“How I became a whistleblower … and what happened afterwards”
By Megan Davis
Inside information has never been so valuable.
In May this year, the U.S. Securities and Exchange Commission (SEC) announced the largest-ever whistleblowing award: a monumental $279 million paid to an individual whistleblower[1].
Under the SEC Whistleblower Program, whistleblowers who report violations of U.S. securities laws can receive between 10 and 30 percent of any SEC recovery in a related enforcement action.
The size of the SEC award is striking in its recognition of the importance of inside information in the battle against economic crime. Although there has been much speculation as to the identity of the award’s recipient [2] [3] [4], the SEC did not reveal it, nor did it say which enforcement actions resulted in the payment.
And this is for good reason. The best information about crime comes from insiders but being an insider is a dangerous game. Faced with the prospect of speaking up or staying silent, most people keep their mouths shut, more worried about personal risk than the fraud they might expose.
Several years ago, I was working as a lawyer in London when I came across a fraud involving a number of international banks. The scheme had been cooked up by my employers and when I expressed my concern about it, my boss offered to make my participation ‘worth my while’. No figure was mentioned, but the amount of money at stake was so large I could have named my price.
I was stunned, and in that moment of disorientation I have to admit, I considered it.
Not because I wanted the money, but because going along with fraud is easier than speaking out and exposing the truth. When everyone turns a blind eye, behavior is condoned and it can be hard to recognise things for what they really are.
We are living in what some commentators have called ‘the golden age of fraud’[5]. One of the reasons economic crime is so prevalent is that there are so many places to hide dirty money: offshore tax havens, crypto currency, and cash. There is $2.34 trillion in U.S. banknotes in circulation[6]. At a time when people are using dramatically less cash for legitimate transactions, the magnitude of that figure is incredibly suspicious, especially when almost 82% of the cash in circulation exists in the form of $100 bills[7].
Dirty money speeds around the planet at a dizzying rate. It runs rings around law enforcement too. Swindlers and criminals are always ahead, deploying ever more sophisticated ways to steal and hide the proceeds of crime. Regulators lag behind, always on the back foot, playing catch up as inequality grows. Just as we are seeing now with the sanctions regime, oligarchs (assisted by an army of lawyers and accountants) are several steps ahead, changing the ownership structures of their assets to evade even the most carefully worded bans. Evasion is big business, manned by professionals in expensive suits.
It’s always better to stop harm before it happens and for that we need insiders. For fraud to flourish, insiders must not break the code, so we need to shift the balance in their favor, recognise their full value and turn the narrative around. Breaking silence is dangerous and that’s why the worst crimes are the ones we never hear about.
At the point I was fixed with knowledge of what my employers were up to, I confronted the dilemmas all whistleblowers face: Could I live with myself if the deal went ahead? Would I be dragged into it too? What if I just walked away?
In his excellent book about whistleblowers[8], Tom Mueller quotes Albert Speer, ‘Hitler’s architect’, who after admitting his guilt for Nazi atrocities wrote: ‘Being in a position to know and nevertheless shunning knowledge creates direct responsibility for the consequences.’[9] Speer is an unlikely proponent of whistleblowing, but he knew a thing or two about turning a blind eye.
It was clear to me that neither standing on the side lines nor walking away were possible options and that once fixed with knowledge, I had responsibility for the consequences, whether I could be legally implicated or not. For me there was no choice: I had to blow the whistle.
I knew that I would lose my job and possibly my career, but I didn’t know what other risks I was taking – to my health, the welfare of my family and my sanity. I understood that things rarely went well when you got between people and their money, but I was wholly unprepared for the backlash that followed.
On the day I blew the whistle, I was escorted from the office like a criminal in full view of my colleagues. I still don’t know what they were told about my sudden disappearance. No doubt word got around that I had done something terribly wrong.
And indeed it felt like it. Suddenly I was thrust into an expensive war of attrition as my employers turned the tables against me, creating trumped up charges I was forced to defend. My boss engaged lawyers to comb through my computer, scrutinizing my emails, documents and correspondence, searching for breaches of confidentiality, misuse of data and other spurious evidence that might cast doubt on my judgment, skills and character.
