By Shanna Devine and Liz Hempowicz From Caribbean Life

When facing the prospect of criminal prosecution for leaking highly classified material to his mistress and later lying about it to the FBI, General David Petraeus found unlikely allies on Capitol Hill. Senators John McCain (R-AZ), Lindsay Graham (R-SC), and Diane Feinstein (D-CA) have all spoken out against criminally prosecuting the four-star general, in part because they feel he has “suffered enough.” This is not the first time that a high-ranking individual may skirt punishment for infractions that would land a subordinate in jail for years. Former Secretary of Defense Leon Panetta and Undersecretary of Defense Michael Vickers were also recently allegedly involved in highly classified leaks to the film producers of Zero Dark Thirty and treated with near impunity.

According to media reports Petraeus plead guilty to one count of unauthorized removal and retention of classified material for which he may face up to a year in prison. His paltry sentence is a far cry from the many years of prison time that many whistleblowers face when they disclose protected information in an attempt to further the public interest. Petraeus claimed no such motive. He seems only to have wanted to help his mistress and biographer, and Panetta and Vickers shared it with a producer from Hollywood – the common thread between the three stories is that these men both leaked information for purely personal gain and each received little more than a slap on the wrist.

The hypocritical dichotomy between the treatments of high-level politically connected officials versus lower level whistleblowers has never been more pronounced. Petraeus, Panetta and Vickers (who continues to serve in a top job at the Pentagon) could count on the support of their former colleagues, despite leaking highly classified material for reasons unrelated to the exposure of wrongdoing or other high-minded motives. This kid-gloves treatment is not something afforded whistleblowers, even when sharing information to further the public interest through official channels. Former NSA contractor Edward Loomis reported government waste on an ineffective and illegal domestic surveillance program up the proper chain of command, yet he was the target of a retaliatory criminal investigation that cost him his career. His colleague Thomas Drake faced 35 years in prison under the Espionage Act, after he legally provided an unclassified briefing on the surveillance program to a reporter. Former CIA agent Jeffrey Sterling disclosed concerns to Congress about an allegedly mismanaged operation to obstruct Iran’s nuclear program, and he was accused of sharing this same information with journalists. In January he become the first civilian to be convicted of Espionage Act.

Intelligence Community (IC) contractor whistleblowers such as Loomis are at a double disadvantage. In addition to threat of being criminalized, they have no statutory protection against workplace reprisal actions – such as demotions or blacklisting – when they disclose government misconduct.

That was not always the case, however.

From 2008 through 2012, all Pentagon and then stimulus funded IC contractors enjoyed best-practice whistleblower protections. This included Intelligence Community agencies like NSA. The law maintained a steady track record and there were not even allegations that it harmed national security. The whistleblower shield was so effective in deterring taxpayer waste that the Council of Inspectors General on Integrity and Efficiency proposed its permanent expansion, and the Senate approved it with bipartisan support. Notwithstanding its widespread support, in an Orwellian maneuver during the 11th hour of negotiations, the closing conference committee stripped all whistleblower rights for IC contractors from the bill.

Six months later, NSA contractor Edward Snowden disclosed the U.S. government’s mass surveillance programs. He later explained the circumstances that led to his course of action, “There are no proper channels for making this information available when the system fails comprehensively.” Currently, IC contractors have two alternatives to almost certain retaliation: 1) remain silent observers of wrongdoing; or 2) make anonymous revelations to the media.

Whistleblowers must have safe channels to report abuses of power that betray the public trust, and Congress has a responsibility to fill these accountability loopholes. Fortunately, as demonstrated by Senator Grassley and Senator Wyden’s newly launched Senate Whistleblower Caucus, protecting the nation’s truth-tellers transcends congressional partisanship. Instead of offering support to disgraced former officials, Congress should follow the caucus’ lead and focus on the heroic whistleblowers who risk their jobs and their freedom to expose government fraud, waste, and abuse.

Shanna Devine is the Government Accountability Project’s legislative director and investigator. Liz Hempowicz is public policy associate at the Project On Government Oversight. Both organizations are partners in the OpenTheGovernment.org coalition.

This article previously appeared in The Hill.

