As seen in the previous article, whistleblowing cases regularly make the news headlines. And while some of the names of the reporters or the cases are well known, it’s worthwhile to take a closer look at the people behind the reports who made huge impacts on the whistleblowing landscape.
What caused these reporters to come forward in the first place and, more importantly, what were the results of this information being brought to light? Banking secrets, pharmaceutical formulas, environmental impacts, financial regulations, manufacturing controls – the lessons learned from these alarms have led to many changes in the world.
So, in the spirit of celebrating World Whistleblowers Day on June 23, let’s take a look at a non-exhaustive list of whistleblowers and the reports that made significant contributions to the business world.
Prominent whistleblowing cases in the United States
Sherron Watkins, Enron and Cynthia Cooper, WorldCom
Who are they?
Sherron Watkins was then the Vice President of Corporate Development at Enron, at the time, an American energy company. Cynthia Cooper was the VP of internal audit at WorldCom, at the time one of the biggest American telecommunication companies.
Why did they report?
Watkins noticed accounting irregularities in financial reports in August 2001. These errors turned out to be intentional financial manipulation, which was assimilated into fraud and corruption. Enron managed to cover billions of dollars of debts through multiple and complex accounting loopholes since the early 90s.
WorldCom falsified the company’s financial statements by misclassifying expenses as investments, inflating assets by about $11 billion in hidden costs. Cooper and her team stumbled upon the scheme in 2002, uncovering a network of false accounting entries that had been running since 1999.
What did it change?
The proliferation of financial scandals among major corporations like Enron and WorldCom led to the enactment of the Sarbanes-Oxley Act in July 2002. This act focuses on financial misconduct, securities violations, and breaches of SEC rules. It also protects whistleblowers in public companies, prohibits retaliation from employers and clears timeframes for complaints.
Bradley Birkenfeld, UBS
Who is he?
Bradley Birkenfeld is an American who worked as a private banker at UBS, a global investment bank located in Switzerland.
Why did he report?
Birkenfeld disclosed details about tax evasion and illegal activities between the bank and wealthy American clients to the Department of Justice.
What did it change?
The Birkenfeld Disclosures obliged the Swiss government to reveal the identities of at least 4,900 account holders. They also partly triggered the end of Swiss banking secrecy, as per their agreement with the Organisation for Economic Cooperation and Development (OECD) in 2014.
Jeffrey Wigand and Brown & Williamson
Who is he?
Dr. Wigand worked as the VP of Research & Development at Brown & Williamson, a tobacco company.
Why did he report?
Wigand publicly revealed in early 1996 that B&W willingly altered the components of the cigarette to boost the addictive effect of nicotine.
What did it change?
Lawsuits started the same year. The Food and Drug Administration (FDA) aimed to regulate the tobacco industry, claiming that nicotine is a “drug” and cigarettes are “devices” that deliver it to the body.
After unsuccessful attempts in court (such as the U.S. Supreme Court case FDA vs. Brown & Williamson Tobacco Corp in 2000), the Family Smoking Prevention and Tobacco Control Act granted control to the FDA in 2009. This act enables the presence of labels and warnings on packaging to discourage young people from smoking. It also banned flavored cigarettes and limited the advertising space.
Prominent whistleblowing cases in Great Britain
Christopher Wylie, Cambridge Analytica
Who is he?
Wylie worked as a Canadian data consultant at Cambridge Analytica, a British political consulting firm specializing in data analytics. This company and its umbrella corporation, SCL Group, were strategic communication agencies focused on information campaigns around elections. Using data mining and data analysis, they could collect valuable details about key audience groups, particularly on Facebook.
Why did he report?
From 2013, Cambridge Analytica harvested data via apps on this social media platform. They ended up acquiring insights from 87 million profiles. Christopher Wylie blew the whistle in 2018 to report the data misuse but also the impact it had on the latest major political events: Brexit, the election of Donald Trump, and collusion with the Russian government. The various political parties and companies incriminated would use the data to build psychological profiles and tailor advertisements to influence their votes.
What did it change?
That scandal played a significant part in the geopolitical landscape at the time. With social media being not quite regulated, and any third party could effortlessly access countless pieces of data. The outcomes of the Cambridge Analytica scandal were many: the European Union promulged the Digital Services Act in 2022 to create a safer space for all users of digital services and guarantee a level playing field to encourage growth, competitiveness and innovation in the European and global markets.
