Overcoming British sensibilities on whistleblower reward payments and immunity from prosecution
Nick Ephgrave – director of the UK’s Serious Fraud Office(SFO) – recently spoke to the “enormous missed opportunity” to tackle high-level fraud due to the lack of whistleblower incentives in the UK (The Telegraph, 8 Dec 2024). Since taking over leadership of the SFO in October2023, Ephgrave has been pushing the debate about two controversial issues in the UK: paying whistleblowers and granting them immunity from prosecution (The Guardian, 22 Oct 2024).
Such practices are commonplace in many jurisdictions, particularly in the United States, as we have explored in a previous article. These methods could be critical to enhancing the effectiveness of the SFO and other enforcement agencies, enabling them to tackle increasingly sophisticated forms of fraud and corruption. Given the reported costs and number of years the SFO spent on the now closed ENRC investigation, any move to minimise the risk of a repeat would naturally be welcome. However, realising the vision will require overcoming entrenched sensibilities in the UK.
British whistleblowers turning to growing incentives schemes in the US
Whistleblowers are a cornerstone of fraud investigations, often providing insider information that is otherwise inaccessible, and quickly leading investigators to the heart of a matter. Yet only a small number of the c.1,300 referrals to the SFO’s Intelligence division come from whistleblowers, with most coming from other agencies and some from the public (SFO 2023/24 Annual Report).
The UK lacks robust whistleblower reward schemes for complex economic crime. By contrast, the US offers financial rewards of up to 30% of recovered funds through the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The Department of Justice (DOJ) also launched a three-year pilot programme in August to incentivise whistleblowers to report corporate misconduct, with awards of up to 30% of the first $100 million in net proceeds forfeited, and 5% of any further proceeds between $100 million and $500 million.
These schemes have been credited with uncovering significant frauds and recovering billions of dollars, and often attract whistleblowers from other jurisdictions, including the UK. Ephgrave said in his recent interview with The Telegraph that 700 British whistleblowers had turned to the US in the last 12 years, expecting more “positive” treatment.
The UK’s existing whistleblower framework, under the Public Interest Disclosure Act 1998, primarily focuses on protecting whistleblowers from retaliation rather than rewarding their contributions. However, the low incidence of reports to the SFO and the number of British whistleblowers reporting to the US might suggest that these UK protections alone do not outweigh the perceived risks of retaliation, professional ostracism, legal battles and reputational damage. Providing reward payments could tip this balance, particularly in high-stakes cases involving corporate corruption or international fraud.
Rewarding whistleblowers “just isn’t British”?
Historically, the UK’s legal and cultural landscape has been resistant to paying whistleblowers or offering immunity to those complicit in wrongdoing. British sensibilities lean heavily on notions of fairness, personal accountability and the belief that justice must not be at the cost of expedience.
Critics argue that offering financial incentives or immunity could be perceived as “rewarding bad behaviour” or undermining moral integrity. The SFO director in 2018, Sir David Green, said that paying whistleblowers “just isn’t British” and that whistleblowing was often seen as a civic duty rather than an act deserving of monetary reward.
Cultural and practical obstacles require political will
Apart from cultural leaning, there are practical risks to paying whistleblowers. Incentives could attract unreliable or self-interested individuals. They may proliferate spurious allegations and taint evidence, particularly if the whistleblower’s motives can be undermined in front of juries and judges. A reward scheme could risk being perceived as encouraging opportunism or “bounty hunting”, exposing genuine whistleblowers to attacks for seeking financial gain rather than acting out of genuine ethical and moral concerns.
Other significant barriers to introducing a whistleblower reward programme in the UK include:
· The need for significant legislative overhaul, which could face political and bureaucratic inertia;
· The complexities of determining eligibility for a reward, including establishing clear and fair criteria and how much whistleblowers should receive;
· Funding for the programme, if not entirely through recovered funds;
· Adding to the backlog of cases in an already overburdened judicial system; and
· A backlash from business, if employers fear that whistleblowing reward programmes could damage workplace relationships by fostering a culture of mistrust or incentivising employees to bypass internal reporting mechanisms.
The UK government and enforcement authorities will have to decide how far they are willing to adapt to the increasing complexity and globalisation of financial crime. The SFO’s mandate - to prosecute high-level economic crime- often places it in competition with well-resourced corporations and sophisticated nefarious networks. In this environment, the reluctance to adopt tools such as whistleblower payments risks hampering enforcement agencies’ ability to secure critical evidence and convictions. An effective whistleblower reward programme would add a significant weapon to the SFO’s capabilities.
Immunity from prosecution: the lesser evil?
Immunity from prosecution is another divisive tool in the fight against fraud. It is not common practice for British prosecutors to strike deals with individuals who have been complicit in crimes, even if their testimony could be illuminating. Critics argue that immunity undermines the moral foundations of justice.
Yet there are situations where immunity may be the most pragmatic choice. Complex fraud cases often involve multiple layers of collusion, making it difficult to isolate culpability without insider cooperation. Immunity can encourage key players to come forward, providing testimony that leads to higher-level convictions. The SFO has publicly stated that they will always go after the individuals responsible. [1] The recent charges against six former Glencore employees was one such statement of intent. Granting immunity from prosecution for lesser players could support this aim.
However, when Ephgrave recently admitted to the use of immunity in an investigation, it prompted shock and criticism. As with whistleblower rewards, there are still cultural and practical barriers to making this a more common tool in the SFO’s arsenal.
Striking a balance: safeguards and transparency
To overcome entrenched British views on these matters, policymakers and enforcement agencies will need to address public and institutional concerns. Transparency and robust safeguards will be critical.
For whistleblower payments, this could involve linking rewards to measurable outcomes, such as recovered funds or successful prosecutions, and rewarding based on the value of the information received rather than the motives of the whistleblower, meaning that a whistleblower could be both sentenced for complicit activity (if no immunity is granted) and receive an award. Clear guidelines could prevent abuse and ensure payments are reserved for cases where the information provided is both critical and credible. It would be important to maintain public trust through stringent eligibility criteria and oversight mechanisms.
Similarly, immunity agreements would need to be carefully considered and subject to judicial scrutiny. Conditions such as requiring full cooperation, truthful testimony and restitution where possible could help balance the need for effective prosecution against the principles of justice.
From the perspective of a forensic investigator, often working on internal investigations precipitated by whistleblower allegations, we see the judicious and transparent use of incentives as a way of improving the odds of resolving investigations correctly, including the SFO’s effectiveness and recoveries. While this debate plays out at the enforcement level, companies with operations in the UK should consider if their own whistleblower channels and response procedures – perhaps with their own reward schemes – are fit for purpose to leverage meaningful tips and a positive compliance culture.