For more on this story go to: http://www.caribbeanlifenews.com/stories/2015/3/2015-03-24-oped-whistleblowers-cl_2015_3.html

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HMRC’s use of powers against whistleblower ‘indefensible’, say MPs

By Rajeev Syal From The Guardian UK
Commons committee praises HMRC solicitor Osita Mba for exposing deal with Goldman Sachs but criticises tax officials for abusing investigative powers

The decision by tax officials to use intrusive investigative powers to try to prove that a whistleblower had spoken to the Guardian has been severely criticised by MPs.

HM Revenue and Customs used the Regulation of Investigatory Powers Act 2000 (Ripa) to examine the belongings, emails, internet search records and phone calls of their own solicitor, Osita Mba, and the phone records of his then wife.

HMRC justified the use of these powers by claiming that they wanted to find out if Mba had spoken to the Guardian’s former investigations editor, David Leigh.
Prosecute financial advisers who assist in tax avoidance, say MPs
Read more

Mba had not spoken to Leigh. Using the Public Interest Disclosure Act, the solicitor had written to the National Audit Office (NAO) and two parliamentary committees in confidence in 2011 saying that the head of tax, Dave Hartnett, had “let off” Goldman Sachs from paying at least £10m in interest.

A report by MPs on the Commons public accounts committee praised Mba for exposing the “sweetheart” deal and called for further scrutiny of HM Revenue’s use of Ripa powers.

“We consider that HMRC’s use of powers, reserved for tackling serious criminals, against Mr Osita Mba was indefensible … HMRC should tell us when it makes use of the powers granted to it under the Regulation of Investigatory Powers Act against whistleblowers from within HMRC,” the report said.

By using Ripa, HMRC can see websites viewed by taxpayers, where a mobile phone call was made or received, and the date and time of emails, texts and phone calls. According to the revenue website, these powers “can only be used when investigating serious crime”.

HMRC’s use of powers, reserved for tackling serious criminals, against Mr Osita Mba was indefensible
Commons public accounts committee

Mba, who trained as a barrister in Nigeria and completed his master’s degree at Oxford, worked in the personal-tax litigation team that dealt with the Goldman Sachs tax issue. He told the NAO and two parliamentary committees that the bank’s settlement had been agreed with a handshake by Hartnett, the permanent secretary for tax at HMRC.

Mba believed the deal could be illegal, and told auditors he was making the disclosure under whistleblowing legislation. His evidence led to Hartnett being accused of lying to parliament over his role in the Goldman Sachs deal, which he denied. He admitted, however, that his organisation had made a mistake by approving the deal. Mba eventually left the Revenue.

IMAGE: The Inland Revenue at Somerset House, London Photograph: Alex Segre / Rex Features

For more on this story go to: http://www.theguardian.com/politics/2015/mar/26/hmrcs-use-of-powers-against-whistleblower-indefensible-say-mps

An accountants guide to the law on whistleblowing

From economa

Over the last twelve months there have been a number of developments in the whistleblowing arena. We have seen the government, together with various UK bodies, aim to improve the law around this subject and clarify existing guidance on how companies should handle whistle-blowers. In this ever-changing environment, it is fair to say that with all these developments comes some confusion. So, what are the key changes that the accountancy profession need to be aware of?
What do accountants need to know about whistleblowing laws?

The current landscape

· The most recent development in the UK came on 12 March 2015, when the Government published a response to a consultation on whether prescribed persons should be obliged to report annually on whistleblowing activity. This would mean that bodies such as the FCA and SFO would be required to make public reports, which set out whistle-blowing activities that have been disclosed to them. However, the Government has stressed that whistle-blowers and their employers will not be identified. The Government also indicated that it would shortly be providing further guidance on the whistleblowing framework.

· This latest paper comes eight months after the Government published its response to a consultation on the current whistleblowing framework (in June 2014). This document provided a useful overview of the current framework and highlighted that the current legislation has not always resulted in a reduction in malpractice, or provided sufficient protection to whistle-blowers. As a result, the Government is continuing to work on improving the existing framework and encourages commercial organisations to ensure they have suitable whistleblowing policies in place.

