 – which measures the perceived levels of public sector corruption in 176 countries and territories – is not likely to put an end to discussions on the topic. The index has become an essential tool for policy-makers, activists and the many businesses that use it to develop their anti-corruption risk management systems.

Corruption Perceptions Index: ranking highlights

What is noteworthy about this year’s index? Denmark, Finland and New Zealand tie for first place while Afghanistan, North Korea and Somalia once again cling to the bottom rung (read about the top and bottom ranked countries here). What is more dismaying, however, is that two-thirds of the countries ranked in the index score below 50 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean).

What do this year’s rankings mean for governments? They need to take a stronger stance on governance, including the introduction of more stringent rules on lobbying and political financing, making public spending and contracting more transparent and ensuring that public bodies are more accountable to citizens.

And what should business take away from this year’s index? Transparency International’s message on corruption is clear: corruption can happen anywhere and no country and no company can afford to be complacent. But in looking at the bottom two-thirds of the rankings, it’s clear that the major emerging economies, where so much of today’s economic activity is taking place, continue to be seen as highly corrupt.

How do the BRICS perform?

This year’s rankings for the BRICS economies show Brazil and South Africa tied for 69th place, China at 80, India at 94 and Russia trailing the group at 133. All but one of the world’s 10 fastest growing economies score less than 40 out of 100.

It is estimated that the BRICS have contributed up to 50% of global economic growth over the last decade. It therefore stands to reason that growing emerging economies are attractive for business looking for new markets. But unless persistent corruption is addressed, it will continue to present high risks for foreign investors and for emerging economies, which could see their growth stunted by failure to confront problems like bribery.

Companies also need to be more transparent. Our research shows that while the world’s 105 biggest multinationals are doing more to report on their anti-corruption programmes,  but they are not doing so well when it comes to reporting country-by-country. The BRICS all have more than 60 of those 105 companies operating in their borders, but in none of them do more than a dozen of the companies disclose their revenues and/or taxes paid in the country on their corporate website (for more details, click here).

Tackling corruption is a challenging and complex task. But it is critical for all of us, whether we are in emerging or more advanced economies, to defeat corruption, thus ensuring that governments gain and maintain the trust of citizens and business can thrive in a competitive environment that is open and fair

Overall, this looks like a sorry story, with a great deal of work around the world required to improve the position. Whether the richer countries such as the US and the UK are in fact able to demonstrate leadership to other countries is still not certain. It is true that these countries have tough laws and that enforcement of those laws is increasing year by year, but the number of corruption stories is not diminishing. If anything, it appears to be growing. But is that because we are all more aware of it and there is increased enforcement, self reporting and whistle blowing? Or is there just more corruption? It is probably hard to tell, and it is far too early to work out whether the Bribery Act 2010  has had any real impact, yet, on British or foreign companies’ conduct. Some of those companies currently self-reporting may end up being prosecuted for activities or conduct which took place many years ago. It is going to take at least ten years and probably many more until we can look back and examine whether most businesses which operate in some way in the UK are adhering to the new laws.

 

The new SFO director, David Green, has his work cut out for him as his budget strapped department heads towards the first anniversary of the Bribery Act, without having initiated a single corporate prosecution for corruption.

As the Act has no retrospective effect, there was always going to be a lag before the SFO would begin enforcement of the Act with any vigour; offences would need to have been committed after 1 July 2011, be detected/reported and investigated before any enforcement action could commence....and even then, there is a great deal of pressure on the SFO to commence its enforcement regime under the Bribery Act with a strong case.

Certainly the SFO is well underway with harvesting leads.  In November 2011 the SFO launched its confidential whistleblower hotline “SFO Confidential”, for the reporting of serious or complex fraud or corruption.  According to a report in the Financial Times yesterday, SFO Confidential has logged approximately 100 complaints a month since its launch. 

To date not a single official investigation has been commenced as a result of the information received via SFO Confidential.  It is fair to say that not all of those leads will be worth pursuing, but where there is so much smoke there must surely be a fire somewhere. 