They had to neutralize me now I had gone rogue and that meant bullying and intimidating me, undermining everything I said. If they couldn’t find anything against me, then they would wear down my spirit and my wallet with false allegations and legal threats.
During the time I now recall as a surreal period of exile from my normal life, I volunteered at a charity that provides legal advice to public interest whistleblowers and I saw that all whistleblowers experience some degree of intimidation, victimization and harassment. I have heard of whistleblowers killed before their message got out and sometimes, in cases with awards the size of the recent SEC one, informers face vendettas for decades afterwards. High profile whistleblowers – Edward Snowden, Chelsea Manning, Julian Assange – live with the reverberations of their whistleblowing for the rest of their lives.
A lot of people don’t appreciate that whistleblowing is career suicide. Despite what they say, no one likes a snitch. I remember interviews I had for jobs in the months after becoming a whistleblower. When I explained what had happened in my previous job, most interviewers shifted uneasily in their chairs, not at all comfortable with the prospect of welcoming a whistleblower into their midst. I could see them thinking: Trouble-causer, what might she uncover in our filing cabinets?
Some have criticized the scale of the SEC award, saying that pay outs of such size undermine internal reporting, draw attention away from lower-value but equally devastating fraud, and from whistleblowing where the wrongdoing is not financial, in sectors such as education, health or government. Those criticisms have merit, but the U.S. agencies that were against whistleblower reward programs initially now acknowledge them as the best tool they have in the fight against economic crime.
Daniel Ellsberg, who exposed the U.S. government’s lies and deception over the Vietnam war died in June this year, and in some ways it is a fitting send off that the nation’s largest ever whistleblowing award came just a month before his death. In 1973, Ellsberg faced a 115 year jail sentence for leaking the Pentagon Papers and escaped serving that sentence partly due to the misconduct of the same team who would later be involved in the Watergate scandal: they broke into Ellsberg’s psychiatrist’s office to steal his file. The bungling team followed a time worn script: if you didn’t like the message you could always shoot the messenger, or pending authorisation for that, discredit them and undermine what they said.
Ellsberg risked his life, forfeited a stellar career, and then lived forever in the fall-out of what he exposed.
The magnitude of the above SEC award recognizes the value of whistleblowing in fighting economic crime. Biden, in his State of the Union address this year said that ‘for every dollar we put into fighting fraud, the taxpayers get back at least 10 times as much.’ The size of the award also, importantly, recognizes the personal toll of whistleblowing, the risks and danger that whistleblowers take on, and the stigma and isolation that follows.
It took me years to recover from the ordeal of blowing the whistle and my view of human nature has been fundamentally altered by what I saw people do when their scam was threatened. The deal I exposed didn’t go ahead as investors took flight, spooked by the threat of my revelations, and I found a much better career. I have been lucky. Many other whistleblowers are not so fortunate. I often think about the other whistleblowers I came across and how, despite ‘doing the right thing’, most whistleblowers are left with their lives in ruins, suffering in the shadow of their decision forever.
[1] https://www.sec.gov/news/press-release/2023-89
[2] https://www.ft.com/content/0c151887-b19f-46bb-a27e-9b6248aff75d
[3] https://constantinecannon.com/whistleblower/sec-whistleblower-remains-mystery/
[5] https://www.ft.com/content/ccb46309-bba4-4fb7-b3fa-ecb17ea0e9cf
[6] https://fred.stlouisfed.org/series/CURRCIR cited in https://www.codastory.com/newsletters/oligarchs/
[7] https://fred.stlouisfed.org/release/tables?rid=311&eid=153785
[8] Tom Mueller, Crisis of Conscience: Whistleblowing in an Age of Fraud, (2019).
[9] Mueller, p.106.
ABOUT MEGAN DAVIS:
Megan Davis was born in Australia and grew up in mining towns across the world. Her debut novel, The Messenger, won the Bridport Prize for a First Novel, as well as the Lucy Cavendish Prize for unpublished writers. She has lived in many places including France for a number of years, but now lives in London where she is an associate at Spotlight on Corruption, an anti-corruption NGO. Read more at https://megandavis.co.uk/.