Whistleblower Trends: Expect More Offshore Leaks in 2022

Avoiding reputational risk, crippling fines, possible criminal liability and destabilizing impacts to an organization, not to mention being a good global corporate citizen, are essential keys to the modern day business.

Whistleblowing is a driving force that is reshaping corporate governance, data protection, third party risk, executive compensation, and approaches to public accountability. Major leaks can have a big impact on corporations and politics. They occur, on average, once a year.

101 Intro to Whistleblowing

A whistleblower is, generally, defined as “an employee who alleges wrongdoing by his or her employer of the sort that violates public law or tends to injure a considerable number of people.”[1] Although not well-publicized, the first whistleblower was a Marine captain, who reported torture of captured British soldiers to the Continental Congress in 1777.[2]

The motivations for whistleblowers include doing the right thing[3] and potential financial rewards[4]. Equally, whistleblowers can face enormous risks.[5] The ethical and moral elements of whistleblowing have generated numerous commentaries[6].

Quite a bit of commentary has been produced regarding the difference between leaking and whistleblowing[7]. But the differences may be less relevant when considering the impact on business, which is largely the same.

Today, virtually every country is experiencing a boom in the whistleblower industry. In the USA, the National Whistleblower Center[8], which was founded in 1988, seeks to assist and protect whistleblowers from retaliation as well as educate them about their rights and the public about the importance of reporting. It has been instrumental in meaningful legislative changes in the USA.[9] Similar organizations have sprouted up in Europe[10], the UK[11], Asia[12], Africa[13], Latin America[14], Japan[15], Australia[16] and on a global scale.[17] These organizations have been instrumental in the enactment of a plethora of legislative changes.[18]

If past trends are any indication, 2022 could be a year with major new leaks by whistleblowers.

Frequency: Major Leaks Occur Annually

Modern trends in whistleblowing can be traced back to the much celebrated[19] and maligned[20] Julian Assange[21] of Wikileaks[22].

Today leaking activity frequently focuses on big targets, with significant troves of data. Crowd-sourced funding and analysis is occurring in partnerships between whistleblowers and organizations such as the globally recognized[23] International Consortium of Investigative Journalists,[24] Transparency International[25] and Distributed Denial of Secrets.[26]

Despite efforts by cyber security and data protection officers to stave off leakage of alleged financial misconduct data, there have been over fifteen major leaks by whistleblowers of significant global impact post-Wikileaks, roughly once annually:

· Wikileaks 2006[27] (“WikiLeaks is a giant library of the world's most persecuted documents. We give asylum to these documents, we analyze them, we promote them and we obtain more.”)

· HSBC[28] Geneva – 2009[29] (records of approximately 100,000 accountholders from more than 200 countries representing USD255 billion in deposits)

· HSBC Jersey – 2012[30] (records of approximately 4,000 accountholders from the UK representing USD1 billion in deposits and resulting in USD34 million in fines assessed by the UK Inland Revenue Department)

· Offshore Leaks – 2013[31] (records from two offshore service providers representing more than 100,000 clients from around the world including Maria Imelda Marcos Manotoc[32], the eldest child of the late Philippine dictator Ferdinand Marcos[33])

· Luxembourg leaks 2014[34] (PricewaterhouseCoopers[35] assisted multinational companies to gain hundreds of favourable tax rulings in Luxembourg and saving billion by channelling money through the country)

· Swiss leaks 2015[36] (leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than USD100 billion, including USD12.6 billion in the name of Venezuela governmental institutions)

· Bahamas Leaks 2015[37] (cache of 1.3 million files from the island nation’s corporate registry with names of directors and some owners of more than 175,000 Bahamian companies, trusts and foundations)

· Panama Papers 2016[38] (11.5 million records of 214,000 offshore companies, trusts and other entities from 21 offshore jurisdictions held by Panama-based global law firm, Mossack Fonseca[39]; business dealings of British prime minister David Cameron[40]; files of brother-in-law of China paramount leader Xi Jinping[41], son of former Malaysian prime minister Najib Razak[42], son of former United Nations Secretary General Kofi Anan[43])

