Whistleblowing: It is not about the money

The Birkenfeld Award is great, but we still need Federal whistleblower protection

It was a surprise among whistleblowers to learn last month that the IRS was paying a record $104 Million award to whistleblower Bradley Birkenfeld. Assisted by NWC, Mr. Birkenfeld was a private sector whistleblower who worked at a Swiss bank and helped the IRS collect close to a billion dollars.

I will admit, when I first heard about this huge $104M award, I was completely unaware of the Birkenfeld case. I was concerned, too, that such a huge award might have the unfortunate effect of making citizens think A) whistleblowers are commonly awarded, and B) the awards are lucrative. Of course, those of us who have spoken up about a waste, fraud, abuse or safety issue know this is not at all the case with today’s whistleblowers in the United States.

To learn more about the Birkenfeld case, I did a few hours worth of online research. Please see the one-page timeline, which I compiled from court records, mainstream news articles, press releases, etc. [NOTE: if any readers have any corrections to this online research, please advise.]

So, what was learned, looking at the whole picture on the Birkenfeld case and the present state of U.S. whistleblowers? Here goes:

First, a law passed by Congress solicited Birkenfeld to seek an IRS-award; he was then arrested.

Public Law 109-432[1] was passed by Congress in 2006, and became law late that year. Birkenfeld, an American private banker working for UBS in Geneva, Switzerland, acted on this law and reported substantial violations by UBS, who had been enabling tax-dodging by Americans with offshore accounts. Two years later, when coming back to the U.S. for his high school reunion, authorities arrested Birkenfeld. He pleaded guilty and, fourteen-months later, was sentenced to serve 40-months. Most of that was in prison; the last few months of his term, which ends in November, are being served under house arrest.

Second, the amount of the award, though quite large, is consistent with the law, and indicative of a much larger gain by IRS.

This specific whistleblower award program reflected a desire by Congress that recoveries produced after whistleblower disclosures would be shared with the whistleblower. The payout by IRS is set at 15-30% of the recovery. In this case, Birkenfeld’s disclosures had enabled IRS to come to an agreement with UBS that included a $780M fine. This was a large net-gain for Federal tax collections.

Third, Birkenfeld was a whistleblower in the private sector, but whistleblower cases are in all workplaces.

In the big picture, there are thousands of whistleblowers who stand up and speak up, to fix problems in the private sector, as well as in government agencies. In my former agency, FAA, the culture causes the vast majority of air traffic controllers to stay quiet and not speak up. TV-watching, DVD movies, and sleeping on the job were abruptly and accidentally exposed in early 2011. Those very few of us who had spoken up were bullied into leaving our jobs, or forced into disabilities and/or early retirements. In the worst cases, some of us were even fired. Not only that, but it is extraordinary to see the huge energies (and wasted money) directed by agencies like FAA, to conceal failures and  drum out those who act responsibly.

And fourth (and most importantly), we still lack needed protections for Federal whistleblowers.

Employees in most Federal agencies have everything to lose and nothing to gain, if they speak up about a problem. They do not need massive monetary awards to speak up. They simply need protection, so they can do their job without retaliation for speaking up. MSPB is flat-out broken. NoFEAR Act and Whistleblower Protection Act (WPA) are also flat-lined, dead-on-arrival. So, really, is it any wonder that retaliations against Federal whistleblowers continue to worsen? That so many Federal agencies are becoming increasingly inefficient and corrupt? No surprises here.

So, congratulations are due to this one whistleblower and those who supported him, as well as to Congress for passing a law that closed the UBS offshore tax-drain.

October 2012


[1] this link is to a Thomas.gov webpage for the House Resolution that became PubLaw 109-432. An interesting (even somewhat alarming?) smorgasbord of legislation.