Frances Haugen. Susan Fowler. Edward Snowden. Erika Cheung. As the tech industry continues to face a reckoning, whistleblowers inside of companies are playing a huge role in bringing important information to light.
Sarah Alexander – everybody calls her Poppy — is a partner at the law firm Constantine Cannon, and works with whistleblowers all over the world. From the first meeting to what she calls the “cold-shower talk” about the hardships that come with going public, Alexander’s job is to help whistleblowers bring about the change they seek. It’s not easy for anyone involved, she said. But it might be getting easier.
Alexander joined the Source Code podcast to explain how whistleblowing works, why there have been so many high-profile whistleblowers in the tech industry, how companies and governments alike can better support whistleblowers and much more.
You can hear our full conversation on the latest episode of the Source Code podcast, or by clicking on the player above. Below are excerpts from our conversation, edited for length and clarity.
David Pierce: This is going to feel sort of elementary, but I want to talk about what a whistleblower is, and what counts as a whistleblower, because it's one of those terms that gets thrown around and seems to mean a lot of things to a lot of people. How would you describe it? What makes someone a whistleblower?
I don't think that's an elementary question! I actually think it's a really interesting and important question that a lot of people are trying to figure out right now. To me, a whistleblower is someone who's telling the truth and telling it like it is, often in the face of people trying to convince them not to say something. A whistleblower is someone who's coming forward and exposing something that has been hidden, often on purpose.
In my world, and the whistleblowers I deal with, it usually relates to corporate wrongdoing: a company that's doing something wrong, that's hurting their investors, that's hurting their consumers, hurting their employees. The whistleblower is the person who tries to make it right. And that can mean talking to people internally, it can mean reporting up the chain. It can also mean external: It can mean going to the press, going to the government. And that's what I help people do. I help them go to the government with the information. But there are many other ways to be a whistleblower.
Anna Kramer: Walk us through these different types of whistleblowing, and where you fit into the conversation.
There are many different ways to be a whistleblower, and often what you see is people first go internal to their company. And it may sound naive, but people usually think their company wants to do the right thing. And so when they discover something that's wrong, they say, “Well, this is crazy, I’ve got to tell someone so we can fix it.” And unfortunately, they're often really shocked by the reaction they get to that. They get people either telling them, “No, no, don't worry your pretty little head, it's not a problem,” or telling them, “We'll fix it, we'll fix it” and not actually fixing it. Or, unfortunately, the most common reaction is either firing them, or otherwise retaliating against them in some way. So that's the internal whistleblower. And those people are usually not working with lawyers, and certainly not working with someone like me, at least not at that initial stage.
Then there's the whistleblower who's going to the press, and that's someone who's just trying to publicize what's going on, and using all the tools available of publicity and social media and what have you to try to expose the wrongdoing.
And then there's the whistleblowers who I'm dealing with, and who are my clients. And what I do is I help them go to the government. In the U.S. there are various whistleblower reward programs that incentivize people to come and tell the government when a company is cheating someone. And we work very closely with the government to help ensure that there's some sort of enforcement action that comes out of it, to hold the corporation accountable for what they did.
DP: And generally speaking, I would assume that most of the work that you're doing with those whistleblowers stays behind closed doors.
That is true, most of our work does happen confidentially. At least until the very end of a case.
The False Claims Act is the big kahuna of whistleblower programs. It actually was created by Abraham Lincoln back in the Civil War, to stop war profiteering. There were companies that were selling the Union Army flour and claiming it was sugar, and so the False Claims Act was passed to try to stop that. The law kind of sat dormant until the 1980s, when it was revived through a series of amendments. And now it is the government's main tool to recover fraud.
So the way the False Claims Act works is, anyone with private information related to a company defrauding the government — think of the hospital that is billing Medicare for operations they're not actually doing, or the defense contractor that promises widgets, but gives gadgets — can file a case on behalf of the government, and bring that information to the government's attention. Those cases don't look like any other law cases you might be familiar with. They're filed under seal; defendants don't even know when these cases are filed. And they stay under seal. That means there's a court order saying you can't talk about them until the government completes their investigation. And the reason for that is, you want to give the government every tool they possibly can have to figure out what's going on. So those cases we really can't talk about, and our clients really can't talk about. And that's hard! I want to be very up-front about that. It's hard as a whistleblower, to have this big part of your life that you can't talk to anybody about.
AK: Is it common for somebody to be an employee working for a company for two to five years while they wait for the government to make this decision?
It's certainly possible. And it certainly happens. I wouldn't say it's common, because often what happens is people kind of can't take it. It's too hard.
And so a lot of our clients are former employees, but not all. You can also be an outsider, you could be a competitor. If you know that your competitor is charging prices there's no way they should be charging, and you have some good evidence about it, you could be a whistleblower. But we do have some current employees who are whistleblowers, and some who, for various reasons, hang on for quite a while. Maybe they're nearing retirement and they want their pension, maybe there's some other familial reason that they're staying on. But for the most part, our clients start looking for other jobs, because it's too much.
