Journal of Financial Crime Volume: 4 Issue: 4 Dated: June 1997 Pages: 336-342
This paper examines the effectiveness of legislation that mandates rewards for "whistleblowers" who provide information that exposes crimes that are costing a government money.
The most important of the recent laws that have spurred whistleblowing is the revised U.S. False Claims Act (FCA). Originally passed to help stem procurement fraud against the Union Army in 1863, the law recognized that the government did not have sufficient resources to police Federal contracts and authorized individuals to do so by bringing suit in the name of the government under a qui tam cause of action. The Act was significantly revised in 1986 to make whistleblowing more attractive by allowing successful whistleblowers to reap large awards. Under the revised law, if an individual supplies new information on false claims for Federal funds and the entity making the false claims is successfully prosecuted in the qui tam action, the whistleblower gets up to 30 percent of monies recovered. It is clear that major awards have caused people to report wrongdoing and that government coffers have benefited; however, the FCA also raises the issue of whether motive should be secondary to the public good. In the United States, social scientists, legal writers, and Federal law-makers have concluded that motive is secondary to the public good; motive is only important as it reflects a good faith belief in the legitimacy of one's claim. Other alternatives, such as citizen actions against government agencies to force them to take enforcement actions and punishing people who fail to come forward with information have not proven as effective. The former has been expensive and inefficient, especially since the government has already shown itself loath to act. The reward structure established by the FCA and other similar laws, however, only works so long as there is public money to be recovered. So far, no laws authorize reward for non-monetary wrongs. If the United Kingdom wants to encourage whistleblowing, a greater focus on the value of the information and less on the whistleblower's motive may be necessary, since the U.S. experience shows that the appeal to conscience has limited success. 54 references