Partner Ian Hargreaves discusses whistleblower incentivisation in The Times

Writing in The Times, Partner Ian Hargreaves explores the Serious Fraud Office’s push to pay whistleblowers and how this policy would impact white collar crime investigations and prosecutions.

Ian’s article was published in The Times, 12 December 2024, and can be found here.

When first appointed as Director of the UK’s Serious Fraud Office, Nick Ephgrave declared that he wanted to make the organisation “bolder, more pragmatic, more proactive.”  While recent legislation such as the Economic Crime and Corporate Transparency Act has provided the SFO with further tools to achieve this, a key reform Ephgrave is looking to champion is whistleblower incentivisation.

When you look across the pond, the argument in favour of such a policy becomes more compelling. Recent figures published by the U.S. SEC have shown that, for 2023, the Commission awarded nearly $600 million to 68 whistleblowers – the highest annual total in the program’s history. These numbers suggest that incentivising whistleblowers can result in a greater number of matters being investigated and, potentially, more successful prosecutions.

While there are a couple of limited incentivisation policies already available in the UK (with the CMA and HMRC), the question of broader whistleblower incentivisation was already being explored by the previous government, following the introduction of a Whistleblowing Bill to Parliament.

While this was later dropped after the election was called, the Bill sought to establish an independent Office of the Whistleblower that would set, monitor and enforce standards for the management of whistleblowing cases, direct whistleblowing investigations and order the redress of detriment suffered by whistleblowers. The Bill also aimed to create offences relating to the treatment of whistleblowers and handling of whistleblowing cases.

Such guardrails are essential where there are clear risks associated with paying whistleblowers. In addition to the general distaste expressed by some  of individuals seeking payment when it is argued that it is their civic duty to disclose such information, and potentially a regulatory duty to do so as the FCA stressed in 2014, should significant awards be available for providing information leading to a conviction, one can foresee a whole new industry of professional whistleblowers growing, where there would potentially be the risk of  unscrupulous tactics and inaccurate information being employed.

Some have suggested that an effective counterweight to substantial financial incentives should therefore be strict sanctions against defamation, perjury and the fabrication of information.

What would effectively be paying witnesses is an anathema to the UK judicial system. One would expect anyone giving evidence at trial, where they are a whistleblower likely to benefit from the evidence that they may give, will face the severest of cross-examination. Some have proposed a stricter standard of proof for information provided by such witnesses.

Consequently, it may not be plain sailing for Ephgrave to persuade those in power to approve his flagship policy, and it is therefore imperative for him to state the case as carefully but as forcefully as possible to ensure it does not become an Albatross around his neck.