· It is not only the Government that is putting whistleblowing under the spot light. In the last year, the FCA has also published a number of consultation papers on the topic, with the most recent being published in February this year. This paper considered whistleblowing in deposit-takers, PRA-designated investment firms and insurers. The FCA proposed a number of new measures including the introduction of a “whistleblowing champion” – an individual within senior management who would have responsibility for overseeing internal whistleblowing procedures to ensure these individuals are appropriately protected. This champion could also be required to make reports to the FCA and/or the PRA, opening up the possibility of regulatory scrutiny. The consultation paper followed the FCA’s conclusion in July 2014 that an American style system of financial incentivisation for whistle-blowers should not be adopted.

·Industry specific reviews have also been conducted over the last year, including Sir Robert Francis QC’s report into the strength of whistle-blowing procedures in the NHS, which highlighted the hostility that whistle-blowers can face. In addition, in October 2014 a consultation paper was published by the Fair and Effective Markets Review on the fairness and effectiveness of the fixed income, foreign exchange and commodities (FICC) markets which sought responses on making whistleblowing regimes more effective.

· The subject has also received attention from the Supreme Court when it ruled that members of limited liability partnerships are “workers”, meaning that they benefit from the legislative protections currently in place for whistle-blowers, entitling them to bring a claim for whistle-blower retaliation (e.g. if they are dismissed because of their whistle-blowing) and claim compensation.

The current level of interest in this subject suggests that there are likely to be further legislative and non-legislative changes in the near future. Commercial organisations therefore need to focus on tightening up their procedures. Professional service providers in particular should also have in mind their own obligations to blow the whistle, for example if they discover that a client has done something illegal. Accountants in particular may be exposed to such situations and it can be very difficult to navigate the minefield of confidentiality and the protections that will be available.

When might accountants need to blow the whistle?

There are many instances when accountants may come across situations where they must consider making a report to regulators, for example, if it becomes apparent that a client has committed:
· fraud;
· theft;
· bribery;
· market abuse;
· tax offences; or
· breaches of the Anti-Money Laundering Regulations.

Whilst there is not always a legal obligation to blow the whistle, it should nonetheless be considered if there is a “public interest” in doing so.
Those who find themselves in a situation where a report must be made can often have difficulty reconciling the tensions between with their legal obligations and confidentiality obligations to the client in question. This may lead to reluctance to blow the whistle.

However, the following should be borne in mind:

· Confidentiality obligations: Some assurance can be taken from professional guidance such as the ICAEW guidance on professional conduct in relation to defaults or unlawful acts. This provides a useful starting point for anyone who finds themselves in a potential whistleblowing scenario, and states that whilst there is a fundamental duty of confidentiality to clients, there is an exception where the disclosure is justified by a legal authority, in the public interest or to protect a member’s own interests.

· Specific considerations for auditors: The importance of accountant’s reporting responsibilities has been highlighted in a whistle-blowing context in the US. The US regime provides financial incentives to whistle-blowers who make qualifying disclosures. However, there is an expectation that external auditors will blow the whistle on clients as a matter of course, because they have separate duties to the SEC. External auditor whistle-blowers are therefore specifically excluded from the financial incentives regime. Whilst the FCA has dismissed the idea of introducing a financial incentives regime, the attitudes of UK regulators are often influenced by those of their US counterparts and therefore all accountants should ensure they are aware of their obligations.

As a result of a number of high profile whistleblowing cases and the continued fallout from the financial crisis, the law and guidance on whistleblowing has been under particular scrutiny over the last twelve months. It is hoped that further guidance from the Government, expected this month, will go some way in laying down a clearer path through the current legislation and guidance, and that it will give an indication of any future changes. Responses are also awaited to the FCA’s February 2015 consultation paper and FICC’s October 2014 consultation paper. The responses to those papers may give some further interesting insight into the evolving landscape.
Commercial firms and professional service providers should watch these developments closely to ensure compliance with reporting obligations.

As noted above, all organisations should also be revisiting their whistleblowing policies to ensure that they are sufficiently robust as this is an issue which is continuing to attract regulatory attention.

Emma Allen, associate in the Disputes and Investigations team at Taylor Wessing

For more on this story go to: http://economia.icaew.com/opinion/march-2015/an-accountants-guide-to-the-law-on-whistleblowing