Jul 27, 2017
Banking: Paying the price for whistleblowers
The case is seen as crucial by those demanding a stronger UK framework to encourage and protect whistleblowers and even compensate them as in the US. "We must give more protection to whistleblowers," says Bradley Birkenfeld, who reported UBS for helping clients to evade taxes. The Securities and Exchange Commission only began paying whistleblowers after the financial crisis and the scandal ignited by the Ponzi scheme orchestrated by Bernard Madoff. The law allows for whistleblowers who provide original, high-quality tips to get between 10 and 30 per cent of penalties above $1m. The SEC awarded $111m to 34 whistleblowers in the five years to 2016, of which the largest payment was more than $30m. The decision of Mr Ben-Artzi to turn down his share of a $16.5m payout for blowing the whistle on Deutsche Bank shocked Wall Street where people do not usually refuse money on a matter of principle. Stanley Bernstein, a New York-based attorney at Bernstein Liebhard specialising in whistleblowers, says the lack of a reward scheme has been "Clearly detrimental" to the UK. One of his clients reported an alleged fraud to the SEC, but most of the activity took place in the UK. "The SEC referred the matter to the FCA and I was asked if our whistleblower would co-operate with the FCA," recalls Mr Bernstein. For Ian Foxley, who blew the whistle at GPT Special Project Management, now a unit of Airbus, over an alleged payment of bribes in Saudi Arabia, there is a difference between paying whistleblowers a reward, and offering compensation.
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