Whistleblowers – Like The Tree That Falls In The Forest

Can something exist if it’s not perceived?

I was on my way to somewhere else when I happened upon this excellent series on Sarbanes-Oxley and whistleblowers in CFO.com. When Sarbanes became law, there were many provisions, like whistleblower (Sec. 806) and real time reporting (Sec. 409) that took a while to sink in. Some companies, when implementing the hotline and whistleblower provisions forgot that they were operating in different countries, with different laws and their own ideas about the rights of workers and other privacy concerns. There was also an excellent presentation on this topic at the Compliance Week conference in June.

It seems, though, that the fears that some had that there would be a plethora of suits and frivolous settlements with whiny former employees has not come to pass in the way everyone thought. In fact, as one of the articles mentions, out of 1000 or so whistleblower complaints lodged at OSHA under Sarbanes-Oxley,(Yes, the Occupational Safety and Health Administration, not the PCAOB or SEC…), “not one has ultimately resulted in the whistle-blower making it past company appeals and winning the case.”

And for foreign employees of listed companies, there is no protection at all.

Whistle-blower Shield Stops at Border

Court rules that some overseas workers are not protected by this provision of Sarbanes-Oxley.

The whistle-blower protections of the Sarbanes-Oxley Act do not extend to foreign workers employed by the overseas subsidiaries of U.S. companies, according to a court ruling reported by The National Law Journal. “If the whistle-blower protection provision is given extraterritorial reach in a case like the present one, it would empower U.S. courts and [the Department of Labor] to delve into the employment relationship between foreign employers and their foreign employees,” Judge Levin H. Campbell reportedly wrote on behalf of the First U.S. Circuit Court of Appeals. “We believe if Congress had intended that the whistle-blower provision would apply abroad to foreign entities, it would have said so.”

I was reminded last weekend, while going through some old emails, of the uphill battle foreign based employees of US listed multinationals often have when trying to maneuver through such bureaucracy. As I have mentioned before, I get mail and sometimes I can’t do anything with it right away with regard to the blog, but I always respond.

Fortunately, my correspondent is having issues with Foreign Corrupt Practices Act, a law that has some coverage for foreign employees.

“Dear Mrs. Francine,

I was reading your presentation about SOX and you outlined the “top importance of FCPA”. I have just fired for an US company at Brazil and I inform you that this company had already problems with SEC and DOJ previously. In fact, they have implemented a FCPA compliance program but apparently, it is not working out. I have been working for a company that have no financial and accounting procedures (SOX), periodic indepent audits also.

Well, based on the Ethical Conduct Guide, I took the “concern” first to my immediate superior and later to our Human Resource Manager and strangely enough my denouncing of possible irregularities (bribes, inefficiency, etc) triggered a process of retaliation against me on part of my>> immediate>> superior that culminated in my dismissal around 40 days later. I would say that this brief history just ended the way it did because I based myself on the Ethical Conduct Guide of the company (FCPA) that cites items about Integrity, Excelence, Team work and Responsability and I ended>> up notifying a “concern” about possible irregularities “rumors of bribes” and bad Administrative pratices at the first possible opportunity. I believed in your Ethical Conduct Guide (FCPA) that supposeally protect>> an employee against retaliation on part of his boss.

Well, it did not protect me ! “Company Ethical Guide” “The company also acts to protect you from any revenge or retaliation as a result of reporting violations”. “You have a duty to report any violations of this guide and, while you may initially reluctant to “get involved” it is important to note that failure to report violations can have substantial consequences. In addition to ……. So, when in doubt, speak up” So, I did the right thing and see what happened ! I do not really understand why they did not protect a prospective witness After my dismissal,

I took the concern to US headquarter and 2 months have been elapsed since my dismissal and everything that I heard since then, “I can assure you that appropriate steps are taking place to look into the concern.” I have information that it is happening yet. Please let me know your outcomes for my questions:

1) In your perspective, the company have already violated FCPA Compliance Program violating their own guide of ethical conduct in my case, dismissing after a denounce.
2) How long does it take for the company reach a final resolution for a violation ?
3) Taking in consideration my official denounce around 50 days to board of company in United States, there is anything else I can do to assure FCPA will not be violated anymore in my case.

It broke my heart to read this note and so I immediately put this person in contact with a friend of mine who is an attorney in his country. After some consultation, this person has found an attorney with this expertise to represent him. We will wait to see what happens.

But unfortunately, whistleblower provisions that were supposed to encourage employees to report wrongdoing by providing protection against retaliation are woefully inadequate in design and execution.

Another hole in SOx.

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