We have previously blogged on two high profile whistleblower cases, concerning BP Tankers and EADS, both of which involve allegations of corruption having been handed to the SFO on a platter.  We await with interest the SFO’s next move with respect to BP and the supplier that is alleged to have paid bribes to a BP employee.  The allegations came to light in March 2012 and we expect it will take some time for both BP and the SFO to investigate.  In the meantime, the EADS investigation has been underway for over a year, with still no outcome.  While this case involves allegations of conduct pre-dating 1 July 2011, the length of time required for the SFO to complete its investigation suggests we may have to wait some time before we see enforcement by the SFO of Bribery Act cases. 

While a significant prosecution under the Act would no doubt kick many of those who are complacent about corruption risks into action, many organisations are nevertheless coming under pressure to develop and implement anti-corruption policies and procedures.  This pressure is not coming from the direct fear of prosecution, but is driven by the need to meet the standards expected of counterparties and others who wish to mitigate their organisation’s exposure to corruption through associated parties.  It remains to be seen, however, how long this momentum will continue in the absence of enforcement.

This was the title of a seminar at which the Director of the Serious Fraud Office, Richard Alderman, spoke at the Said Business School and Oxford University on 6 March 2012.

The full text of the speech is here.  Actually the speech contains a review of the SFO’s activities in the area of corruption, and the various criminal procedures which are (or ought to be) available to it to deal with corruption offences.  As Mr Alderman is stepping down as Director soon (in April) it is a kind of goodbye and “this is what I have achieved – this is what more needs to be done - hand-over” speech to the new Director.

The Director began by making a few general comments about the genesis of the SFO 25 years ago; pointing out that it is a small office with about 300 staff and that the current budget is approximately £38 million and is decreasing.

Mr Alderman is of the view that the SFO has an important international role and that over the last three to four years in particular law enforcement has become increasingly internationalised.

He continues that the SFO’s view is that law enforcement in the modern environment is about far more than just prosecution

 “…it also involves education, prevention and disruption.  What this means is that the SFO places great emphasis on helping individuals and corporations get it right in the first place…of course, helping people get it right is of limited benefit if we don’t also tackle very vigorously those who have no intention of getting it right.  This is why I want to focus SFO resources as much as possible on the individuals and corporations who continue to act criminally rather than on those who are trying to get it right but have come unstuck in some way or another.”

Mr Alderman believes that although the SFO’s new policy which is to engage with corporations was initially regarded with suspicion by corporations, the SFO is now regarded as being sensible and constructive.

Our view, at the BriberyLibrary, is that for many people and corporations this new policy must be regarded as a sea change in attitude.  Hitherto, prosecutors have been regarded with great fear and suspicion.  In other countries, such as the United States, the various prosecuting bodies across the US are still, with considerable justification, regarded as very aggressive and uncooperative.  It is interesting, therefore, that British and American prosecutors are now working together much more closely despite the “cultural” differences.  Presumably the SFO’s cooperative approach, as outlined by the Director in this speech, may come as a surprise to many American prosecutors many of whom may formulate their own career paths and personal public profiles from aggressive and high profile prosecution strategies.  Whether the new Director, David Green QC, will adopt the same apparently cooperative approach remains to be seen.  Our sources, who know him, suggest he may be a lot more aggressive prosecutor than Mr Alderman.

Corruption

Back to Mr Alderman’s speech: he then turned to the subject of corruption, stating that this area of work had been one of the major changes in the United Kingdom over the last four years.  Prior to then “for one reason or another” there were no prosecutions relating to overseas corruption in the UK and the previous law was widely regarded as being wholly inadequate for modern purposes.  Mr Alderman publicly recognises that the UK’s reputation had also suffered great and lasting damage as a result of the decisions involving BAE Systems and Saudi Arabia (as reported in my blog post of 13 March 2012 and other earlier posts).

Mr Alderman takes the view that:

1. The UK’s new Bribery Act 2010 has made a very great difference to the UK’s shattered (our word) reputation as it has replaced the previously unsatisfactory law with a range of new offences including one aimed specifically at corporations.
2. Secondly, another feature of the new Bribery Act is the extraterritorial jurisdiction of the Bribery Act and it will include the activities of many companies around the world.
3. Companies internationally are now regarding the Bribery Act as the global gold standard for anti-corruption legislation and as a part of the rules that corporations internationally have to meet.
4. Anti-corruption should just be one part of a company’s overall ethical approach, and that the tone should be set from the top of the organisation.
5. That the SFO expects corporate boards to conduct risk assessments on themselves in order to identify what measures that need to take to mitigate the risks, and to look at agents in high risk countries in great detail.
6. The SFO expects corporates to make sure that their processes are actually implemented in practice and that this should be done on a proportionate and commercial basis using sensible judgment.
7. A number of corporations both British, American and indeed others are increasingly coming to visit the SFO to talk to them about what they are doing in terms of compliance.  It appears that corporations around the world are starting to wake up to the fact that the Bribery Act potentially has global application.

