Two recent stories involving whistleblowers demonstrated the extremes in company responses.
The first story involved Barclays and its CEO Jes Staley violating the company’s own policy by trying to unmask an anonymous whistleblower.
Contemporaneously the bank cancelled a contract with Endinel, which was set to provide a chat service that would allow the bank’s employees to anonymously blow the whistle. The bank claimed this termination of a service expected to go live this month was merely a “coincidence” of timing with the revelations that CEO Staley ordered the bank’s corporate security department to find an anonymous whistleblower.
The second story was equally interesting but for very different reasons. It involves the insurer AmTrust and an investigation by the SEC and FBI based on a whistleblower’s secret tapings and other information. The whistleblower worked for the company’s then auditor BDO and was assigned to the audit team.
The undercover auditor surreptitiously recorded AmTrust employees during his tenure at the insurer. Even more fascinating was that this undercover auditor worked with a professional whistleblower group led by Harry Markopolos.
If that name sounds familiar it’s because Markopolos was the person who tried to alert the SEC to the massive fraud perpetrated by Bernie Madoff. Unfortunately for investors, Markopolos’ warnings went unheeded and Madoff continued for several more years.
After the Madoff scandal broke, Markopolos formed a professional whistleblower entity that looks for cases to take to the SEC under the Dodd-Frank whistleblower provisions, which can provide a bounty of up to 30 percent of successful recoveries.
It was the Markopolos group that enlisted the Bank of New York Mellon whistleblower over its FOREX manipulations. Now Markopolos has AmTrust in his sights.
The BDO auditor working at AmTrust demonstrates that anyone can be a whistleblower, and not only receive the protections of confidentiality and anonymity but hope to reap significant financial rewards if the SEC brings a successful enforcement action.
For its part, AmTrust said in a statement there was “nothing in the story that is different from the old, recycled” information that has been circulating for years.
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Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He’s the creator of the award winning FCPA Compliance and Ethics website. He is the Compliance Evangelist. His best-selling seminal book, “Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.
1 Comment
If a staff of an external audit firm has concerns would he first have to raise them with his employer and the firm concerned and wait for that non-response, before he is allowed to go to the SEC?
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