Whistleblower programs and internal company compliance processes share a common objective: to deter and root out fraud and violations. Contrary to the belief that these programs compete for information, they often work in tandem. Data from the SEC’s fiscal year 2017 report reveals a strong tendency for whistleblowers to report issues internally before approaching government agencies.
Data collected over nine years also support this trend, showing that more than 90% of whistleblowers who brought retaliation cases had initially reported internally. This points to the fact that government whistleblowing is often a last resort, following the ineffectiveness of a company’s internal compliance mechanisms.
While fears exist that whistleblowers might bypass internal processes for the lure of rewards from government programs, research indicates otherwise. Many whistleblowers are driven by ethical convictions and a desire to prevent harm, rather than the prospect of monetary gain. Rewards are not a guarantee, and the personal and professional costs of whistleblowing can be steep.
Anonymity and the risks of retaliation are significant concerns. According to a 2023 study by the Ethics and Compliance Initiative, nearly half of global employees who reported misconduct faced retaliation, which can include harassment and even lawsuits.
Ultimately, corporate compliance programs and government whistleblower initiatives should be viewed as complementary. They both aim to ensure that industries operate fairly and to protect taxpayer and investor interests. When internal compliance fails, it is essential that whistleblowers have external protections to fall back on, as highlighted in the detailed discussion by Emily Stabile and Samuel Brown in their article.