Self-Reporting

The Director stated that self-reporting was something that the SFO introduced in 2009 and reflects existing US practice.  In his view, the process has been a success in the UK and the SFO has had over twenty corporations come in to the SFO to self-report (he does not say over what period these twenty self-reports took place so it is unclear to us whether it is twenty since 2009 or twenty in the last twelve months).

Mr Alderman recognises that a corporation, when discovering that corruption has taken place within the organisation, is faced with a choice of whether to self-report or not to self-report, and hope that no one finds out.  He then outlined a number of reasons why a corporation may want to self report, as follows:

1. The SFO will work with the corporation on managing the reputational risk, pointing out that reputational damage can happen almost instantaneously and can be long lasting in its effect;=

2. The SFO can work with the corporation towards a civil law resolution of the problems which, if it happens, means that there is no criminal conviction for corruption, remembering that a conviction can lead to public procurement debarment in the EU and elsewhere which he claims: “this is a very powerful deterrent.  Indeed some companies could go out of business, faced with debarment”.

As an aside, we at the BriberyLibrary are not aware of many instances either in the UK or the US where public procurement debarment has been exercised or anywhere it has led to a company going out of business (if we are wrong, please tell us!).  This is perhaps because judges would regard this as an excessive and disproportionate punishment with unfathomable and unjustifiable consequences on shareholders, employees and others who supplied to the company and are reliant on the supply-chain for business.

3. Another advantage is the opportunity to work towards a relatively speedy outcome.  The damage to reputation will be much less if the result takes months to achieve, rather than several years, which can occur through the normal criminal processes.

How Self-Reporting actually works

The Director then explains how this all works.  Usually it starts with an allegation of bribery internally at the company, possibly through a whistleblower line.  The corporation does some preliminary work and then may bring in their professional advisers to investigate further.

It is only at this point that corporations tend to contact the SFO (presumably on advice) and they are required to involve the SFO in the processes of investigation.  Naturally they also want “full credit from us” for self reporting.  The Director states that that credit can come in the form of recognition that this process should have a civil and not a criminal outcome.

The Director explains that the case is discussed with the corporation at senior levels and that the SFO will normally agree that the investigation should be carried out by the corporation’s own professional advisers but that the SFO expects to negotiate the terms of reference and the work plan for the investigation.  The SFO also expects regular updates from the corporation so that there are no “surprises” when the eventual report comes to the SFO.

The SFO does not necessarily take the report completely at face value: they will probe it in order to find out whether the company has genuinely uncovered what has happened and has now faced up to the consequences.  Apparently, there can sometimes be a lengthy process of discussion with the company.

Civil Recovery

Mr Alderman reports that the SFO has been using its powers under the Proceeds of Crime Act 2002 (“POCA”) to obtain recovery of the proceeds of criminal conduct.  Vivian Robinson QC has blogged on this subject previously here on 19 January 2012, in the context of the Mabey & Johnson case.

The Director reports (as he did in his speech, on which we blogged on 13 March 2012) that in cases where the choice is between a civil recovery order and no action at all, a civil recovery order is a good result.  However he reports that there are critics of the CRO procedure and that although these cases have to be approved by a High Court judge, less is published about the illegal conduct than would otherwise happen in a criminal case.  Another criticism apparently is that the SFO is only able to recover the proceeds of the unlawful conduct and cannot impose a fine on top of the civil recovery.

Because of these criticisms of the civil recovery process, the Director has been pushing for a more powerful system of settlement that would involve a “deferred prosecution”.

