Paying bribes to foreign officials or cooking the books to hide financial improprieties is obviously illegal. Unfortunately, in many industries it is an everyday occurrence. Lately several big pharmaceutical companies have been fined tens of millions of dollars after being caught paying bribes to foreign healthcare officials. Now it seems that the SEC is setting its sights on the oil and gas industry. That could be bad news for companies breaking the law but great news for those interested in stopping corruption and earning huge whistleblower awards.
The SEC has just released new rules for businesses engaged in “resource extraction.” The rules cover the mining and energy sectors.
Companies that bribe foreign officials are already required to self-report under the Foreign Corrupt Practices Act (FCPA) but that’s like asking a bank robber to call the police after the robbery. Under the new rules, companies will need to immediately disclose any payments made to foreign governments or government officials.
Obviously not every payment to a foreign government is illegal. By requiring more disclosures, however, the SEC is hoping it will be more difficult to hide bribes.
The SEC says its new rules are designed to combat global corruption. The rules also help create a level playing field although that is somewhat idealistic in that not all countries follow the rules. The EU and Canada have already implemented similar measures.
Payments that must be reported include taxes, royalties, licensing or other fees, in-kind payments, payments made to foreign officials and social responsibility payments.
The new rules are part of the Securities Exchange Act and Dodd Frank law. This means they are in addition to the existing disclosures required by the FCPA.
The new rules will begin to be phased in later this month.
New Whistleblower Opportunities
The SEC has a robust whistleblower program that pays awards to those that report securities related fraud. Because the new rules are part of the Securities Exchange Act, a violation can result in an award. Ditto for violations of the FCPA.
Under the SEC’s new whistleblower program, people with inside information about violations can earn up to 30% of whatever the Commission recovers from wrongdoers. The SEC’s program got off to a slow start but this year there has been a dramatic uptick in awards and a very visible push to punish companies that bribe foreign officials.
We anticipate the new rules will lead to a few companies coming forward and taking their lumps. Unfortunately, many will continue to hide their illegal activity.
In order to qualify for an award, would be whistleblowers must generally be the first to file. Because of the new mandatory disclosures, we urge whistleblowers with information to come forward immediately. If you wait until after a company self-reports, it is too late.
Interested in becoming a whistleblower? We have helped our clients collect over $100 million in whistleblower awards. The next award could be yours. Our mission is to get you the maximum possible award, stamp out corruption and protection you from any retaliation. (Whistleblower retaliation is illegal we have a dedicated employment lawyer just to handle retaliation claims.)
Need more information? Our consultations are without cost and always confidential. For more information, contact attorney Brian Mahany at *protected email* or by telephone at (414) 704-6731 (direct).
MahanyLaw – America’s FCPA Whistleblower Lawyers
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