On October 22, 2020, the US Securities & Exchange Commission (SEC) announced the largest reward payment ever made to a whistleblower in the United States, of US$ 114 million, more than R$ 650 million at current values. Much more than the often dreamed of mega-sena lottery in Brazil. Since its first award, the SEC has paid $ 676 million to 108 whistleblowers.
The term whistleblower has gained unprecedented relevance in the last decade. In France, the anti-corruption law Sapin II, 2016, reinforces the importance of protecting whistleblowers who disclose, in good faith, any violation. In the United States, the century-old False Claims Act of 1863 allowed a whistleblower to file a lawsuit (called qui tam) on behalf of the US government and obtain an award of up to 30% of the penalty amount, if so attributed by the judge of the case. More recently, the Dodd-Frank Act of 2010 reinforced the concept of protecting a whistleblower against retaliation and the provision of awards from 10% to 30% of penalties above US$ 1 million.
The effects, mainly those resulting from the Dodd-Frank Act, were notable in the growth of the number of complaints, enabling the investigation and application of civil and criminal sanctions against organizations and individuals in the public and private sector, especially those involved in acts of corruption, fraud and money laundering. As a result, public and private organizations needed to invest in financial and human resources to consolidate compliance cultures to avoid crimes and, consequently, denunciation by whistleblowers among their employees.
The truth is that countries, no matter how developed they may be, do not have audit and inspection structures effective enough to identify and prosecute the most varied illicit acts. Many violations involve the conspiracy of several actors and often count on the participation of public agents. How, then, to expand the state’s capacity to combat such violations? The answer is the whistleblower, or, in “good Portuguese,” the soprador de apito.
The idea is not entirely novel in Brazil, as the hotline services in some states already draw on the same concept when requesting the support of society in the fight against crime, offering anonymity and, sometimes, a cash reward for information in the capture of the wanted or in the rescue of victims. On January 10, 2018, Law 13,608 was enacted, which provided the telephone service for receiving complaints and rewards for information that would assist in police investigations.
However, it was Law 13,964, of December 24, 2019, resulting from the anti-crime package submitted for approval by the Brazilian Congress, which brought about the great innovation that could change the panorama of corruption in Brazil, especially “white collar” crime. It changed another Law, 13,608, introducing the figure of the whistleblower. Among other guarantees, it created: (i) complete protection against retaliation, establishing specific sanctions for those who retaliate; (ii) exemption from civil or criminal liability concerning a report made in good faith; and (iii) preservation of anonymity. In addition, the law opened the possibility of a reward to the whistleblower for up to 5% of the recovered amount when the information resulted in the recovery of goods stolen from the government.
As much as the instituted reward is relatively minor and conditional on the recovery of public money diverted by criminal conduct, this is undoubtedly one of the most significant advances that Brazil has made in the fight against corruption and related crimes. The question to be asked is: why did such an initiative not yield more remarkable results in the fight against corruption in Brazil?
First, some ineffectiveness is due to a lack of awareness concerning the whistleblower provision amongst the population. The rules are largely unknown, and there is never any public disclosure of an award to a whistleblower, even one preserving their anonymity. Another reason is the lack of confidence in the mechanism to prevent retaliation. In addition, the law does not guarantee the payment of a reward, which is at the authority’s discretion. And finally, due to the lack of public resources, considering that budgeting for such sums, given the unpredictability of their payment, means that those responsible for determining the budget at the federal, state, municipal, and district levels typically disregard them.
We already have the diamond in the rough state, which is a legal provision for the whistleblower. It remains to be polished so that it shines.