Cash for Your Conscience: Do Whistleblower Incentives Improve Enforcement of the Foreign Corrupt Practices Act?

Abstract

This article examines the effect of the whistleblower incentive award program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act on enforcement of the U.S. Foreign Corrupt Practices Act (FCPA). Because it prohibits bribery of foreign officials and misleading accounting by public companies, the FCPA is particularly difficult to enforce without inside information. By encouraging insiders to report such information, the Dodd-Frank whistleblower incentive program would seem to be especially important in the FCPA context. The article describes the relevant aspects of whistleblower law generally, the Dodd-Frank incentive system, and the FCPA. Attending to the laws, regulations, and caselaw, the article addresses contemporary issues raised by the program. It also contrasts the scope of the bounty program with the scope of the whistleblower anti-retaliation protections, which are being considered by the U.S. Supreme Court in Digital Realty Trust, Inc. v. Somers.

Taking the longer view, for many reasons, it is difficult to be sure that Dodd-Frank has improved FCPA enforcement. As discussed in the article, there are psychological, moral, organizational and economic difficulties with the bounty system, and substantial obstacles to assessment. Nonetheless, the United States has a long history of private enforcement generally and whistleblower incentives in particular. This is in some contrast with attitudes and laws in the rest of the world.

Although whistleblower incentives in the corporate context are difficult to assess and may have significant drawbacks, bounties are likely to remain a significant aspect of the enforcement of the FCPA for the foreseeable future.