· Paradise Papers 2017[44] (offshore interests and activities of more than 120 politicians and world leaders, including Queen Elizabeth II[45], and 13 advisers, major donors and members of U.S. President Donald J. Trump's administration[46] as well as tax engineering of more than 100 multinational corporations, including Apple[47] and Nike[48])

· West Africa Leaks 2018[49] (offshore companies and accounts used to strip cash out of West Africa)

· 29 Leaks 2019[50] (Millions of emails, phone calls and faxes from London-based company formation agent The London Office, then called Formations House[51], and its related companies, used to facilitate fraud in Africa, Europe, Asia, the Middle East, and the Americas)

· Cayman National Bank & Trust (Island of Man) Leak 2019[52] (copies of the servers provides data evidencing that government regulators have too cozy a relationship with the financial powers and don't act as "custodians of the public interest")

· Mauritius Leaks 2019[53] (global law firm Conyers Dill & Pearman[54] and major audit firms, including KPMG[55], enabled corporations operating in some of the world’s poorest nations to exploit tax loopholes; private equity push into Africa backed by anti-poverty crusader and rock star Bob Geldof[56] benefited from Mauritius’ treaties that divert tax revenue away from Uganda and elsewhere)

· Luanda Leaks 2020[57] (more than 400 companies in 41 countries are linked to Isabel dos Santos[58], the eldest child of Angola's former President José Eduardo dos Santos[59], including 94 in secrecy jurisdictions via services provided by, among others, PricewaterhouseCoopers and Boston Consulting Group[60])

· Pandora Papers 2020[61] (millions of leaked documents from Alemán, Cordero, Galindo & Lee[62], a Panamanian law firm led by a former ambassador to the USA, of financial secrets of 35 current and former world leaders such as former British Prime Minister Tony Blair[63], more than 330 politicians and public officials in 91 countries and territories, celebrities such as pop music diva Shakira[64], and a global lineup of fugitives, con artists and murderers, including Italian mobster Raffaele Amato aka “Lell the Fat One.”[65])

· FinCEN Files 2020[66] (trillions in tainted dollars flow freely through, among others, UBS[67], Credit Suisse[68], JPMorgan[69], HSBC, Standard Chartered Bank[70], Deutsche Bank[71] and Bank of New York Mellon[72] utilizing, in part, 81 trusts uncovered in South Dakota as well 37 in Florida, 35 in Delaware, 24 in Texas and 14 in Nevada)

Based on the trends, 2022 could see one or more major new leaks.

Impact: Results Are Big Takedowns

Many skeptics have commented on the impact of leaks and whistleblowing[73]. This largely reflects the mentality of “too big to jail” and government compromises with corporations.[74] These usually take the form of deferred prosecution agreements (“DPAs”), which involve a deal between the prosecution and company, under court supervision, where there is payment of a fine, admission of facts, waiver of statute of limitations and suspension of the prosecution for a defined period. DPAs also avoid lengthy and expensive trials and are transparent to the general public.[75]

Regardless of the analysis of DPAs and similar “too big to jail” issues, leaking and whistleblowing have clearly impacted business, celebrity and political elites and resulted in public protests, arrests, legal reform, official inquiries around the globe, and multiple resignations of previously thought untouchables. Several notable consequences published by the International Consortium of Investigative Journalists include:

· EU Tax Transparency Package (2015)[76]

· Panama Papers law firm Mossack Fonseca closes its doors (2018)[77]

· HSBC To Pay $192m Penalty For Helping Americans Evade Taxes (2019)[78]

· EU Whistleblower Directive (2019)[79]

· Notorious tax haven British Virgin Islands to introduce public register of company owners (2020)[80]

· Advocates celebrate major US anti-money laundering victory (2020)[81]

· 136 countries agree to global minimum tax for corporations in ‘historic’ OECD deal (2021)[82]

· Germany seeks arrest of senior Panama Papers lawyer (2021)[83]

