transfer, reassignment, and any disciplinary action or decisions regarding compensation. People are protected from negative personnel actions, if they legally disclose information, about which they have a reasonable belief that they have evidence for:
– violation of any provision of law, rule, or regulation;
– gross mismanagement;89
– gross waste of funds;90
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– an abuse of authority;91 or
– a serious and particular threat to public health or safety.92
However, the disclosure of information may not be explicitly prohibited by law93 and may not be covered by secrecy for reasons of national defense or foreign affairs.94 As indicated above, a person who discloses certain information must have a reasonable belief that the information is true. Whether or not the information ultimately proves to be true is irrelevant to the possibility of receiving protection, if the actions are taken in accordance with the provisions of the Act. The employee must only prove that the person in their place can reasonably believe – given the information available to them – that the information disclosed is indicative of one of the statutory types of misconduct.95 If this condition is met, the burden of proof is shifted to the employer, who must prove with clear and convincing evidence that he would have taken the same action against the employee, even if the latter had not disclosed the information.96 The Act also applies to the disclosure of irregularities to the Special Counsel,97 the General Inspector of the agency or any other employee designated by the head of the agency to handle such disclosures.98
The whistleblower may seek legal protection under one of the following procedures: complaint due to an agency’s negative action against ←28 | 29→an employee to the Merit Systems Protection Board; action brought by the Office of Special Counsel; individually maintained right to lodge a complaint to the Merit Systems Protection Board; and, complaint brought by an employee under negotiated grievance procedures.99
Moreover, we should mention that in November 2012 Congress amended the Whistleblower Protection Act by adopting the Whistleblower Protection Enhancement Act.100 The new version strengthened the protection of federal workers who disclose evidence of waste, fraud, or abuse.101 The aim of WEPA was to close the gaps in the WPA that were exploited by managers and supervisors.102 Among others, literature mentions the abolition of the Federal Circuit Court monopoly on appeals,103 the extension of protection to Transportation Safety Administration staff and the obligation for the Inspectors General Offices to appoint an Ombudsman for the protection of whistleblowers in order to educate staff in the field of whistleblower protection.104 The role of the Whistleblower Ombudsman is to educate agency staff about prohibited retaliation for disclosures, and about their rights and remedies in the event of retaliation for reporting irregularities.105 Moreover, the Office of Special Counsel has been granted the right to act as a “friend of the court” amicus curiae at the appeal stage, if the whistleblower lost the administrative hearing stage.106
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1.2.1.3 The Sarbanes-Oxley Act
The United States has a number of laws that regulate the protection of whistleblowers in the private sector.107 The most important is the Public Company Accounting Reform and the Investor Protection Act from 2002,108 also known as the Sarbanes-Oxley (Sarbox or SOX) Act.109 On July 30, 2002, President George Bush Jr., when signing the bill, described it as “the most far-reaching reform of American business practices since the time of Franklin Delano Roosevelt.”110 This revolutionary act on the American market became a response to the stock market collapse at the beginning of the twenty-first century and to the decline in investors’ trust in enterprises.111 It has been recognized as one of the greatest reforms of US securities law and a breakthrough in the protection of the rights of whistleblowers.112 Legislation strengthening corporate governance also includes provisions on the protection of whistleblowers that aim to help breaking the code of corporate silence and encouraging more people to report corporate malpractice.113 These rules treat whistleblowers’ disclosure as a tool to control companies’ activity.114 The financial scandals that happened in the USA during this period clearly revealed that employees can play a key role in detecting fraud in companies.115 It was the whistleblowers ←30 | 31→who raised public awareness about the abuses committed in entities such as Enron or WorldCom.
The provisions of the Act oblige issuers, i.e. persons or firms who issue securities, to ensure the protection of whistleblowers and, pursuant to section 10A, extend such protection to auditors.116 This is reflected, among other things, in the obligation to establish a code of ethics and develop procedures that enable internal and anonymous reporting of detected irregularities.117 Under section 301 SOX, audit committees of listed companies must establish internal procedures that regulate issues such as:
a) receiving, retaining, and handling complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
b) the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters by employees of the issuer.
In this way, a company creates an opportunity for its employees to react to detected irregularities on an internal forum.118 This solution encourages whistleblowers to provide information about the problems noticed in the workplace. It should be noted that SOX does not specify any particular method for submitting complaints.119 As a result, employers may establish different procedures in this area, e.g. by telephone, post, fax or e-mail. The condition is to guarantee at least one confidential, anonymous method of submitting complaints.
The provisions of the Act protect employees of companies listed on public stock exchanges or companies required to report to the Securities ←31 | 32→and Exchange Commission (SEC).120 Pursuant to section 806 of the SOX, the protection applies to employees who have a reasonable suspicion that they report activities that violate:
– any federal criminal law provisions prohibiting postal fraud, bank transfer or bank fraud;
– any rules or regulations of the Securities and Exchange Commission (SEC); or
– any federal laws related to shareholder fraud.121
A whistleblower must be guided in their actions by a reasonable belief that their employer has committed fraud. In order to satisfy the requirement to act with a reasonable belief, a whistleblower must genuinely believe that the conduct he has noticed constitutes an infringement, and that a reasonable person in their position and with the same education would consider that the conduct in question constitutes an infringement. The case law has pointed out in this context that, “[a]; belief that an activity was illegal may be reasonable even when subsequent investigation proves a complainant was entirely wrong. The accuracy or falsity of the allegations is immaterial; the plain language of the regulations only requires an objectively reasonable belief that shareholders were being defrauded to trigger the Act’s protections.”122 However, whistleblower’s mere raising of general doubts as to the regularity of a particular transaction without indicating any specific reasons for concern is insufficient.123 This implies a requirement that the information disclosed must meet a certain minimum degree of concreteness.
For instance, a whistleblower may provide evidence of fraud to a supervisor, another employee, “who has the authority to investigate, discover, or terminate misconduct,” federal regulatory
