Glossary term
Whistleblower Reward
Subject: Governance, Ethics, Conduct and Whistleblowing
Also known as: Informant Reward Scheme
A whistleblower reward is a payment, usually a share of money recovered, made by a government to a person whose information about wrongdoing leads to a successful enforcement action.
Explanation
Reward schemes pay informants to offset the cost and risk of coming forward. In the United States, securities and commodities regulators pay eligible informants a percentage of large sanctions, and the False Claims Act lets private persons sue on the government's behalf over fraud against public funds and share the recovery. Such a suit is called a qui tam action, from Latin words describing a person who sues for the government and for himself at once. Tax authorities in several other countries run informant schemes too. Supporters say rewards bring out information that would otherwise never surface. Critics say they may tempt people to bypass internal reporting or to make weak claims. Most regimes pay only for original information that leads to sanctions, and exclude people who took part in the wrongdoing. Details vary widely by country.
Example
A former finance employee gives a tax authority records showing that a trading company hid revenue through false invoices. The authority recovers a large sum in tax and penalties. Under its informant scheme, the employee receives a fixed percentage of the amount collected, since the information was original and she had no part in the scheme.
Not to be confused with
- Whistleblower Protection
- Protection shields a reporter from retaliation. A reward pays the reporter for information that leads to a recovery.