· Chilean legislators impeach president after Pandora Papers revelations (2021)[84]

· ICIJ releases new Pandora Papers data from two offshore service providers (searchable database) (2021)[85]

[1] Cornell University Legal Information Institute, https://www.law.cornell.edu/wex/whistleblower. [2] The Whistle-Blowers of 1777, NY Times, https://www.whistleblowers.org/wp-content/uploads/2018/11/1777whistle-blowers.pdf, June 12, 2011. [3] Whistleblowers: Not Rats and Snitches, Just People Trying to Do the Right Thing, https://www.i-sight.com/resources/farewell-rats-snitches-hello-doing-the-right-thing/, July 5, 2011. [4] SEC Surpasses $1 Billion in Awards to Whistleblowers with Two Awards Totaling $114 Million, https://www.sec.gov/news/press-release/2021-177. September 15, 2021. “"The SEC has awarded approximately $1 billion to 207 individuals since issuing its first award in 2012." See also https://ftilaw.com/award-journal?blogcategory=whistleblower+award. [5] What are the impacts of Financial Data Leaks?, https://pideeco.be/articles/aml-financial-data-leaks/, February 26, 2021. “Whistleblowers face numerous risks including blackmail, physical harm, threats, blacklisting, public trust damage, professional retaliation, accusations of treason, and in certain countries death penalty. In 2012, the former Assistant Inspector at the U.S. Securities and Exchange Commission (SEC), David Paul Weber, stated that after revealing misconduct and accusations of foreign espionage against stock exchanges, he was placed on paid leave and was falsely accused of serious threat allegations, including bringing weapons to work.” [6] The psychology of whistleblowing, Science Direct, https://moralitylab.bc.edu/wp-content/uploads/2011/10/DunganWaytzYoung_2015.pdf. Throw Out Your Assumptions About Whistleblowing, Harvard Business Review, https://hbr.org/2020/01/throw-out-your-assumptions-about-whistleblowing, January 14, 2020. [7] 'Whistleblowing' and 'Leaking' Explained, Voice of America, https://www.voanews.com/a/whistleblowing-and-leaking-explained/3736863.html, February 23, 2017. [8] The National Whistleblower Center, https://www.whistleblowers.org/. [9] The Dodd-Frank Act, The National Whistleblower Centre, https://www.whistleblowers.org/what-is-the-dodd-frank-act/. See also Sarbanes-Oxley (SOX) Whistleblower FAQ, The National Whistleblower Centre, https://www.whistleblowers.org/faq/sarbanes-oxley-sox-faq/, Whistleblower Protection Laws for Federal Employee Whistleblowers, The National Whistleblower Centre, https://www.whistleblowers.org/whistleblower-protection-laws-for-federal-whistleblowers/. [10] Integrity Line, https://www.integrityline.com/. [11] Whistleblowers UK, https://www.wbuk.org/. [12] Integrity Asia, https://integrity-asia.com/whistleblowing/. [13] Platform to Protect Whistleblowers in Africa, https://www.pplaaf.org/. [14] LatamLeaks, https://www.latamleaks.lat/. [15] The Consumers Affairs Agency, https://www.dataguidance.com/news/japan-caa-releases-guidelines-whistleblowing. [16] Whistleblowers Australia, http://www.whistleblowers.org.au/. [17] Whistleblowing International Network, https://whistleblowingnetwork.org/About. [18] National Whistleblower Center, https://www.whistleblowers.org/whistleblower-laws-around-the-world/. [19] Julian Assange: Readers’ Choice for TIME’s Person of the Year 2010, Time Magazine, https://newsfeed.time.com/2010/12/13/julian-assange-readers-choice-for-times-person-of-the-year-2010/ [20] Julian Assange Arrested in London as U.S. Unseals Hacking Conspiracy Indictment, The