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Protecting Whistleblowers since 1977

International Support for Financial Sector Whistleblowers

Bea Edwards, June 28, 2010

On Sunday, June 27th, the G-20 Toronto meeting of heads of government issued a declaration in which anti-corruption initiatives figured strongly. The leaders recognized that corruption, particularly in the financial services sector, had played a significant role in bringing on the economic crisis of 2008/2009.

We agree that corruption threatens the integrity of markets, undermines fair competition, distorts resource allocation, destroys public trust and undermines the rule of law.

 

In addressing the relationship between strong anti-corruption measures and the health of the international financial system, the G-20 placed an emphasis on the importance of whistleblowers and set out the intention to cooperate in international efforts to protect those who stand up against corruption.

The declaration made specific reference to the UN Convention Against Corruption, which calls upon signatories to take active steps to shield witnesses from retaliation when they disclose corruption and fraud. Article 32 is explicit in assigning to member countries of the United Nations an obligation to provide for the physical safety of whistleblowers and victim/witnesses, as well as for their protection from “unjustified treatment,” i.e. reprisal.

Article 32. Protection of witnesses, experts and victims

1. Each State Party shall take appropriate measures in accordance with its domestic legal system and within its means to provide effective protection from potential retaliation or intimidation for witnesses and experts who give testimony concerning offences established in accordance with this Convention and, as appropriate, for their relatives and other persons close to them.

 

Article 33. Protection of reporting persons

Each State Party shall consider incorporating into its domestic legal system appropriate measures to provide protection against any unjustified treatment for any person who reports in good faith and on reasonable grounds to the competent authorities any facts concerning offences established in accordance with this Convention.

 

In the run up to the Toronto G-20, the US Congress agreed on a financial regulatory reform that also includes strong whistleblower protection at the US Securities Exchange Commission (SEC). The new legislation is designed to “encourage” whistleblowers because it:

Creates a program within the SEC to encourage people to report securities violations, creating rewards of up to 30% of funds recovered for information provided.

As we examine more closely the circumstances in the US financial services sector and its offshore franchises that preceded the meltdown of banks, investment firms and credit markets in 2008, we can see how important an early warning system could have been. In the banking and insurance sectors it is clear that as early as 2005, many experts realized that the coming collapse was only a matter of time – a question of “when” and not “if.” As the world’s political leaders assess global efforts to recover from the economic crisis, it is encouraging to note that the US financial reform package and the G-20 Declaration of the heads of government are recognizing the centrality of whistleblowers to maintaining stability in the financial system. Cooperation, not just among governments, but also among governments and international financial institutions, is essential to strengthening the recovery and ensuring that crises like the most recent one cannot recur.

Bea Edwards is the International Reform Director for the Government Accountability Project, the nation's leading whistleblower advocacy organization.