It also had an impact on social and digital platforms: Facebook now allows its users to opt out of political ads, X (formerly Twitter) banned political ads, and Google limited its targeting options. Transparency tools spread across the channels to track and review the ads. Lastly, the EU members are currently discussing the regulation of social media microtargeting, which is using data to produce customized ads to individuals based on their details and preferences. It should be voted after the EU election in June 2024.
Prominent whistleblowing case in France
Who is she?
Dr. Frachon is a pulmonologist. Mediator is the commercial name of benfluorex, an active compound that aims to decrease insulin resistance in diabetics. The French multinational pharmaceutical company Servier sold this drug.
Why did she report?
After observing recurring correlations between cases of cardiac issues and the intake of a specific medication known as Mediator. Frachon investigated between 2007 and 2009 and found out the active ingredient of the drug can trigger heart failure. She released a book in 2010, but the cases went all the way back to 1976.
What did it change?
Servier was obliged to stop selling the medication. It appears that Mediator may have caused the death of 2,000 people and side effects to thousands of patients. Additionally, the Loi Bertrand, passed in 2013, strengthens the independence of public health expertise by preventing conflicts of interest between decision-makers and the pharmaceutical industry. This law aimed to cease the “rewarding” actions from the laboratories to the doctors and practitioners, such as gifts, subsistence expenses or remunerations for conferences. Also, the former French drug regulator (ANSM) was replaced by a French government agency (AFSSAPS), which has excluded pharmaceutical representatives from its board of directors.
Prominent whistleblowing case in Germany
Karsten Vom Bruch and Alberto Alaya, Dieselgate
Who are they?
Von Bruch is a German engineer who worked for BOSCH near Stuttgart. Alaya was an American control officer at the California Air Resources Board (CARB) in Sacramento. The name “Dieselgate” refers to the Volkswagen emissions scandal.
Why did they report?
The CARB and other American institutions noticed discrepancies in nitrogen oxide (NOx) emissions produced between laboratory testing and live road tests. It turns out that a specific program was designed to control the emissions only during the testing to comply with environmental protection standards. Vom Bruch originally created the software, but he realized Volkswagen had fraudulently modified it.
After being fired for reporting this to his managers, he decided to plead his case to the labor court in Berlin and revealed the situation. Simultaneously, the CARB and the U.S. EPA (Environmental Protection Agency) announced the carmaker breached the Clean Air Act. The emission of NOx was 40 times higher than the laboratory testing results, and it certainly impacted the environment and violated health standards.
What did it change?
Following the scandal, manufacturers could no longer choose the parties that checked their compliance with standards. Henceforth, an independent body will perform the test in Europe: The Worldwide Harmonised Light-Duty Vehicle Test (WLTP). This test is mandatory in the EU for all new car models launched since September 2017. Real-driving and device testing are reinforced. Carmakers also must disclose their emission strategy.
Prominent whistleblowing case in Luxemburg
Antoine Deltour and Raphaël Halet, LuxLeaks
Who are they?
The two Frenchmen worked as auditors for the British professional services network PricewaterhouseCoopers International Limited (known as PwC).
Why did they report?
They discovered compromising documents (tax rulings) allowing fiscal agreements between the Luxemburg tax office and multinational firms. Many global corporations benefited from the financial advantages ruled via official deals made with the country’s tax authorities. They revealed the case in November 2014, but the tax rulings were made between 2002 and 2010.
What did it change?
EU members unanimously approved the decision to enable fiscal transparency by making the exchange of tax rulings automatic and mandatory when asked by any fiscal administration. The European Commission endorsed a directive aiming to fight tax evasion and ensure global organizations pay local taxes wherever they are settled.
The two former auditors, along with the journalist Edouard Perrin, were indicted by the Luxembourg courts for domestic theft, breach of confidentiality, violation of business secrets, and money laundering in December 2014. After years of proceedings, they were acquitted by the Luxembourg Court of Cassation and the European Court of Human Rights, which also granted them whistleblower status, stipulating that “recognition of whistleblower status must apply in principle to all offenses, failing which the protection would be voided of its substance”.
The prosecutions of the whistleblowers stressed how vulnerable the reporters were from a legal perspective. Thus, in October 2019, both the European Commission and Parliament adopted Directive 2019/2037 to reinforce the protection of persons who report breaches of EU laws.
Join us as we celebrate World Whistleblowers Day!
The above list of whistleblowers who have made huge impacts is far from exhaustive, but clearly highlights the contribution of the reporters globally and from many perspectives. They deserve our respect and gratitude for what they have done, and the least that can be done is to dedicate a special day to celebrating their.
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View original article at Risk & Compliance Matters