New York Times https://www.nytimes.com/2019/04/11/world/europe/julian-assange-wikileaks-ecuador-embassy.html, November 4, 2019. [21] Julian Assange, Wikipedia, https://en.wikipedia.org/wiki/Julian_Assange. [22] Wikileaks, https://wikileaks.org/ [23] ICIJ nominated for Nobel Peace Prize for combating dark money flows, International Consortium of Investigative Journalists, https://www.icij.org/investigations/fincen-files/icij-nominated-for-nobel-peace-prize-for-combating-dark-money-flows/, February 1, 2021. [24] International Consortium of Investigative Journalists, https://www.icij.org/. [25] Transparency International, https://www.transparency.org/en [26] Distributed Denial of Secrets, https://ddosecrets.com/wiki/Distributed_Denial_of_Secrets. [27] Wikileaks, https://wikileaks.org/What-is-WikiLeaks.html. [28] HSBC Group, https://www.hsbc.com/. [29] HSBC documents show bank helped clients hide billions from tax man, Canadian Broadcasting Corporation, https://www.cbc.ca/news/business/hsbc-documents-show-bank-helped-clients-hide-billions-from-tax-man-1.2950062, February 10, 2015. [30] 5 big leaks of tax-haven records before the Pandora Papers, Ibid, https://www.cbc.ca/news/offshore-tax-haven-leaks-panama-pandora-paradise-papers-1.6205447, October 10, 2021. [31] Secrecy for Sale: Inside the Global Offshore Money Maze, International Consortium of Investigative Journalists, https://www.icij.org/investigations/offshore/#_ga=2.216457046.1396548686.1638517056-1057217629.1638428544, September 20, 2016. [32] Maria Imelda Marcos Manotoc, Wikipedia, https://en.wikipedia.org/wiki/Imee_Marcos, “She has been linked to the unexplained wealth of her family, identified as a beneficiary of various Marcos offshore holdings as revealed in the Panama Papers…” [33] Ferdinand Marcos, Ibid, https://en.wikipedia.org/wiki/Ferdinand_Marcos. [34] Luxembourg Leaks: Global Companies’ Secrets Exposed, International Consortium of Investigative Journalists, https://www.icij.org/investigations/luxembourg-leaks/, September 12, 2019. [35] PwC Global, https://www.pwc.com/gx/en.html. See also https://en.wikipedia.org/wiki/LuxLeaks. [36] Banking Giant HSBC Sheltered Murky Cash Linked to Dictators and Arms Dealers, International Consortium of Investigative Journalists, https://www.icij.org/investigations/swiss-leaks/banking-giant-hsbc-sheltered-murky-cash-linked-dictators-and-arms-dealers/, February 8, 2015. [37] Bahamas Leaks, Ibid, https://www.icij.org/tags/bahamas-leaks/, 2015.. [38] The Panama Papers: Exposing the Rogue Offshore Finance Industry, Ibid, https://www.icij.org/investigations/panama-papers/, 2016. [39] Mossack Fonseca, Wikipedia, https://en.wikipedia.org/wiki/Mossack_Fonseca. See also https://www.investopedia.com/terms/p/panama-papers.asp. [40] David Cameron, Wikipedia, https://en.wikipedia.org/wiki/David_Cameron. See also When David Cameron was subject of leaks, he just shrugged it off, https://www.thetimes.co.uk/article/when-david-cameron-was-subject-of-leaks-he-just-shrugged-it-off-l07lcgjmt, July 14, 2019. [41] Xi Jinping, Wikipedia, https://en.wikipedia.org/wiki/Xi_Jinping. [42] Najib Razak, Ibid, https://en.wikipedia.org/wiki/Najib_Razak. [43] Kofi Anan, Ibid, https://en.wikipedia.org/wiki/Kofi_Annan [44] Paradise Papers: Secrets of the Global Elite, International Consortium of Investigative Journalists, https://www.icij.org/investigations/paradise-papers/, 2021. [45] Queen Elizabeth II, Wikipedia, https://en.wikipedia.org/wiki/Elizabeth_II. See also Paradise Papers: Queen's private estate invested £10m in offshore funds, https://www.bbc.com/news/uk-41878305, November 6, 2017. [46] Donald Trump, Wikipedia, https://en.wikipedia.org/wiki/Donald_Trump. See also 'Paradise Papers' documents touch Trump administration, https://www.politico.com/story/2017/11/05/trump-paradise-papers-finance-244577, November 5, 2017. [47] Apple, https://www.apple.com/. Paradise Papers: Apple's secret tax bolthole revealed, https://www.bbc.com/news/world-us-canada-41889787, November 6, 2017. [48] Nike, https://www.nike.com/. See also Revealed: how Nike stays one step ahead of the taxman, https://www.theguardian.com/news/2017/nov/06/nike-tax-paradise-papers, 2017. [49] West Africa Leaks, International Consortium of Investigative Journalists, https://www.icij.org/tags/west-africa-leaks/#:~:text=West%20Africa%20Leaks%20was%20the,It%20was%20released%20in%202018, 2018. [50] 29 Leaks, Distributed Denial of Secrets, https://ddosecrets.com/wiki/29_Leaks, 2019. [51] House of Horrors, Transparency International UK, https://www.transparency.org.uk/formations-house-29leaks-uk-company-formation-agent-anti-money-laundering. [52] Sherwood, Ibid, https://ddosecrets.com/wiki/Sherwood, 2020. [53] Mauritius Leaks, International Consortium of Investigative Journalists, https://www.icij.org/investigations/mauritius-leaks/, 2019. [54] Conyers, https://www.conyers.com/. See also Inside the Firm at the Heart of Mauritius Leaks, International Consortium of Investigative Journalists, https://www.icij.org/investigations/mauritius-leaks/inside-the-firm-at-the-heart-of-mauritius-leaks/, July 23, 2019. [55] KPMG International, https://home.kpmg/xx/en/home.html. See also Angolan tycoon’s frozen funds highlight KPMG’s role in offshore secrecy, International Consortium of Investigative Journalists, https://www.icij.org/investigations/paradise-papers/angolan-tycoons-frozen-funds-highlight-kpmgs-role-in-offshore-secrecy/, April 23, 2018. [56] Bob Geldof, Wikipedia, https://en.wikipedia.org/wiki/Bob_Geldof. See also Treasure Island: Leak Reveals How Mauritius Siphons Tax From Poor Nations to Benefit Elites, International Consortium of Investigative Journalists, https://www.icij.org/investigations/mauritius-leaks/treasure-island-leak-reveals-how-mauritius-siphons-tax-from-poor-nations-to-benefit-elites/, July 23, 2019. [57] Luanda Leaks, International Consortium of Investigative Journalists, https://www.icij.org/investigations/luanda-leaks/, 2020. [58] Isabel dos Santos, Wikipedia, https://en.wikipedia.org/wiki/Isabel_dos_Santos. See also Isabel dos Santos ordered to return to Angola $500 million in shares ‘tainted by illegality’, International Consortium of Investigative Journalists, https://www.icij.org/investigations/luanda-leaks/isabel-dos-santos-ordered-to-return-to-angola-500-million-in-shares-tainted-by-illegality/, August 2, 2021. [59] José Eduardo dos Santos, Wikipedia, https://en.wikipedia.org/wiki/Jos%C3%A9_Eduardo_dos_Santos [60] Boston Consulting Group, https://www.bcg.com/en-sea/. See also Global firms under scrutiny in Isabel dos Santos alleged corruption leak, Financial Times, https://www.ft.com/content/cf261ec8-3b7e-11ea-b232-000f4477fbca, January 20, 2020. [61] Offshore havens and hidden riches of world leaders and billionaires exposed in unprecedented leak, International Consortium of Investigative Journalists, https://www.icij.org/investigations/pandora-papers/global-investigation-tax-havens-offshore/, 2021. [62] Alemán, Cordero, Galindo & Lee, https://www.alcogal.com/. See also Law Firm at Center of Pandora Helped Global