So that's the False Claims Act. And then there's the other half of the whistleblower programs, which are the agency programs. These are a little different. These are not formal complaints, these are not lawsuits. These are the programs run by, for example, the Securities and Exchange Commission, the Internal Revenue Service, the Commodities Futures Trading Commission, there's a brand new one run by the Department of Treasury related to money laundering. And these are all different agency programs that allow someone to come and tell the government about different kinds of frauds.
So, for example, for the SEC it's investor fraud. So if you know that a company is lying to their investors about their actual profits, you can go tell the SEC about it — it's legally called a tip. You give them a tip that this is happening, and it goes to the Commission, and then they investigate. And if they find that there is merit to your complaint, they might bring an enforcement action based on it. Those kinds of programs are not under seal in the same way that the False Claims Act is. However, almost always, it's in everyone's best interest to keep these things confidential for all the same reasons, right? You want to do everything you can to help the government investigate. And once companies get wind that there might be a whistleblower, and secondly that the government's looking into them, they can do a lot to hide their tracks.
Particularly the SEC, but also the other agencies, are very, very good at protecting whistleblower confidentiality. At this point, the SEC is very up-front: They love whistleblowers. Every SEC enforcement action that you're reading about, very likely there is a whistleblower behind it.
DP: Maybe this is a totally cynical view of this, but I would think that any of these agencies, they want people to come forward. In some cases, they are happy to pay people potentially very large amounts of money if they come forward. If I'm a competitor, or a former employee with an ax to grind, I have other incentives to come forward. Are there too many people fighting to blow whistles now because there's so much upside in it? Or is there more going on that prevents that from happening?
I think honestly, it gets back to the fact that it's really hard to be a whistleblower. I mean, even in the best-case scenario, it's hard. You're talking about waiting for years, and something you can't talk about, often going against your community or your friends or your colleagues or what have you. And there still is such a stigma around whistleblowing.
And I can tell you that none of our clients are primarily motivated by money. Some of them, maybe there's a little bit of wanting to be proven right. They complained internally about this thing, and they were told, "No, no, no, you're wrong, you're wrong, you're wrong." And they want someone to tell the world, “No, I'm right. I knew what I was talking about.” But no one is going to come forward and go through this whole process if they are not very motivated by some level of public interest and wanting to expose the wrongdoing.
We are very up-front with them that this is not an easy process. And you should not expect it to be an easy process.
Whenever we get a new client through our door, we give them what we call the cold-shower talk. We are very up-front with them that this is not an easy process. And you should not expect it to be an easy process. And the clients who stick around after that are the ones who are really motivated, and the ones who we know are going to be great whistleblowers, and do everything to help the government and support the cause. And will give it their all, because we need that, and they need that. And the government needs that.
AK: What are the programs that tend to be applied to tech companies specifically? What are the ones that you think people should know exist and should pay attention to?
Honestly, all of them. I don't think a lot of people in the tech world know about the False Claims Act. It’s the kind of thing that you probably know if you work in health care, you probably know if you work in defense. You probably don't know if you work in any other industry, even ones that do a lot of business with the government. And you absolutely should.
We have a lot of tech companies going public via SPAC, traditional IPOs, what have you. You're falling under investment laws, and you need to be familiar with them, and you need to know what they are. And if your company is not following through with them, you need to know that there's a way that you can try to help. There are a lot of big tech companies that work around the world. Maybe they're not reporting their income properly, that sort of thing, so the IRS program applies.
The Department of Treasury recently released a report about money laundering in the art world. And in that they have a throwaway section about NFTs. And specifically NFT marketplaces. They say, “Look, we're looking at these, and as we look at them, these look like what are called money services businesses.” And that sounds like an obscure designation, and it is, but it matters because that would mean NFT marketplaces would fall within the Bank Secrecy Act. And suddenly, that means they have a whole lot of compliance obligations that I don't think they're prepared for.
And obviously in crypto, there's a huge concern with money laundering, and tracing things through the blockchain only gets you so far. We saw that with the two fraudsters recently who [weren’t caught] until they tried to take their money off the blockchain. But the federal government was able to trace them and follow through with that. So to the extent anyone is helping people move their money in illegal ways, there are some pretty big obligations there. And obviously, the CFTC and SEC have both claimed jurisdiction over crypto in different ways. So both of those whistleblower programs also apply. And so, yeah, I think people in tech need to know about all these programs. They're all relevant to the work that they do.
DP: One thing I think is interesting about the way we're defining this is that especially in tech, the whistleblowers who get a big name — like Susan Fowler at Uber and Frances Haugen, at Facebook — seem to occupy a different space. They’re less saying, “We're cheating investors,” or “We’re doing some shady financial footwork.” They're just coming out and basically saying, like, “My company is bad for the world.” Which feels messier in a certain way, but I think it also falls under the same thinking. From a legal perspective, how do folks like that fit into the way you think about whistleblowers?
