Do motives matter for assessing the legitimacy of whistleblower allegations? This issue is currently subject to debate in Canada as the Ontario Securities Commission (OSC) and Canada Revenue Agency (CRA) are respectively considering and testing reward-based schemes for whistleblowers.
The United States and the United Kingdom have taken different approaches. UK law requires that whistleblowers have a reasonable belief that their disclosure promotes the public interest, and they should not be motivated by personal gain.
The threshold may be even higher in Canada, where the federal Public Servants Disclosure Protection Act (PSDPA) provides that the Public Sector Integrity Commissioner may refuse to investigate alleged wrongdoing or deal with a complaint of reprisals if the whistleblower did not act in good faith.
On the other hand, U.S. legislation generally values information over motive. According to the False Claims Act and the Dodd-Frank Act, blowing the whistle to gain a large recovery is fine as long as the information is novel and leads to successful prosecution.
Our cultural background may largely influence where we stand on this issue. Only a minority of participants to my 2014 study on Measuring the Effectiveness of Canadian Whistleblowing Law mentioned financial rewards as an incentive to report wrongdoing, and one expert mentioned that whistleblowers may be insulted at the idea of receiving money for doing what they consider the right thing. However, many take the view that whistleblowing law may be more effective by not only relying on individuals with superior morals and ethical values who are willing to risk their career, financial stability and more to accomplish what they consider as their civic duty.
In fact, requiring purely or even mainly altruistic motives in order to grant legal protection to whistleblowers may be counterproductive. Personal gain motivations can coexist with the public interest. Putting too much emphasis on motives encourages the wrongdoer to attack the credibility and personality of whistleblowers, and it ultimately shifts the attention from the alleged misconduct to the relationship between the wrongdoer and the whistleblower. Moreover, it may be very difficult to establish whistleblowers’ motives with certainty.
What matters most for investigative purposes is that the information may help establish wrongdoing and that it can be verified, and for protection purposes that it has not been intentionally fabricated to mislead relevant authorities. This approach is also consistent with Recommendation CM/Rec(2014)7 of the Council of Europe.
Providing cash rewards to whistleblowers as compensation for the risk they are taking may become more socially acceptable in Canada. CRA’s new Offshore Tax Informant Program, which aims to provide financial compensation to individuals who provide information that will help collect taxes owing arising from major international tax non-compliance, has led to promising results. The OSC is also currently conducting public consultations on the implementation of a financial incentive scheme for whistleblowers.
The scope of such programs may be limited, but if they are implemented successfully in the long run, they may spearhead the implementation of broader financial incentive regimes for whistleblowers in Canada.
In the next post, I’ll discuss the importance of designing and implementing ex ante mechanisms the right way, and how failure to do so may create a generalized lack of trust in whistleblowing mechanisms of an organization.
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Frédéric St-Martin advises a Canadian financial regulator on corporate governance, anti-corruption controls, investigations and the implementation of whistleblower programs. He graduated from the inaugural IACA MACS 2012-2014 program summa cum laude and received the Best Master Thesis Award in December 2014. He also holds a Master in Law from the University of Montreal, as well as a Bachelor of Common Law and Civil Law from the University of Ottawa. He can be reached by email here and through linked here.