Rich Hide Money, Bloomberg, https://www.bloomberg.com/news/articles/2021-10-04/law-firm-at-center-of-pandora-helped-global-rich-hide-billions, October 5, 2021. [63] Tony Blair, Wikipedia, https://en.wikipedia.org/wiki/Tony_Blair. See also Pandora Papers: Blairs saved £312,000 stamp duty in property deal, BBC News, https://www.bbc.com/news/uk-58780559, October 3, 2021. [64] Shakira, Wikipedia, https://en.wikipedia.org/wiki/Shakira. See also Shakira, Claudia Schiffer Among Celebrities Named in Pandora Papers Leak, Newsweek, https://www.newsweek.com/shakira-claudia-schiffer-celebrities-named-pandora-papers-leak-1635141, October, 4, 2021. [65] Raffaele Amato, Wikipedia, https://en.wikipedia.org/wiki/Raffaele_Amato. See also Ancelotti, Camorra boss Amato feature in Pandora Papers, ANSA, https://www.ansa.it/english/news/general_news/2021/10/04/ancelotti-camorra-boss-amato-feature-in-pandora-papers_e27e6273-8a37-4f53-92d2-23a3cd985aec.html, October 4, 2021. [66] Global banks defy U.S. crackdowns by serving oligarchs, criminals and terrorists, International Consortium of Investigative Journalists, https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs-criminals-and-terrorists/, 2020. [67] UBS, https://www.ubs.com [68] Credit Suisse, https://www.credit-suisse.com/. [69] JP Morgan, https://www.jpmorgan.com/. [70] Standard Chartered Bank, https://www.sc.com/en/. [71] Deutsche Bank, https://www.db.com/index?language_id=1&kid=sl.redirect-en.shortcut. [72] Bank of New York Mellon, https://www.bnymellon.com/. [73] A Bank Too Big to Jail, NY Times, https://www.nytimes.com/2016/07/17/business/a-bank-too-big-to-jail.html, July 15, 2016. See also Too Big To Jail, Republican Staff of the Committee on Financial Services, USA House of Representatives, July 11, 2016. [74] Too Big to Jail: How Prosecutors Compromise with Corporations, Book by Brandon Garrett, Harvard University Press, 2016, https://www.hup.harvard.edu/catalog.php?isbn=9780674659919. [75] Deferred Prosecution Agreements – Justice delayed or Justice denied?, Law Firm of Norton, Rose, Fulbright, https://www.nortonrosefulbright.com/en/knowledge/publications/48cf9cbe/deferred-prosecution-agreements---justice-delayed-or-justice-denied, March 2018. [76] https://ec.europa.eu/taxation_customs/tax-transparency-package_en [77] https://www.icij.org/investigations/panama-papers/panama-papers-law-firm-mossack-fonseca-closes-doors/ [78] https://www.icij.org/investigations/swiss-leaks/hsbc-to-pay-192m-penalty-for-helping-americans-evade-taxes/ [79] https://pideeco.be/articles/eu-directive-whistleblowing-protection-compliance/ [80] https://www.icij.org/investigations/fincen-files/notorious-tax-haven-british-virgin-islands-to-introduce-public-register-of-company-owners/ [81] https://www.icij.org/investigations/paradise-papers/advocates-celebrate-major-us-anti-money-laundering-victory/ [82] https://www.icij.org/investigations/paradise-papers/136-countries-agree-to-global-minimum-tax-for-corporations-in-historic-oecd-deal/ [83] https://www.icij.org/investigations/panama-papers/germany-seeks-arrest-of-senior-panama-papers-lawyer/ [84] https://www.icij.org/investigations/pandora-papers/chilean-legislators-impeach-president-after-pandora-papers-revelations/ [85] https://www.icij.org/investigations/pandora-papers/icij-releases-new-pandora-papers-data-from-two-offshore-service-providers/?utm_source=ICIJ&utm_campaign=10332625a1-2021206_WeeklyEmail&utm_medium=email&utm_term=0_992ecfdbb2-10332625a1-83780870

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