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Mumbai: Martin Woods, an ex-policeman hailing from Liverpool in UK turned bank anti-money laundering officer, is credited with blowing the whistle on US-based Wachovia Bank and its dealings with the Mexican drug trade. Based on disclosures made by Woods, the US justice department charged the bank with serious violations of the Bank Secrecy Act back in 2010. Since then, the role of whistleblowers has become increasingly important in sniffing out wrongdoings in the global financial system. Woods, who now works with the financial crimes unit at Thomson Reuters, says whistleblowers are critical in shaping the society and adds that they should be offered monetary incentives as they tend to become unemployable in the aftermath of a whistleblowing incident. Woods spoke to Mint on the sidelines of a Thomson Reuters event. Edited excerpts:

Whistleblowers world over, face a lot of pushback. What has been your experience and have different jurisdictions been able to address some of the issues that whistleblowers face?

The world, government, corporates and even society to an extent do not like whistleblowers and some countries go so far as to call them ‘traitors’. When I found out that my workplace (Wachovia Bank) was helping Mexican druglords to launder billions of US dollars, I was expected to look the other way. My repeated appeals to the management remained unresolved. After I blew the whistle about this to the US Drug Enforcement Administration (DEA) in 2007, I became unemployable by other banks and financial services firms. One of the banks, according to documents obtained under the Freedom of Information Act, said that it could not employ me because of my act of whistleblowing. This should tell you where the banks and financial services firms stand world over.

As far as different jurisdictions are concerned, the United States of America is seen by some to have become the ‘sheriff’ and encourages whistleblowers anywhere in the world to write to Securities Exchange Commission (SEC) if the wrongdoing involves a US company or even the US dollar, as it is in “the US national interest". Other major jurisdictions still have to catch up.

Do you think that whistleblowers are making a difference and how?

The whistleblowers world over are MAD. By this I mean these are the people who are ‘Making A Difference’. In the wake of the Panama leaks, the role of whistleblowers is becoming more relevant in shaping the society, toppling governments and holding powerful people accountable.

What do governments and companies need to do to encourage more whistleblowers to come forward?

They should start with ensuring that there is some monetary incentive for the people who are willing to come forward with the information that is in public interest. In many situations after the whistleblower blows the lid, he/she becomes unemployable. The governments have an ethical responsibility towards whistleblowers who are often saving countries millions of dollars by volunteering information at a huge personal risk. The governments should ensure security of life of whistleblowers. Additionally, if a whistleblower is requesting anonymity that should be maintained forever, or at a very minimum, until long after the issue has been dealt with.

Coming to India’s Whistleblower’s Protection Bill amended in 2015. What is your view on it?

The bill in its current format provides a mechanism for receiving and inquiring into public interest disclosures against acts of corruption or criminal offences by public servants. Thus, it excludes private companies and private persons from the applicability of the provisions of the act. This is bizarre, the whistleblowing act pertaining to corporates and private individuals, needs to build in adequate protection. For better practices free of corruption, there needs to be a fear that someone could blow the lid off and that ‘someone’ would be protected. Currently, it is the corporates and private individuals that are indulging in the practices of money laundering and tax evasion and they need to be held accountable whether in terms of corporate governance practices or through law. The Indian government by framing such a law has perhaps inadvertently skewed the rules in favour of private companies and individuals by keeping only public servants under the purview of the Whistleblower Protection Bill. Imagine a scenario where a government-owned company is bidding on a contract in competition with privately owned companies, the latter can bribe the contract provider without fear of a third-party blowing the whistle. Thus, the law may actually incentivize the private companies to indulge in such illegal practices. Does the Indian government perceive no public good will come from extending the provisions of the bill to the private sector?

Many times whistleblowers are faced with uncomfortable situations such as their integrity being questioned and often being labelled as a ‘vested’ party. How does one work around it?

Remember every whistleblower is a vested party, but that doesn’t mean that the information being brought forward is not legitimate. One way around is that authorities first verify the genuineness of the information being revealed and then go into intent. In my case, couple of years after I blew the whistle there were some charges fabricated against me by regulatory authorities to question my integrity. So, yes these are the hazards that one has to face when one decides to become a whistleblower, isolation is the biggest one. These issues can be dealt with only by having stronger policies in place to protect whistleblowers. In the alternative, try to imagine a world without whistleblowers, a world within which wrongdoers have no anxiety about another party blowing the whistle about their criminal conduct. Such a world actually incentivizes wrongdoing.

ABOUT THE AUTHOR

Jayshree P Upadhyay

Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
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