Brazil Report Offers Clues Into Rise of Transnational Whistleblowers

Earlier this year, Francesca West, the Director of Policy at UK whistleblower organization Public Concern at Work, noted an increase in individuals engaged in regulatory shopping. In a Wall Street Journal article about the surge of tips to a regulator in the UK, West indicated that more and more people were weighing the benefits and drawbacks of reporting to different jurisdictions. The justifications for choosing the best government agency to report could not be better elucidated than in a report about the problems facing Brazil whistleblowers reporting corruption.

The OECD Working Group on Bribery published an update about whistleblowing in Brazil as part of its attempt to encourage implementation of the OECD Anti-Bribery Convention in the country. The information about domestic whistleblowing within Brazil is disappointing but not altogether surprising. You can get a copy of the Phase 3 Report here (pdf).

Since 2000, there has not been one investigation of foreign bribery in Brazil started as a result of a tip from a domestic whistleblower. Of the 14 investigations that have been opened during that time period, only one resulted in prosecution. The company facing prosecution disclosed to shareholders that it was under investigation by the United States for the conduct in 2011.

There are also limited protections for private sector whistleblowers. Information provided to the government is only kept confidential until the indictment. And even that confidentiality guarantee is limited to instances of a formal statement made by the complainant. Although Brazil proposed a bill to address the lack of protections in 2009, it was not adopted.

A survey of whistleblower protections in G20 countries put Brazil in the bottom half in its protection of both the public and private sector.

Given these facts, it should be no surprise that Brazil has problems getting individuals to come forward. When corruption implicates a country with stronger protections, like the United States, why not report to the SEC instead? Indeed, there have been 7 tips originating from Brazil during the first two full years from the open of the SEC whistleblower office.

Brazil continues to have trouble getting whistleblowers to come forward despite implementation of tools for individuals to report corruption, including an anonymous hotline and website with a reporting mechanism. One panelist told the working group there is a cultural aversion to reporting. Others cited distrust of the government and the police as the reason.

Regardless, reports like this one specific to Brazil suggest that individuals will continue to forum shop internationally for the best place to report when they have information about bribery and corruption. When it implicates the FCPA, the SEC will generally be an excellent choice.  Our FCPA whistleblower lawyers provide a free, confidential consultation if you are interested.