Deferred Prosecutions

The Director then outlined the way in which deferred prosecutions work and that this idea has been taken from the US where they have worked very powerfully within the criminal justice system.  In short, however, he says that in the US the Department of Justice and the corporation reach agreement about the criminal conduct that has taken place; there is agreement on the amount of the fine and other penalties; there is also agreement about monitoring and other measures, and a term for which the Department of Justice agrees to defer the prosecution for a set number of years.  That prosecution is then cancelled if the corporation complies with all the terms of the agreement and there would be no conviction in respect of corruption.

The agreement is then taken to a judge who is able to express his or her own views.

Mr Alderman very much wants to see deferred prosecutions in the UK and reports that the Solicitor General, Edward Garnier QC MP has been pushing this idea very hard in seminars and the media (including one seminar at QEB Hollis Whiteman this week which we attended and on which we may blog soon).  If it does become law in the UK then, when faced with a new case, the SFO will have a choice of either:

1. No action at all;
2. Making a civil recovery order;
3. Entering into a deferred prosecution agreement; or
4. Pursuing a full criminal prosecution.

He says that if it becomes law, “transparent guidelines” will need to be agreed and published.

He is adamant that a significant difference about the way in which things will have to work in the UK, as opposed to the way they work in the US, is that in the US, the Department of Justice and the corporation themselves reach agreement on the amount of the fine and other issues.  The courts in the UK have made it very clear in recent cases (in belligerent judgments in both Dougall and Innospec) that the SFO has no role to play in discussing questions of penalty or sentence.  Therefore Mr Alderman concludes that the only way to deal with this is to involve a judge at a much earlier stage, which itself will be a significant change.

A further change is that the SFO will still have to talk figures with the corporation which can then be brought to the judge so that the judge can express a view, otherwise he says this isn’t going to work (so in our view the SFO will have to tread carefully here, given Lord Justice Thomas' previous outburst on the subject).

Finally, the Director says that there must be much more transparency about the process so that when an agreement is reached, the facts can be explained in open court and documents placed on websites so that the public can see what has happened and that a judge has agreed to the proposals.

Plea Bargaining

The Director then turned to plea bargaining.  In the US, where plea bargaining is very common, he points out that there is a very striking difference between the sentence on pleadings guilty and the sentence after conviction following a contested trial.

In the UK the difference to the US approach is that plea negotiations tend to be engaged at a much later stage of the criminal process.  He repeats that British judges are not happy with the role of the SFO in these plea negotiations and certainly do not want the SFO to suggest a sentence to the judge.

He doesn’t say as much, but reading between the lines it looks like the Director thinks that this is something else that needs to be addressed by the legislature, as the plea negotiation process currently takes far too long.

Companies that do not self report

Mr Alderman concludes by warning that neither the Department of Justice nor the SFO will be sympathetic to a company which has failed to come forward with information.

Further, if the corporation (aware of the criminal activity) allows the corruption to go unpunished, then the profits of that crime may well form a separate offence under the UK’s anti money laundering legislation.

Furthermore, since the establishment of the new whistleblower line called “SFO Confidential”, they received in the first month 2000 reports.  In the US, by contrast, they have set up a whistleblower program with very large rewards for whistleblowers, so there is a very high incentive for someone else to report the corporation even if the corporation decides not to report itself.

If senior executives turn a blind eye to corruption, they themselves risk committing an offence personally under the new Bribery Act (section 14) as well as committing personal money laundering offences, concealing criminal conduct and perverting the course of justice.

In short, his message seems to be: whether or not a corporation self reports should not be regarded as an option for an ethical well run corporation.  It should do so automatically.

Finally, and with no real connection to the themes in his speech on self-reporting, the Director talked about the possibility of creating a new offence of recklessly running a financial institution.

He believes that a new offence needs to be created as there is not one specifically dealing with the conduct of senior executives whose reckless conduct led to the (2008) financial crisis (that we are currently still experiencing).  He reports that

 “there has been considerable interest in this from Parliamentarians and others.  I notice as well that the FSA has put forward proposals about changes to the criminal law in its report on RBS, although it has suggested a rather different solution to mine.  All of these issues will be for Parliament to consider.  I would like to see change”. 

Something for the new Director to pursue, perhaps, when he takes office in April?

