Memorandum by Tony Burchell
1. Written evidence prepared for the House
of Lords European Union Committee inquiry into Law and Institutions
for Sub committee E members to examine where ideas triggering
work for legislation come from. As an EU citizen, in 2006 I emailed
London MEPs about adopting Qui Tam whistleblowing incentives within
the Sarbanes Oxley Act (SOX).
2. John Bowis 15/9/06 responded "this
is not within the competence of my own committees in the Parliament,
which are Environment & Health and Development". He concluded
"I will raise this with the Commission and with my colleagues
on the relevant Committees".
3. Claude Moraes 21/9/06 "Corporate
governance and accountability" said he had contacted the
Secretariat of the Eurojust Joint Supervisory Board, but was unaware
about Eurojust considering whistleblowing hotlines. He told me
about the history and role of Eurojust and concluded by outlining
the European Commission aims "to combat corruption through
a combination of strategies, including Eurojust and the Anti-Fraud
Office (OLAF)", signposted me to the European Union's anti-corruption
policy.
4. Baroness Sarah Ludford's 25/10/06 "Whistleblowing
Provisions" directed me to article 29 Working Party (EU data
protection commissioners) opinion on Sarbanes Oxley and EU data
protection legislation. She emphasised that "The UK already
has specific whistleblowing legislation". She highlights
how the Public Interest Disclosure Act 1998, Act protects most
workers (in the public, private and voluntary sector) from detrimental
treatment or victimisation from their employer if, in the public
interest, they blow the whistle on wrongdoing or make a protected
disclosure". She thanked me for recommending the book, saying
"I will try to find time to read it".
5. Now the idea was being considered by
MEPs, other EU actors and forwarded to European Institutions I
wondered what role I had played in initiated EU Legislation.
6. However, Franco Frattini 28/11/06 outlined
the process of consideration and negotiation of new EU legislation
in the field of corporate malpractice and revealed he was "not
aware that the Eurojust Joint Supervisory Body is looking at whistleblowing
hotlines". He outlined how legislation is generated inside
the Commission and why the Commission adopted the Communication
on Preventing Corporate and Financial Malpractice in 2004, "issued
after the Enron and Parmalat scandals, outlines a strategy for
co-ordinating action in the financial services, company law, accounting,
tax, supervision and enforcement areas, with a view to reducing
the risk of financial malpractice".
7. John Bowis 28/3/07 response from Klaus
Tolksdorf, Joint Supervisory Body noted the letter to Mr Frattini
regarding "constituents" question are "Eurojust
considering provisions similar to those contained in the US Clinger
Cohen Act", and concluded that the Joint Supervisory Body
of Eurojust had confirmed that Eurojust was not considering these
provisions and disclosed that "Eurojust would not be competent
to deal with these issues".
8. Communication from JSB Eurojust, the
Vice President of the European Commission and MEPs indicated my
proposal lacked the necessary quality to entice other interested
parties to support strengthened whistleblowing provisions. Though
the idea was not seriously considered for legislation my responses
suggested that individual citizens had the right of initiative.
Respondents were also open about their limitations and clear about
the reasoning behind the decision making process.
9. As a constituent, my assessment is that
I learned more about the developmental process and how priorities
are determined regarding how legislation is generated inside the
Commission.
10. However, the "signposted"
documents were huge, and heavy reading which made me aware of
the volumes of paper work created by the Commission and the importance
of scrutiny and "openness" when considering and responding
to ideas from external actors. As a source of information on which
the Commission draws, Eurojust willingness to engage with constituents
questions, demonstrates the significance of views from other EU
Institutions and forwarding of constituent letters by MEPs as
the above account illustrates, provide the Union some impetus
for an ideas development".
11. All EU actors and Institutions attempted
to explain their general political guidelines.
12. Although the proposal failed the letters
I received highlight the developmental process of legislative
proposals, and how the views of EU bodies and agencies are anticipated
and sought informally.
13. The above evidence of my experience
illustrates the significance of the views of an individual citizen
and the relationship between Member State, Members of the European
Parliament in the process of an ideas initiation.
14. Continuing the theme of how ideas are
developed the following Media accounts highlights how the creation
of proposals associated with Qui Tam and Sarbanes Oxley were interpreted
by the Home Office to illustrate how State Institution's, "spins"
ideas in the Media.
15. 25/5/07 The UK's Home Office presented
the Daily Mail with the idea of offering financial incentives
to "informers". Citing Qui Tam, Home Affairs Editor
James Slack helps lift the veil on how ideas are interpreted and
spun. The article reveals how other interested parties, in this
case Home Office Minister, Vernon Coaker sees Qui Tam's value.
16. Instead of tackling white collar crime
"the informant plan" emphasises the benefits of targeting
"benefit cheats, and those who evade VAT by bringing cigarettes
and alcohol from abroad for resale".
17. Qui Tam's financial incentive could
help people "Shop thy neighbour and make a fortune".
This headline by Daily Mail, Home Affairs Editor James
Slack, goes on to outline Coaker's idea about how "rewards
could be paid for exposing VAT fraud" whilst stressing that
the "informant plan" was merely a "consultation
idea, based on a strikingly successful scheme in the US, known
as Qui Tam, which has recovered £5.5billion since 1986 whereby
those who `shop' cheats receive between 15 and 30%". Coaker
also indicated that the way officials seize assets raises questions
under human rights law.
18. 28/3/08 nine months after The Daily
Mail's story, Ben Morris, BBC Business reported that the Financial
Services Authority (FSA) wanted more aggressive regulation similar
to the powers available to their US counterparts the Securities
and Exchange Commission (SEC) Tracking insider dealing and other
financial crimes, Ben Morris suggested that there is a growing
demand for stringer whistleblower proposals.
19. Introduced through legislation, the
(FSA) would get "specified prosecutor status" allowing
greater protection to whistleblowers. Morris tells how Sarbanes
Oxley Act legislation offers better protection to whistleblowers
when they approach the authorities about illegal activities and
concludes "since white collar criminals are often desperate
to avoid jail, they are open to doing deals".
REFERENCES
(1a) Letter: John Bowis 15/9/06.
(1b) Letter: Claude Moraes Ref: LC/BURC02001/02060331.
(1c) Letter: Baroness Sarah Ludford Ref:
EU issues/data protection/Burchell 10.10.06.
(1d) Letter: Franco Frattini Vice President
of the European Commission Brussels, 28/11/06 1594.
(5b) Daily Mail 25/5/07 "Shop
thy neighbour and make a fortune".
(5c) BBC News Business 28/3/08 "Policing
the Markets: US vs UK".
3 March 2008
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