Nigeria’s Whistleblowing Policy: A Good Start, But Not Enough

On December 21, 2016, Nigeria’s Federal Ministry of Finance approved a whistleblowing program as part of the Nigerian government’s continued efforts to fight corruption. Key features of the program include the launch of an online portal for submission of tips and the establishment of a reward for “information that directly leads to the voluntary return of stolen or concealed public funds or assets” (the reward is 2.5 to 5% of the amount recovered, with the percentage decreasing as the amounts recovered increases). As over $176 million in stolen funds was recovered within the first two months of the program, the whistleblowing policy appears to be an overnight success story. Nevertheless, although stolen funds are indeed being recovered, the existing policy does not do enough to offset the risks that whistleblowers face when they come forward with information, and this deficiency may limit the long-term effectiveness of the program. In particular, there are three aspects of the program that the government ought to reform in order to encourage individuals to assume the risks associated with becoming a whistleblower, and consequently to ensure the policy’s continued success. Continue reading

The Opportunity to Address Kenya’s Corruption Problem

With the Kenyan Presidential elections on the horizon in 2017, incumbent President Uhuru Kenyatta, who hopes to continue his regime, has spoken out against corruption, emphasizing that combating this widespread problem requires effort on the part of every Kenyan. In his first term, President Kenyatta had shown promising signs of staying true to his philosophy of holding everyone accountable by actually getting rid of members of the Cabinet. Yet Kenya’s recent history makes many skeptical. For over a decade, Kenyan presidents have been pledging to get corruption under control. In 2003, newly-elected President Kibaki promised to stamp out corruption in Kenya. He proceeded to enact two important pieces of legislation in his first year: the Anti-Corruption and Economic Crimes Act, which established the Kenya Anti-Corruption Commission (KACC) to investigate corruption and educate the public, and the Public Officer Act, which required all public officers to declare their wealth. Yet at the end of President Kibaki’s decade-long regime, the situation remained bleak, with corruption running rampant. Kenya’s education sector offers a particularly troublesome glimpse into the continued prevalence of the problem. A 2010 forensic audit of Kenya’s Education Sector Support Programme found that misappropriation of funds and leakages in transfer of cash and materials from the Ministry of Education to schools, as well as other types of private embezzling and mis-accounting of funds, had led to the loss of 4.2 Billion Kenya Shillings (US$55 million) that was originally intended for education. Furthermore, most of the suspected actors went unpunished; even when caught, the culprits were either transferred to new departments or at most suspended from their role.

As for President Kenyatta’s more recent efforts, the President claims that he has done his part in the anticorruption fight and is frustrated by the lack of complementary efforts by others. Yet many critics claim that President Kenyatta has not demonstrated the political will necessary to fight corruption. And some have gone further, accusing the president of suspect and excessive awarding of government contracts to companies like Safaricom without an open bidding process. Safaricom have been involved in multiple corruption scandals already, leading to suspicions of bribery. Critics have also been highlighting the fact that those close to Kenyatta seem immune from serious scrutiny for corrupt acts.

Even if we put those concerns to one side, and assume that both President Kenyatta and President Kibaki before him were acting in good faith, the numerous anticorruption initiatives undertaken by both administrations do not seem to have had much of an impact. There are a few things that Kenya’s next president—whether it is Kenyatta or someone else—could do that would go further in making progress against the corruption problem than the measures that have been adopted so far: Continue reading

Reporting Corruption Easily and Safely: Papua New Guinea’s Phones Against Corruption Initiative

Nick Brown, head of Global Distribution for Mobimedia International, contributes the following Guest Post.

 Persuading corruption victims to complain remains one of the great challenges to combating corruption.  Policymakers can’t prioritize prevention efforts or know where to deploy enforcement resources if they don’t know who is demanding bribes where and from whom. But getting citizens to blow the whistle is no mean feat.  Citizens must be convinced it is worth the effort, that something will happen if they do speak up.  Citizens must also be assured they will be safe if they do, that the corrupters will not harm them or their loved ones, financially or physically.

With its “Phones Against Corruption” initiative, the Government of Papua New Guinea has hit upon a way that citizens can easily and safely report corruption complaints, and since its launch in 2014, with technical support from Mobimedia International and financial backing from UNDP and Australia, it has taken off.  Critical to its success is that it makes no technological or financial demands on PNG’s limited capacity.  It requires no more technological sophistication from citizens than the ability to send a text message, a form of communication widely used throughout the country. How does it work? Continue reading

Whistling in Chorus: The Potential Impact of the Rise of Parallel Prosecutions on Whistleblower Regimes

A few months ago, Chinese officials announced a number of new incentives for whistleblowers to come forward to disclose corporate wrongdoing: pledging to develop protection plans for whistleblowers when necessary to “prevent and end acts of retaliation” and increasing the rewards whistleblowers could potentially receive to approximately $33,000 for “actionable information” (with even greater sums available for “significant contributions of information”).  While these policies are fascinating in their own right, they also feed into a larger discussion that has been taking place both on this blog and in other forums, regarding what impact, if any, an increased commitment to anticorruption norms by demand-side countries may have upon the current anticorruption regime. A number of authors have already discussed this phenomenon both in broad strokes and specifically within the context of China’s increased enforcement of anticorruption laws (though some have suggested China’s recent, high-profile corruption prosecutions, including a $490 million fine of GlaxoSmithKline, may serve as a cover for protectionist policies).  One area that may warrant further consideration, however, is the likely impact that the rise of demand-side prosecutions and the resulting potential for parallel enforcement by demand-side and supply-side countries may have upon these states’ whistleblowing regimes.

