Under the proposals, individuals would be eligible for a financial reward regardless of where they are located or where the information originated. The information given must be ‘significant’ and ‘original’, and rewards would be calculated as a percentage of the financial penalty or fine, and awarded when recovered. Rewards could be capped, for example, a cap of CAD $5m applies in Canada.
To deter frivolous claims, a criminal offence of knowingly submitting false or misleading information under the scheme would be created.
In July, Jonathan Fisher KC recommended the government legislate to allow the SFO to introduce such a scheme, in Part 2 of his independent review of disclosure and fraud offences. Similar schemes in the US and elsewhere have proved successful, with some providing rewards of 10% to 30% of recovered sums.
The government consultation, ‘Whistleblowing’, which launched this week, will close on 8 January.
Corker Binning partner Nick Barnard pointed out that ‘no reference is made to the perceived “cultural aversion” to paying witnesses in the UK, and so no questions invite suggestions as to how that might be overcome.
‘Similarly, the challenge of potential bad-faith or low-quality reports is only touched on by an arguable no-brainer as to whether it should be a criminal offence to knowingly submit false or misleading information’.
Ian Hargreaves, partner at Quillon Law, said there were ‘mixed views on how effective such incentives will be, with some arguing it is morally problematic to encourage people to blow the whistle for financial reward.
‘The argument is that it should be a public and social duty, without the need to be paid’.
However, Kingsley Napley criminal litigation partner Alun Milford, who is a former general counsel at the SFO, said: ‘This may well not be as controversial as the proposal to abolish jury trials for fraud cases... our concern will be about fair trial safeguards.’
The government is also considering updating and reforming the whistleblowing framework in the Employment Rights Act 1996, which came into force in 1999.
