A largely overlooked provision of the U.S. financial reform bill could create a cottage industry of whistle-blowers trolling for violations of the Foreign Corrupt Practices Act, says Douglas Lankler, chief compliance officer of drugmaker Pfizer. The provision, which will give whistle-blowers who report securities law violations 10 to 30 percent of any settlement in excess of $1 million, may lead to an increase in FCPA cases — and more headaches for compliance officers at international firms — Lankler told delegates at a recent Practising Law Institute seminar in New York.
The proposed program would reward individuals who provide government agencies with original information that leads to successful enforcement cases. Though the provision is in both the House and Senate bills, only the Senate bill calls for a mandatory reward of at least 10 percent. A congressional committee is hammering out a unified reform bill for U.S. President Barack Obama to sign; the most current version of the unified bill includes the Senate provision on whistleblowers.
Lankler warns that given the recent rise in FCPA enforcement actions and the added financial incentive to report violations, firms need to be more diligent about monitoring practices and policies in foreign countries, particularly in regard to preventing bribery of foreign officials.
But while he urges compliance officers to be aware of the provision, there is little they can do in response. “The attitude to take is: [Whistle-blowers] exist. They’re going to do what they’re going to do, and we’re going to do what we’re going to do.”
— Compliance Reporter
