Canadian Whistleblowers Find That Government Provides Little to No Compensation for Risk

What does it take to convince someone to blow the whistle on deceptive corporate practices? Right now, there is a lack of incentive for whistleblowers among Canada’s high-profile companies. As a result, many people are not choosing to come forward, out of fear of losing their job, and receiving no compensation for the risk they take on in reporting.

This troubling standard was recently highlighted in the case of Don Andrews, a mutual fund salesman. His Ottawa-based attorney, Harold Geller, advised him to contact authorities after Andrews realized that his superior had devised a scheme that operated against the rules of their financial services firm.

Thanks to Andrews’ intervention, an investigation was launched that took the superior out of business. Because of what Andrews did, however, he received not only a three-year prohibition, but a hit to his reputation, and a loss of clients as well. His lawyer says that reporting on what happened effectively held a harsh penalty for Andrews. “There’s no incentive for people who get caught in schemes to come forward and self-report,” says Geller.

The U.S., on the other hand, is often willing to pay thousands of dollars for information on corporate wrongdoing that could impact the market adversely by hurting hundreds of investors. So far, Canadian securities authorities have not created a financial-incentive for whistleblowers, even though extensive research indicates that it would encourage reporting.

So, while authorities were happy to set up whistleblower hotlines, they haven’t exactly had to staff them full time. As one example, the Investment Industry Regulatory Organization of Canada only logged eight calls throughout 2013. Compare this to the U.S., which received a total of 3,200 tips in the same year.

Considering that the financial crisis of 2008 was largely the result of financial institutions not following the rules — and not being reported on — it wouldn’t be a bad idea for Canada to start investing in potential whistleblowers. Currently, the Ontario Securities Commission is talking about forming an official whistleblower program, complete with monetary awards, but has yet to put the program into place.

Author: GWOB

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