Corporate whistleblowing is booming in Russia. The U.S. Securities and Exchange and Commission’s 2017 whistleblower report shows a 333% increase of whistleblowers coming from Russia. The SEC’s 2016 whistleblower report showed that six people from Russia had made reward submissions. The 2017 report noted that 26 whistleblowers were from Russia.
As background, the Dodd-Frank Wall Street Reform and Consumer Protection Act created a reward program that pays whistleblowers who report securities violations, which include violations of the U.S. Foreign Corrupt Practices Act (FCPA), of SEC-regulated companies. The U.S. government’s reward payouts now exceed $175 million to international and American whistleblowers. Many foreign whistleblowers submit FCPA cases under the program. Dodd-Frank reward payouts are made to qualifying whistleblowers as long as the case results in a penalty in excess of $1 million, which happens in the vast majority of FCPA corporate settlements. In fact, many companies have paid tens of millions of dollars – with some paying hundreds of millions – to resolve FCPA violations with the U.S. government. Dodd-Frank whistleblowers are eligible for rewards ranging from 10% to 30% of the total amount collected by the U.S. government.
International participation in the Dodd-Frank reward program has increased globally from last year. In 2016, 464 whistleblowers reported from abroad, and in 2017, approximately 550 reported from outside the U.S., resulting in an 18.5% increase overall. But what accounts for the 333% increase in whistleblowers coming from Russia? One explanation provided by Russian whistleblowers is that there has been much press on corrupt activities by SEC-regulated healthcare companies in Russia. This has been noticed by people working in the healthcare industry in Russia. These current and former employees who work for SEC-regulated companies – or who work for affiliates, subsidiaries, or joint venture partners of such companies – are now feeling more emboldened to report their healthcare companies’ corrupt practices and violations of the FCPA. One of the cases that whistleblowers have been referencing is Teva Pharmaceutical’s $519 million FCPA settlement with the U.S. government in December 2016, which was based in part on Teva’s corrupt practices in Russia. Similarly, in August 2016, the SEC settled an FCPA case with AstraZeneca based in large part on corrupt practices engaged in by its Russian subsidiary. This case also has been referenced by whistleblowers who are now coming forward.
If anyone has information about reward-eligible companies engaging in corporate bribery in Russia, please contact me for a free confidential consultation, as this could be valuable information.