Feargal Quinn (Independent) | Oireachtas source

I welcome the Minister. I welcome the Bill and agree with the comments just made by Senator Higgins.

I welcome any Bill in the area of whistleblower protection. I particularly welcome the fact that workers who are victimised for whistleblowing could receive up to five years pay in compensation under new legislation. However, what goes unsaid in many whistleblower cases is that employers can come to settlements behind the scenes with employees who want to whistleblow. We are all aware also of situations where whistleblowers are blacklisted by employers. In a small country like Ireland, this is a massive issue. Indeed, I remember well the ordeal that one bank brave bank employee, the AIB auditor, Tony Spollen, had to go through in public as part of the DIRT inquiry. His integrity was attacked and he was called "childish". However, he was vindicated after much personal pain and the Revenue Commissioners eventually collected almost €1 billion.

Will the Minister elaborate on whether the Government has any figures on how State bodies have effectively gagged former employees? I would be very interested to hear the views of other Senators on this. This sort of retaliation is at the nub of the issue. How do we tackle this and how do we get people to come forward in the real world? First, to put this in context, we must remember that financial regulators all over the world failed to out wrongdoing before 2008. Thus there is a big move towards whistleblowing. We must remember that, as The Economist points out, tips are by far the leading source of fraud detection. I believe, whether we like it or not, that compensation is the core issue in regard to whistleblowing. Should we consider rewarding whistleblowers and giving them the "nudge" and confidence to report?

In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Securities and Exchange Commission, in cases where the Government recoups more than $1 million, to award to qualifying whistleblowers no less than 10% and no more than 30% of the total monetary sanctions collected as a consequence of the information they provided. The fundamental idea behind the whistleblower reward programme in that country is to encourage whistleblowing by giving people a reason to come forward. The argument could be made that the prospect of a reward might encourage so-called gold-diggers. The experience in the United States, however, is that the Office of the Whistleblower has been receiving a manageable eight tips per day on average, most of them high-quality.

It is evident that many of those working in the financial sector were aware of the problems that existed before the crisis hit. Even in the months leading up to the collapse of Lehman Brothers, that institution's vice president, Mr. Matthew Lee, attempted a whistleblower action in regard to the firm's accounting methods. His contract was terminated just a few weeks later, in June 2008. In Ireland there have been many examples of bankers and others working in the financial sector whose careers were severely affected when they raised concerns about malpractice on the part of their employers. The reality is that these are often the only people in a position to highlight such abuses. We must do everything to protect them and to incentivise disclosure of vital information.

I do not subscribe to the view that we must have a vast financial reward scheme as part of any effective whistleblower framework. At the same time, however, it is an aspect that is worth considering. The promise of financial reward could tip the balance for potential whistleblowers who fear for their career and job. In the case of the banking collapse, a reward of some small percentage of the moneys potentially saved by the State would probably have been a fair and modest price to pay for an early warning, in the context of the €64 billion it has thus far cost to bail out those institutions. Will the Minister consider an amendment to the effect that whistleblowers would be entitled, as a consequence of the information they provided, to 5%, say, of every €1 million recouped by the Government? If the State obtained €1 million in lost revenue, for example, the whistleblower would receive €50,000. That might be sufficient incentive to give people the peace of mind and, hopefully, the subsequent financial security, to feel able to whistleblow and thus potentially save the Irish taxpayer billions of euro. We have an opportunity to put out a signal in terms of our commitment to transparency and our willingness to put our money where our mouth is when it comes to tackling this issue. Should a person like Tony Spollen, who helped the State recoup some €1 billion, have received some type of reward after all the pain he went through? I would argue that he should have.

On the issue of financial incentives, it is worth noting that the United States Internal Revenue Service agreed to pay UBS Bank whistleblower Bradley Birkenfeld $104 million for his role in exposing the giant Swiss bank's efforts - illegal in the United State but not in its home country - to help American taxpayers to hide money in offshore accounts. After the Birkenfeld case, the IRS introduced amnesty programmes allowing Americans to repatriate the contents of undeclared offshore accounts at a modest penalty rate. At least 33,000 have done so to date, netting the United States Government more than $5 billion in back taxes and penalties it might otherwise never have seen. Some people have argued that the Birkenfeld case gave people 104 million reasons to come forward. His actions have resulted in massive revenue being generated for the United States Government. Notwithstanding the immense financial strain on the economy, the introduction of a similar incentive in this jurisdiction is worthy of consideration. We might consider following the lead of the United States in providing some type of amnesty or emulating its Foreign Account Tax Compliance Act as a sort of complement to the Bill before us today. That legislation requires foreign financial institutions to identify American account holders and disclose their balances and withdrawals.

These issues should have been tackled in the whistleblowing legislation. I hope we can have a mature debate on my proposals rather than their being dismissed out of hand simply because they did not emanate from the Government side. A campaign to offer rewards to whistleblowers is under way in Britain. Will it be the case, as it so often proves, that our neighbouring country will introduce innovative legislation and we will pat ourselves on the back when we do the same ten years later? Let us not be afraid as legislators to take a lead on this issue, to show we mean business when it comes to protection for whistleblowers and empowering them to come out from the shadows. An innovative approach would have significant potential benefits for taxpayers and citizens. It is certainly worthy of consideration.