While the ways in which the increased prevalence of demand-side corruption prosecutions will impact the interactions between supply- and demand-side countries’ anticorruption regimes remains unclear, this phenomenon seems likely to result in one of two possible outcomes with respect to states’ attitudes towards whistleblowers. First, countries may perceive some benefit to ensuring that they are the only–or, at the very least, the first–government to receive a whistleblower’s report.  Second, states may alter their whistleblowing policies to reflect the fact that whistleblowers can potentially report to, and be rewarded by, both demand- and supply-side countries.  While the impact of these different scenarios on the ways in which whistleblowing protections and incentives will develop over time may be quite different, both appear disadvantageous to states’ anticorruption efforts, to the whistleblowers themselves, or both.

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A Problematic Proposed Whistleblowing Law in Switzerland

Switzerland is currently not a particularly hospitable country for whistleblowers.  The anti-retaliation protections provided to potential whistleblowers are relatively sparse – individuals fired from their jobs can, at best, hope to receive up to the equivalent of six months of their salary rather than reinstatement – and there are few legislative incentives in place to encourage individuals to report corruption or other forms of corporate wrongdoing.  Moreover, not only are the country’s laws rather harsh when it comes to encouraging and protecting whistleblowers in the private sector, commentators have noted the “brutally hard line” that the Swiss government has taken in a number of high-profile whistleblower prosecutions.

Unfortunately, a proposed law which has passed the country’s Council of States and will be considered by its National Council, initially billed as an attempt to address ambiguities within the current whistleblower system, appears likely, if enacted, to make an already hostile climate for whistleblowers even worse.

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Guest Post: India’s Whistleblower Protection Act — An Important Step, But Not Enough

Christine Liu, an associate at Cravath, Swaine & Moore’s New York Office, contributes the following guest post:

As Raj noted in his last post, the recent election of Narendra Modi as prime minister of India demonstrates that the Indian population wants change and supports actions against corruption (as do recent polls, such as the Lowy Institute study, which found that 96 percent of Indians believe corruption is holding the country back, and 92 percent believe that reducing corruption should be one of the government’s top priorities). One of the most important obstacles to fighting corruption in India has been the lack of adequate whistleblower protections. Individuals reporting incidents of bribery or corruption faced numerous hurdles, including verbal threats, physical violence, and ostracism. Others encountered workplace retaliation. Confronted with these risks, many potential whistleblowers chose to remain silent.

But there are encouraging signs that this may change. On May 14, 2014, Indian President Pranab Mukherjee cleared the way for the Whistleblowers Protection Act. This action represents a much-needed change from the history of delay surrounding the original bill, which was first introduced in August 2010 and then took years to pass the two Houses of Parliament—it passed in Lok Sabha on December 11, 2011 and in Rajya Sabha on February 21, 2014. The new whistleblower law is a significant achievement. Nonetheless, the law has some important limitations, and there are outstanding concerns about whether the law will be enforced effectively and foster public confidence. Continue reading

Rethinking Kiobel: Is there Room for Human Rights in FCPA Enforcement?

Today is the one-year anniversary of the U.S. Supreme Court’s decision in Kiobel v. Royal Dutch Petroleum Co. In its decision, the Court narrowed the admissibility of Alien Tort Statute (ATS) claims related to extraterritorial human rights abuses, ruling that such claims are not actionable unless the claim has a sufficient nexus to U.S. territory. What kind of nexus is enough for an ATS case arising from exterritorial conduct? For cases involving foreign multinational companies, such as the defendant Royal Dutch Petroleum in Kiobel, a “mere corporate presence” in the U.S. is not enough.

A striking feature of this holding is the clear contrast between how a “mere corporate presence” in the U.S. is not enough for an ATS claim based on extraterritorial conduct, but is sufficient for a Foreign Corrupt Practices Act (FCPA) prosecution. Although Royal Dutch Petroleum’s “mere corporate presence” in the U.S. was not a sufficient basis for an ATS claim, if these human rights abuses were tied to corruption for the retention or solicitation of business in Nigeria (and involved U.S. interstate commerce — a requirement not difficult for the DOJ and SEC to overcome), Royal Dutch Petroleum could be liable for FCPA violations. As a foreign multinational company, Royal Dutch Shell Company lists its shares on the New York Stock Exchange and prepares filings for the SEC. Such activity is sufficient for establishing FCPA jurisdiction.

This suggests a possible strategy for human rights advocates dismayed by the Kiobel decision: Perhaps it might be possible to more aggressively utilize FCPA enforcement for circumstances in which corporate accountability for human rights abuses is tied to bribery. Continue reading