As we have reported in a previous post, on 6th June 2011, section 92 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) amended the Securities Exchange Act of 1934 by adding (amongst other things) securities whistleblower incentives and protections.  Section 21F directs the Commission to make monetary awards to eligible individuals to provide voluntarily original information that leads to successful Commission enforcement actions resulting in the imposition of monetary sanctions over $1 million, and certain related successful actions.  Awards are required to be made in the amount of between 10% and 30% of the monetary sanctions collected.

The Dodd-Frank Act requires the Commissions Office of the Whistleblower to report annually to Congress on its activities, whistleblower complaints and the response of the Commission to such complaints.

In its first report, just published, it is stated that the Office of the Whistleblower, in the Division of Enforcement, currently consists of six attorneys and one senior paralegal.

Since the whistleblower hotline was established for members of the public to call with questions about the program, the Office has returned over 900 phone calls from members of the public.

During this period the Whistleblower’s Office has been busy publicising the new program actively through participation in webinars, presentations, press releases and other public communications, and also conferring with regulators from other agencies’ whistleblower offices including the Internal Revenue Service, Commodity Futures Trading Commission, Department of Justice, and Department of Labour to discuss best practices and experiences.

The Whistleblower's Office reports that because the Final Rules only became effective on 12 August 2011, in fact only seven weeks of whistleblower tip data is available for the fiscal year 2011.  Notwithstanding that, within that period 334 whistleblower tips were received which break down into different categories as follows:

• Manipulation – 16.2%
• Offering fraud – 15.6%
• Trading and pricing – 5.1%
• Insider trading – 7.5%
• Corporate disclosure and financials – 15.3%
• FCPA – 3.9%
• Municipal securities and public pension – 2.7%
• Unregistered offerings – 5.4%
• Market event – 3.3%
• Other 23.7%
• Blank (nothing specified by the caller) – 1.5%

Although this is, of course, only a short period of statistical samples, it puts the issues with the FCPA into context with all the other types of SEC violations, at approximately 4% of the total.

Geographically the whistleblower submissions arise from individuals in 37 states within the United States, as well as several foreign countries of which China at 10 callers and the United Kingdom at 9 callers were by far the highest.

The SEC concludes that as a result of the very recent launch of the whistleblower program and because of the small sample size, it is too early to identify any specific trends or conclusions from the data collected to date.

The SEC further reports that on 12 August 2011 the Office of the Whistleblower posted notices of covered actions for the 170 applicable enforcement judgments and orders issued from 21 July 2010 to 31 July 2011 that included the imposition of sanctions exceeding the statutory threshold of $1 million.  The 90 day deadline for all applications for the initial list of covered actions is 11 November 2011 and because the 90 day application period had not passed with respect to any notices of covered actions as at the end of the fiscal year (which the report covers), applications for awards have not yet been processed: therefore the Commission has not paid any whistleblower awards during the fiscal year 2011.

Presumably when the SEC produces its annual report at the end of the fiscal year for 2012, there will be a great deal more information and, we assume, a significant number of whistleblower awards will have been paid.  The analysis should then be much more informative and interesting.

We, at the BriberyLibary, follow this new program with great interest as we are of the view that financial incentives and compensation designed to encourage people with knowledge and evidence to come forward to blow the whistle on corporate corruption (and other legal wrongs) should be seriously considered in the UK without further delay. As we have previously posted, in the competition context, on 3rd August 2011, rewards for whistleblowers already exist in the UK in the competition context and are payable by the Office of Fair Trading, although they are not on the scale potentially foreseen by the SEC’s own program but are limited to £100,000 (which may not be enough to compensate someone whose career might be damaged by speaking out). As always, the US leads the way in developing intelligent "heat seeking" legal strategies and methods to root out serious and systemic crime. Even taking into account the greater size of the US economy, in terms of enforcement it is far ahead of all other developed economies in rooting out large scale national and international bribery and corruption.

The political will to eradicate corruption is growing in many countries, but there are decades of catching up to be done to get to the same level of enforcement with the US.

Almost two years ago, Sergei Magnitsky, a Russian lawyer who was working for a Moscow based law firm and was acting for Hermitage Capital, a London based investment fund, died in state custody, apparently on trumped up charges.

