Dodd-Frank whistleblower

A philosophical change, or is the government fed up?

By Bert F. Lacativo, CFE, CPA
bert-lacativo-80x80   My Take: Views on the News

The views expressed here aren't necessarily those of the ACFE, its executives or employees. – ed.

JulyAug-whistle-blowerDo the whistleblower provisions of the Dodd-Frank Act send a clear message to the public and corporate America that the U.S. government is fed up? One can easily argue that by making it easier to become a whistleblower, the government no longer trusts corporations to police themselves. Let's look at some history about the government's philosophy on compliance and whistleblowing activity.


In the 1980s, companies serving defense industry contractors found themselves inundated with government investigations, so they collectively decided to put the brakes on improper activities that were hamstringing the industry. They instituted the Defense Industry Initiatives in which all participants agreed to develop ethics and compliance programs to put in place anti-fraud policies, procedures and processes. 

They decided to police themselves not only because it was the right thing to do but because they knew the government wasn't going to go away anytime soon. We began to see a new era of cooperation between corporate America and the government, which applauded the defense industry's efforts. Since then, the Department of Justice Civil Division has reported a decline in the number of new defense industry matters, which include newly received referrals, investigations and qui tam actions. 


In 1991, we saw the implementation of the Federal Sentencing Guidelines for Organizations (FSGO) that laid out expectations for corporate ethics and compliance programs. This carrot-and-stick approach rewarded companies for implementing effective compliance programs while allowing for more severe punishment for those who chose not to. This is another example of the government's position of wanting companies to police themselves.

In spite of the FSGO, in the 1990s we witnessed an onslaught of health care fraud. Again the government cracked down, and again we saw the industry react by working with the government to develop accepted compliance practices for the various players — payers, providers, home health agencies, long-term care, etc. — to police themselves.  

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