In my last post, I discussed and critiqued a proposal, advanced in a policy paper published by the Israel Democracy Institute (IDI), for a mandatory reporting requirement in Israel’s public sector. Under the IDI paper’s proposal, a public official who, acting in his or her official capacity, formed a “substantial suspicion” that corruption has taken place or will take place could face disciplinary sanctions for failing to report this suspected corruption “as soon as possible.” I criticized this proposal on the grounds that it would both discourage reporting in those cases where a potential whistleblower is reluctant to report right away and so delays for a period of time, and would also deter employees from cooperating with investigators by sharing relevant information that they had not previously disclosed. In both of these cases—the employee who didn’t report right away but might be willing to report later, and the employee who didn’t voluntarily report but might be willing to share information when questioned by investigators—the threat of disciplinary sanctions for failure to report immediately may actually induce employees to keep silent, especially since the chances they will be caught and punished if they never reveal what they suspected are generally quite low. Instead of imposing a mandatory reporting requirement, I argued, Israel (and similarly situated countries) should strengthen positive incentives for whistleblowers, offering them more generous rewards and more effective protections against retaliation.
While many readers broadly agreed with my critique of the IDI paper’s mandatory reporting proposal in its current form, several colleagues suggested that a modified version of the mandatory reporting requirement might be effective and appropriate. In this post, I consider what seem to me the most plausible and promising revisions to the original IDI proposal, and evaluate whether these modifications would overcome my principal critiques:
- Adopting a predetermined grace period: First, instead of requiring employees who suspect corruption to report “as soon as possible,” a mandatory reporting requirement could give employees a longer period of time in which to report. For example, the law could require public officials to report on corruption within eight months after having formed a substantial suspicion that an act of corruption has taken place or will take place. This revision would ameliorate the concern that the mandatory reporting requirement could discourage potential whistleblowers who failed to report right away from ever reporting. At the same time, though, specifying a fixed period within which the reporting should occur may encourage potential whistleblowers, who might otherwise have reported earlier, to “take their time” and use up the entire grace period before reporting. In addition, in most cases it is not possible to prove when a public official formed a substantial suspicion of corruption, which may often render the reporting requirement nearly meaningless. Most importantly, the length of a predetermined grace period, whether it is one week or one year, would be arbitrary, and public officials who did not report within this period would still be discouraged from reporting or cooperating later on.
- Adopting a “reasonable time” standard: Instead of adopting a rigid, predetermined grace period, a mandatory reporting requirement could obligate employees to report on corruption suspicions within a “reasonable time, depending on the circumstances.” Under such a case-by-case standard, a whistleblower who reported on corruption in her workplace long after learning about it could, for example, avoid disciplinary sanctions if she could show that she had a justified concern for her safety that dissuaded her from reporting earlier, whereas another employee who did not face any such concerns might face sanctions for not reporting more promptly. This approach would make tailored determinations as to how much delay is reasonable, rather than establishing an arbitrary and fixed grace period. But this approach suffers from many of the familiar disadvantages associated with flexible standards, which are difficult to apply in a consistent and predictable manner. The uncertainty of what a future disciplinary tribunal might consider a “reasonable time” may confuse and discourage potential whistleblowers, who might prefer to err on the side of caution and avoid reporting or cooperating with an investigation if the potential whistleblower believes that there is a chance, even a relatively small chance, that a tribunal may find their time of reporting “unreasonable.”
- Granting immunity to “voluntary” whistleblowers: Another alternative is to modify the IDI proposal so that any whistleblower who steps forward voluntarily would be granted immunity from disciplinary proceedings for failing to report on time. Instead, disciplinary actions would be taken only against those officials whose failure to promptly report was discovered by the authorities before the officials voluntarily stepped forward. Such a rule would encourage public officials to report on acts of corruption (lest they eventually be caught for not reporting), but without creating the fear that delayed reporting would expose them to disciplinary sanctions. However, this immunity can easily be abused. For example, public employees who do not want to report on corruption might step forward only when they fear that their failure to report is very close to being discovered. Additionally, this rule would not eliminate the disincentive employees would face to respond honestly when questioned by investigators as part of an active corruption investigation.