The way we talk about the whistleblower landscape, and the whistleblower reward programs specifically, is that these are massively large hammers but only when they apply. And you're right: The whistleblower programs do not cover all the possible ills that exist in the world. And there's nothing they can do about just saying, like, “Look, this company is bad for the world.” But oftentimes, when a company is bad for the world, it's also bad for investors. And usually, if a company is lying about all the horrible bad things they're doing, they're also potentially lying to investors.
Usually, if a company is lying about all the horrible bad things they're doing, they're also potentially lying to investors.
A really interesting thing that I think we don't know the answer to yet is the SEC’s new emphasis on ESG and whether that means they're going to start bringing enforcement actions against companies for lying about their ESG compliance. Specifically, I'm thinking about an answer to your question about the S and the G part — about the social and the governance part. Are they going to start holding corporations accountable for their bad acts around the world, based on the fact that they represented to their investors that they're such wonderful corporate citizens? I don't know. It's a really interesting question that I think we're probably going to find out in the next couple of years.
AK: It feels to me like we're in a bit of a cultural shift in terms of what we think of whistleblowers, because I feel like both Fowler and Haugen made very big names for themselves. Is there some kind of cultural shift happening around how we think about whistleblowers? Or is this something unique to the tech space?
I hope you're right. And I think you are in a lot of ways, and maybe specifically in tech. So, for example, I don't know if you've seen but there's this really great resource that was put together by the Signals network and a few other organizations called The [Tech Worker] Handbook. It's very extensive, and it's getting a lot of use I think. And there’s the Silenced No More Act in California.
There is this movement right now that is very pro-whistleblower. And I think people are really recognizing that we need it in this industry that until now has really abided by its “move fast and break things” rules, without paying attention to the fact that in fact there are regulations and laws for a reason.
But the flip side of that is, I was, frankly, a little distressed during the Theranos trial to see that there were a lot of very negative public comments directed at Erika Cheung, in particular. I mean, this poor woman has come forward of her own volition and done an extraordinary thing to help expose something that I think most people would agree is a pretty significant fraud. And yet, there's still this public knee-jerk reaction to see that, “Oh, she must be doing it for a reason, not just out of public interest.” And so, as long as we still have that kind of knee-jerk reaction, I think it's still going to continue to be a struggle that we all need to engage in.
AK: How often is it that a company becomes receptive to something once you get involved? Or does that not happen, because once you're involved, it's already secret?
You're right, once we're involved, it also means that there's a layer between our client and the company and the government. I think a lot of companies do respond very well to enforcement actions, and to corporate integrity agreements that they're required to sign and that sort of thing. Unfortunately, we see a lot of repeat players as well. And clearly, some companies just write whistleblower complaints into the cost of doing business. And that's really unfortunate. I think every company should see a whistleblower complaint as an opportunity to recognize that they did something wrong, and they should fix it. And if they fix it the company is going to be better for it.
This is a moment of reckoning for tech, and largely whistleblower-caused. And I really, really hope that this industry that prides itself on innovation, and being ahead of the curve, all of these things, they realize this is another place where they really have to be ahead of the curve, and recognize whistleblowers for the asset that they are.
DP: Practically speaking, what does that look like? Obviously, companies should stop doing bad things and violating the law. But at the same time, it feels like there are large, systemic changes that it sounds like you're thinking about that might push all of this in the right direction. As you think about what better looks like in the coming years, if we are in this reckoning, what's top of mind for you?
The Silenced No More Act is a great example. That's a major step forward in helping people. I cannot tell you the number of people who come through my doors with really bad information that maybe for some reason doesn't make a great whistleblower case, but they want to tell someone and they can't, because of an NDA.
I should say: NDAs don't affect my work, because you can basically always tell the government about fraud. You really cannot contract out of your right to tell the government about fraud, because the right actually belongs to the government. It's the government who has been harmed, so you can tell the government about it. You don't have the right to contract that away.
What I want to see is companies recognizing that if someone reports up the chain, that there's an issue, they act on it. I want to be put out of business, honestly. I don't want companies to be defrauding investors and defrauding the government, I want them to fix it. And everybody makes mistakes, right? So when you know that you made a mistake, you fix it. That's what you should do with a mistake. And so I think it's really unfortunate companies don't have that.
We always see in HR policies very well-worded, pro-whistleblower policies — oh, we always listen, blah, blah, blah — and I want to see some teeth in those. I want to see companies actually following through on the promises that they're making. And I think, I think we're getting there. We've only been talking about the U.S. so far, but there are new whistleblower laws all around the world, and my clients come from all over the world. I work with people on basically every continent at this point, and there's more and more recognition internationally of the importance of whistleblowing, and I think that's going to affect things too, as it stops being seen as the sort of weird niche, little American thing. And I think we're gonna see growth and change.
So in that respect, I'm super hopeful. But there needs to be a pretty big sea change in corporate culture before that really means something.