This story is still shocking, even though it has been widely reported in the Western media over the last two years both in newspapers and on television. The continued presence of the story  in the media is largely thanks to the tireless efforts of Mr Magnitsky's former client, Hermitage Capital, and the law firm for which he worked, who together have worked hard to ensure that this story stays in the media and in front of the US and UK governments, and that they in turn maintain diplomatic and political pressure on the Russian government to pursue justice for the Magnitsky family.

Today, 22nd October 2001, The Sunday Times, a British newspaper ran another article on the story, this time told from the viewpoint of Mr Magnitsky's mother Natalia, who says she has utter disbelief that the prosecutors have re-opened the investigation. Apparently they wish to question her, but she says she wants to have no part in it, presumably fearing that the investigation will turn out to be a whitewash. She is reported as saying that she fears the questioning is intended to put pressure on her and her family to stop complaining through the Western media. Instead she has requested that an independent medical commission examine the circumstances in which her son died. This request, which seems perfectly reasonable, has been refused.

In brief, for those not familiar with the story, in the words of the Sunday Times article - no hyperlink, I am afraid, as The Sunday Times is available by subsription only, but it is on page 34:

"The Lawyer, who worked for Hermitage Capital, a London based investment fund, reported to prosecutors that a group  of corrupt policemen and tax officials had embezzled £140m by obtaining a fraudulent tax rebate. However, officials at the interior ministry who had been accused by Magnitsky of being invloved arrested him on charges of committing the crime he had uncovered. In jail Magnitsky, 37, who had two children, developed pancreatitis. In what his mother and widow says was an attempt to coerce him into retracting his accusations against the police, he was denied medical help. During his year long detention, he complained about his treatment more than 450 times..............Magnitsky was transferred to another Moscow jail 18 days later, supposedly for treatment. In a version of events  that has since been confirmed by an official report, [his mother] said that instead of  being admitted to the prison clinic her son was kept in isolation and savagely beaten by eight guards with batons, and put in a strait jacket."

The story continues with how the Russian authorities have attempted to deal with the story by sacking some prison guards since then but no-one has gone to jail for what happened to Mr Magnitsky and the fraudsters have been able to enjoy the fruits of the fraud, the very thing which Mr Magnitsky reported to the Russian authorities.

It is difficult to see other whistleblowers coming forward in Russia when such terrible consequences may follow.

Now no-one is suggesting that such awful things go on in every country when a person with real moral courage tries to stop legal wrongs taking place, but the fate of the whistleblower is often unpleasant, even in countries like the US and the UK where the rule of law is, mostly, strictly upheld. Frequently, whistleblowers lose their jobs, even their careers, and the impact on their family life and financial well being can be harsh, due to their loss of income. But what price moral courage? Shouldn't we as a fair and open society compensate such people?

In the ongoing UK based investigation by the Serious Fraud Office into alleged corruption by EADS/GPT which I have already blogged on twice previously (and which could turn into a really nasty story for the coalition government) there are not one but two whistleblowers, one of whom has allegedly done a deal with GPT in  order to stop him talking further, an irony given the primary allegations, wouldn't you have thought? There was a further story in The Sunday Times on 23rd October on page 22 which I will blog on again very soon. It seems that the UK Ministry of Defence is trying to scare the first whistleblower, Lt Col Ian Foxley, into silence by threatening him with prosecution under the Official Secrets Act. I make no comment here as to whether there has been a breach but the government seems to be walking a very difficult line in making such threats at the moment. It risks getting itself into a real soup by using such threats when there is already a high profile investigation by the Serious Fraud Office underway.

As I will develop in my next blog, there are significant risks that commercial parties and/or organs of government around the world will very often try to stymie whistleblowers, which is why the US SEC whistleblowers reward programme under the Dodd-Frank Act should in my view be adopted in large measure here in the UK to give people an incentive to come forward and to compensate them for their losses.  Only by doing this can you make serious steps in anticorruption to stop crimes from taking place or to prevent their further commission, without fear of these people being punished financially in the loss of their job or career.  Large rewards are needed if you will no longer have a career to pursue.

I invite other  past or present whistleblowers to contact me with their own stories. I would be happy to blog on them and share their experiences with those reading this blog. This will help develop a narrative and an argument to the UK's lawmakers for developing both better incentives and better protections for them in the future.