In short, it is not clear whether the IDI paper’s proposal can be modified such that the benefits of a mandatory reporting requirement will outweigh its potential costs. Still, this is worth further exploration and debate, as I acknowledge there are upsides to imposing corruption reporting obligations on public employees, which may not be fully achievable with positive incentives alone. For example, as the authors of the IDI paper argue, the existence of a mandatory reporting requirement might reduce the public stigma that sometimes attaches to whistleblowers, therefore encouraging more public employees to expose corruption. But as I have tried to show in this post and the preceding post, the effects of mandatory reporting requirements are complex, and careful attention must be paid to the details of the design of such rules. Different models entail different benefits and risks, which are not always immediately apparent.
For my former post on this subject (titled “Why Mandatory Corruption Reporting Requirements May Prove Counterproductive”), see: https://globalanticorruptionblog.com/2021/03/01/why-mandatory-corruption-reporting-requirements-may-prove-counterproductive/.
I really enjoyed this follow-up post, Guy! You’ve put a lot of thought into the different options that are on the table in terms of improving mandatory reporting requirements. I’m curious if there’s any reason why the “reasonable time” standard would be more or less workable in the context of whistleblowing than it is elsewhere in the law. I agree that reasonableness standards are inherently ambiguous, which can lead to confusion on behalf of regulated entities, but is there a reason why that ambiguity/flexibility trade-off might be more or less acceptable here? Thanks for a series of interesting posts!
Thank you very much for your positive feedback, Mayze! You raise an interesting question. Overall, I do not think that the advantages or disadvantages associated with the “reasonable time” standard are much different in the context of mandatory corruption reporting requirements as compared to other contexts. However, one question to ask is what would regulated entities do if they wanted to err on the side of caution and avoid potential sanctions. As I mentioned in the post, due to the phenomenon of “delayed reporting,” erring on the side of caution in the context of mandatory corruption reporting requirements may actually mean that potential whistleblowers would altogether refrain from stepping forward. In other words, the ambiguity associated with the “reasonable time” standard here, I argued, would frequently lead to undesirable outcomes.
Does Israel allow whistleblowers to receive a percentage of the recovery if their tip leads to a successful enforcement action? I know the US offers such incentives in at least some whistleblower cases. I would imagine that many employees who suspect something unscrupulous may be afoot would rather bury their head in the sand to avoid turning their “sneaking feeling” into a sanctionable “substantial suspicion.” Perhaps offering similar financial incentives in Israel would encourage more employees to follow their suspicions and determine whether corruption is actually present. Such a program would also incentivize exposing the most egregious forms of corruption, since whistleblowers stand to make more money if the recovery is larger. While paying whistleblowers may increase the public stigma they face, the IDI’s policy proposal could shield what are ultimately self-serving acts by dubbing them legally required reports.
Thank you for your comment, Jennifer. Such a financial incentive does not exist in Israel. Interestingly, the IDI proposal briefly addresses whether adopting such a measure would be desirable, but the authors ultimately conclude that it wouldn’t, largely for the same reason you mentioned, namely the risk that whistleblowers would be perceived negatively.
Really like this follow-up post, Guy. Thank you for writing it. To be quite honest, after reading this post and your previous one again, I am becoming more and more pessimistic about the regimen in general. It seems that any proposal would have detrimental effects to the fight against corruption at the end. As we discussed in your previous post, at the end, we must make sacrifices if we want to implement any public policy and it ends up being sort of a cost benefit analysis. Implement a mandatory reporting mechanism seems to be more costly, but not implementing it would mean, if there is a whistleblower regime already in place, that there is anyways a default rule (correct me if I am wrong but I believe the default rule would be the voluntary regime) that does not seem to be particularly better either.
Thank you very much for your comment, Astrid. While there are no perfect measures that can be taken to encourage whistleblowing in Israel, and while I do not believe that adopting a mandatory reporting requirement is a desirable step, I do think that there are certain reforms that would encourage potential whistleblowers to step forward. I wrote last year about two potential reforms on this blog: https://globalanticorruptionblog.com/2020/07/13/two-legal-changes-which-would-bolster-israels-protection-of-whistleblowers/. Hopefully that’s a reason to be less pessimistic.
Thank you very much, Guy!